Friday 6 October 2017

DAVIS ON IRRATIONAL BEHAVIOUR

In 2016 both before and after the referendum, David Davis who was then a plain MP, made a number of speeches and wrote various articles about Brexit, the economic case for it and how the Article 50 process should be planned. He was wrong on virtually every single thing he said but this didn't prevent Mrs May appointing him as our Secretary of State for exiting the EU. One might think a lack of knowledge was almost a prerequisite for ministerial office.


He said in May 2016 (HERE) that we would be "free to negotiate our own [trade] deals faster" and "Our trade will almost certainly continue with the EU on similar to current circumstances". In July (HEREafter the vote he said he would, "expect that the negotiation phase of most of [a large round of global trade deals] to be concluded within between 12 and 24 months".

Looking back now this looks less like over-exuberant optimism and more like he had sat outside for too long under a hot sun and his brain had overheated. He also said, "However, remember that neither the IMF nor the Treasury have a very good track record on forecasting" which is a bit like a one legged man criticising Usain Bolt for his running skills.

On the WTO or the so called no-deal scenario he was clear. In May 2016, he said, "However, let us assume for a second that everybody behaves irrationally (HERE), and we are forced back onto WTO terms. He said we would use the money from tariffs to support industry, specifically the car industry, "Which of course is another reason that the EU will not force this outcome"

And in July, "we should work out what we do in the improbable event of the EU taking a dog in the manger attitude to Single Market tariff free access, and insist on WTO rules and levies, including 10 per cent levies on car exports. Let us be clear: I do not believe for a moment that that will happen, but let us humour the pre-referendum Treasury fantasy" (HERE).

Well, now it is not the EU but everybody on our side who is apparently behaving "irrationally" with calls from various MPs and lobby groups for us to walk away from the negotiations. Mr Davis himself tell us he is now planning for such an outcome (HERE). And German industry is being advised by it's own federation, the BDI, that it is being naive if it is not planning now for a very hard Brexit (HERE), in other words trade on WTO terms. Even the author of Article 50 says the chances of crashing out with no deal is now 50:50 (HERE).

This is how international negotiations go disastrously wrong. The macho nationalistic posturing, the inability to compromise, avoiding a loss of face at all costs. They all contribute to a ratcheting up, an increase in the ante until the irrational becomes the fait accompli.