Sir Ivan Rogers gave another great speech yesterday at Liverpool University. You can read it in full (HERE). Sir Ivan was UKREP to the EU until Theresa May sacked him for giving her sound advice and telling her she was wrong to trigger Article 50 before getting a clear plan, something with which everyone now agrees, I think. The lecture is called Nine Lessons. Around 10,000 words long, it will take about 40-50 minutes to read in full. Get a cup of tea sometime and read it. It will be the best time you'll spend on Brexit this year.
What I think comes across is the sheer negotiating strength that the EU as a collective has. It is the very essence of why countries join the bloc in the first place. The political and economic interests of member states, however small, come first. Once outside we will literally be on our own. Brexit is about to bring a painful end to British exceptionalism.
But for those who don't have the time to read the lecture in full, a few extracts that I enjoyed. The sub titles are mine by the way, not his:
On Ireland
This may the first Anglo-Irish negotiation in history where the greater leverage is not on London’s side of the table. And the vituperation aimed at Dublin politicians tells one just how well that has gone down with politicians and apparatchiks who had not bothered to work out that this was no longer a bilateral business, and are now appalled to find they are cornered.
On future trade talks
Well, just wait till the trade negotiations. The solidarity of the remaining Member States will be with the major fishing Member States, not with the U.K. The solidarity will be with Spain, not the U.K., when Madrid makes Gibraltar-related demands in the trade negotiation endgame. The solidarity will be with Cyprus when it says it wants to avoid precedents which might be applied to Turkey.
I could go on. And on… The Free Trade Agreement talks will be tougher than anything we have seen to date.
On becoming a third country
But the EU is negotiating with us, not as a member, but as a prospective soon-to-be third country. Those glorious, sweaty, fudge-filled Brussels denouements are gone. The Prime Minister is not in a room negotiating with the 27. That’s not how the exit game or the trade negotiation works, or was ever going to.
We need, urgently, on all sides of the spectrum, to start understanding how being a “third country” is different. And the most naïve of all on this remain the Brexiteers who fantasise about a style of negotiation which is only open to members of the club.
We are indeed, a soon-to-be third country and an opponent and rival, not just a partner, now. Again, that is what Brexit advocates argued for. It is time to accept the consequences. Some of those will be beyond tiresome. And one of them will be that we shall be, like Switzerland, in a state of permanent negotiations with the EU about something highly intractable, on which they may have more metaphorical tanks than us.
Get used to it!
The pre-referendum bluster
Bold, confident assertions, during and in the many months after the referendum that we would have a fully fledged trade deal with the EU ready and in force by the day of exit, and, not only that, rafts of further free trade deals with other fast growing countries across the globe, were just risible when they were made, and have now proven empty bluster.
Likewise, all the breezy assertions that “no deal” would pose no great problems for aviation, for road haulage, for medicines, for food, for financial services, for data and for any number of other areas – for most of which, “WTO terms” are simply not a safety harness.
No number of repetitions of the grossly misleading term “WTO deal” makes it any more real or effective. Its proponents – or most of them – know this full well, incidentally.
This is not because of Establishment remainer sabotage
The folly of triggering Article 50 without a plan
Put bluntly, none of this happened [recognising how complex it all was]. Instead, before much of the serious work to look at where we wanted to land post exit had happened, we locked ourselves into a date certain for the invocation of Article 50.
That duly forfeited at a stroke any leverage over how that process would run. And it gave to the 27, who had, by the morning of June 24th, already set out their “no negotiation without (Article 50) notification” position, the first couple of goals of the match in the opening 5 minutes.
All the people who are now loudest in bemoaning the Prime Minister’s deal were, of course, the loudest in cheering from the rafters as she made this fateful error.
The vassal state
And because the U.K. had given no serious thought to the question of transitional arrangements until it was too late – precisely because of the fantasies propagated that this would be one of the easiest “trade deals in human history” and all would be definitively tied up legally by exit day – by the time they actually did focus, London was urgently begging for what is now pejoratively termed the “vassal state” transition, precisely because it knew that it could not be ready for a post Brexit equilibrium state by March 2019.
As I have said before, I am all for knowing your “best alternative to a negotiated deal” – your BATNA – in all negotiations. You have to know whether you can walk out, and be very sure you understand what could happen if you do, and what you can do to mitigate all downsides.
But if you are emitting all sorts of signals which indicate that you know you cannot, don’t bluff. It just makes you look weak, not strong, and it fools no one.
Those who were suckered into doing, or cheering, the wrong thing in the negotiation at the wrong time for the wrong reason, and duped themselves and others into thinking it would all be extraordinarily simple, cannot acknowledge that of course.
The great Brexit paradox
You cannot simultaneously argue that it is perfectly fine to leave a deep free trade agreement with easily our largest export and import market for the next generation, and trade on WTO terms because that is how we and others trade with everyone else…
….AND argue that it is imperative we get out of the EU in order that we can strike preferential trade deals with large parts of the rest of the world, because the existing terms on which we trade with the rest of the world are intolerable.
If moving beyond WTO terms with major markets represents a major step FORWARD in liberalising trade, then deliberately moving back to WTO terms from an existing deep preferential agreement – which is what the Single Market is – represents a major step BACKWARD to less free trade. You really can’t have it both ways.
Well, when I say “you cannot” argue this, clearly many can and do. But it is well beyond incoherent.
On sovereignty
As long as one also recognises that all trade deals inevitable erode and trammel one’s sovereignty to some degree – often to a significant degree.
Binding international commitments to opening each other’s markets – on goods, services, government procurement, whatever – seriously limit one’s capacity to regulate sectors of the economy as one might ideally see fit.
Genuinely free global trade actually seriously trammels national sovereignty. Hold the front page.
Indeed, the greatest reason to be a passionate free trader – which I am – is surely precisely that: it curtails the ability of myopic politicians to erect barriers to commerce in the name of sovereignty and national preference against non-national producers.
This is why our current debate on sovereignty and “taking back control” is often frankly so bizarre. It is just comical listening to Right wing populist politicians claiming they are avid free traders and simultaneously saying that one of the purposes of taking back control is to be able to rig domestic markets / competitions in favour of British suppliers / producers.
Protectionism is always someone else’s sin, of course.
On getting future trade deals
That even if every one we aspire to [free trade deals] were completed, this will have a really very modest impact on overall UK economic performance.
And that every version of Brexit involves a worsening of the UK’s trade position and a loss of market access to its largest market. As we strive to limit the extent of that worsening, public debate will have to be serious about what the real trade-offs are. Because the EU will be quite brutal in teaching us them.
Meanwhile, before we have even left, we have seen, in the last 2 ½ years, the most anaemic boost to UK net trade triggered by ANY major sterling devaluation since World War 2. For politicians not completely blinded by their own rhetoric, the warning signs for the UK economy as we worsen our trade terms with the Continent are there to see. Again, public debate needs to be based on the realities, not on fantasy. Or the reality will soon catch up with us.
On controlling immigration
The implications are obvious. And again the public is not being told of them. Because the fiction has to be maintained – at least until a first deal is done – that there will be no sort of preferential free movement terms for EU citizens.
We stagger on, constantly postponing the long promised White Paper on immigration post Brexit.
And after it eventually does get published, we know that, in reality, once the FTA negotiations truly get under way, and reality bites on the UK side, the policy, like so many others in the last 30 months, will simply disintegrate in the face of negotiating imperatives.
The EU already knows that the UK will, under whoever’s Premiership, be prepared to pay a heavy price to maintain better access to business, legal, consultancy, and financial services markets than other third countries have, to date, achieved via standard FTAs. Why? Because that’s an economic imperative for a country which has world class services capability, but needs market access.
EU leverage
That EU leverage will be deployed in the years ahead and it will be used to enforce deals on issues like fisheries, on which again referendum campaign commitments will be abandoned in the teeth of reality.
Those saying this now will of course get the ritual denunciations for defeatism, lack of belief, treachery and whatever.
But just give it 2 more years. The Brexiteers, the strength of whose case to the public always resided, as I say, in saying to the public that their leaders had mis-sold them on what the EU was becoming, have now done their own mis-selling. And they are in the middle of the painful process of discovering that, as trade terms worsen on exit, which they denied would happen, they will, under economic duress, have to let down the very communities to whom they promised the post Brexit dividend.
That penny is dropping. Just very slowly.
Canada or Norway +
The “pluses” merely signify that all deficiencies in the named deal will miraculously disappear when we Brits come to negotiate our own version of it.
As the scale of the humiliation they think the Prime Minister’s proposed deal delivers started, far too late, to dawn on politicians who had thought Brexit was a cakewalk – with the emphasis on cake we have seen a proliferation of mostly half-baked cake alternatives. They all carry at least one plus. Canada has acquired
Besides “Canada +++” or SuperCanada, as it was termed by the former Foreign Secretary, we have Norway +, which used to be “NorwaythenCanada” then became “Norwayfornow” and then became “Norway + forever”. And now even “No deal +”, which also makes appearances as managed no deal” and “no deal mini deals”.
What is depressing about the nomenclature is the sheer dishonesty. The pluses are inserted to enable one to say that one is well aware of why existing FTA x or y or Economic Area deal a or b does not really work as a Brexit destination, but that with the additions you are proposing, the template is complete.
Walking away with no deal
The “no deal + “ fantasy is that if we just had the guts to walk away, refuse to sign the Withdrawal Agreement with the backstop in it, and withhold a good half of the money the Prime Minister promised this time last year, capitals, suddenly realising we were serious, would come running for a series of mini deals which assured full trading continuity in all key sectors on basically unchanged Single Market and Customs Union terms.
I don’t know what tablets these people are taking, but I must confess I wish I were on them. It will be said of them as it was said of the Bourbons, I think: “they have learned nothing and they have forgotten nothing”.
The reality is that if the deal on the table falls apart because we have said “no”, there will not be some smooth rapid suite of mini side deals – from aviation to fisheries, from road haulage to data, from derivatives to customs and veterinary checks, from medicines to financial services, as the EU affably sits down with this Prime Minister or another one.
Next generation of fantasies
We already see the next generation of fantasies out there, and it’s now just a matter of time before a Tory leadership contender offers them publicly as the Houdini act.
A suite of very rapid legal mini deals, accompanied by the existing Withdrawal Agreement deal on citizen’ rights, the complete dropping of the backstop, and only paying the remainder of the 39billion cheque when the mini deals have turned into the miraculous Canada (with lots of pluses) deal.
All of which must happen in months. But of course…
To which the EU answer will be a calm but clear “Dream on. You still want a transition? All existing terms and conditions apply. And when it comes to any FTA – deep or shallower – “nothing is agreed till everything is agreed” – and that still includes the fish”.
The risks
But I do fully understand the legal realities. And because so-called “WTO rules” deliver precisely no continuity in multiple key sectors of the economy, we could expect disruption on a scale and of a length that no-one has experienced in the developed world in the last couple of generations.
The complacency that such things cannot and would not ever really happen in modern economies is staggering. Mercifully, it is not shared in either Whitehall or the Berlaymont. But these are outcomes which proper political leadership is about both understanding, contingency planning against - and avoiding.
Markets continue to react, or have until this week, as if something must turn up and that “no deal” is a virtually unimaginable scenario for politicians professing to be serious, to contemplate. That risk has therefore been seriously underpriced for a year or more, because we are dealing with a political generation which has no serious experience of bad times and is frankly cavalier about precipitating events they could not then control, but feel they might exploit.
The UK's secretive negotiating strategy
At virtually every stage in this negotiation, the EU side has deployed transparency, whether on its position papers, its graphic presentations of its take on viable options and parameters, its “no deal” notices to the private sector to dictate the terms of the debate and shape the outcome.
A secretive, opaque Government, hampered of course in fairness by being permanently divided against itself and therefore largely unable to articulate any agreed, coherent position, has floundered in its wake.
The dishonesty
But the dishonesty of the debate has, I am afraid, been fuelled by Government for the last 2½ years. It took ages before grudging recognition was given to the reality that no trade deal – even an embryonic one – would be struck before exit, and that no trade deals with other players would be in place either.
Even now, though, the Prime Minister still talks publicly about the Political Declaration as if it defined the future relationship with some degree of precision, and defined it largely in line with her own Chequers proposal, when it simply does neither.
It is vague to the point of vacuity in many places, strewn with adjectives and studiously ambiguous in a way that enables it to be sold as offering something to all, without committing anyone fully to anything.
And finally:
the whole conduct of the negotiation has further burned through trust in the political class.
Do yourself a favour, read it in full.
Do yourself a favour, read it in full.
