Sunday 21 July 2019

THE SHAPE OF THINGS TO COME

Switzerland is in EFTA and Schengen but not the European Economic Area and is in a bit of a dispute with the EU over their relationship, which is very complicated, governed by 120 separate bilateral agreements. The breaching of any single agreement could result in all 120 being broken. The EU, not unreasonably in my opinion, wants to have a more permanent, all embracing and easily managed agreement, something akin to the EEA, I assume. Briefings for Brexit (HERE) thinks the EU is 'bullying' Switzerland and believes it's the 'shape of things to come'.

This is what we who warned that taking back control was the opposite of what was going to happen always feared. That Brexiteers are going to claim from now on, whenever the EU set the terms of access to its single market, they are 'bullying' us.

The article's author is Professor David Blake of the Cass Business School who is fanatically opposed to the EU. He has penned other pieces for various pro-Brexit websites with delusional ideas (HERE) on how to, "force the EU and, in particular, the Irish Taoiseach Leo Varadkar to agree a workable solution that allows the UK to leave the Customs Union and Single Market at the end of October".

Note the use of the word 'force'. Blake doesn't have any principled objection to bullying, it's who is doing the 'bullying' that he objects to. We 'force' people to do things, others 'bully' us. He also said:

"In parallel with this [restating we will leave with no deal], the new PM should immediately inform the US President that the UK will enthusiastically take up his long-standing offer to negotiate rapidly a US-UK Free Trade Agreement (FTA)".

The proposed 'rapidly' negotiated US FTA will be with an American President who has the word 'bully' tattooed on his forehead. Trump unilaterally renegotiated NAFTA because he wasn't happy with it, withdrew from the Iran Nuclear deal, pulled out of the Paris Climate accord and is generally thought to be a threat to the WTO and the entire rules-based international system of trade. If Mr Blake thinks the EU is bullying Switzerland, just wait until our novice trade negotiators get in front of the Americans.

In his latest ravings he talks about using the City of London as a lever. He says, "The City is six times bigger than all the other EU financial centres combined. So the EU’s stance is totally unacceptable and needs to be replaced with either a form of ‘enhanced equivalence’ or ‘mutual recognition’ which cannot be withdrawn unilaterally".

He is looking down the wrong end of the telescope here. Overall, the EU has an economy six times the size of ours. Not only the City, but all the other industries, covering both goods and services and thousands of businesses need access to the EU single market. We are never going to succeed by threatening this sort of thing, where we think we have strength, against an opponent six times our size.

The bottom line for Blake and the Brexiteers to understand is that the US, the EU and China (a) know the value of their own market (b) are entitled to regulate access to it in whatever way they want and (c) demand the highest price they can get.

This is precisely what remainers said before the referendum. We will be the supplicant in any future negotiations with the EU. You can probably get a quicker trade deal with the US and China than the EU, the question is can you get a better one? The answer to that is obviously no.

Perhaps Blake and the other Brexiteers will sooner or later have their delusions shattered and the truth behind revealed. To that extent, the Swiss problems are indeed the shape of things to come.