Life After Brexit: New Research Shows the UK is Spoiled for Choice

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Dr Lee Rotherham writes an exclusive article for Get Britain Out:

Herodotus tells us of an unusual figure who fought in the Persian Wars. Sophanes “the Anchor” was a hoplite who chained himself to an iron deadweight, lugged it onto the front line and dropped it there. That way, if he was overwhelmed by enemy numbers, he would not be swept away, but would stand his ground.

The anecdote might be a misunderstanding (the historian also points out he had the emblem on his shield). But as a metaphor it serves us today in the EU debate. Amidst the press of claim and counterclaim, what truths amidst the surging fray may anchor us in turn?

I would point to four, in publications latterly published by the sturdy peltasts at Better Off Out.

To begin with, can we define whether a cost-benefit review of EU membership could ever be devised for EU states and applicants? In a recent international conference, surrounded by senior diplomats, I was astonished by their reliance on basic assumptions that were hopelessly out of date. So in The National Interest we dig from fresh into such basics. When you take apart the fundamentals, some states do come out of it quite well. But the UK is not one of them. A low-regulation country such as ours, with an embedded democracy, which exports a much smaller share of its economy to other EU states and is not within walking distance of Germany, benefits from a much looser type of trade deal. As Charles Crawford, who penned the foreword, observes,

“Canada has achieved intense economic integration with the United States but stayed a free, separate sovereign state with its own voice in senior global counsels. This is the almost aesthetic choice we face in our UK referendum. To be Canada? Or Illinois?”

It transpires on audit that Brexit is a perfectly logical decision in a way that, say, Luxcit might not be.

A companion piece of research, 42: The Answer to Life, the Universe, and Everything (EU), takes the review a stage further. If the EU is not the ideal model, are there extant others that are? The possibilities are not exactly advertised and require serious digging across treaty databases. But an exhaustive audit reveals 42 distinct models as defined by the Commission itself; a studious observer can differentiate five more; WTO challenges to Lomé terms suggest that another six new ones will follow.

Now this is not to say that all 42 (or 47) are types the UK would want to work under, or are even relevant to the UK. But some are.

Consider the case of the WTO MFN model. This modern global default comes in near the bottom of the list. As the massive Change or Go audit comprehensively revealed, even these terms, while not without their difficulties, overall constitute an improvement on the UK’s current terms of EU membership.

That is particularly so once agreements on complex issues such as Cumulation and Reciprocity are also reached; and given the starting point of compliance with existing standards, the two years’ timeframe should be ample time to address such important adjuncts. Similarly, if you actually look at the texts of those EU bilaterals with, for example, India or China, the great majority in fact turn out to be administrative arrangements to implement UN and other globalised deals.

The key point though is that the deeper you dig into the detail, the more the scares associated with the WTO route turn out to be overblown. The example of a pre-GATT level of tariffs the UK might face, which David Cameron referenced in his recent Sunday Telegraph piece, was for instance confined to tobacco exports. Average world tariffs are otherwise at a shadow of those former levels which pushed us into joining the EEC in the first place.

If a model as low down the list as the modern global default can work for the UK, our prospects are surely far from gloomy. It is significant that Norwegian Eurosceptics themselves, while preferring a WTO-based option to their current lot, in turn prefer their current EEA position to EU membership terms.

Other possibilities exist – the newest also arguably happens to be closest to the UK’s original EEC accession deal. The Deep and Comprehensive Free Trade Agreement (DCFTA) model includes a number of Non-Tariff Barrier (NTB) defeating aspects, but also massively slashes tariffs themselves. Ukraine’s deal leads to the removal of 97% of duties on exports, and the reduction of the average tariff on its exports down to 0.5%.

The more you look, the more existing models emerge to supply precedent, allowing for cooperation and coordination in any number of areas of joint interest (such as over migration or combating crime). They all happen without EU membership.

This is a huge positive for Brexiteers. The various existing workable end options collectively congregate in what astronomers would call a ‘Goldilocks Zone’ – an area which is neither too hot, not too cold, but just right for life.

This prospect was not entirely unforeseen by our latter day ‘fathers of confederation’. Happily, for all the bluster of panic-mongering Europhiles, Article 8 TEU today specifically authorises the Union to ”develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation.” Old hands will also recall that this allows bilaterals that “may contain reciprocal rights and obligations as well as the possibility of undertaking activities jointly.” A ‘British Option’ outside of the EU turns out to be a legitimate aspiration.

This all means that a new deal is both an improvement, and works on a principle established by precedent. So now let’s review a core argument of the Remain campaign – which the UK could not thrive outside, because it would lose influence over drafting the rules for its EU exports.

The obvious rebuttal is to point out that the tail here wags the dog – helping under 10% of the economy adds burdens without benefits to the other 90% of it – almost the highest ratio amongst EU states. Moreover, our net membership fees themselves now exceed the savings generated by the reduction in tariffs from WTO levels. But even then, this is far from the full story.

Those who are afraid of the loss of UK influence would be greatly reassured if they had a greater appreciation of how international trading standards are reached. In the Life of Laws, we take the insomnia-busting example of how standards have been agreed on car safety glass. It is particularly appropriate as an example, as Nick Herbert in a recent speech made some quite fundamental mistakes specifically about how standards governing Canadian car exports to the EU are generated. In our report, we are able to confirm that not only is UK trade power weakened by membership of the EU, but membership adds two extra levels of compliance costs that foreign competitors outside the EU are able to avoid. The fundamental point is made by John Redwood in the foreword:

“Outside the EU the UK would have more voice and vote over global trading rules and product standards than inside. The UK would still need to apply the agreed global rules, outside, as we do inside the EU. There is no threat to UK trade if we leave.”

The Prime Minister might similarly have reflected on this before choosing to make a recent pro-EU speech at a manufacturer of railway signals. Top level coordination of European standardisation in that area happens at UNECE‘s Working Party on Rail Transport (SC.2), an international body where the European Commission is merely one participant amongst many.

Are there lessons that could be taken from other continental exemplars? As I happens, there are. Our final paper, New World Order: Lessons from the Americas on Federalism, Intergovernmentalism and Sovereignty, contrasts the EU model of governance with what has been going on across the Atlantic. It sets the seeping federalism of the EU against the more fixed guarantees contained in North American forms of federation. It compares the EU with the wide range of alternative models of trade deal, showing Brussels by comparison to be far more Bolivarist in its aspirations (a point indeed that emerges from our review of Vince Cable’s doctoral thesis). We also contrast the use of vocabulary in the EU debate with how it is expressed in Native American politics, revealing the concept of the EU’s ‘pooling of sovereignty’ to be a veneer. To quote the author of the foreword, Dr Liam Fox,

“Looking at the North American experience and evaluating its strengths and weaknesses is particularly timely, not least as the United Kingdom approaches its referendum on continued membership of the European Union. Concepts of federalism and subsidiarity need to be fully understood if nation states are not to be subsumed into faceless and unaccountable entities.”

These four papers constitute heavy fare, and they are meant to be. The issues that confront us are complex. They merit fulsome investigation.

But we can also offer lighter diversion and thoughtful distraction too. The Renegotiation Game, developed with Tim Philpott, is a free, downloadable board game that allows anyone (or at least, 2-6 players) to simulate David Cameron’s team, darting around the continent to seal the deal. Will the result be a speedy stitch up, or a brand new free trade settlement? In real life we now know how it played out. Perhaps a hard copy could usefully be posted over to Whitehall, or used to jolly up Open Europe’s next ‘wargame’ – this version allows greater strategic use of jelly babies.

Campaigners for the Remain side pretend that there is no alternative to EU membership. They say there is no strategic insight in the Leave camp, and pretend the lack of uniformity across their opposing contingents suggests a lazy flaw. Nothing could be further from the truth.

Europe is today covered by a mesh of trade treaties covering the Barents Sea to the Black, from steaming Eyjafjallajökul to the foothills of Elbrus, and the range of precedent is extensive. Indeed, the EU now has trade-facilitating settlements which are even stretching out across the Mediterranean – to the Atlas Mountains, the Second Cataract, and beyond the Dead Sea. These may still be developing, but the direction of travel is clear.

For the UK outside of the EU, there’s a rich treaty smörgåsbord already laid out, but no-one in Whitehall or Downing Street has yet bothered asking which ones other countries themselves would prefer to engage with us in post-Brexit.

The underlying problem turns out to be more fundamental than the Europhiles portray it. The issue has never been one of choice, but of the choosers. At the summit of government, long laced with diffidence, it seems we have too few Sophanes anchoring the front line and too many Brussels lotus eaters.

Dr Lee Rotherham is one of the most experienced analysts of EU issues on the British political scene. He was an adviser to three Shadow Foreign Secretaries, part based within the European Parliament.

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