Weekend Reading: Raphael Hogarth: 'No Deal' Actually Means Total Supplication...

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Weekend Reading: Raphael Hogarth: "Some MPs Talk about 'No Deal' as a Great Liberation. 'No Deal' Actually Means Total Supplication, Handing Huge Control over the UK to the European Commission.Read the government’s technical notices on no deal, and you will find that an awful lot of sectors will need a decision from Brussels to keep trading...

...Agriculture: the UK is “confident” that its products of animal origin meet the EU’s import requirements for third countries, but the EU has not formally listed the UK products as such. If it doesn’t, no exports of animal products to Europe. Likewise plant variety rights and marketing of seed. “The UK would apply to the EU to recognise its certification processes as equivalent, but we cannot guarantee this recognition would be in place at the point the UK leaves the EU.”

Data (vital for UK services): Commission would have to issue an “adequacy decision” to allow data flows to continue. The Commission “has not yet indicated a timetable for this and have stated that the decision on adequacy cannot be taken until we are a third country.”

Operating bus services: the UK “intends to rejoin” Interbus, an intl agreement including the EU, which would allow UK bus and coach operators to carry out journeys. Not mentioned in the notice, but Interbus members (incl EU) take decisions by unanimity, so EU has a veto.

Horizon 2020 (research co-operation): HMG “seeking discussions w the Commission to agree ... continued participation as 3rd country”. And Erasmus (student exchange): UK to "engage" w the Commission w aim of securing "UK’s continued full participation”. Will they engage back?

Trading electricity: it is “strongly in the interests of all parties" to agree a means to avoid the split of the single electricity market, and so HMG will “work with the Irish government and the European Commission” to “seek agreement that the status quo will continue”.

Pet travel! Unless UK is formally “listed”, you must get your pet microchipped and vaccinated before it can travel. “We are seeking discussions with the Commission to allow the UK to become a listed third country” and “will continue to press the Commission to discuss”.

And all of that is ignoring the massive power of member state customs authorities, and their Commission supervisor @EU_Taxud, to decide what proportion of trucks and boats to stop, what proportion of customs declarations to check, how lenient to be when paperwork is faulty. The Commission clearly intends to use its leverage. Listen to Barnier adviser @StefaanDeRynck words at recent @UKandEU event, and read between the lines. “If you have a no deal scenario, the first weeks and months will be crucial for the UK government. Choices will be made.... Will the UK honour its financial obligations to the EU?” And crucially: “the UK has said it wants to be respectful of Ireland’s place in the single market. All these commitments, hopefully, will stand in a no deal scenario.”

EU has already promised some mitigation: 1y equivalence for clearing, 2y for depositing, and subject to fair competition conditions/UK reciprocation, planes fly for 1y, aviation licences valid for 9 months, road haulage rights stay for 9 months.

NB “subject to fair competition conditions” is v interesting. The backstop provisions on “fair competition” involve UK alignment with EU rules on environment, labour and state aid. Sub-text is: if UK goes for Singapore-on-Thames in a no-deal scenario, planes may not fly.

In my view, those who worry about "no deal" should be focusing much more on this loss of control. The "economic apocalypse" message is not landing with the public, and particularly Leave voters, who remain quite relaxed about no deal. Plus, in the eyes of no-dealers, every mitigating measure that either side adopts will "prove the doom-mongers got it wrong" when they said that planes would not fly, supermarket shelves would be empty, etc.

In summary:

  1. No deal is not the ultimate in “taking back control”, but in handing control the EU.

  2. Even in a no-deal scenario, the Commission will try to get the UK to sign up to the backstop and pay the bill, and has plenty of leverage with which to do so.

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