Monday 9 October 2017

Planning for No Deal is nearly as hard as trying to negotiate a deal

So, after a long-time trying to negotiate with the EU, the intervention of Macron and Merkel over the weekend has seemingly woke-up the British Government to the reality of its situation.

The EU is asking the impossible in return for a deal, extra-territorial rights for it citizens, a united Ireland in effect and a huge cash bribe. None of this is either desirable, or frankly, even deliverable by the UK Government. The UK had been patiently waiting for the German and French elections in the autumn of 2017 in the hope that the crazy demands might get watered down.

Predictably, this has not come to pass. The EU needs to try to save itself from further break-up and dis-order and is in no mood to accommodate the UK. Plus there is finally a chance to put one over on a trade/power rival - they have not gotten very far with Russia to date, nor America, after all. Let's not even start with China....

So, the problem is that No Deal is in fact a really bad place to start. It was always going to be this way, but with only a year to plan, it is hard.

Let's just take the WTO-rules. We are not really a member of the WTO, votes are required by all members to make this happen - this sounds a lot like negotiating with the EU 27. In fact, the most likely route is that we do not join the WTO but become and 'Observer' this way we can sigh trade deals.

Also, collecting tariffs, a net benefit for the UK, also requires customs points everywhere- real ones. These now need to be built and a eighteen months is a tight schedule.

Then there is air travel, this needs some sort of agreement to continue the status quo as a minimum. These discussions need to start.

Euroatom is another one, though over-hyped. Who is going to come and switch off-off our nuclear plants in reality?

Then there is the status of EU citizens, again, actually this is quite straight-forward if we just offer them all the right to remain, but there is a lot of paperwork for a lot of people. Plus we will need to decide how many visas to offer so that we do not get a cliff-edge employment scenario.

Of course, taking this route will also drive the remainers insane. they are going to go to court, demand referendums and crazed attempts to undermine the Government. It will be a rocky road. Business too will freak and we will have to start dealing with some tantrum moves by international companies and City businesses, as well as some actual needed ones from supply chain companies.

Overall, the big challenge to me is that No Deal requires some very different conversations with the EU as compared to 'Deal' conversations. Due to their nature, we can't really do them in parallel, this means that if it is to be no deal then the Government needs to announce this by the end of the year.


andrew said...

.. so we need to negotiate a 2 year transition so we have enough time to agree a 'no agreement agreement'?

glad that's cleared up.

Raedwald said...

Agree - ball is in EU's court. We can give them until Christmas to respond to TM's reasonable offer, then start building the new traffic lanes, erecting the portacabins and recruiting to HMRC

If France resiles on HMRC in French ports treaty than we will have set up customs points on the entry ramps of UK flagged vessels in Calais and the exit ramps of EU flagged vessels in Dover. Loading times will double. Other ports must expand - Felixtowe, and the new PoL terminal on the Thames, Newhaven. Illegals will left on board French ships for them to deal with.

Merchant fleet must expand with suitable size vessels to carry break bulk shipments from UK to EU ports to replace road vehicles (currently ~£4bn a year of EU bound freight landed here by very large ships and distributed across channel mainly by road)

Increase of freight through Eurotunnel - massive increase in customs sidings, holding capacity

Given mobilisation lead times for civils - already heavily committed in London & SE - decision may also have to be taken to postpone competing schemes such as HS2 etc. Also, govt can cheerfully break EU construction procurement laws - they'll be on the bonfire soon enough anyway, and we'll be buggered if we have to invite Thyssen Krupp, VoestAlpine or LafargeHolcim to bid ...

Presuming contracts and procurement preliminaries are already quietly taking place, we will be able to break ground by Easter next year.

The govt should already be quitely asking for expressions of interest from UK firms for the work ...

Nick Drew said...

Mr R - all this presumes Action This Day ... but I don't see a Churchill anywhere in Downing St.

(If it all fails to materialise, there will be criminality of all kinds on a scale not seen since the collapse of the USSR - and I don't see a Putin anywhere either ...)

Steven_L said...

My professional institute has set up a 'brexit think tank' pushing for a trade deal based on mutual recognition. I'm not sure if it's just a gravy train talking shop / remoaner whingefest or something more sinister. A good number of the people on it have been on an EU payroll one way or another.

Anonymous said...

The EU commission are playing hardball - assuming that the BBC are telling the truth, which is a bit of an assumption. This morning BBC news reports that "May will taking a harder line, ball in EU court", by lunchtime, before she's even made the speech, BBC report the commission have thrown the ball back at her.

The EU hope is that as May gets closer to Brexit with no deal, that she'll either give way on freedom of movement/vast payments or be thrown out and an incoming Corbyn administration persuades itself (with lots of help and money from Blairites) that hey, second referendum or Norway option is the right thing to do.

How long can May continue with the "deep and stable" stuff when they are not moving? Surely it's time to say "I said no deal was better than a bad deal, and the EU are playing silly buggers - we are going forward on a no deal assumption. If the EU want to talk they have David Davis's number". But she's got to mean it, and she's got to actually get the work done - I appreciate tricky when so many civil servants aren't used to independence and many hate the idea.

The Guardian/BBC axis will scream, but there's going to be a lot of screaming whatever happens.

"The Government will implement what you decide" - Cameron, June 2016.

Anonymous said...

There are three options and not two

* Deal
* No deal
* Stay

Seems that if you don't mention the elephant in the room, then people may think it's a binary choice.

And going back to business "tantrums", the major corporates - the large multinational employers don't have tantrums, they have plans and can switch out of the UK to elsewhere in under 12 months. Or has the decimation of UK manufacturing by moving production abroad been forgotten about.

John in Cheshire said...

Is it correct that the negotiating teams are only meeting to negotiate on one week a month? If so, why aren't they negotiating every day of every month? And who decided to only conduct negotiations for one week in four?

CityUnslicker said...

Anon - stay is to deny the democratic will of the people, which is much worse than any economic hit. No govt will ever get that through, what is the point of democracy. By the same token, you could accept an independent Scotland as that referendum does not matter either?

However, the decimation of production is less clear - certainly if we are not prepared and it appears that business cannot continue then that is a major, major issue. If we are prepared and major businesses always can be (its called bribery, or um, export credit, whatever)then this does not have to be the case. Unless the EU close the borders on purpose, I really hope the EU do not enforce a trade war or indeed real war situation, albeit I am not 100% certain of even that as surely they know where their stance is taking us.

JC - once a month as there was supposed to be much to mull over and refine in-between times. Sadly, that has not really been the case.

Andrew- that was not my point, my point is that it is not realistic to hold both types of discussions simultaneously and neither will the Eu play that game. If there really is no chance of a 'deal' then we should move onto 'no deal' discussions asap as there is a hellava lot do to.

Nick Drew said...

This silly EC October 'negotiation progress assessment' only ever had one outcome, because UK was never going to sign up for "the eventual bill will be whatever the EC eventually declares is the bill", which is all that's ever been on the table from the other side

this, I assume, was obvious to Davis et al from the moment October was declared (it was obvious to a senior Labour person I talked to in July)

I don't know whether or not to conclude the EC had set it as a trap - it's such a blatant one, I sort-of think it was just one of the dumb procedural things the EC goes in for, totally fatuous in circumstances like this

(in fact, I rather assumed they would quietly drop it, and they may yet do that, like any hostage deadline that was never really meant)

au fond, I guess the EC feels we are utterly panic-stricken (as, individually, they would be) at the prospect of being cast adrift without "a deal" - and perhaps we should be!

but we ain't! & it's always a problem when you're dealing with a madman ... us & Fat Boy Kim both

Sebastian Weetabix said...

Here’s a thought. Why not abolish corporation tax and tariffs? That should scare the shit out of the commission, though I doubt Appeaser May would have the guts to make such a move.

Anonymous said...

I'm torn part of me wishes we had a bold and brave (kamikaze?) politician that had the balls to explain how petulant the EU behaves and would be willing to give them a taste of their own medicine (90% tariff on German cars would be a good start)

But whilst I'd love to see to that, I think it would be futile - doing anything that plays the EU at their own game (being a stroppy child/teenager or over emotional woman that's been cheated on that can only think about the hundreds of ways to get revenge) is always going to fail - I feel they would be willing to bring themselves to the brink of collapse if it meant giving us a good kicking.

There's no point us trying to play the game - whilst we want something from the EU we can only lose.

Maybe we should be looking at school playgrounds to see how little kids out smart the bully in the group and using that as our strategy...

Anonymous said...

Anon 9.28,
In 'General Jack's Diary' (WW1 hero -well worth a read) he describes,as far as I can recall the French character as being that as something akin to 'emotional (or jealous)women.'I don't suppose much has changed.(Reading'The Sleepwalkers' shows how the French,their revanchism and their mad politicians were perhaps the greatest contributor to the lead up and outbreak of that great disaster.I dislike them even more for that.

But on playing the game what is a British Govt to do? Simply give in and face humiliation? Could May or Corbyn/Tory or Labour survive that?

I was always taught that in the real world the way to stand up to a bully to was to face him out and kick him in the nuts.With hindsight that did involve the risk of a worse kicking although it did by some respect.

However painful that option should always be borne in mind.

Perhaps the way to circumvent the bully -seemingly France/Germany - is to talk to his/their mates and that seems to have been the strategy.

Charlie said...

"There are three options and not two

* Deal
* No deal
* Stay"

I don't really see how "Stay" doesn't result in mass riots.

Timbo614 said...

@anon 10:12 Being known as Tiny Tim in the playground (I never did pass 5'6") I found an easier way with bullies - Make BIG friends! UK doesn't have many and Trump is unreliable it seems. Who else have we got that's big and not in the EU? The aussies? - not sure about them these days either.

Anonymous said...

I don't really see how "Stay" doesn't result in mass riots.

Interesting statement when the whole issue is the sovereignty of parliament and if parliament decides on staying - or another vote about leaving - then why should that be a consideration.

Unless of course we are being hijacked by a small group of vociferous ultra-rights who are blinded to the damage to the economy and our democracy by the claims of "mass riots".

We had a positive vote to leave but no reasonable person would have read into that vote the implied "at any cost". It was a shambles of a vote, ill-considered by Cameron, and has left a mess behind.

Any reasonable person would wait until the terms of the "best deal for Britain" was known before jumping one way or another.

Call me cynical - or experienced in the ways of politicians - but I'd like to see some details first.

Anonymous said...

Timbo @11.01,
Thing is the EU big boys are demonstrating that they are not really our friends either.

Raedwald said...

The Brexit process has exposed the EU as being far from the benign, selfless confederation it would have us believe; they have shown themselves to be malicious, grandiose, bullying, vindictive and imperious and quite happy to trample nationality, hope, aspiration and the peoples of the nations of Europe under a new legal and economic jackboot for the sake of their own power.

It's not just about economics and GDP.

Stay? No. I'm willing to risk all I have to leave their clutches.

Anonymous said...

And with the infallible political instinct that's seen such changes in her approval ratings, Mrs May launches a "it's all those white people's (aka The People Formerly Known As British) fault" report - one of apparently an ongoing series.

"Theresa May has said she wants the findings – which shine a light on vastly different experiences for ethnic groups in Britain’s schools, workplaces, hospitals and justice system, and reveal huge regional disparities – to reveal “uncomfortable truths”.

She said: “People who have lived with discrimination don’t need a government audit to make them aware of the scale of the challenge. But this audit means that for society as a whole – for government, for our public services – there is nowhere to hide. These issues are now out in the open. And the message is very simple: if these disparities cannot be explained then they must be changed.”"

The disparities can be explained OK - "people are different. Burkina Faso is not Sweden, Syrians are not Greeks, Greeks are not Germans". But I don't think that's the explanation they're looking for.

andrew said...

anon, it is easy to call out may's catchphrase
'Ein Volk, ein Reich, ein F├╝hrer'(*)
then look at this country and laugh.

to a great extent you are right.

but when you hear 'Black Caribbean pupils are permanently excluded from school at three times the rate of white British pupils'

clearly something is not right.

It may be that there is nothing we can do, but we should try.

(*) I hope you appreciate the umlaut - not easy to type.

On the 'Third Option', I would have liked to stay, but we voted to go and sent the letter and 27 other countries accepted that letter.

I suspect that the cost of un-leaving would be about the same as many of the things the remainers claim to be the cost of leaving.

The clash song comes to mind.

miker22 said...

Why do you say we're not really a member of the WTO? I thought we'd been a member from the beginning and of GATT before then?

L fairfax said...

How about telling them if they treat us badly they can rely on Trump to protect Eastern Europe from Putin - and suggest a good online course to learn Russian?

CityUnslicker said...

miker 22 - We are only a member of the WTO via the EU, we are not members in our own right.

Elby the Beserk said...

Charlie said...
"There are three options and not two

* Deal
* No deal
* Stay"

I don't really see how "Stay" doesn't result in mass riots.
10:31 pm

Indeed. And if that does happen, it will be my first riot. Aged 66 or more. Putting hob nails in my boots already, and sharpening my pitchfork.

miker22 said...

We are a member of the WTO in our own right but operate under the EU schedules, according to the Institute for Government site (sorry can't link it).

Anonymous said...

Andrew - "It may be that there is nothing we can do, but we should try"

Lots of things have been tried both here and in the States. What DOES result in lower exclusions is if you just give up, but then all the parents complain when their sons lose their lunch money, and the teachers don't like being assaulted.

Something else that would have a major effect is the presence of an intact family - half of black kids don't have a father in the house. Suggestions for fixing that?

May's on a hiding to nothing when she talks about fixing intractable differences that Americans have been struggling with (and hurling cash at) since at least 1965 and the Great Society of Lyndon Johnson.

It won't get her any Brownie points with the "Tories are racist" crowd, and her implication that poor outcomes for minorities are the fault of the natives breeds resentment of whites in minorities and resentment of May from the white people she seems to be blaming.

Mr Ecks said...

Anon--Stay is your option if you want a civil war.

I am not young but can think of no way to meet my (inevitable anyway) death than fighting for freedom in such a war. Freedom not just from the EU but from well-off, middle-upper class, cultural Marxist, London Bubble Bliarite/ BluLabour scum who like democracy when it gets them what they want and think they can wipe their arse on it when it doesn't.

As for the Deal/No Deal--IT ISN'T ABOUT THE MONEY. As Solid Steve a great commenter on Tim Worstall's blog put it: If we'd surrendered after Dunkirk we'd have saved ourselves a fortune.

Bring it on you EU scum. Our only dangerous enemies are internal.