The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Campaigning for a Clean Brexit

Andrew Roberts asks you to support the Bruges GroupBrexit is under threat. Every day an anti-democratic alliance orchestrated by Tony Blair, senior Labour figures, the Lib Dems, together with their cheerleaders in big business and the media, are working to block delivery of what you, I and 17.4 million others voted for on 23rd June 2016. Every day ...
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Robert Oulds
Thank you for your kind words, many people feel like this and are deeply troubled by the so-called progress made so far.
Monday, 11 December 2017 09:07
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Open letter to the British government: Keep calm and walk away from Brexit negotiations

​Dear members of Her Majesty's Government,In your efforts to ensure the UK's smooth transition away from EU membership, you have met more than one stumbling block. It's still unclear whether the European Court of Justice will maintain jurisdiction in Britain. The amount of money on offer to the EU to "settle your accounts" has only increased, and d...
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Robert Oulds
Thanks for your comment, it is alarming. I think that we have people who are ultimately in charge of the process that do not belie... Read More
Monday, 11 December 2017 09:06
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Puppet Master Behind Juncker and Barnier: Martin Selmayr

​Jean Claude Juncker's closest henchman, Martin Selmayr, is positioning himself to become the European Union Commission's most powerful figure and the real puppet-master of the Brexit talks. He will have a central part in the EU Commission response to May's speechJean-Claude Juncker owes his whole life as EU Commission president to his enforcer Mar...
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Brexit, Ireland, and the EU

Submission by Anthony Coughlan to the Northern Ireland Affairs Committee of the House of Commons on North-South border problems in Ireland and the Irish Government's policy response in the context of Brexit.Executive Summary -Logically, there would be no new North-South Border problems within Ireland if the Republic of Ireland should leave the EU i...
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The New European: an undiluted Remain hatefest

​The tentacles of the Stop Funding Hate campaign reach far and wide. En route to the station, I would sometimes stop at a nearby café, reading their copies of the Sun and Daily Mail over a coffee. The cafe gets most of its trade from mums on the school run, and you wouldn't think this quintessentially suburban setting would be fertile soil for poli...
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EU Sock Puppets in the UK Act Out Brussels Agenda

In the months leading up to United Kingdom's 2016 European Union membership referendum, many "independent" think tanks espoused studies against Brexit.However, these UK-based, pro EU campaigners and their research remain closely linked to Brussels through financial funding. The European Commission's tactic of shelling out millions to pro-EU lobby g...
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The European Deadline Diktat and Other Issues

​Donald Tusk gave Theresa May ten days (with less than a week remaining) to offer him much more money and also give him a solution that he likes to the Irish border problem. We should be relaxed about this and either give what is legally due the EU or nothing and sort it out after Brexit.This dictatorial deadline that conflates both the Irish borde...
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Post Brexit Britain: In Conversation with Sir Desmond Swayne MP

​Contrary to the mainstream point of view, a post Brexit Britain is an open Britain. While Brexit is portrayed as a very isolationist, nationalist vote, Sir Desmond Swayne MP said it's a very much outward-looking event. "United Kingdom is going to re-establish its place in the world and it's an attempt to actually maximize that," Swayne said. "Rem...
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Bordering on Madness

The thing that first drew me to being opposed to our membership of the EU in 1991 was the realisation my elected Government was not in control of our country, that authority had passed to an offshore, unelected and unaccountable body. My awakening came through a letter written to the Chancellor of the Exchequer during the terrible recession of...
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​International Brexit: In Conversation with Kate Hoey MP

Euro skepticism and Brexit is synonymous with right-wing politics. The reality is the Leave vote was ushered in by a broad coalition of both left-leaning and right-leaning voters, said Labour Party MP Kate Hoey, a proponent of Brexit. Speaking with Morten Dam of Peoples Movement Against the EU in Denmark, Hoey discussed the position of the Labour...
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Rest Assured: There Will Be a Brexit Trade Agreement

​Bruges Group director Robert Oulds assured the possibility of a Brexit trade agreement in an interview with Jeremy Naylor on IG.com. It was one of the many issues discussed during last Friday's broadcast. Topics ranged from the cost of other trade agreements, need for deregulation, lower taxes, and passporting rights. The term "hard Brex...
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​Passporting: Concerns & Realities

The crown of UK is its financial services sector: buying and selling across the EU and the world. Now, fresh fears about the backbone industry of London are on the rise. EU's chief Brexit negotiator Michel Barnier announced last Monday that firms based in Britain will lose their "passporting" rights post Brexit. A "passport" allows financ...
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The Merchant of Belfast

The problem of Ireland is one that perplexes both the UK and the EU during Brexit negotiations. Should Northern Ireland have a hard border after Brexit or should it remain as it is - flexible?In considering the Irish Border question I am reminded of The Merchant of Venice or in this case The Merchant of Belfast. The EU after all created Article 50 ...
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James Coghlan
To clarify like Scotland the Irish Pound note is different to the English Pound note.
Sunday, 03 December 2017 18:58
James Coghlan
Perhaps I should have been clearer. Like Scotland Ireland has its own set of notes. They do not ALL say BANK OF ENGLAND!
Sunday, 03 December 2017 18:59
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Send Morrissey to break the impasse

£40 billion isn't enough. The EU, facing a gaping hole in its finances after losing its British cash cow, is extorting to the max. But even the most generous offer from our pathetic political leaders, in return for a few cake crumbs, won't guarantee a mutually-rewarding trade deal. The whole protracted and humiliating process could be voted down by...
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Fighting for Brexit on two fronts

​A gathering storm over London.Photograph: Garry Knight, Wikimedia Commons. While the UK's parliament debates the EU Withdrawal Bill, its government is pursuing a post-Brexit deal on the continent. On both fronts, the decision Britons took to leave the EU is under threat. Indeed, their government has precious little wiggle room to deliver, but it s...
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5 Reasons To Visit Bruges This Winter

5 Reasons To Visit Bruges This Winter
The historic city of Bruges has long attracted some of the world's leaders, including Margaret Thatcher who made her famous Bruges speech at the College of Europe, which is still considered a political centre today. Bruges has so much to offer visitors, so here's why you should renew your e111 card, pack your suitcase and head to the charming city ...
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British people will make their own trade deal

​Cars have always been more than four-wheeled transport; they're status symbols. Owners of a Ford Focus, a 'Chelsea tractor' or a quirky Citroen display something of their character, and their wealth. In the past, cars were also expressions of patriotism. A proud ex-serviceman would insist on a staid black or beige Austin or Hillman, but by the 197...
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How Likely is a No Deal for Brexit?

​The Chancellor, the Right Honourable Philip Hammond MP, recently stated that he would not be providing funds to put in place contingency measures, to prepare for the outcome of the Brexit negotiations being "No Deal".He did not want to spend money that could otherwise be spent on hospitals, schools, defence etc on protection against a merely hypot...
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Rt Hon John Redwood MP Discusses Brexit

​Conservative Member of Parliament for Wokingham, Berkshire, John Redwood discussed UK's stance on Brexit negotiations as well as Britain's future relationship with the EU after Brexit. Redwood affirmed that the UK will only make an agreement after examining all the issues instead of settling specific issues as a prerequisite to move forward with a...
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Fast Forward to 2020: U.K. Needs to Speed Up Brexit

​It's no secret that deals are an "art form" for U.S. President Donald Trump, who likes making deals, preferably big deals, and promises to cut a very big and exciting trade deal with the U.K. after Brexit. That window of opportunity is quickly closing in the face of slow-moving negotiations with EU and looming uncertainty behind Trump's reelection...
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A Historian’s Vision: Post Brexit Britain Will Be Kind and Caring

​Britain's exit from the European Union, ushered by a majority of Leave votes, is an opportunity to build a better Britain. Not a better Britain, according to historian Bess Rhodes, but a kind and more caring Britain. Speaking at the Bruges Group's "Deal or No Deal" conference on Nov. 4, Rhodes admitted she voted to remain in the EU. After the resu...
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Here's Why U.K. Should Prepare for "No Deal" on Brexit

​"Deal or no Deal" event speech by Professor D.R. Myddelton.BackgroundGeneral de Gaulle was a difficult Frenchman!In 1963 he rejected Britain's application to join the Common Market – on the grounds that England was too different from the continental countries.I share that political judgement. So I voted in both Referendums – in 1975 and again...
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Support for EU membership in Iceland reduced even further

​Two political parties who favour membership of the European Union remain in Iceland's parliament following the general elections that took place in the country on 28 October. Before the elections they were three but one of them, Bright Future, lost all its MPs. The two remaining pro-EU parties, the Social Democratic Alliance and the Restoration Pa...
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U.K. Military Autonomy Under Threat

​The Bruges Group hosted Veterans for Britain, a group of 14 Admirals and Generals led by Mag Gen Julian Thompson, who campaigned for Brexit. David Banks spoke on the EU's proposal for a Permanent Structured Cooperation. The agreement binds member states armed forced into a joint single output spearheaded by Brussels for defense. The lack of d...
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The Healthcare Cost of EU Policy

​With plans for an Airbnb-style scheme for National Health Service patients set to roll out as early as next month, the state of NHS hits a new low. The health service will compensate homeowners £50-a-day to host patients in their spare rooms. Overcrowded hospitals and long wait times are a culmination to decades of European Union's open-...
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Opening of borders, closing of minds

A clumsy request from a parliamentarian on what is taught about Brexit in universities has caused uproar. Chris Heaton-Harris, MP for Daventry and a junior Conservative whip, was suddenly likened to Senator Joseph McCarthy, who infamously led a campaign to root out 'reds under the bed' in American institutions back in the 1950s. But incredulous cla...
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Dr Bess Rhodes - what actually is Brexit?

Dr Bess Rhodes - what actually is Brexit?
Bruges Group ConferenceWill Britain make a Brexit deal with Brussels? What should the UK prioritise? Where should it draw the red lines? When is the cost of any deal too high?Will we get what we actually voted for? This conference will answer those important questions.Saturday, 4th November 2017http://www.brugesgroup.com/events ...
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EU will end like the Holy Roman Empire

By Niall McCrae

holyromanempireChief commissioner Michel Barnier wags his finger at the media conference. An uprising in a major European country has forced his hand, as attacks on police and politicians lead to desertions and defections. Unlike the British government, which was pummelled into submission over the Brexit deal, these plucky secessionists are undermining the authority of the formidable Eurocrat. So he threatens to send in the EU Army.

It’s 2027, and the EU is more powerful than ever, yet also more detached. It reigns supreme in the cosmopolitan cities, in the financial centres, and on university campuses: Berlin, Heidelberg, den Haag, Frankfurt-am-Main, Gothenburg, Barcelona, Fiorentina. These islands of the liberal intelligentsia look condescendingly on the masses, whose unpredictable and uninformed votes put progress in peril come each election. The provincial hinterlands are stifled by backwardness, with rising tension between nostalgic nationalism and expanding ethnic enclaves. Among the commoners, rule by Brussels is at best tolerated, at worst despised.

Consulting historians, political commentators begin to see what the EU has become: a latter-day Holy Roman Empire. And Barnier and fellow commissioners are behaving like the ‘enlightened despots’ of the European past.

The HRE was a revival of the old Roman Empire, but with papacy to the fore. Founded in AD 800 when the Pope crowned Charlemagne as emperor, its domain comprised France, Germany and most of modern-day Italy. After the French left in the tenth century, and the Italian parts were given away, the empire centred on Germany. Successive emperors looked east to expand their territory; the pagan Prussians, Slavs and Balts were suppressed by brute force, and fiefdoms were established in Hungary, Poland and Bohemia. But the intent to rule Europe was confronted by the forces of national identity, the Reformation and Thirty Years War, and the HRE gradually retreated to a federation of principalities.

Maintaining order over the many petty oligarchies of the HRE was awkward, but Joseph II, emperor of the late 18th century, had a master plan. He was an arch-centraliser, who cloaked his zeal for control in Enlightenment values. Determined to create a state apparatus that would banish feudalism, Joseph II levied taxes to pay for institutions and representative bodies operating under his jurisdiction.

Just as the European Union is becoming less united, the HRE was not really holy. The rich statelets presented themselves as hubs of intellectual enterprise and the arts, but as the princes sought to fortify their privileged status against popular rebellion, survival was prioritised over aesthetics or virtue. The Vatican with its papal bulls was a hindrance, and religious fervour was regarded from the castle ramparts as dangerous populism. With his Secularisation Decree, Joseph II banished the Jesuits, cut the number of saints’ days, and his anti-clerical stance led to a testy visit by Pope Pius VI. Joseph II didn’t care much for God: leave superstition to the ignorant plebs.

Joseph II overstretched himself. He signed a treaty with Russia and Prussia to divide Poland among the three, but faced serious revolts in Hungary and Belgium. The end came soon after Napoleon declared himself emperor of France. As la Grande Armée marched across Europe, German princes seceded from the HRE to accept Napoleon’s protection, and in 1806 Francis II formally rescinded the empire.

The HRE ended as an embarrassment of corrupted ideals, and the EU may be going the same way. It has extended beyond coherence, having incorporated the same parts of eastern Europe that caused so much trouble for the holy emperors. Economically it is stagnating, and it has created a cultural timebomb with its mass migration from Muslim lands. For now, the EU seems to have strength and resilience: the combined might of France and Germany, its neoliberal multiculturalism an inspiration to youth. But ten years on, and the view from Barnier’s bastion looks less assured.

Breaking news from a burning city: protesters surround the old parliament building, the EU flag is ripped off the pole. Inside, worried officials burst into a wordless rendition of Ode to Joy. The soldiers, experienced only in handing out food tokens to crowds of migrants, are refusing to fight. And this is how the most apparently impermeable and permanent regimes end: not with a bang but a whimper.

This article first appeared in Conservative Woman

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IF

How will the word 'if' be powerful in the context of the EU and Brexit negotiations? As Philip II of Macedon found out, sometimes there are battles that brute force will not win. Battles where threats and punishment do not work against a counterpart. Philip II of Macedon had defeated numerous enemies when he sent the following warning message to an...
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The Brexit Legacy

There are a variety of reasons why the EU has doomed itself following the creation of Article 50. It is akin to Superman building a Kryptonite factory. Perhaps a more apt metaphor would be a fisherman widening the gaps in his nets without quality control checks. Could either the superhero or the fisherman hold a 3rd party responsible for the outcom...
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Bad faith in Brussels: A warning to the UK’s Brexit negotiators

Michel Barnier, the EU’s Chief Negotiator for Brexit.
Photograph: DG EMPL, Flickr

British Prime Minister Theresa May outlined her government’s vision for Brexit in a speech delivered in Florence on September 22. In a bid to breathe new life into ongoing UK-EU negotiations, she presented proposals regarding the rights of EU citizens living in the UK, the length of a “transition period” after 2019, and the sum Britain might pay during that period. Rather than inspiring counterproposals or constructive criticism from EU leaders, May’s speech generated little more than the same refrain repeated from Brussels since negotiations began: that more “clarity” was needed, and that “sufficient progress” would have to be made before talks could advance. This lacklustre, somewhat apathetic EU position does not look like the result of sincere consideration of May’s proposals, or a constructive attitude towards the talks. Rather, it looks a lot more like a deliberate tactic to either prevent Brexit, or punish Britain.


Some might find this approach perplexing. After all, is it not in both parties’ interests to negotiate a mutually-beneficial outcome? Not necessarily…


To better understand Brussels’ foot-dragging in Brexit talks, it helps to understand the incentives driving it. First and foremost, the EU is a political union. Economic, social, or environmental considerations may all have contributed to the appeal of ever-closer union, but they remain secondary to the very political objective of federal statehood. Indeed, from the days of Jean Monnet and Robert Schuman at the dawn of European integration, to more the more recent mandates of José Manuel Barroso, Viviane Reding, or Guy Verhofstadt, the goal of a pan-European nation state is no secret.


Grasping that European statehood is the EU’s ultimate objective is essential for the UK government’s Brexit Secretary David Davis and his team of negotiators as they engage with their counterparts. It means that, no matter how amenable the UK is to facilitating trade or subsidizing the EU’s budget, the bottom line in Brussels remains the preservation of their political project. The win-win economic gains desired by the UK are not necessarily desired by the EU, for whom a successful Britain would signal there is no longer any economic appeal to remaining in the bloc. A strong UK economy poses an existential threat to European integration.


This explains why trade negotiations have not even begun, despite both parties already sharing near-identical norms and regulations. It is also why the EU seems in no rush to maintain access to the UK’s large consumer market, with Britons buying more from the EU than the other way around. In order to preserve the union, the EU’s only options are to ensure the UK remains inside, or fails outside.


When seen through this lens, the whole exercise of negotiating seems futile. Of course, Britain is right to try, as it shows good faith as good neighbours. But in order to make the most of Brexit, the UK government needs to radically shift its focus to the next chapter of its national history, rather than dwell on the previous one. As championed by major figures in the Leave campaign, Britain should embrace the opportunities afforded to it by its newfound freedom to trade with the world. With Japan, Australia, the United States, Canada, New Zealand and others eager to engage with the UK after it leaves, Whitehall resources would be better spent solidifying the relationships of tomorrow, rather than appeasing the relationships of yesterday.


The good news is that many in Britain already understand this. Recent commentaries by cabinet ministers David Davis, Boris Johnson, and Liam Fox suggest they are well aware of the EU’s motivations. The question is, will the rest of the cabinet, and indeed the rest of Parliament follow their lead and make the most of the incredible opportunities offered by Brexit; or will they remain fixated on negotiations with a counterpart that wants them to fail?

This article is from The Eurosceptic

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A History of Brexit

Managing the Brexit negotiations is merely one aspect of Brexit. In the coming years much will be written (presumably by both sides) as to the rights and wrongs of why the UK population by percentage voted to leave the EU on 23 June 2016. You know that books will be written examining why and how Brexit came about. Someone will try and lay the blame...
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Government must scrap its compromises over EU military schemes

eumilitarystaffVeterans for Britain, supported by the Bruges Group, bring an urgent message to Manchester on Monday 2 October: we need full Brexit for defence and an end to recent UK commitments to the EU that have a nasty sting in the tail.

Since the Brexit vote, the UK has given a green light to the juggernaut of EU military schemes on the understanding we would be outside of them.

However, government position papers incredibly propose STAYING IN joint EU schemes on military finance, research and assets.

The schemes, which have never been voted on by MPs, would mean the UK staying in EU Common Defence Policy, the European Defence Agency and even EU defence procurement directives. Norway is the only non-EU country in the schemes and was obliged to accept these rules.

The PM has rightly declared the UK’s unconditional commitment to Europe’s defence via NATO.

However, we fear that MPs and ministers are not aware of the full implications of a Norway-style military union agreement. Many civil servants are aware of these implications and are pushing for UK entry relentlessly.

At the same time as these new EU military finance and structure schemes are being agreed, the EU is growing the remit of its Common Security and Defence Policy in a way that consolidates its control over EU Council-agreed military responses. The EU’s new military HQ, the MPCC, which UK diplomats tried in vain to change, is just a small part of this.

The EU is also tightening defence asset production rules to make an EU defence market in which member state governments will find it impossible to protect domestic defence jobs and industry eg Scottish shipyards in the UK’s case.

Sadly, the Government’s National Shipbuilding Strategy of September 2017 fully adheres to the latest EU rules in cross-border defence tendering – clearly anticipating a future where the UK would need to comply.

It is essential that at the Conservative Party Conference in Manchester delegates are made aware of the risk to Scottish shipyards, particularly Ruth Davidson and her Scottish Conservatives team. The UK is heading towards a scenario where it is dictated by these EU procurement rules which will only become more assertive when the UK is fully committed to them.

‘Dodging the EU bullet’

Speakers: Major-General Julian Thompson, Colonel Richard Kemp, Captain Will Carver & Geoffrey Van Orden MEP

Monday 2nd Oct 11.00 at Manchester Town Hall, Albert Square, Manchester, M60 2LA

For more info on the commitments made by the UK to the EU military juggernaut and the risks posed from the proposal to stay in them, see:

http://veteransforbritain.uk/dexeus-defence-partnership-paper-is-a-grave-mistake-and-gives-the-eu-control/

and

https://www.brugesgroup.com/blog/the-uk-is-stuck-in-a-quagmire-over-eu-defence-union

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No Transition is Better than a Bad Transition

No Transition is Better than a Bad Transition
In my last blog post, I made my own personal views on transition clear and I also stated what the government had said that their views on transition were. To summarise, I personally believe that, if a free trade agreement (FTA) between the UK and the EU is agreed by midnight on 29th March 2019 and, if a subsequent transitional arrangement is deemed...
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Signalling a post-Brexit industrial strategy

Supporting Bombardier - Putting employment in Britain at the heart of economic policy.

Robert Oulds

25th September 2017

We are determined that Brexit, if when it eventually happens in earnest, delivers the change we need. One of these new approaches can be in defending British industry, along with its jobs and innovation from unfair actions. But why wait for Brexit? It can begin now!

 

Bombardier, a major employer in Britain, a new entrant in the plane market, is being threatened by a trade complaint brought by Boeing designed to keep it out of the US market.[i] Theresa May’s government must show that a post-Brexit Britain will use its new-found independence to stand up for UK jobs. A policy area where we would not have to live with pan-EU rules any more. British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country.


 

What should the Government do?


 

The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier his government will cancel its taxpayer-funded contracts with Boeing.[ii]


 

Theresa May should follow suit and review all taxpayer contracts with Boeing, until the company withdraws its threat to close British factories. This would be a real show of commitment to a UK-focused industrial strategy.


 

Some in a resurgent Labour Party at their conference in Brighton are attempting to undermine the spirit of the referendum by keeping the UK tied in as closely as possible to the EU for as long as possible. They seem to be pushing at an open door. The Government has accepted an EU transition with some of the obligations of membership, minus the influence, as proposed by our Prime Minister in her recent speech in Florence.


 

Taking such an approach to its extremes means not only accepting EU control over trade but also its undue influence over our industrial strategy and EU procurement rules and tendering.


 

Since the referendum progress has been made. The initial stages of Brexit have already been a boon to employment.[iii] British manufacturing has grown since the referendum.[iv] This has largely been driven by increasing export demand.[v] The rebalancing of the British economy should have little to fear from Brexit. The potential extra costs of tariffs placed on British exports to the EU is more than mitigated by the reduction in the value of the pound.[vi]


 

Despite this fear still pervade British politics, infecting some areas of business confidence.[vii] Steps were taken to alleviate the naysayers’ predictions of gloom if the UK was fully free to implement its own policies. Some supply side reforms were proposed. Yet, talk of a low tax UK alternative to the dilapidated EU (Franco-German model) has been muted of late. This backtracking away from boldness does little to restore confidence. The other approach now adopted by the Government is one making renewed concessions to the EU. This has problems of its own.


 

Any half-hearted Brexit, any postponement, any delay is a denial of the referendum result and just as importantly a rejection the opportunities that await UK plc after Brexit. If the rediscovery of Thatcherite classically liberal economic policies is no longer on the agenda then a new approach is needed.


 

We want to make sure Brexit is a success, but we are now further than before from being able to make the right choices for ourselves. Yet, the Government can show that despite some recent mixed messages, which fail to appreciate the opportunities that await us, there is still another way to signal that it will make Brexit a success.


 

The Government can restore confidence and outline a better tomorrow by showing that it will protect the employment gains that have recently been won and much more than that protect and enhance high-end manufacturing, creating well-paying jobs that add value to the economy. The government can signal that it will do what is necessary, taking back control must mean something.


 

To mitigate the fears and genuinely to secure the best outcomes for the British economy a self-governing country will have many decisions to make. Brexit has the potential to be a huge opportunity for many organisations, especially our excellent manufacturers. One of these threatened employers is Bombardier.


 

Defending a respected company – alongside Canada, a potential new global trading partner - will show that we have much to gain from Brexit. This must begin now and this is a real issue that needs to be addressed, not just for its totemic importance but also because jobs in this country depend upon it.


 

Bombardier is a well-known maker or trains, which has suffered before because of the UK’s over officious implementation of EU procurement rules awarding contracts to German rivals Siemens. [viii] There is now a new issue where the Government can step in to help its plane-making division in a dispute with American rivals Boeing. Bombardier is trying to break the duopoly of Boeing and Airbus in the production of smaller commercially sold planes. These pricing from there powerful rivals is having the effect of squeezing Bombardier.[ix] [x] What is worse, is that Boeing is trying to push Bombardier out of the US market altogether. The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier through the courts his government will cancel its contracts with Boeing.[xi] The British Government should follow suit and review all contracts with Boeing.


 

Of course, a real solution is only fully achievable when we ae outside of the EU but it can ward off Boeing’s aggressive action and make them think twice about the long term, implications of its legal action in the US courts. Through signalling such an approach the remoaners that fear change, even in the Labour Party will see, that Brexit can be a real opportunity.


 

British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country. Theresa May, stand up and support workers in the UK.


 

Its not just about defending Bombardier and the production of its C Series aircraft. There are also over 200 UK suppliers directly provide materials, hardware, equipment, and services for this planes production. The Belfast facility plays a critical role in C Series production and advanced composite wing assemblies.


 

Boeing’s petition to the US International Trade Commission (ITC) is a direct attack on innovation, competition, and development, which would ultimately harm the industry, consumers, and workers. Boeing’s petition would hinder future investment and domestic job growth in the UK. Northern Ireland leaders have asked Vice President Pence to interject. They fear peace in the region could be in jeopardy over job loss.[xii]


 

If Boeing is successful, Bombardier’s C-Series aircraft could be pushed out of the American market. The Times wrote “Boeing says it believes that "global trade only works if everyone plays by the same rules of the road. The company [Boeing] should heed its own advice before condemning others.”[xiii]

 

Theresa May announced that she phoned President Trump to raise concerns over Northern Ireland jobs.[xiv] Yet that is not enough. Theresa May knows what can be done and can follow Canada robust example. Justin Trudeau and Theresa May held a meeting to discuss the Boeing-Bombardier trade dispute in Ottawa on Monday 18th September.[xv]

Boeing’s protectionist complaint is unjustified. If successful, it would lead to job losses in this country, harming UK manufacturing. Taxpayer contracts with Boeing should be suspended until Boeing commits to withdrawing its complaint against Bombardier. The Government must use every weapon in its armoury to protect British workers.

 

This should be the message of what a post-Brexit Britain will be like. We will then see business confidence return.


[i] http://uk.businessinsider.com/bombardier-calls-boeing-trade-lawsuit-pure-hypocrisy-2017-9

[ii] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[iii] http://blog.fxpro.co.uk/daily-forex-outlook/14092017-uk-unemployment-at-42-year-low/

[iv] http://www.cityam.com/272260/british-manufacturing-now-eighth-largest-world

[v] https://www.theguardian.com/business/2017/sep/05/factory-and-retail-sales-climb-despite-fears-of-brexit-slump

[vi] http://www.brugesgroup.com/images/papers/whatitwilllooklike.pdf page 32

[vii] http://www.independent.co.uk/news/business/news/brexit-latest-news-uk-business-low-level-confidence-lloyds-bank-economy-a7920101.html

[viii] http://www.telegraph.co.uk/finance/newsbysector/transport/10119477/Bombardier-blow-as-Siemens-wins-1.6bn-Thameslink-deal.html

[ix] https://www.economist.com/news/business/21693188-wounded-canadian-planemaker-announces-big-losses-and-job-cuts-bombardier-course

[x] https://www.economist.com/news/business/21729469-row-between-planemakers-has-become-political-boeing-takes-flight-hypocrisy

[xi] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[xii] http://ca.reuters.com/article/topNews/idCAKCN1BO19Y-OCATP

[xiii] https://www.thetimes.co.uk/article/air-fair-55r92xlpl

[xiv] https://www.thetimes.co.uk/article/may-pleads-with-trump-to-help-save-british-jobs-boeing-bombardier-democratic-unionist-party-hw93jf3bn

[xv] https://globalnews.ca/news/3736751/boeing-bombardier-justin-trudeau-theresa-may/

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Financial Services and Brexit

​Project Fear scaremongered more about financial services than anything else during the EU referendum campaign and this scaremongering has unfortunately continued after the Brexit vote. Remoaners and soft Brexiteers (those who want us to remain members of the European single market after Brexit) now tell us that the reason why there was not an imme...
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Not My Brexit

In the last year we have seen the ordinary person take on the establishment and win. Not just here in the UK, but also across the pond in the USA. Against great odds both Brexit and Trump became victories. The blatant lies that mainstream media carried included the fact there would not be an EU Army. In the USA women who had yelled rape with regard...
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How Much The UK Actually Pays The EU

​It's a highly contested figure both during and in the aftermath of the Brexit referendum. The true cost to Britain being a part of the European Union is close to £661 million per week since 2010, a number hidden from the British taxpayers due to an intricate payments system and largely ignored by the mainstream media. Our estimated figure encompas...
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Robert Oulds
Jon, thanks for engaging with us. The £1.7 billion was still paid in full, when one takes in the reduction in the abatement. That ... Read More
Wednesday, 20 September 2017 15:17
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In Defence of the Visegrád Group

People have only as much liberty as they have the intelligence to want and the courage to take.”

Emma Goldman

The name of a quiet medieval town in Hungary – Visegrad – has in recent times become synonymous with the word “rebellion” in Brussels.

 

The Visegrad Group, also known as the Visegrad Four, or V4, is a cultural and political alliance of four central European states, comprising, the Czech Republic, Hungary, Poland and Slovakia, for the purpose of furthering their European integration, as well as for advancing military, economic and energy cooperation with each other. They have always been part of a single civilization sharing cultural and intellectual values and common roots in diverse religious traditions, which they wish to preserve and further strengthen. They have now emerged as the greatest modern defenders of European civilisation by undertaking to deploy armed forces to protect their borders.

 

The Visegrad Four have mounted their fiercest revolt against the European Union in the matter of the European compulsory allotment of refugees for resettlement throughout the Schengen Agreement, a passport-free arrangement involving most of the EU states.

 

Now these nations are increasingly consolidating as a bloc and challenging the liberal-internationalist leadership of the European Union, which had traditionally been dominated by Western countries. The Visegrád bloc is increasingly articulating an alternative “conservative” vision of what Europe should be.

 

The Brexit vote was a shock to the EU, and while it reinforced the V4’s presence, it offered them an opportunity to press for their own interests in Europe. Gradually, Visegrád governments are becoming policy-shapers rather than policy-recipients.

 

The EU’s inability to handle the immigration crisis, combined with a tilt in the power structure within the Union after the Brexit vote and increasingly bellicose and eurosceptic leaders in Hungary and Poland, has thrust the group to the fore.

 

Now the EU seeks to force these unlawful immigrants compulsorily on member states in what they call “redistribution”, with heavy fines for non-compliance. This is the sort of punitive action that only occupation governments impose on defeated nations. (Council Decision (EU) 2015/1523, supra.) Denmark and the ex-EU member, the United Kingdom, are not participating in this decision.

In spite of all, the EU has no right to ‘blackmail’ these countries!

The Visegrád leaders have made their voices heard on the EU stage.

 

czechCZECH REPUBLIC

The Czech government opposes an EU quota system to redistribute asylum seekers. “Our country simply cannot afford to risk terrorist attacks like those that occurred in France and Germany. By accepting migrants, we would create fertile ground for barbaric attacks,” Jiri Ovcacek said. The president does not agree with any acceptance of migrants in the Czech territory. How can anybody blame them?

 

polandPOLAND

Poland’s Minister of Justice delivered a scathing response to European Union bureaucrats who are attempting to bully the staunchly anti-migrant country as the battle over ‘refugee resettlement’ quotas rages on.

 

I’d like to ask Mr. Timmermans to stop speaking with such insolence and arrogance about Poland, and to Poles, and to the Polish authorities because we deserve respect.”

We expect and demand respect.” Polish Minister of Justice Zbiegniew Ziobro retorted.

Forget that, my friend, you cannot get anything better than that from the arrogant European Union! It is evident that the arrogance of Barroso has been inherited and is seeping through the ranks of the whole European Union.

 

slovakiaSLOVAKIA

Slovakia, with the support of other eastern member states, went to the European court to block the EU decision to relocate 120,000 Syrian and other asylum seekers. EU judges ruled that even those countries that voted against the plan were bound by law to implement the quota scheme. The Slovak people, in their massive uprising against the usurpation of their homeland, shouted: “Slovakia for the Slovaks” and to the immigrants: “Avoid our country”, while burning the EU flag.

 

hungaryHUNGARY

Hungary has violated the EU's basic values and should be expelled from the Union”, Luxembourg's Foreign Minister

Jean Asselborn, Luxembourg's Foreign Minister, stated also the accusation. “Hungary has attacked the independence of the judiciary", But the Maltese government has been playing around with the judiciary for years and nobody said anything, or even noted. No need to sing you a lullaby to go back to sleep, I suppose. Mr. Asselborn! I guess you never woke up!

 

But Croatia has likewise refused access and passage to illegal immigrants.

No more Third World invaders will be allowed to pass through the territory of Croatia”, its president has announced.

Croatia will not let migrants pass through its territory, because the borders of neighboring countries are closed and Croatia needs to protect its territory,” she said.

However, we have to be prepared, and not depend on anyone else,” she continued. “We should be ready to protect our territory and borders.”

So, will Croatia also be kicked out of the European Union?

 

EU officials have suggested engaging with the “more reasonable” elements within the V4 – Slovakia and the Czech Republic – to separate them from Poland and Hungary whenever possible. The EU should be ashamed of its ‘divide and rule’ policy! Hungarian prime minister, Viktor Orbán, has warned that the EU is targeting Poland as a warning to all others who might follow their lead in standing up to the tyrannical superstate. Haven't we all seen this before…, in the case of Brexit??

 

If anyone still entertains any doubts about the profoundly undemocratic, totalitarian, authoritarian and arrogant nature of the European Union, one has only to note the treatment that the EU is dishing out against Britain following its decision to quit the EU. This was one of the main reasons that made the British just vote 'leave'.

 

Europe is lost.” Rabbi urges Spanish Jews to flee Europe for Israel before it’s too late

Eritrean migrants warn Germans their days are numbered.”

Austria Police: Dye Blonde Hair Dark and avoid travelling on public transport at night to avoid being attacked by nonwhite invader “refugees.” These are a massive disgusting insults.”

Israel will forcibly deport all non-Jewish illegal aliens after Court ruling

We don’t want to become Greece. That’s the monster in the corner that you don’t want to become.”

Ninety percent of all nonwhite invaders entering Europe are using criminal networks and forged documents”, a joint Europol-Interpol report has found.

What our politicians are giving away now, took over a thousand years to build.

 

Do you want this? Not so fast! Poland, Hungary, the Czech Republic and Slovakia - so often lumped together in a Euroskeptic club, hostile to closer EU integration, wary of domination by big Western European countries like Germany, and wary of accepting migrants, especially Muslims, don't want it! ‘No refugees, No terror’, they sustain. Definitely also the Austrians really are not so craven and brow-beaten as to accept this.

 

Why do only these sane man “get it”? What the heck is really going on? Why are so many fools bent on destroying their own nations? It can not be just stupidity, no one can be actually THAT stupid. There is an agenda somewhere for some nefarious reason!!!

 

Curiously, it is evident that in our tiny, or rather miniscule, island of Malta, none seem to think or bother where this issue is leading us, as no government proves to have the nerve to inform and protect our people from this impending catastrophe. Can Malta be even certain whether it could meet its obligations even if it wanted to? The amount, according to the quota for Malta, would be considerably higher always dependent on the total influx of illegal immigrants entering Europe. Are we supposed to turn our citizens' brains into pink balloons? Are we to be robbed of our identities and memories and to be stunted and rendered devoid of political reflection? None shouted, “Hands off Malta”. Greece is Europe's dumping ground for illegal immigrants and Malta has become a trash can!

 

Too bad the rest of the world didn’t get the message. How dare do these people use common sense! Don’t they know it’s against EU policy to look after your people and make good decisions! They’ll be invaded by the European army to prevent this common sense tool from spreading to other EU figure-heads, lest they become leaders and find the guts and the courage to stand up.

 

But it is the political trajectory of “the Visegrad Four that could prove the European Union’s undoing!

 

Merkel invited the third-world to Germany. She then over-rode the EU’s requirement for asylum application in country of entry. She was not authorised to take such a step.

Her action has been ruled unlawful by a German court.

merkel

The basic problem is that you can't send refugees rescued in the Mediterranean back to Libya. They can only be brought to a safe haven. Attempts by Germany to find refuge for them in Tunisia or Egypt were rejected by those countries. And Libya hasn't been safe since the days when European bombs helped to topple Gaddafi's regime, nullifying the treaty on refugees which was similar to the one between the EU and Turkey. Western Europe opened the door to this mess and is now powerless to close it again.”

 

In the first place, do the countries of the Visegrad Group bear any responsibility for the economic backwardness and exploitation which the under-developed and developing countries inherited and which is still prevailing by their colonial past?

 

Secondly, have these countries ever waged or are waging war in these poor countries, or perhaps instigated internal conflict for selfish ends, as the other Western countries are constantly doing?

Thirdly, they have never practiced nor do they practice any economic exploitation of any countries whatsoever.

 

But that is another sorrowful story, which surely must be tackled in full later. At least, suffice it to say that African farmers are being condemned into prolonged poverty by EU trade rules and Africa is being starved into submission by its historical trading partners, first and foremost, the European Union.

It is not clear, considering all, how Brussels will be able to hypocritically force those countries to take in refugees against their will. 

schengen 

Some EU members, including Austria, Hungary, Slovenia, Spain, France and the initially welcoming Denmark and Sweden, have reacted by practically suspending the Schengen Agreement and reinstating border controls.

 

Perhaps it would be more beneficial for them if the Visegrad nations, together with Austria and other east/central Europe states, would split off from the EU and form their own separate free trade zone.

 

Finally, please permit me to quote the noble thought expressed by the illustrious Thomas Paine; "If there must be trouble, let it be in my day, that my children may have peace", which I humbly try to emulate.

 

If you truly want to be respected by people, you must prove to them that you can survive without them.”

Michael Bassey Johnson

 

 

Joseph M. Cachia

Freelance Journalist

Email: jmcachia@maltanet.

Pone: 99866151

Malta

 

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The New Project Fear

John Bull280

Since Theresa May's Lancaster House Speech in January of this year, two new Project Fears have sprung up. The first (from The Labour Party, EFTA4UK, Liberal Leave, Leave HQ and Dr Richard North) states that “We need to remain members of the EU's internal market after we officially leave the EU”, even though there are over 50 countries outside of the single market which have free access to it via free trade agreements. The second (from Nick Boles, Lord Hague and Chancellor Philip Hammond) states that “We need to have a transitional period of up to four years during which time we would still be members of the single market and the customs union”.

 

Before we pay these campaigns and their claims any attention, we should bear in mind just how wrong the previous Project Fears, which were often run by the very same people, really were.

 

The first Project Fear said “We need to join the European Economic Community (EEC or so-called 'Common Market') and, if we do, we'll export more to the EU”. The exact opposite has happened – we've exported less and less to the EU and, in 2016, we had a record high trade deficit with the EU of £78.1 billion. The second said “We need to join the European Exchange Rate Mechanism (ERM)” but this was then a disaster for us and led to Black Wednesday. The third said “We need to join the Euro and, if we don't, London's business will grind to a halt”. The exact opposite has happened. The fourth said “We need to stay in the EU and, if we don't, there'll be a recession in the immediate aftermath of a leave vote”. We've instead had record levels of prosperity since the Brexit vote.

 

All of Project Fear's economic predictions were wrong except, I will admit, for their prediction about sterling. They correctly predicted that there would be a significant fall in the value of the pound sterling in the immediate aftermath of a leave vote and the pound has fallen in value by about 15% on average. However, remoaners seem to want to think that the value of the pound is the only, or at least the main, indicator of the strength of the UK economy. This is, as any economist will tell you, nonsense. There are other indicators such as the FTSE 100, the FTSE 250, our output, our exports, our unemployment rate, the amount of foreign direct investment we attract and the rate of our economic growth which are equally as important, if not more important, than the relative value of sterling. All of these factors must together be taken into account before a judgement can be made on the strength of the UK economy.

 

The FTSE 100 has hit four new record highs since the Brexit vote: in December 2016 (6 months after the Brexit vote), in January 2017 (7 months after the Brexit vote), on 1st March 2017 (9 months after the Brexit vote and 2 months after the Brexit plans' release) and on 17th March 2017 (9 months after the Brexit vote and 2 months after the plans' release). The FTSE 250, which is widely acknowledged as being the best gauge of domestic economic sentiment, also reached a record high on 15th February 2017 (8 months after the Brexit vote and a month after the revelation of the Brexit plans). I include the relative timings in brackets as remoaners constantly told us in the months after Brexit that the reason why there still hadn't been a recession due to Brexit was because the Government hadn't revealed its position on the single market and the customs union and as Article 50 hadn't been invoked yet. However, a year and three months after the Brexit vote, eight months after the Government revealed its Brexit plans in the Lancaster House speech and six months after the invoking of Article 50, we are still waiting for this recession.

 

We were told that, after a vote to leave, unemployment would rise by 9,000 per month for the rest of 2016 but unemployment has actually fallen by almost exactly that amount and is now at a record low of just 4.4% - the lowest level since 1975. We were told that we would experience two successive quarters of negative economic growth but we actually grew faster in the six months after the Brexit vote than we did in the six months leading up to the vote. At the end of 2016, we finished up as the most successful major economy in the entire world, the fastest growing economy in the entire of the western world and the fastest growing economy in the G7.

 

The Department for International Trade has attracted £15.8 billion of foreign direct investment (FDI) from August last year to January this year and the UK still attracts more FDI than any other country in the whole of Europe. Since the Brexit vote, we've seen a record increase in financial services trading figures and a record increase in service industries growth. As of 30th June 2017 the UK attracted more FDI in financial services than any other country in the whole of Europe. Developers have continued to press ahead with the construction of more office spaces in London, showing fears of a post-Brexit business exodus (a so-called “Brexodus”) to be yet more scaremongering. UK car sales increased by 3.3% and reached their highest level in 2016 after the Brexit vote. Cake and cheese exports have both increased by 25% since the Brexit vote and the UK now exports more food, drink, bread, cakes, pastries and biscuits than it ever has before. Over the last year UK exports increased by 11.5%. As of 31st July last year, 27 non-EU countries with a combined GDP of over £40 trillion reportedly already wanted to sign new trade deals with the UK once it has left the EU and this potential market rather dwarfs the EU’s internal market which is worth only about £12 trillion.

 

Even if we are to take the value of the pound sterling in isolation, the remoaners are far from telling the whole story. Firstly, they all just presume that they can *know* for certain that the devaluation was indeed *caused* by the Brexit vote alone. Correlation does not, however, prove causation - it could just be a coincidence or other factors could be involved. Jacob Rees-Mogg MP has pointed out that both the OECD and the IMF said before the referendum that the value of the pound was too high - even strong remainer Ken Clarke MP has admitted this. Lord (Mervyn) King, the former Governor of the Bank of England, has said that the devaluation is a welcome fact. Therefore, a devaluation was only a matter of time and the Brexit vote merely brought forward this already-inevitable devaluation. The columnist Peter Hitchens foresaw a devaluation way before the referendum and states that the devaluation has nothing to do with the Brexit vote and would have also happened if we had voted to remain.

 

However, remoaners go on to presume that this devaluation has only been a negative thing for the UK economy. This is false. It has not led to out of control inflation as many predicted - inflation actually fell in October of last year, 4 months after the Brexit vote. Jacob Rees-Mogg has pointed out that the last two significant devaluations before the Brexit vote (in 1931 and in the early 1990s) both resulted in lasting periods of prosperity and rising living standards. News of the devaluation has been happily received by UK exporters who have said that the value of the pound has been too high for too long. The devaluation has made their exports cheaper and more competitive relatively-speaking and has consequently increased demand for our exports overseas. In fact, in September of last year, UK exports reached their highest level in 20 years. Finally, remoaners are always negative and pessimistic about our chances of getting a good free trade agreement with the EU agreed by midnight on 29th March 2019. However, even in the most unlikely and worst-case scenario of there being no Brexit deal at all by then, the average ~15% devaluation would easily dwarf an average most-favoured nation (MFN) goods tariff with the EU of just 5%.

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CANZUK - The Genesis of a Post-Brexit Culture

Before 23 June 2016 people toyed with the idea of the UK being free of the EU in trade, economic and immigration policies. However, even if the UK had voted to Remain in the EU, it would not have been able to benefit from such concepts as CANZUK (Australia, Canada, New Zealand and UK group). It is noteworthy that these 4 members are also part of th...
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Fishing: it has to be cast iron guaranteed

All that is required is to exempt any fisheries acquis from the withdrawal bill.

John Ashworth

7th September 2017
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Having spent the past 25 years against the European Union, I never thought I would see the day I would agree with Barnier and Junker, that our side has become an embarrassment.

 

It is no good expecting the EU to be flexible, where their structure is one of rigidity. Even if Barnier wanted to bow to British demands, he can't, the system doesn't allow it.

 

On the home front, we now start what was to be called the Great Repeal Bill, and is now called the European Union (Withdrawal) Bill. This is a dangerous bill, not because it is repealing the European Communities 1972 Act and its amendments, but because it is turning the acquis, the 34   individual subject contents, into domestic law on the assumption by doing so, will mean the EU regulations we are presently controlled by will continue from day before today after exit, and create a smooth transition. However, it is not that simple.

 

The bizarre process then starts. Article 50 has taken us cleanly out of the CFP, and no one EU member can complain because all members have accepted this process by Treaty. Our own Westminster Parliament, by bringing the Fisheries acquis across, our parliament has endorsed   the CFP we have just left, and carried it forward as if nothing has happened, in the process giving 59% of our marine resource away again.

 

So, we have come out of the CFP, all bar name gone back in with the acquis, and then to come out again a fishiness bill has to be created on time and very accurate to counter the withdrawal bill.

 

If there is a withdrawal agreement, which is looking highly unlikely because of time, but if there is, it will have to be written to match the fisheries bill.

 

We are heading to the situation Parliamentarians will have to vote on the withdrawal bill not knowing what is coming up in the Fisheries Bill, nor knowing if a withdrawal agreement will be finalised, thereby giving HMG a blank piece of paper based on trust, where anything can go wrong, and the nations resource could be lost for good whereas all that is required is to exempt any fisheries acquis from the withdrawal bill.

 

All we know on the fisheries bill, is the regulations will be adjusted accordingly, but we don't know what or how., which bits will be taken out or left in. If all reference to the EU is taken out, such as “member State” “Union” “Commission”, on the main Fisheries regulation 1380.2013 there will be hardly anything left, So why take the difficult route.

 

When Fishing for Leave campaigned on the subject of the London Fisheries Convention 1964 we did so as a precautionary measurer, so as to avoid legal challenges at a later day.  We appreciate the Minister took that advice.

 

The same applies to this torturous route HMG are attempting. Our fear, by bringing the fisheries acquis into domestic legislation, the present CFP measures are being endorsed by our parliament, and could run us foul of the Vienna Convention, which convention is about Treaties, and it is not treaties that are being moved into domestic legislation, but regulation, and by de-coupling the regulation from the treaty, the Vienna Convention does not apply.

 

However, EU regulations take their authority from the Treaties and can't be de-coupled, but the process of the acquis being moved to domestic provides the evidence of our parliament supporting the CFP, and it is the withdrawal agreement (if there is one), which will be a legal agreement, and it is that, that could bring us foul of the Vienna Convention.

 

Just as our argument over the London Convention was to take a cautionary approach to avoid any legal challenge, the same applies here, why take the risk because if we are faced with a challenge, it could drag on for years, which would see the final nail in the coffin for the British fishing Industry and the inability to rejuvenate our coastal communities.

 

Just as Barnier is saying the British position lacks detail, so we have the same situation here, you can't expect parliamentarians to vote for something without the detail. The importance of this nation's resource goes beyond “trust” it has to be cast iron guaranteed.

By John Ashworth of Fishing for Leave

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Surrender Is Not Negotiation

In the latest round of Brexit negotiations, the European Union called on Britain to pay a hefty bill before commencing with trade talks. Negotiators are asking the UK to commit paying 14 percent of the EU's budget until 2020, a pledge that could cost British taxpayers billions of pounds.Prominent reclaimer Gina Miller argued Britain shoul...
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Sugar Beets and the Pandemic of Modern Obesity

This country’s change from consuming sugar derived from sugar cane, which Britain historically purchased from its old colonial territories, to consuming sugar extracted from sugar beets from about 1973 onwards has slowly but surely greatly contributed to this country’s obesity problem

S Davies

2nd September 2017
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I pose the question of whether this country’s change from consuming sugar derived from sugar cane, which Britain historically purchased from its old colonial territories, to consuming sugar extracted from sugar beets from about 1973 onwards has slowly but surely greatly contributed to this country’s obesity problem. It is popularly believed that despite us as a nation consuming fewer calories these days than was the case in the 1960's,  obesity has gradually become a real problem. So, is it the EU's forced substitution of sugar obtained from sugar beets rather than sugar obtained from sugar cane making us really fat? 
 
I suggest that the country's obesity pandemic is partly due to its switch to the creation of sugar from sugar beets, which came about after the UK entered the European Economic Community in 1973. The UK had historically relied upon sugar cane for its sugar, which was a state of affairs that hadn't changed since sugar was first introduced into this country and became more widely available from about the 16th - 17th centuries onwards. In fact beets were not discovered as an alternative to cane until the late 18th century and weren't used in manufacturing until the early 19th century, when they had to be cultivated to yield a higher sucrose content than that which they originally and naturally contained.
 
The difference in quality between the two types of table sugars is a matter of debate. From a culinary perspective, I personally find sugar derived from sugar cane to be a far superior substance. I find it crisper and that it gives a lighter result. There is no apparent taste to cane sugar, which is just sweet. I personally find that there is an ever so slight aftertaste or noticeable different texture to beet sugar. Cane sugar is the master baker's sugar of choice, whatever the chemists say about it supposing to be the same. Meringues made from sugar cane are crisper and far superior. Cakes don't flop as easily with cane sugar. Yet the scientists say that “sugar is just sugar” and that there is no difference between the two substances. 
 
So, what is the difference between sugar cane and sugar beets? To look at a 500 gram pack of Silver Spoon (beet sugar) and Tate & Lyle (cane sugar) next to each other, they generally appear to be of the same size, and have the same volume, so there can't be much of a difference regarding the physical density of the product. On closer inspection of the sugar grain or crystals, the beet sugar may seem less crisp and light than the cane sugar. However, I think that to appreciate the difference between them, one needs to look at how the two products are processed, the difference in production being necessary due to their respective botanical composition. 
 
Sugar beets and sugar cane must be processed differently to achieve apparently the same table sugar. Sugar beets, which are a root crop, are sliced and boiled to extract the syrup. This is then evaporated into crystals. Sugar beets produce two by-products: the beet pulp, from which the sucrose syrup has been extracted, and molasses. The beet pulp is dried into pellets and fed into the human food chain inasmuch as it's then sold on as animal feed. The sugar beet molasses is not fit for human consumption but can and is fed to animals.
 
Sugar cane, which grows in reeds above the earth's surface for several feet before it's harvested, is sliced and heated in water to extract the sugar syrup. Cane sugar also produces molasses as a by-product. However, this molasses can be used for human consumption - e.g. in the Caribbean it is utilised in the manufacture of rum. The bark or reeds of the sugar cane crop is then either defunct or can be used in the manufacture of baskets and mats etc.
 
The botanical composition of sugar beets is described on Wikipedia as follows: "The pulp, insoluble in water and mainly composed of cellulose, hemicellulose, lignin, and pectin, is used in animal feed." The botanical composition of sugar cane is described as: "A mature stalk is typically composed of 11–16% fiber, 12–16% soluble sugars, 2–3% nonsugars, and 63–73% water." 
 
I suggest below that the more resinous nature of sugar beet may have a deleterious effect on the human liver. It must be ground down or processed to such a level in standard sugar production that it is then able to permeate the small intestines and enter the liver via the bloodstream. This can then act as a resinous mist on liver cells and affect their ability to act to their required capacity, so forcing the body to rely on alternative glucose-fuelling sources - i.e. cortisol from the adrenal glands. Perhaps cane sugar, having no inherent resinous qualities, degrades more easily, leaves no residue and is thus less taxing on the human body.
 
In attempting to explain my theory, I think that it's important to first go through the stages involved in the body's metabolism of food. The human body, and animal kingdom in general, are glucose-driven vessels who rely upon glucose as their primary source of fuel. This contrasts with the plant kingdom, whose primary source of energy is slightly different and is called fructose. This general blood sugar requirement is irrespective of whether the body ingests fat, carbohydrate or protein. 
 
I initially wondered whether it was fructose, which, as has been noted above, is not the animal kingdom's source of sugar. As a substance, it may impose a bit of a strain on the body because it is not broken down by insulin, as glucose is, and in the usual way. It must be processed in the liver after ingestion, before it's released into the wider bloodstream. It has been suggested that everyone is slightly fructose intolerant, with their ability to break down fructose varying in degree from individual to individual and associations have been made between fructose and fatty liver disease. However, my point here is that where one obtains the fructose or plain sugar from also makes a difference – i.e. whether it’s obtained from sugar beet or sugar cane. 
 
In fuelling the human body, it is of paramount importance to maintain blood glucose homeostasis - i.e. balance - and therefore blood glucose levels hover within a limited range, with a normal range being 70 to 110 mg/dl (milligrams per deciliter). The body will try and move heaven and earth to achieve this balance and therefore has more than one mechanism to ensure blood glucose stability. For immediate use, it will rely on the glucose stored in the liver. This is termed glycogen. Thereafter, glucose is stored in fat and muscle tissues. 
 
The body accesses glucose by synthesizing (i.e. creating) and using insulin, which is a hormone produced by the beta cells of the pancreas. Insulin mobilises blood glucose and ensures it reaches the body's cells and muscles. The pancreas also synthesizes another hormone called glucagon, which is something of a mirror-image to insulin. Glucagon senses when blood glucose levels are low and sends negative feedback messages to the liver that this is the case, so instructing the liver to release more glucose, whilst insulin mops up glucose in the bloodstream and either helps the body utilise it immediately or helps to store it as excess fat. 

If glucose or glycogen stores in the liver are low, the body can also produce a hormone called cortisol from the adrenal glands, which lie on top of the kidneys, to remedy the shortfall. However, the body's usual glucose reserves are stored in the liver. If the body is forced to rely on short-term cortisol from the adrenals to release glucose stores from the body’s tissues, this is not the preferred method and long-term use carries its own problems - e.g. high blood pressure, which is associated with an increased cardio-vascular risk, increased risk of stroke, increased risk of diabetes due to cortisol's glucose-raising effects. Cortisol is also associated with obesity because it slows down the body’s rate and generally deteriorates body tissue etc.
 
So, why would the body choose to use the cortisol hormone instead of the glucagon one? 
 
Simply because it feels that it has to, to maintain blood glucose balance. Either the alpha cells of the pancreas, which produce glucagon, have become impaired, or the liver's reading of and sensitivity to them has become impaired. The body is then moved into emergency mode and cortisol is forced to take over and aid the release of glucose into the bloodstream where glucagon left off. So, we need to ask ourselves whether the liver cells or even the pancreas cells are being caked up with a resinous substance that hinders its ability to detect blood glucose levels and whether this irritating substance is present in sugar beet.

By S Davies

 

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The Shape of Gibraltar in the aftermath of Brexit

A Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation lies ahead; but if mapped successfully, can be a positive one.

George Macquisten

31st August 2017

Every civilization that has settled in Gibraltar has thrived, be it the Phoenicians, the Romans, the Ottomans, the Spanish and most recently, the British. Its strategic location and deep water harbour have been the reasons behind this, and enabled them to make it a vital trading hub.

Brexit represents a huge challenge to the future of Gibraltar as an economic centre, since it means losing membership of the biggest trading bloc in the world once the UK leaves in 2019. Gibraltar has experienced similar issues before in the various sieges mounted against it in the War of the Spanish Succession, and most recently during Franco’s blockade. There is certainly plenty to be cautious about, since the territory has become more dependent than ever on the land frontier remaining open to facilitate the movement of tourists, labour and imports.

However, the thriving financial services sector, which is closely aligned with that of the UK, means that the economic outlook is not as bleak as businesses and politicians initially feared, especially since the TiSA negotiations are proceeding well. The symbolic relationship Gibraltar shares with the neighbouring Spanish province of Andalucia means that they cannot function without the other.

Sense between the negotiating parties will prevail, especially since Madrid will not wish to sacrifice the economic well being of 10,000 Spaniards and forego the purchasing power of 30,000 comparatively wealthy Gibraltarians through causing difficulties at the border. If all sides can tone down the sometimes fiery rhetoric, there is every hope for creative solutions to keep the border with Spain open and flowing to the benefit of all.

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How will Brexit affect British Holidays

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Brexit could hit UK travellers like a summer storm. But don’t fret – it’s not all bad. Although it is deemed likely that travellers will needs a visa to travel around Europe, mobile roaming data charges are set to be scrapped entirely across the board. If you plan on travelling around Europe this summer, make sure you apply for an E111 card or renew it if you haven’t already to ensure you are eligible to receive medical treatment away.

With the UK scheduled to begin with the process to depart from the European Union under Article 50 at the end of March, it’s time to consider how it could affect your holiday:

Duty-free

Rules regarding duty and tax-free product are likely to make a comeback. Since 1999, travelling within Europe meant that people held no rights against duty or tax-free purchases. But, the separation of Britain and the European Union could mean that the rule is bought back into practice. So if you rely on buying cheap alcohol or tobacco, you will have to revert to buying products in limited quantities just like all non-EU countries.

The EHIC scheme

One of the many perks of being part of the EU is The European Health Insurance Card, more commonly known as the EHIC or E111 card. The card entities all EU citizens to access public health care whilst abroad, on the same basis as citizens of that country. All travellers carrying the EHIC card are eligible for almost free treatment. When the UK leave the EU, this form of healthcare will be scrapped, and a new scheme will be put into practice. For the time being, there’s no need to worry. You will still be able to use your EHIC card abroad. There will be no immediate effect to how you can use it.

Value for money

Since the second day of Brexit negotiations, the pound weakened. The sterling is predicted to be volatile due to the uncertainty of the outcome. Be aware that some airport currency suppliers have the worst rates in the country, even if you place an order in advance. To save money, don’t buy your currency at the airport. You can find some of the best currency exchange rates online.

The weakened pound may result in increased flight prices. If you have already paid for your holiday, you have already protected yourself. For now, it will only affect those paying for accommodation abroad in other currencies, such as Euros. Visiting good value destinations will help you save money. Currently, two of the most cost-effective destinations are Mexico and Tokyo. Despite seeing inflation rise in the UK, most holiday destinations have seen little, if not no change since 2016.

Until the UK officially completes the leaving process no changes will be made. The good news is that this will be no sooner than two years’ time, so people like yourself are still able to hop between the UK and EU countries.

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Is a Transitional Deal Good for Brexit?

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With the Brexit negotiations in full flow, Britain is looking for a way to make the transition away from the European Union run as smoothly as possible while ensuring that Brexit happens unimpeded. There are two possible exits. The first is a clean cut that will come into effect on 29th March 2019. The second option is to negotiate a transition deal that will allow Britain to disengage with the EU over a designated period of time. Here on The Bruges Group we have examined how trade can successfully continue outside of the Single Market. It is just a case of how we get there. In this article we look at the advantages and disadvantages of a transitional deal.

 

For a Transitional Deal

A big concern amongst some leave voters is that Britain is heading towards a cliff edge scenario where no agreement or deal is reached. Many political and business commentators believe that this would leave Britain in a precarious position as all EU laws and regulations would suddenly cease. It is estimated that over 700 treaties have to be renegotiated, ranging from the airline industry to Britain’s nuclear agreement (Euratom), with the EU. With less than two years till the Article 50 deadline there is a strong argument that it isn’t feasible to negotiate every deal in time. This could leave many UK businesses in difficult positions, as they have to suddenly change from one set of regulations to another.

British trade minister and prominent leave advocate Liam Fox has pushed for a transitional deal. The Irish Times reported that Fox told Andrew Marr that a deal of around two years was necessary to give businesses the chance to adapt. He is quoted as saying: “I want to leave the European Union at the end of March 2019. Now once we have done that, once we have fulfilled our promise to the British people, we can look to see what we are going to do in terms of making that a smooth transition… whether that’s 23 [months], whether that’s 25 [months]." The trade minister reassured leave voters by stating that the transition period would have a limited time scale.

 

Against a Transitional Deal

There are valid fears that a transitional deal could be used by remainers to keep Britain locked into many EU regulations including the Single Market and Customs Union. Business Insider predicts that a transitional deal could be based on the EEA model which would allow free movement of citizens and require Britain to remain under the European Court of Justice. With Britain replicating the EEA model, remainers in the government could use it as a base to push for a permanent EEA status.

The British Government recognises that the British public voted for a clean cut. FXCM notes that May has clearly laid out the terms of Brexit: “Let me be clear. We are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European Court of Justice.”

A transition deal could also hinder Britain’s ability to make trade deals with nations outside of the EU. If Britain cannot negotiate trade agreements during the transition, due to EU regulations, businesses in the UK would face even longer uncertainly. For Brexit to be successful. Britain must be able to trade globally without EU interference.

 

 

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Brexit will fail if it does not develop a clear vision for the future

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Barely one year after the Brexit referendum, and under four months since the triggering of Article 50, the Financial Times has published a “democratic case for stopping Brexit”, adding to a crescendo in overt calls to upend the exit process. How did we get here? The whole point of the EU referendum, just like the Scottish referendum before it, was to bury a longstanding and contentious political issue. In both cases, this has not been so.

 

In the case of Scotland, it is clear that the opportunism of the nationalists was to blame for reviving the independence issue. Similarly, in the case of Brexit, it is tempting to point the finger at the “Remoaners” who never really accepted the result of the referendum, protesting against the democratic outcome from the get-go. Their scheming has not been particularly covert, with the entire frame of the “hard” vs. “soft” Brexit debate geared towards eventually thwarting the outcome of the vote.

 

Yet, the blame primarily lies with the pro-Brexit camp. It is no secret that prominent figures in the Leave campaign had no clear plan for victory, themselves appearing flabbergasted by the result. The present situation is the logical continuation of this reckless incompetence.

 

Beyond hazy generalities, there is little to believe in with Brexit as it stands. As a result, people will increasingly become disillusioned. If a bad deal is eventually struck and it goes to parliament for approval, either a general election or second referendum could become a legitimate vehicle through which to upend the entire Brexit process. With May’s government barely clinging to a majority, it doesn’t require too much imagination to see how persistent Remainers could eventually get their way.

 

What is needed, if Brexit is to stop haemorrhaging legitimacy, is an ambitious plan. A favourite example of prominent Brexiteers revolves around the promise of the Anglosphere, so why not start there?

 

Together, the United Kingdom, the United States, Australia, Canada and New Zealand constitute an Anglosphere of over 450 million people. This is more than the population of the EU 27 (without the UK). On top of this, these people are more prosperous than their EU counterparts, and have been for a long time.

 

Their GDP per capita is significantly higher than the EU average. In fact, in most cases it is even above that of the eurozone’s main economic success story: Germany. Growth rates have been higher too. While such aggregate figures are not the be all and end all of prosperity for the average citizen, they are certainly indicative.

 

Globally, the EU has been losing in relative economic importance at breakneck speed. The Western European edge of the Eurasian landmass –represented by the core 15 EU Member States– once dominated the global economy, controlling over a third of global GDP at the end of the 1960s. This was well above the US share of just over one quarter. Asia and Oceania stood at around 15% at the time.

 

Fast forward to 2011 and the EU15 share had tumbled to around a quarter of global GDP, having been overtaken by Asia and Oceania (driven primarily by China), as well as by the USA, whose share remained constant. Europe’s downwards trajectory has only accelerated as the eurocrisis has worn on.

 

The standard excuse offered up by sclerotic EU bureaucrats is that this march towards oblivion constitutes a natural “rebalancing” process as Asia, particularly China, regained its economic standing in the global economy. This naturally squeezed Europe’s share of global income.

 

But what is never addressed is why the US, Australia, Canada and New Zealand were all able to hold onto their relative shares of global wealth compared to the EU. In other words, why were they able to grow faster? Why are they more prosperous? It is obvious that the dramatic rise of China had to displace other economic players in relative terms, but why has this decline fallen squarely on the EU’s shoulders, and not on those of the Anglosphere as well?

 

The “rebalancing” rationalisations for Europe’s terminal decline are most often offered up by those working for institutions obsessed with “relaunching” Europe, “fresh starts”, “no more business as usual”, “delivering European renewal”, “acting now” or otherwise declaring it “time to act”, cooking up plans to make the EU “the most dynamic and competitive knowledge-based economy in the world”, etc. etc. Yet, these are the same people who shrug at the total and unique failure of Europe’s economy to hold its own in the world. You couldn’t make it up!

 

The EU has achieved unparalleled economic integration compared to any other regional bloc. And Britain was able to be a part of this union with such diverse nations for decades. Why, then, would some scheme for the Anglosphere be so far-fetched? Why would free movement of workers, for example, among countries with such similar needs and concerns –not to mention entwined intelligence services– be so unthinkable? And if it is not, where is the action?

 

As regards the limitations on Britain’s right to negotiate alternate trade deals while it remains within the EU, Britain must be careful to observe the letter of the law but certainly not its spirit, which is designed to thwart any successful secession. What is needed is a concrete plan that could be signed as soon as Britain is officially out of the EU, to be confidently presented to the public as a vision of the future after Brexit.

 

Without this, Brexit will surely suffer the same fate as the Remain campaign. Repeating generalities about executing the will of the people is as uninspiring as hypothesising over the future marginal economic costs of leaving the Union. These are not winning arguments. Leave won the campaign because it developed enthusing stances revolving around sovereignty: “take back control”. What does it offer now?

This article is by Daniel Matthews-Ferrero

 

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Barnier's career of wacky ideas and EU power-grabs

Michel Barnier is quickly becoming a pantomime villain in the UK, with his regular grandstanding and puerile PR stunts. But a lot of British commentators still give him far too much credit - we can only guess they haven't looked into the wreckage of his political career.
michaelbarnier
(Photograph courtesy of Foto-AG Gymnasium Melle)
Barnier's track record, described below, is marked by wacky EU-federalist ideas which have been his undoing on several occasions.
From his less-than-subtle effort to force the EU Constitution onto all of us through to the range of smaller proposals for EU power-grabs, which resulted in criticism, rebukes and a dismissal.
The Brexit talks show that he might never learn from these errors.
Despite having absolutely no elected mandate in his current role, he is stuck in the EU Commission mindset and trying to boss Britain around.
Any eurosceptic would have known that EU intransigence would soon surface in spite of David Davis's efforts to create an amicable and respectful exchange of views.
We highlight eight of his career low points here:


1. As French Minister for Foreign Affairs...
...he helped write the despised EU Constitution, a massive EU power-grab, that was trashed and rejected by French voters in a referendum and later in a Dutch referendum.

 
 
2. Sacked as French foreign minister...
...because his EU Constitution campaign was so roundly trashed in the French referendum. He later complained he was "unfairly singled out" for the referendum defeat, but he still didn't learn his lesson as the next items shows.
 
 
 
3. As French nominee to rewrite the failed EU constitution...
...he was asked to produce a new document to replace the constitution alongside other panellists. An unrepentant Barnier and his colleagues instead produced virtually the same list of power-grabs in the controversial and hated Lisbon Treaty. Co-writer Valéry Giscard d'Estaing confirmed it was "substantially the same as the EU Constitution".
 
 

4. As EU Commissioner for Regions...

...he oversaw the EU regional funding team which proposed a much-criticised funding project of more than EUR 60 million to the Spanish enclave of Melilla including millions spent on a luxury golf course next to a refugee fence and refugee reception centre. Although he oversaw the team which wrote the funding proposal and gave the initial approval, final approval to the criticised scheme was by his successor Jacques Barrot.
 
 
5. As adviser to José Manuel Barroso...
When asked to look into civil emergency response, he was ridiculed for his proposals for an EU Civil Protection Force which turned into an obvious power-grab for the EU Commission. He is credited with invented the phrase 'the cost of non-Europe' and his civil protection paper includes the bizarre phrase: "As the tsunami so tragically bears out, the price of non-Europe in crisis management is too high". He was also a Barroso adviser when Barroso made his famous gaffe, "the EU is our empire".
 
 
 
6. As EU commissioner for the internal market...
He was criticised repeatedly over: Solvency II insurance regulation; EU Commission power-grabs; toothless bank reform proposals; and half-baked banking reform proposals. He was also criticised by the UK Government for his banking reform proposals and the Alternative Investment Fund Managers' Directive which was especially punitive to the UK financial services industry.
Slammed over the Solvency II legislation process
Criticised for toothless proposals
Criticised for half-baked banking reform proposals:
Criticised by UK gov for his first draft of banking reform
Faced Uk gov criticism over AIFMD
 
 
7. As defence adviser to Juncker...
He helped create the concept of the European Defence Fund and the European Defence Action Plan. From 2015 to his appointment as EU Commission Brexit negotiator he helped plan the EU's defence powergrab which was eventually rolled out in a legislative onslaught at the EU Council between November 2016 and June 2017.

8. As co-president of the Albertville Olympic Committee...
...saw the event costs escalate to more than double its intended budget. UK analysts later found the event suffered a cost overrun of a whopping 137%.
 Flyvbjerg, Bent; Stewart, Allison; Budzier, Alexander (2016). The Oxford Olympics Study 2016: Cost and Cost Overrun at the Games. Oxford: Saïd Business School Working Papers (Oxford: University of Oxford). pp. 9–13. SSRN 2804554 Freely accessible.
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Brand Britain Beyond Brexit

When we inevitably run out of a product, we go to the shops and buy a new one. We are not told what to buy. There is no security to ensure we select Brand A instead of Brand B. We have a choice. Product placement is a reality, in many stores, but we have real choices. After Brexit, the EU and UK have very real choices too. They both must win over...
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Debunking the Brexit Myths

During the referendum campaign both sides made considerable remarks (some justified, others less so) about the state of trade, the economy and employment and whether the UK voted Leave or Remain on 23 June 2016. One year on we have learnt many things including the reality of an EU army. We have also learnt that Australia, Canada, New Zealand and th...
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The Will to Act

In the referendum on 23 June 2016 the majority of British people voted Leave. In doing so, they placed the cornerstone of a new future for the U.K. beyond the E.U. Some politicians, mainstream media and many pollsters failed to remember how the will to act had built the British Empire, Commonwealth and NATO. The will to act against questionable ves...
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Brexit under threat

The Union Jack flies over the Houses of Parliament in Westminster.
Photograph: Rian (Ree) Saunders, Flickr

With Article 50 triggered and Brexit negotiations well underway, the UK government looks like it’s carrying out the instructions it received from 17.4 million voters last summer. At best, Britain and the continent will establish a mutually advantageous trade relationship; at worst, the UK and EU will revert to World Trade Organization (WTO) rules, including minor tariffs on the exchange of goods and services. In either case, it seems, the UK will regain control over its finances, its borders, and its laws –all of which are necessary to fulfill the mandate given by voters.

Nevertheless, a growing threat hangs over Brexit Britain.

In hopes of consolidating power, Prime Minister Theresa May called an election in June. Rather than expand her mandate with a comfortable majority in Parliament, May’s Conservatives lost their majority, necessitating the support of Northern Ireland’s Democratic Unionist MPs to govern.

Emboldened by the election result, opposition parties have redoubled efforts to undermine the government’s position in Brexit negotiations. By seeking guarantees that single market access is maintained at all costs, or that, if by March 2019 (the date by which the UK has notified the EU it will leave) negotiations have not born fruit Britain’s current relationship with the EU should be maintained, MPs from Labour, the Liberal Democrats, the SNP and even some Conservatives are undermining the primary objective of last year’s referendum: to leave the EU.

Beyond Westminster, a growing number of voices have added themselves to the anti-Brexit bandwagon.

Devolved administrations in Scotland and Wales have expressed concern over the UK government’s “great repeal bill”, meant to repeal the European Communities Act of 1972, and bring all EU law currently applying to the UK into British statute. Scottish and Welsh first ministers Nicola Sturgeon and Carwyn Jones see the bill as a “power grab” by Westminster, supposedly denying any say to devolved administrations. Despite reassurances from cabinet minister David Davis, the UK’s departure from the EU will likely face many more such episodes from pro-remain Sturgeon and Jones.

A third front of opposition to Brexit has been opened by big business. The British Chamber of Commerce and the Institute for Directors have pushed Theresa May’s government for more clarity regarding the Brexit process, and the importance of avoiding a “cliff-edge” upon expiration of the 2-year transition period triggered in March. Certainty is crucial, but clear pressure is mounting from industry giants not to change the status quo –the very purpose of last year’s Brexit vote.

A fourth, ongoing front against Brexit is from advocacy groups within civil society. Last year’s court challenge of the government’s authority to trigger Article 50, and the persistent efforts of former Prime Minister Tony Blair to slow or stop the UK’s departure from the EU continue to erode meaningful debate on how best to carry out Brexit.

If Theresa May and her government are serious about carrying out the largest democratic mandate in British history, they need to do three things. First, they need to negotiate with the EU in good faith. Taking the first steps on EU citizens’ rights, adopting a constructive, realistic approach to deciding Britain’s share of EU debts, and ensuring the border in Ireland remains open (regardless of what the EU decides to do on its side) will not only give the UK the moral high ground, but also usher in the next part of Brexit talks: trade negotiations.

Second, May and her government need to prepare for the worst. In short, they should assume a “cliff-edge” scenario –involving a complete breakdown of talks– will occur, meaning a reversion to WTO trading rules. Businesses may not like this, but by signalling that no deal is guaranteed to emerge, industry has more certainty, and any future arrangement with the EU will be considered a bonus. This would likely shock the UK economy in the short term, but the ability for businesses and individuals to plan ahead would benefit all in the long term.

Third, the UK must aggressively pursue closer relationships with its international partners. Current negotiations with the EU are important, but Brussels has made clear that they preclude any further talks on a future trade relationship. It seems likely, therefore, that negotiations will start late, and be drawn out. Moreover, the EU has every reason to undermine the UK’s position, so as to discourage other member states from leaving the block. It is therefore quite possible they will negotiate in bad faith. As such, the UK would do far better to direct as many –if not more– resources towards trade with other nations, boosting access to far larger markets than the EU. Hints of this have already emerged, with International Trade Secretary Liam Fox opening discussions with the US, and Foreign Secretary Boris Johnson’s recent visit to New Zealand and Australia. China, Japan and Canada have also expressed interest in trade with the UK, underscoring the enormous opportunity associated with the UK’s newfound sovereignty. Of course, such deals will not be allowed so long as the UK is an EU member state, but they can be arranged for finalisation after the UK leaves, ensuring a smoother transition.

Above all, it must be clear to Britons and the world that there is no going back from last year’s referendum result. Brexit actually does mean Brexit.

This article is from The Eurosceptic

 

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The Five Eyes - Security after Brexit

The UK will continue to thrive due to its existing linguistic and intelligence connections

1st August 2017
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I come from a family who have served on Five Continents for their country in both military and civilian platforms. As such, I became aware of the Five Eyes as a youngster.  The Five Eyes is a joint intelligence community comprising of Australia, Canada, New Zealand, the UK and the United States.   Initially the Five Eyes or FVEY was formed in 1941. It is therefore arguable, given the geographical locations of its members and their historical endurance, that no amount of pressure from the EU will cause it to falter.

 

FVEY operates beyond the remit of the EU. All are members of NATO and this will not change irrespective of Brexit. Brexit is inconsequential in matters of Intelligence.  Few in the Remain camp have even acknowledged this central pillar of British government that will endure beyond the legal confinements of any Brexit deal that London has with Brussels, if such a deal is even achieved.  The UKUSA Agreement of 1946 may have evolved, but nevertheless it shall remain a core part of British domestic and foreign security information gathering and sharing post-Brexit.

 

Cooperation between Five Eyes members will be ongoing, parallel to any changes within the EU.  Whereas some MPs feel that Britain will be left 'out in the cold,' (as if a new Cold War has developed), historical facts and agreements between the Five Eyes members will ensure this does not happen.  Unlike their European counterparts, the Five eyes all share the same language which in terms of intelligence communication can only be of significant benefit to all concerned.

 

According to James Cox, “Precise assignments are not publicly known, but research indicates that Australia monitors South and East Asia emissions. New Zealand covers the South Pacific and Southeast Asia.  The UK devotes attention to Europe and Western Russia, while the US monitors the Caribbean, China, Russia, the Middle East and Africa.”[1] It is hard to argue in any way that these arrangements will somehow change after the UK formally leaves the EU.

 

Incidentally, Human Intelligence gathering will not change post-Brexit. Signals Intelligence gathering will also remain unchanged. The other forms of Intelligence gathering will also be unaffected by the process of Brexit.  So too the agencies such as GCHQ, Canadian Security Intelligence Service and Central Intelligence Agency. These pillars will continue to support the national security of their respective countries independently and jointly when necessary.

 

There are numerous challenges ahead for the Five Eyes, once the UK takes her place back on the International stage.  These challenges will not be compounded by Brexit, but they could be alleviated by them.  Terrorism goes beyond the EU. So, too kidnappings and murders. Crime has become high tech and so too have the agencies targeting them.

 

Overall, it can be argued that the UK will continue to thrive due to its existing linguistic and intelligence connections. We must remember and acknowledge that the UK's Intelligence community is one of the oldest and most respected in the world, on top of being part of the Five Eyes.

 

By James Coghlan

 


[1] Canada and the Five Eyes Intelligence Community, James Cox, Strategic Studies Working Group Papers, December 2012, page 4

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Brexit: the end to austerity

Unlocking the benefits of leaving the EU

By Bob Lyddon

Bob is the author of The UK’s liabilities to the financial mechanisms of the European Union for the Bruges Group, and the Brexit Papers for Global Britain – www.brexitpapers.uk

23rd June 2017
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The current Government led by Theresa May has noticeably failed to bake any “Brexit dividend” into its policies for the coming 5-year Parliament. This is concerning because it may indicate either that they have not yet figured out the sources and extent of the financial benefits from Brexit, or that they are not going to pursue the negotiations with the EU in order to garner them, or both.

 

The guideline financial benefit is £50 billion per annum, or £961 million per week: almost three times the “battlebus” figure of £350 million, and approximately the size of the black hole in the Labour Party manifesto pledges for the recent election.

 

The keys to garnering the difference between the two figures lie in structuring a fair deal on the EU economic migrants already in the UK and on the taxation of corporate profits. “Fair” means fair to the UK population as a whole.

 

Talk of “a breakthrough” supposedly achieved on the first day of negotiation in the matter of the rights of EU citizens living in the UK must be a concern if this turns out to mean that the status quo is preserved for the 3.6 million citizens of other EU countries now living in the UK, since this heading contains the single largest amount of money connected with these negotiations.

 

It is vital that real “reciprocity” on this matter is achieved: the same amount of money flowing in both directions and for the same amount of time.

 

This is not the same as striking a deal that has an equivalence in words but not in figures, applying equally to EU citizens here and UK citizens living elsewhere in the EU. There are only 1.2 million UK citizens so affected, and these bald figures do not reflect either the annual cash value of the services delivered in the UK to EU citizens as compared to those delivered to UK citizens in other Member States, nor the age demographic: for what period will these services need to be provided?

 

Research based on the UK government’s National Labour Survey and issued by Global Britain indicates that the UK subsidises the public services obtained by each of the EU citizens in the UK by just under £10,000 each per annum. This figure is the difference between (i) their direct and indirect tax payments and national insurance contributions on the one hand and (ii) the costs to the UK state deriving from their usage of public services on the other.

 

In other words, the annual cash cost to the UK state of the 3.6 million EU citizens currently in the UK is £30 billion per annum. If the trade proposed by the UK government involves the exact same cost per head being spent by other EU Member States on UK citizens, then the annual cash cost on that side would be £10 billion, resulting in a net detriment to the UK under this heading of £20 billion per annum.

 

There is also the question of demographics: if the average UK citizen involved is a pensioner living in Spain and the average EU citizen in the UK is aged 25, then the cost to the UK will be of far longer duration than the cost to the other EU Member States. Mr Davis’ travelling direct to Spain from the first day of negotiations in Brussels could be taken to indicate that it is exactly this type of UK citizen that constitutes the average, and that the main country with whom a deal needs to be done is Spain.

 

Whatever has actually transpired so far, the UK government needs to now justify whatever position it has taken in the negotiations by qualifying the computations around which it is proposing a “trade” on this issue, based on:

  • Confirmation of numbers of people involved
  • Age demographic – to indicate for how long the people will be contributing funds and drawing benefits
  • Analysis of usage of public services:

o   in the UK, this would indicate whether the consumption per annum per head is more or less than the £10,500 average

o   in other Member States the figures would need to account for the actual cash value of the public services usage and not assume that the level of the service or the cost are the same as the provision in the UK

  • Analysis of contribution of direct and indirect taxes and national insurance contributions

 

That analysis will then deliver two figures:

  • Confirmation, or not, of the estimate above that there is a cost to the UK of £30 billion per annum, and for how long that cost will persist;
  • The equivalent figure for the 1.2 million UK citizens living in other EU Member States and for how long that will persist. The assumption made in this article that there is a parity of cost-per-head on both sides is no more than that, although the costs on the UK side are based on research undertaken for Global Britain.

 

These figures can then be expressed as a Net Present Value, and we can then see what money should flow from other EU Member States to the UK as a lump sum, or in the other direction, for the status quo to be maintained.

 

There are, of course, other ways of doing it, to ensure reciprocity, but also to cap the liabilities of the rest of the citizenry of the UK. For example, the rights of EU citizens to continue to live here could simply be curtailed as of March 2019, along with their rights to UK benefits and pensions, beyond a single pension transfer payment that buys as many years of entitlement in the state scheme of their home member state as they have paid NI contributions for into the UK scheme:

o   They do not retain an entitlement to the UK state pension;

o   They get as many years’ entitlement in the state system of their home member state as they paid for into the UK scheme.

 

If this approach were to be adopted, the transfer value of UK citizens’ contributions into the state schemes of other member states must be offset against it and those UK citizens awarded as many years of the entitlement in the UK scheme as they accrued in their host member states while abroad.

 

Another alternative would be for the 1.2 million UK citizens living elsewhere in the EU to apply for nationality in the member state where they are now living, and to continue to accrue rights in the state system there; when they get foreign nationality, they would surrender their UK passport and the UK would pay over a transfer value to buy them as many years of state pension in their new home country as they had accrued while working here.

 

Were this to be the arrangement, then the 3.6 million EU citizens would be free to apply for UK nationality, and the UK would have to have a scheme to adjudicate whether those applications are accepted. If they are not, the person would be obliged to return to their home member state, and the transfer value of pension rights would be paid over.

 

The first key point here is that no-one will have dual nationality. The second key point is that there is always a third-party to the tests of fairness of the arrangements, beyond just the UK government and the individual involved. The third-party is the UK taxpayer, who should not be called upon to subsidise any economic migrant. This has been one of the major failings of the EU from a UK perspective and a main cause of the failure to eliminate the public spending deficit.

 

After the Eurozone debt crisis of 2011 the UK rose in attraction as a place of employment, and the previous Conservative/LibDem government made great play on the increase in numbers of people employed and the increase in GDP that resulted. Unfortunately, and as the National Labour Survey has shown, these were mainly low-skill/low-wage jobs taken by EU economic migrants, and each such job has cost the country money.

 

In order to block every breach in the financial dam, the UK’s negotiators need to make sure there is a comprehensive exit on several other issues including:

  • Release from all the contingent liabilities associated with (i) the 2013-2022 Multiannual Financial Framework for the EU Budget and for all preceding budget periods; (ii) the European Central Bank; and (iii) the European Investment Bank – EUR1.3 trillion in all;
  • Buying out the European Investment Bank’s loans into the UK and then offsetting - against the reimbursement to the EIB - the UK’s book of Student Loans to citizens of other EU Member States who have studied in the UK, taken a UK student loan, and returned to their home countries or elsewhere without repaying it;
  • No further payments into the EU Budget after March 2019.

 

If the EU does not agree to all of the above and to one of the approaches outlined regarding citizens living outside their home EU Member State, the UK’s fallback would be to open the issue of the past – as well as the future - costs of the 3.6 million migrants and their benefits and pensions. If they are to stay in the UK, their home member state should pay that cost in cash every year, with a mechanism to adjust it annually, and make an upfront payment of the retrospective costs that the UK has already shouldered.

 

For the future we have to have it in our own hands to define our migrant worker regime for workers from anywhere in the world, and the start point can be a fairly easy one:

1.    A maximum six-month visa for seasonal and contract workers, with no access to UK public services: the employer would need to show an insurance policy for healthcare during the worker’s stay in the UK and pay – and show they had paid – the premium upfront;

2.    A work permit for a permanent, salaried position, as long as the salary is on a PAYE basis and is a minimum £50,000 per annum. The person would have full access to UK public services and the direct and indirect taxation and national insurance would certainly be above the £10,500 average consumption of public services.

 

As for the other elements of the UK’s financial relationship with the EU going forward, these come down to the terms-of-trade.

 

The two essential elements here are:

  • What replaces our current membership of the customs union and Single Market;
  • How we protect ourselves from predatory tax practices of other EU Member States.

 

The guiding principle is that it is impossible to remain part of the customs union and Single Market and also preclude predatory tax practices.

 

To solve the latter issue, the UK needs to rewrite its domestic corporate tax code by drawing up industry templates for cost/income ratios through which HMRC could run the group-wide figures of the likes of Google and Amazon, and the many other companies who benefit from the Freedom of Establishment and the sweeteners embedded in the domestic corporate tax codes of Ireland, Luxembourg and the Netherlands in particular.

 

Whatever the appearance these companies might present about the extent of their UK business, HMRC would be accorded the right to look through to the substance, and extrapolate the profits of their UK business from the company’s group-level sales and from a template of costs that would apply to a UK company undertaking the same business from a 100% UK base, and not with the activities split between the UK and other EU Member States.

 

This splitting of activities is underpinned by the implementation of odorous “transfer pricing” that lands the costs in the UK and the profits in Ireland, Luxembourg or the Netherlands. Instead the UK needs a new regime:

  • HMRC can make assumptions about the group’s UK sales from the group’s global Profit&Loss account;
  • Then HMRC can derive their UK costs and their UK pre-tax profits through applying the industry templates for 100% UK-based companies undertaking the same activities;
  • Whatever the company says is the profit of the UK subsidiary, HMRC would then respond with the UK’s official version of their profits, on which they would pay 16-17%, or whatever the standard rate is;
  • HMRC would send the company an Advance Payment Notice for the difference between what is in their own tax return and the UK’s computation, regardless of what tax the company had paid in Ireland, Luxembourg or the Netherlands.

 

The remaining issue is import/export tariffs. These can be negotiated in the knowledge that the UK exports approximately £280billion of goods and services to the EU now and imports about £360billion, an annual trade deficit of £80billion (Source: Walbrook Economics).

 

Given this imbalance to the UK’s detriment, the UK should have no qualms about going onto World Trade Organisation terms. If tariffs of on average 10% were applied by other EU Member States to the UK’s exports under these terms, this would amount to a detriment of £28billion per annum. However, the detriments caused by EU membership fees (net £9billion), Freedom of Movement (net £20billion) and Freedom of Establishment (£11billion) total £39billion, and outweigh the tariffs that would be imposed on UK goods and services under WTO rules.

 

By the same token, if the EU imposed 10% average tariffs on UK goods and services, the UK could do the same in return. In that case HMRC would receive £36billion in customs revenues, enough to subsidise all of our EU exports:

  • Assume an export was to be made for £50,000 and the EU tariffs would have raised this to £55,000;
  • The UK government sets up a scheme allowing the UK exporter to still quote a £50,000 all-in price, but composed of a cash price of £45,454 plus 10% EU import duty of £5,454 = £50,000;
  • The UK government reimburses the UK exporter with the £5,454 of duty so the impact of the duty is neutralised;
  • Even if EU governments did the same in return, the UK as a whole would still be better off by £8billion per annum: 10% of the UK’s negative trade balance with the EU.

 

On top of that the UK would be able to strike trade deals with non-EU member states at lower tariffs than apply now, when they are set at an EU level.

 

There is, however, one proviso to the above. The UK government should only reimburse EU import duties to UK exporters where the UK goods and services being exported into the EU have a minimum of 70% UK content. There would be an exclusion where goods/service are prepared mainly outside the EU, imported into the UK for finishing, and then re-exported as UK product i.e. as an EU product. This kind of “trade deal shopping” adds little value to the UK. Where the Confederation of British Industry lobbies for continued access to the Single Market, it would be interesting to know how much usage their members are making of the UK as an entrepot to “game” the Single Market rules, as opposed to their investing and creating proper jobs in the UK: the latter deserves UK government support, whilst the former does not.

 

The main penalties, then, of the UK negotiators failing to reach any kind of agreement with the EU negotiators by March 2019 can be summed up as:

1.    EU import tariffs being imposed on the UK’s exports of goods and services, which, for purposes of illustration, we have put at a detriment of 10% of £260billion, or £26billion;

2.    The necessity of providing public services for 1.2 million UK citizens living in other EU Member States now, at an assumed cost of £10billion per annum based on parity of cost with that the UK bears now for providing public services to the 3.6million citizens of other EU Member States;

3.    Loss of estimated £5billion per annum of grants from EU bodies into the UK.

 

The total detriments would thus amount to £41billion per annum.

 

Were the negotiations to fail in that way, the financial benefits to the UK would be:

1.    Imposition of tit-for-tat import duties on EU goods and services, at the same level as imposed by the EU. If that were at 10% and on the current level of EU imports, the UK would book £36billion of import duties;

2.    Cessation of payment of £14billion per annum EU Member Cash Contribution, out of which the £5billion per annum of grants from EU bodies back into the UK are funded;

3.    Cessation of the need to bear the cost of the public services for the 3.6million citizens of other EU Member States currently in the UK, which is £30billion per annum;

4.    New revenue in Corporation Tax on tax-efficient EU business models where profits are currently concentrated in Ireland, Luxembourg and the Netherlands, calculated by the author for Global Britain at £11billion per annum.

 

The cash benefits amount to £91billion per annum, as contrasted with the cash detriments of £41billion – a net cash benefit of £50 billion per annum.

 

The difference expressed as a Net Present Value may well be far higher if one were to calculate the relative periods over which public services would need to be provided to EU citizens in the UK compared to UK citizens in the rest of the EU, based on age demographic.

 

In addition, the failure of negotiations and the UK’s exit from the Treaty of the Functioning of the EU would release the UK from EUR1.3 trillion of contingent financial liabilities. In order to ensure this release, the UK government should buy out all of the European Investment Bank’s loans into the UK:

  • Adjusting the payment in the EIB’s favour for their loss on redeployment of funds, where the EIB has funded its loans at higher interest rates than prevail now (the loans will be set to those higher rates so the UK would earn this adjustment back over the life of the loans);
  • Offsetting the value of the Student Loans to students from other EU Member States.

 

This last point could be of course be challenged, with the UK’s position being that allowing these students to study here and take out a student loan here were part-and-parcel of the UK’s membership of the EU and should not survive the UK’s withdrawal.

 

Apart from that, the UK could simply enact the remainder without striking a Brexit deal in negotiation. This should then be the baseline: the negotiation needs to achieve a better outcome for the UK than the result if no negotiation were undertaken at all.

 

Since the “no negotiation” route can be expected to deliver £50billion per annum cash benefits and release the UK from (i) EUR1.3trillion of contingent liabilities and (ii) a liability to provide public services to EU citizens of a far longer duration than the likely need to take over public service provision for UK citizens currently in other EU countries, the UK negotiating position is straightforward: the above is a minimum outcome and is completely acceptable. The negotiating task is to improve on that, and walk away if that is all that can be achieved.

 

The walk-away can deliver £50billion per annum cash benefits: 2/3rds of the UK’s public spending deficit and enough to bring austerity to an end, and without Labour’s Land Value Tax and financial conjuring tricks.

By Bob Lyddon

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The Future is Another Country: Brexit, CAP and the Future of British Agriculture

A Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation lies ahead; but if mapped successfully, can be a positive one.

Richard Ferguson

21st June 2017

The possibility of a Brexit-driven reconfiguration of the UK’s food and agricultural sector suggests that a period of significant transformation and structural adjustment lies ahead. Set against an industry already in the midst of rapid technological displacement, value-chain disruption and regulatory change, a transformative event such as Brexit appears to add to existing uncertainty.


However, while the potential institutional, financial and operating frameworks that will arise from Brexit suggest a wide range of possible outcomes, the process, if mapped successfully, can be a positive one. The UK’s current position is not unique. In the 1980s, the government of New Zealand instigated a reform programme to transform the country’s food and agriculture sector, the results of which were immediate and painful as well as long-term and beneficial.


At the core of the transformation that shook New Zealand’s agriculture sector in the 1980s and 1990s was a pressing need to access new markets in the face of external economic shocks and structural adjustments, such as the UK’s decision to join the then European Economic Community (EEC) in 1973. While there are obvious direct parallels between the New Zealand case study and Brexit, both situations remain distinct and unique. The first section of this report “The past is another country” considers the New Zealand experience and argues that an agenda focused on long-term goals can deliver significant economic and social benefits, but may come with considerable short-term costs. The battle about to commence is set to be as brutal, complex and ideological as that which determined the direction of the British economy in the late-1970s and early 1980s.

 

The second part of this report “The here and now” considers the Common Agriculture Policy (CAP), the defining policy feature of the UK’s agriculture landscape over the past few decades. The design of any new policy-making framework has to begin with some macro considerations, not least: how relevant is a subsidy-based system of payments in the modern era? Moreover, what is the relevance of food security in a country with a structural trade deficit in food? We must also consider to what extent environmental considerations should influence the policy-making agenda. What is the role of government in terms of regulation, environmental compliance, bio-security and food trust? Alternatively, can a free-market, liberalisation agenda deliver wider social, political and environmental objectives as well as economic goals? Can the UK use its fledgling – and flourishing – agtech knowhow to raise productivity, build exports and deliver value added to the British economy?

 

The third part of this report “The future is another country” peers into the future, and presents some innovative and strategic thoughts. As a study it is neither exhaustive nor academic, but it does cover many of the key and very real issues that come up time and again in our daily work with clients. It simply considers some of the strategic directions that the UK should consider if it wishes its food and agriculture sector to prosper. A global imperative is: how do we feed a world of 10bn people within a generation when its current needs are delivered by an army of unsophisticated and undercapitalised smallholders? We contend that the Department for the Environment, Food & Rural Affairs (DEFRA) and the Department for International Development (DFID) need to shift their respective – and parallel – focuses on agriculture subsidies and development aid to collude with the Department for International Trade (DIT) and the Foreign & Commonwealth Office (FCO) to bring much of the UK’s technological, commercial, developmental and diplomatic ambitions in food and agriculture under a joint strategy.

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Government Agrees to EU Military

Five concerns for the UK arising from the EU Defence Union

14th June 2017
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There are five main areas which the EU has been pursuing in order to establish what it calls an ‘EU Defence Union’ across the 28 EU countries, including the UK.

1. Procurement policy and incentives

2. Finance

3. Intelligence, Battlegroups and PESCO

4. UK defeat over HQ

5. Contradicting statements over UK involvement.

 

Since 23rd June 2016, the UK has made commitments in each of these above areas of defence with no debate in the British Parliament. Each one is described in more detail below:

 

1. Procurement policy and incentives

The UK has agreed to…

  • More power for the EU to enforce EU-wide tendering in defence contracts
  • An expanding remit for the EU over defence industrial strategy and joint-built assets
  • An expanding remit for the EU in purchasing and conduct of joint-owned assets
  • Incentives for UK defence companies to engage long-term with the developing EU-wide industrial strategy

 

The only reason the UK is permitted to build its own aircraft carriers is by using an exemption to the EU Procurement Directive. The exemption is known as the security clause (Article 346) and is permitted when a member state feels there is a national security reason to reserve production for its domestic market. The European Commission is tightening application of the clause following a review in 2016 and has gained the consent of member states to do so.

(EU Council Conclusions, 14 November 2016)

The EDA and EU Commission have a benchmark of achieving 35% pan-EU equipment procurement.

(EDA Benchmarks)

 

UK ministers have approved measures that allow the European Defence Agency to have a greater role in standardisation and certification.

(EU Council conclusions in Security Defence, 18 May 2017)

 

These measures would amplify EU influence in the trading conditions of the defence sector and an additional tool for the enforcement of policy. For example, certification and mutual recognition of standards might be used as a barrier to entry to UK exporters in years ahead in the same way that EU ‘standards’ produce a barrier to non-EU exporters in other sectors. Conversely, certification and standards could be used as an incentive for UK manufacturers and policymakers to adhere to EU policy. Either way, the changes bring a measure of additional control to the European Commission.

 

The EU refers to EU defence industrial strategy as the European Defence Technology and Industrial Base (EDTIB) and has more recently started using the term ‘Single Market for Defence’. With the objective of ‘reducing duplication, the EU intends to integrate this market under coordinated joint projects and an EU-controlled policy environment. The aim is for the resulting combined EU defence industrial strategy to serve the needs of the EU’s ‘new level of ambition’ in a military context.

 

This above agreement on standardisation and certification is an additional method of directing the integration of the EDTIB beyond the two already mentioned previously: 1. enforcement of the pan-EU Procurement Directive and 2. financial incentives via the European Defence Fund.

 

The EU Commission could conceivably tell the UK after Brexit that ‘access’ to its newly coordinated ‘Single Market for Defence’ requires adherence to the Procurement Directive. Also, now that UK participation in the European Defence Fund’s imminent incentive programmes is being concluded, UK ‘withdrawal’ could be viewed by the EU as an act that warrants retaliation or requires UK concessions.

 

2. Finance

The UK has agreed to…

  • The creation of the EU's first central military budget, the European Defence Fund
  • The use of European Investment Bank money (16% UK shareholding) for the European Defence Fund
  • The creation of a Cooperative Financial Mechanism (CFM) to augment the European Defence Agency
  • The creation of a Coordinated Annual Review of Defence (CARD), a mechanism which sees the EU offer financial incentives for adherence to EU planning over member state defence budgets.

 

The European Defence Fund will begin with a budget of only a few billion euros, but this money will be dangled in front of policy makers and defence companies to steer them towards joint activity and a policy environment that is under EU authority.

 

Millions of euros have already been placed into an "unprecedented level of engagement" with defence companies including defence industry conferences in the UK financed by the EU Commission, which started in April (Southampton) and are continuing throughout 2017 (Bournemouth etc).

 

UK companies are being invited to bid for the first tranche of European Defence Fund money in June 2017, via an EU Commission / EDA programme known as PADR (Preparatory Action for Defence Research). The programme is even being promoted by the UK Defence Solutions Centre, a UK-Government-funded unit which was formed to boost output of UK defence companies.

 

According to the EU Commission and EEAS, the Cooperative Financial Mechanism “will strengthen the European Defence Agency” as a central EU defence capabilities tool. The mechanism appears to be separate to the European Defence Fund. It is designed to manage member states’ money in a joint budget and will be spent on EDA research projects, military units conjoined under Permanent Structured Cooperation and joint assets.

 

This added financial firepower for the EDA overrides many years of policy by UK ministers who argued that the EDA’s scope and budget should be restricted.

(European Defence Agency ministerial steering board, 18th May 2017)

 

The UK Government has a 16% (EUR 39 billion) stake in the EIB, the same as Italy, France and Germany (the four largest shareholders). The EU Commission is changing the lending criteria of the EIB to ensure it supports the European Defence Fund. The EIB is an instrument of the EU and operates in adherence to EU policy. There has been no confirmation of whether the UK will withdraw from the EIB, but to remain a shareholder would mean a level of participation in EU policy. The EIB has placed funds into infrastructure projects in the UK including Crossrail and the Manchester Metrolink.

 

The UK’s consent to EIB funding for UK defence industries provides the EU with additional locks on UK participation in EU defence policy and on its EIB shareholding. These additional locks were made after the UK’s referendum on EU membership and add to the task of unravelling these links after Brexit.

 

3. Intelligence, Battlegroups and PESCO

The UK has agreed to…

  • An increased size, scope and infrastructure of the EU’s military intelligence agency as a central ‘hub’.
  • Participation in a 2019 EU Battlegroup under EU Council control. Approval given pre-referendum. No confirmation from MOD about whether it is cancelled or continuing.
  • Drop objections to Permanent Structured Cooperation (first version of permanent military unification) by willing member states. MOD will not confirm whether the UK is staying out or not.

 

The European External Action Service (the EU’s ‘foreign ministry’) has put forward plans to grow the role of its intelligence agency known as the Single Intelligence Analysis Capacity (SIAC). (EU Council conclusions in Security Defence, 6 March 2017 and 18 May 2017).

 

SIAC is composed of the EU Military Staff Intelligence Directorate and the 'civilian' EU INTCEN. The EU Council agreed to develop them as an EU "hub for strategic information, early warning and comprehensive analysis".

Member States, including the UK, have been asked to consider initiatives and ways to interact with these plans. (Security and Defence Implementation Plan, 14 November 2016).

 

The UK was scheduled to lead an EU Battlegroup in Jan-Jun 2019. The MOD will not state whether Britain’s participation will be cancelled or proceed.

 

4. UK defeat over the HQ

The UK has agreed to...

  • The reordering of EU agencies to include ‘permanent planning’ of EU defence missions and a ‘coordinated military command chain’.
  • The creation of a permanent military HQ with staff responsible for strategy and operations. It was kept as a non-executive function of the EU, but executive power over EU military developments rests with the EU Council and EU Commission.
  • Drop its objections to the wordings that describe the new HQ (May 2017) because previous approval in March 2017 had made later objections invalid.

 

The EU Council, with UK consent, has agreed to reorder the European External Action Service to "develop the necessary structures and capabilities for the permanent planning and conduct of CSDP missions and operations" with "distinct but coordinated civilian and military chains of command".

 

These will work under the political control, strategy and leadership of the EU Council's Political and Security Committee.

(EU Council Conclusions, 14 November 2016, with UK ministerial approval. Confirmed by EU Council heads of government conclusions, 15 December 2016)

 

The plans include the creation of an operational HQ, the Military Planning and Conduct Capability (MPCC). While the UK made an issue of the MPCC being prevented from having executive powers, this was a pointless fight as the executive power over the MPCC’s deployments already resides with the EU Council.

(EU Council Conclusions, 6 March 2017. Confirmed by EU Council conclusions, 18 May 2017)

 

5. Contradicting statements over UK involvement.

The UK has agreed to...

  • Participate in measures that apply to UK defence without the approval of Parliament, nor even a debate.
  • Participate in developing plans until at least March 2019, possibly March 2022 or even longer.
  • Provide the EU with several new powers over UK defence and a new bargaining chip for the EU.
  • Accept measures that mean a more complicated and time-consuming withdrawal process that the UK didn’t face before the first of the EU Defence Union agreements in November 2016.
  • Provisional statements on PESCO (Permanent Structured Cooperation) while keeping open the prospect of UK participation in PESCO and the EU Council-controlled EU Battlegroups in 2019.

 

Each time new agreements are made, additional hours will need to be spent on severing EU ties and controls. New agreements are currently being formed in finance, intelligence, regulation, procurement strategy, joint assets, joint missions and research. This will impact upon several departments of government.

 

The duration of UK involvement might be expected to be until March 2019 (the anticipated end of Britain’s membership) and possibly March 2022 (end of a three-year transition deal which requires adherence to EU policy) and potentially even longer. Until then, even adhering to new EU measures (in finance, intelligence, regulation, procurement strategy, joint assets, joint missions and research) will add complexity to the UK’s exit negotiations, potentially extending the duration of the exit process.

 

Not a single one of these agreements at the EU Council has ever been mentioned in the House of Commons, let alone subject to a vote by MPs. All defence agreements at the EU Council take the UK further down the road of military integration and have had an immediate effect regarding UK participation. The EU Commission immediately embarked on a dialogue with UK defence companies about incentives to participate in EU defence integration projects.

 

EU Council conclusions are considered by the EU commission to have been co-authored by UK diplomats. Therefore, if a minister does not raise objection during an EU Council meeting, conclusions are considered to represent a joint direction, or consent, of all member states.

 

The EU Commission has stated that agreements the UK enters as a member state “must be carried out in full” while the UK remains subject to the EU’s treaties.

 

In addition, the EU has said it is not willing to even begin to discuss UK withdrawal from EU defence arrangements until a withdrawal agreement has been settled and “all other matters” agreed, because defence is “too important to be a part of the main negotiations”. This means the UK will be obliged to adhere to these rapidly developing measures for at least two years to 2019 and there is a real possibility of the UK being tied in for an additional transition period of three years up to 2022.

 

The Foreign Office minister Sir Alan Duncan wrote to the European Scrutiny Committee chairman in December 2016 to inform the committee of the plans and agreements the UK was entering, as is required under UK Parliamentary protocols. Sir Alan Duncan told the committee there were parts of the Security and Defence Implementation Plan (SDIP) which his team 'liked' and no decision had yet been made over the quantum of UK involvement and for how long. This may be contrasted with the Foreign Secretary's October and November statements that the UK did not wish to prevent the EU27 from participating in agreements in which the UK had no interest itself in participating.

 

The European Scrutiny Committee marked Sir Alan Duncan's letter and corresponding agreements as 'politically important' to have them discussed in the relevant Parliamentary Select Committees of Foreign Affairs, Defence and Exiting the EU.

 

Meanwhile, the EU Commission will know it may now employ all of the UK’s recent set of agreements in defence as a bargaining chip, a threat, a delaying tactic and a deepening ‘binding agent’ to EU membership. It is conceivable that EU officials will cite the example of UK defence companies who have the promise of European Defence Fund money as a means of influencing or undermining perceptions among UK observers or negotiators in the realm of defence.

 

Finally, an answer we received from the MOD (19 May 2016) said that the British government had not ruled out joining PESCO in spite of its control by EU Council and CSDP:

“Decisions on UK engagement with CSDP after we leave the EU, including with initiatives such as PESCO, will be part of the wider negotiations.”

 

A UK Rep spokesperson had earlier (18 May 2016) told us the UK might participate in the EU Battlegroups after Brexit, which is also controlled by the EU and CSDP.

By David Banks, Veterans for Britain

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EU security and counter-terrorism control after Brexit

Dominic Grieve, the Conservative Chairman of the Commons Intelligence and Security Committee, argues that the UK must retain membership of the EU’s law enforcement agency (Europol) after Brexit, even if this means “accepting EU rules and judicial oversight for the European Court of Justice (ECJ).” This is not real Brexit and nor will it make us safer, in fact quite the reverse.

5th June 2017
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Security is the new defining issue of both British and European politics. Even the United States is concerned that Europe’s problem is a danger for us all. It will also form the key issue in the Article 50 Brexit negotiations, or at least so the Government hopes. According to The Daily Telegraph, the Cabinet meeting of 7th March 2017, which approved the strategy for PM Theresa May’s opening gambit in her soon to be sent Article 50 letter mentioned security no less than 11 times.

 

This was seen as using ‘blackmail’ and ‘threats’ and taking advantage of the fear of Russia. The governments thinking is that security is the ‘defining issue for the EU.’ And that the government believes that this issue gives Britain a ‘very strong hand’ in its forthcoming negotiations with Brussels.[i] It is surprising that a Conservative Government would see benefits in the fact that the EU’s eastern frontier is unstable and, in the view of some, vulnerable to Russian aggression.

 

Theresa May has not been alone in taking a robust approach to the EU and playing the security card. The Home Secretary, Amber Rudd, has said that the UK could stop co-operation with Europol. Perhaps the British government may even come out of the European Arrest Warrant… but that may be too much to hope for.

 

The flip side of the Government’s perceived threats not to participate in security measurers, if no trade deal is forthcoming, is that if the EU does acquiesce to Britain’s demands then the UK will support and participate in Brussels ambitions in this area.

 

The benefit of the European Arrest Warrant and EU led police, judicial and intelligence cooperation is itself highly questionable. There are other ways with which a post-Brexit UK can still cooperate with other nations, and attempt to keep its citizens safe. Click here to read a recent article which details how this can be achieved.

 

There is a presumption that intelligence and data sharing via the EU is a good thing. This is not necessarily so. Compelling the UK to share information breaches the cardinal rule of intelligence, control over that information. Indeed, the US intelligence agencies drew the ire of the British government after they leaked information on the Manchester terror attack. The BBC reported that police stopped passing America information on the Manchester attack.[ii] Yet, even bigger issues are at stake. The effectiveness of how best to protect people is at stake and the independence of our security services from Brussels.

 

Dominic Grieve, the Conservative Chairman of the Commons Intelligence and Security Committee, argues that the UK must retain Europol membership after Brexit, even if this means “accepting EU rules and judicial oversight for the European Court of Justice (ECJ)”.[iii] In these times, the European Union is being touted by some unformed remainers as an answer to Europe’s terror threat.

 

In the referendum, they warned that Brexit will mean that the UK will be outside of Europol. This would not be a bad scenario as its officers are ‘immune from legal proceedings in respect of acts performed by them in their official capacity’. Yet, the Director of Europol, Rob Wainwright, recently stated that a post-Brexit UK can indeed still cooperate with the EU’s law enforcement agency. So, the arguments used by Remain in the referendum were clearly false. Yet, is the EU and coordination of security the answer to our safety? Some would argue that it has exacerbated the terrorist problem we now face.

 

EU Freedom of Movement was described by Ron Noble, the Head of Interpol, as “like hanging a sign welcoming terrorists to Europe.”[iv] He is not alone in his criticism. Sir Richard Dearlove, the former head of MI6, stated that Brexit is a security gain as it will allow us to have "greater control over immigration from the European Union."[v] Indeed EU Directive 2004/38 stipulates that an immigrants criminal record is not grounds to refuse entry to the UK.

 

Sir Richard’s assessment of EU security agencies is that "...though the UK participates in various European and Brussels-based security bodies, they are of little consequence." Ultimately his assessment is that these bodies have no operational capacity and are mainly forums for the exchange of ideas.

 

Just because these bodies are ineffectual is not the only problem. The even more significant issue is that EU led intelligence will detract from Britain’s participation in global bodies such as the ‘Five Eyes’ Intelligence-sharing partnership.[vi]

 

Another layer of EU bureaucracy taking over intelligence is no substitute for effective national control. Yet this emerging bureaucracy, indeed it has several new tiers, is exactly what Brussels is putting into place. And perhaps even keeping a post-Brexit UK tied into their structure. The EU has created Eurojust, the European Union's Judicial Cooperation Unit, and in 2010, as a part of Europol, they established in 2010 the European Cybercrime Task Force (EUCTF).

 

Charles Michel, the Prime Minister of Belgium has called for “A European CIA (Central Intelligence Agency).” This is just the beginning the European Commissioner for Migration and Home Affairs, Dimitris Avramopoulos, also called for a pan-European spy agency.[vii] The President of the European Commission is also in favour of the EU coordinating member states secret services.[viii]

 

What is not realised by many is that these plans are already underway. The EU Intelligence and Situation Centre (EU INTCEN) came into being in 2011 and is the intelligence body of the European Union. It operates under the European External Action Service (EEAS). Along with the European Union Military Staff (EUMS) which handles military intelligence, EU INTCEN is part of the EU’s Single Intelligence Analysis Capacity (SIAC). These bodies are not effective.

 

Richard Walton, Head of Counter Terrorism Command at New Scotland Yard from 2011-15, is adamant that Britain’s counter-terrorism capability will not be harmed by Brexit.[ix]

 

Sir Richard Dearlove dismissed the relevance of Brussels security bodies such as Europol, stating they were “of little consequence”. In fact, they are worse, as the fear of leaks is ever present. According to Sir Richard Dearlove British information is not shared throughout the EU as its members are potentially a “colander” for intelligence.[x]

 

The EU does not have a great track record on security. The EU’s Focal Point Travellers initiative, which seeks to coordinate investigations into foreign terrorist fighters in Europe from places such as Syria and Iraq only has information on 2,000 suspects which is less than half the foreign fighters known to individual EU member-states security services. And of course, this is just a fraction of both the number of people who have recently arrived in Europe from the middle-east and those homegrown people that sympathise with the jihadis. There is an intelligence black hole at the heart of Europe Union.[xi] Europol’s European Counter Terrorism Centre is not making us any safer.

 

Currently the dead hand of the European Union has been of little benefit tackling the problems that emerge out of places such as Molenbeek, Malmö and the suburbs of Paris, and clearly in the UK as well. Our safety cannot be outsourced to the EU as the likes of Dominic Grieve suggest. Nor is there the need. The UK is an intelligence leader and does not need the control of the European Union. Other states will, and do, want to share intelligence with Britain.

 

Britain’s intelligence services, along with our armed forces, are areas where we have an important resource which the EU is seeking to co-opt. Brussels is not stopping at the EU developing an intelligence arm. It is also building its military capacity, to back up its foreign policy[xii] and no doubt to establish its power at home and abroad. The plans are already underway.[xiii]

 

In the Brexit negations, which start on 19th June, the British Government must stand firm against EU attempts to take a measure of control over our excellent military and intelligence resources, and certainly not offer them up as part as some deep and special arrangement with Brussels. We can cooperate with global bodies and individual nations, but more EU bureaucracy in this important area is an unwelcome distraction.


[i] http://www.telegraph.co.uk/news/2017/04/01/revealed-cabinet-plotted-exploit-eus-defence-fears/

[ii] http://www.bbc.co.uk/news/uk-politics-40040210

[iii] https://www.theguardian.com/politics/2017/may/27/eu-theresa-may-combat-terror-brexit-europol

[iv] https://www.nytimes.com/2015/11/19/opinion/europes-welcome-sign-to-terrorists.html?_r=0

[v] http://uk.reuters.com/article/uk-britain-eu-security-idUKKCN0WQ0NE

[vi] http://www.pbs.org/newshour/rundown/an-exclusive-club-the-five-countries-that-dont-spy-on-each-other/

[vii] http://www.euronews.com/2015/11/30/belgium-s-pm-michel-calls-for-a-european-cia

[viii] http://www.euractiv.com/section/global-europe/news/juncker-warms-to-the-idea-of-an-eu-intelligence-agency/

[ix] https://www.thesun.co.uk/news/3676254/former-counter-terror-chief-says-britains-security-wont-be-harmed-by-brexit-because-of-our-spooks-global-reach/

[x] http://www.telegraph.co.uk/news/2016/03/24/quitting-the-eu-would-help-our-security-former-mi6-chief-suggest/

[xi] http://www.politico.eu/article/europes-intelligence-black-hole-europol-fbi-cia-paris-counter-terrorism/

[xii] http://www.bbc.co.uk/news/world-europe-31796337

[xiii] http://www.consilium.europa.eu/en/infographics/eu-global-strategy/

 

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The deals that may be worse than no deal

How a compromise agreement may keep Britain subject to aspects of the EU.

2nd June 2017
article50withdrawalagreement

Introduction

Here we answer your questions on the Article 50 UK/EU Withdrawal Agreement.

 

- Would it be one big treaty with lots of articles, so one cannot repudiate one article without denouncing the whole treaty?

 

Article 50 of the Treaty on European Union (TEU), which was introduced by the Treaty of Lisbon (and came into effect with the rest of that Treaty on 1st December 2009), provides that the EU and the departing Member State are to enter into an agreement governing withdrawal. However, the Article does not specify very much about the content of the agreement. It is thus possible to conceive of minimalist and maximalist approaches to the content of the agreement. Article 50 TEU states:

 

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

 

The wording of Article 50 refers to ‘taking into account the framework’, this is all it says prescribing the content of the withdrawal agreement. Understood textually, this seems to indicate that the withdrawal agreement should set out or at least reflect a general framework of future relations. This seems to indicate the agreement could tend toward a minimalist approach, setting out certain fundamental features of the future relationship, but not necessarily addressing the detail.

 

The closest precedent in the context of the EU is the secession of Greenland and their subsequent withdrawal in the 1980s from the then European Economic Community (EEC). The resulting agreement between the then EEC (now the EU) and Greenland was quite short, just setting out some basic principles. The EEC/EU later into entered into separate agreements in specific areas with Greenland, mainly to do with fisheries. This practice is consistent with the wording of Article 50 TEU and may well have informed it. 

 

- Or can we have a series of different agreements, perhaps separate treaties on specific areas or a Memorandum of Understanding(s)?

 

As discussed above, this option seems open. A main advantage of this option would be that it could help localise disputes in future between the EU and UK, in case a comprehensive treaty would lead to a situation where a dispute between the UK and EU could be used to cast doubt over the continuing validity of the entire Treaty, which could introduce uncertainty into future UK-EU relations.

 

Any such withdrawal agreement would be subject to the general rules of public international law on treaties. In international law, a dispute about one term or part of a treaty does not generally invalidate or suspend the entire treaty. Normally, in international law, when a State or organisation violates a treaty obligation, the victim state can respond in a proportionate way by suspending its own adherence to relevant obligations (under the law of counter measures and reprisals). There are relatively well established grounds for legitimate repudiation or suspension of the entire treaty, which are quite narrow (they are set out in the Vienna Convention on the Law of Treaties 1969 or ‘VCLT’). However, treaties can provide for this issue by specifying that breach of one provision does not justify repudiation of the entire treaty (see Article 44 of the VCLT). It would be advisable for the UK to specifically deal with this issue in the text of the withdrawal agreement, whether or not the agreement is meant to be comprehensive or just to set a framework for relations between the UK and EU.

 

An important related issue here is the dispute settlement procedure that the withdrawal agreement would adopt. The comments just made in the previous paragraph (about repudiation/suspension and countermeasures/reprisals) relate to the normal or default rules of international law, but the withdrawal agreement could substitute its own dispute settlement procedure (just in the way the EU Treaties establish their own dispute settlement procedures, chiefly by giving a key role to the Court of Justice). If the UK wants to maximise its influence over the future dispute settlement procedure, it should ensure that the Court of Justice of the EU is not given jurisdiction over future disputes about the withdrawal agreement. The agreement between the EU and New Zealand contains the following dispute settlement clause, which could be a model or precedent for the withdrawal agreement:

 

Article 54

Modalities for implementation and dispute settlement

1. The Parties shall take any general or specific measures required to fulfil their obligations under this Agreement.

2. Without prejudice to the procedure described in paragraphs 3 to 8 of this Article, any dispute relating to the interpretation or application of this Agreement shall be resolved exclusively through consultations between the Parties within the Joint Committee. The Parties shall present the relevant information required for a thorough examination of the matter to the Joint Committee, with a view to resolving the dispute.

3. Reaffirming their strong and shared commitment to human rights and non-proliferation, the Parties agree that if either Party considers that the other Party has committed a particularly serious and substantial violation of any of the obligations described in Articles 2(1) and 8(1) as essential elements, which threatens international peace and security so as to require an immediate reaction, it shall immediately notify the other Party of this fact and the appropriate measure (s) it intends to take under this Agreement. The notifying Party shall advise the Joint Committee of the need to hold urgent consultations on the matter.

4. In addition, the particularly serious and substantial violation of the essential elements could serve as grounds for appropriate measures under the common institutional framework as referred to in Article 52(1).

5. The Joint Committee shall be a forum for dialogue and the Parties shall do their utmost to find an amicable solution in the unlikely event that a situation as described in paragraph 3 would arise. Where the Joint Committee is unable to reach a mutually acceptable solution within 15 days from the commencement of consultations, and no later than 30 days from the date of the notification described in paragraph 3, the matter shall be referred for consultations at the ministerial level, which shall be held for a further period of up to 15 days.

6. If no mutually acceptable solution has been found within 15 days from the commencement of consultations at the ministerial level, and no later than 45 days from the date of notification, the notifying Party may decide to take the appropriate measures notified in accordance with paragraph 3. In the Union, the decision to suspend would entail unanimity. In New Zealand, the decision to suspend would be taken by the Government of New Zealand in accordance with its laws and regulations.

 

From the internal perspective of EU law, Article 344 of the Treaty on the Functioning of the European Union might cause a problem. It states that “Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein.” This has bene interpreted extensively by the Court of Justice in its caselaw, and it cannot be excluded that the Court of Justice would decide, irrespective of the text of the future EU-UK withdrawal agreement, that it (i.e. the Court of Justice) should decide any disputes between the EU and UK over the withdrawal agreement. This would be very strained conclusion, but it is certainly possible in light of the overall approach of the Court to legal reasoning. Although the UK would no longer be a Member State at that point, the Court of Justice could not impose its judgment, but it would be a complicating factor for UK-EU relations.

 

- Can this be done via the Withdrawal Agreement which should follow the Article 50 negotiations?

 

It seems it could be done by having a general withdrawal agreement and then separate agreements regarding particular policy areas. 

 

- Or can it be done via the EU itself under its legal personality, or requiring the of all member states national Parliaments, and perhaps even referenda in some EU members?

 

Article 50 TEU sets out the procedure for the withdrawal agreement. If separate agreements were to be adopted in specific policy areas, it would depend on the decision-making procedure in that area of the Treaty. It is up to each Member State to decide how its positon at EU level is to be determined first at national level. Where unanimity amongst the Member States applies in the Council (of Ministers) (which it generally doesn’t since the Treaty of Lisbon), the EU in its decision-making is to a certain extent hostage to the idiosyncrasies of national procedures (e.g. if Belgium required the consent of the Walloon Parliament or one of the other two regional Parliaments).

 

 

Links: 

Database of EU bilateral agreements with other countries:

http://ec.europa.eu/world/agreements/searchByType.do?id=1

 

By Gerard Conway

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Co-operation after Brexit in the spheres of Justice and crime prevention

The UK should not seek full Europol membership or participation in the flawed European Arrest Warrant scheme.

30th May 2017

Introduction

One unavoidable fact about the modern world is that criminal gangs and terrorist groups work across national borders.

 

A concern raised during the EU referendum campaign was that if the UK left the European Union, the UK would not be able to co-operate with other countries and their police forces in these vital areas.

 

In the wake of the recent terrorist attack in Manchester, it has been claimed by figures such as Dominic Grieve, the Tory chair of the Commons intelligence and security committee; that the UK must retain EUROPOL membership after Brexit, even if this means “accepting EU rules and judicial oversight for the European Court of Justice (ECJ)”.[1] While Sir Hugh Orde, former chief constable of the police service of Northern Ireland has stated that:

 

“If we don’t have all this, it makes it a lot more difficult to do this crucial work. It is vital that we get to a situation as close to what we have as members of the EU as possible, though it is difficult to see how we do that.”

 

In this report we will explain how co-operation will indeed continue after Brexit without the need for Europol membership.

 

Key bodies

The UK has a long record of working internationally with other nations in the fields of Justice and Crime prevention; via the relevant global and regional bodies. In addition, the UK works with other NATO members to detect and prevent terrorist activity.[2]

 keybodies

The UK is currently a member of/signatory to:

  • The International Criminal Police Organization (ICPO)/INTERPOL[3]
  • International Criminal Court (ICC or ICCt)/Rome Statute[4]
  • United Nations Office on Drugs and Crime (UNODC)[5]
  • World Customs Organization (WCO)[6]
  • Organization for Security and Co-operation in Europe (OSCE)[7]
  • EUROPOL The European Police Office[8]

 

The UK is also a member of the:

  • Commission on Narcotic Drugs[9] and:
  • The Commission on Crime Prevention and Criminal Justice (CCPCJ)[10], both of which are subsidiary Bodies of the United Nations Economic and Social Council (ECOSOC).

 

Also, the UK is affiliated with the NGO ‘The International Center for the Prevention of Crime’ (ICPC).[11]

 

Finally, the UK participates in The Council of Europe’s Committee of Experts on the Operation of European Conventions on Co-operation in Criminal Matters (PC-OC).[12]

 

Of these bodies, clearly the most important is Interpol. Originally established as the International Criminal Police Commission (ICPC) in 1923 it now has 190 member countries[13] and branches in all corners of the globe.

 

Interpol has huge databases containing millions of criminal records which member states can access 24 hours a day via a system called I-24/7.[14]

 

To quote their website:

“I-24/7 is the network that enables investigators to access INTERPOL's range of criminal databases. Authorized users can search and cross-check data in a matter of seconds, with direct access to databases on suspected criminals or wanted persons, stolen and lost travel documents, stolen motor vehicles, fingerprints, DNA profiles, stolen administrative documents and stolen works of art. I-24/7 is the foundation of information exchange between the world's police.”

 europolmap

 

In addition to all the bodies already mentioned, the UK is also a member of the ‘Five Eyes’ Intelligence-sharing partnership.[15]

 fiveeyes

 

Co-operation between bodies

The bodies we have mentioned already are connected to each other via a bewilderingly complex web of agreements and partnerships.

 

Interpol signed a Memorandum of Understanding with Europol in 2011[16] in order to “establish and maintain co-operation between the Parties in combating serious forms of organised international crime…In particular, this will be achieved through the exchange of operational, strategic, and technical information, the co-ordination of activities”[17]

 

Europol has signed a Co-operation Agreement with the United Nations Office on Drugs and Crime (UNODC) in order “to facilitate co-operation between UNODC and Europol in combating serious forms of crime”[18]

 

Similarly, Europol has also signed a Co-operation Agreement with the WCO.[19]

 

Likewise, Interpol has signed an ‘Arrangement on co-operation’ with the UNODC[20] and has signed various agreements with the International Civil Aviation Organization (ICAO), World Customs Organization (WCO), Organization for the Security and Co-operation in Europe (OSCE) and the American Federal Bureau of Investigation (FBI).[21]

 

OSCE

The Organization for Security and Co-operation in Europe has 57 participating States[22] including all current EU member states[23]. OSCE dedicates much of its efforts into terrorism prevention.

 osce

As the OSCE website states:

 

“The OSCE promotes a co-operative and co-ordinated approach to countering terrorism at all levels, including co-ordination among national authorities, co-operation among states, co-operation with relevant international and regional organizations.”[24]

 

EUROPOL

Amber Rudd, the Home Secretary has said that: “Europol has played an important role in keeping us safe and we will be having discussions about how to continue some form of involvement within the agencies of the EU that help to keep us safe.”[25]

 

This does not necessarily mean however; that the UK should seek to continue as a full member of EUROPOL after Brexit.

 europol

Several non-EU countries have signed agreements with EUROPOL and so the UK could likely do the same. Examples include the USA, Switzerland, Norway and Canada.

 

As the EUROPOL website states:

“In general, there are two types of cooperation agreement that Europol can enter into with states and other entities outside the EU: strategic and operational agreements…both types of agreement are aimed at enhancing cooperation between Europol and the country concerned”[26]

 

At any rate, the importance of Europol is exaggerated. Formed in 1998 it is a relatively young organisation that relies heavily on UK involvement and expertise.

 

According to media reports:

“Britain is the largest contributor to Europol, sending 35,000 messages last year, and the UK leads the way in Europe in clamping down on cross-border child sexual exploitation and money laundering.

 

Around 40 per cent of all Europol cases have some kind of UK involvement.”[27]

 

Conclusions

The EU’s member states are in fact obligated to work with the UK on Transnational Organized Crime as they are signatories to the United Nations Convention Against Transnational Organized Crime (agreed in 2000).[28]

 

[Interestingly, under Article 103 of the UN charter, in the event of a conflict between the obligations of the Members of the United Nations under the Charter (and by implication, UN Conventions and protocols) and their obligations under any other international agreement, their obligations under the UN take greater precedence.]

 

The UK is signed up to the world’s pre-eminent crime fighting organisations already. Given the very real threat of terrorism, the EU will seek a new reciprocal bilateral solution with the UK in order to ensure maximum co-operation.

 

The UK should not seek full Europol membership or participation in the flawed European Arrest Warrant scheme. Instead it should sign a co-operation Agreement with Europol and then either sign a bilateral extradition treaty with the EU or investigate whether we could fall back on the pre-existing European Convention on Extradition (ECE).[29]

 

Co-operation with the EU’s member states on crime and terrorism prevention will continue largely as it does at present – but there may be a small shift in focus and emphasis from co-operating via EUROPOL to co-operating via INTERPOL and the OSCE.

 


[1] https://www.theguardian.com/politics/2017/may/27/eu-theresa-may-combat-terror-brexit-europol

[2] http://www.nato.int/cps/en/natohq/topics_77646.htm

[3] https://www.interpol.int/Member-countries/Europe/United-Kingdom

[4] https://asp.icc-cpi.int/en_menus/asp/states%20parties/western%20european%20and%20other%20states/Pages/united%20kingdom.aspx

[5] https://www.unodc.org/

[6] http://www.wcoomd.org/en/about-us/wco-members/membership.aspx

[7] http://www.osce.org/participating-states

[8] https://www.europol.europa.eu/partners-agreements/member-states/united-kingdom

[9] https://www.unodc.org/unodc/en/commissions/CND/index.html

[10] http://www.unodc.org/unodc/commissions/CCPCJ/

[11] https://www.unodc.org/unodc/en/commissions/CCPCJ/PNI/institutes-ICPC.html

[12] http://www.coe.int/en/web/transnational-criminal-justice-pcoc

[13] https://www.interpol.int/Member-countries/World

[14] https://www.interpol.int/INTERPOL-expertise/Data-exchange/I-24-7

[15] http://www.pbs.org/newshour/rundown/an-exclusive-club-the-five-countries-that-dont-spy-on-each-other/

[16] https://www.europol.europa.eu/newsroom/news/interpol-and-europol-agree-joint-initiatives-to-enhance-global-response-against-transnational-crime

[17] https://www.europol.europa.eu/sites/default/files/documents/agreement_between_Interpol_and_Europol.pdf

[18] https://www.europol.europa.eu/partners-agreements/other-agreements

[19] https://www.europol.europa.eu/partners-agreements/other-agreements

[20] https://www.interpol.int/About-INTERPOL/Legal-materials/International-Cooperation-Agreements

[21] https://www.interpol.int/About-INTERPOL/Legal-materials/International-Cooperation-Agreements/National-Institutions

[22] http://www.osce.org/participating-states

[23] http://www.osce.org/partnerships/european-union

[24] http://www.osce.org/countering-terrorism

[25] http://www.express.co.uk/news/uk/709745/What-is-Europol-Will-UK-sign-up-EU-police-after-Brexit-european-union-leave

[26] https://www.europol.europa.eu/partners-agreements

[27] http://www.express.co.uk/news/uk/775300/Brexit-terror-border-control-security-Europol-Interpol-European-Union-Tim-Loughton

[28] https://www.unodc.org/unodc/treaties/CTOC/#Fulltext

[29] http://www.coe.int/en/web/conventions/full-list/-/conventions/rms/0900001680064587

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Norwegians reject the 'Norway option'

More Norwegians want to see a bilateral comprehensive free trade agreement with the EU replacing Norway's membership of the European Economic Area (EEA) than those who want to hold onto the country's EEA membership according to a new opinion poll. The poll was produced last week by the polling company Sentio for the Norwegian organisation Nei til E...
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Can Brexit be a success?

Reportedly the President of the European Commission, Jean-Claude Juncker, says Britain leaving the European Union cannot be a success. Well, that is quite understandable from the EU's point of view. After all Brussels' idea of a success is not entirely the same as what most Britons have in mind. The most successful outcome of the Brexit talks ahead...
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Scotland, Separation and the Brexit Question

The SNP has abandoned ‘True Independence’ and Sturgeon is forcing Scotland to choose between a more powerful Scotland inside a Federal UK, or a less powerful one inside the EU and most likely the Eurozone.

David Roach

23rd April 2017
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I remember the SNP’s 2015 manifesto commitment very clearly: the more seats they won in Westminster, the more powers they would get back for Scotland. It was not their most original manifesto commitment, but it was consistent with the main theme of Scottish politics for the past few decades: that devolution should bring power closer to the people of Scotland.

 

It is not an idea which most of us who support devolution tend to argue with, nor was it the majority of Scottish voters who, on 7 May 2015, returned 56 SNP candidates out of a possible 59 to the House of Commons.

 

It puzzles me therefore, in this Brexit age, why Nicola Sturgeon was so counterintuitively against the United Kingdom leaving the European Union in the referendum last year, and why she is fighting so hard for Scotland to secure a bespoke deal on membership of the EU’s Single Market.

 

Of course, the First Minister is trying to manufacture a pretext for a second referendum in Scotland. Forget that for a moment: Nicola Sturgeon is playing political games. She has a ‘Party management issue’ following the influx of die-hard nationalists who swelled the SNP’s membership figures after their referendum defeat in 2014. Also, forget (but only for a minute) that since occupying Bute House the SNP has sought to find differences with England wherever there aren’t any; it's all part of the drive towards so called ‘independence’. 

 

I always imagined that the First Minister after a Leave victory would have been “champing at the bit” to empower her own office and Scotland. After all, she has a manifesto commitment to keep… Alas, no.

 

Constitutional observers will have noticed in recent years how the SNP has instead empowered the Scottish Government by centralising almost everything – from policing to planning for wind turbine projects – away from local government and into the hands of Edinburgh. Their attack on localism is an idiosyncrasy I fail to understand given their commitment to bring power “closer to The People”. But equally difficult to understand is the SNP administration’s shunning of the opportune moment that Brexit presents to “grab” yet more power.

 

Perhaps Nicola Sturgeon genuinely believes she can win the second referendum on so-called ‘independence’, despite recent opinion polls consistently showing Scotland would vote to stay part of the United Kingdom. Indeed, the Leader of the Scottish Conservatives Ruth Davidson, in a recent interview in The Daily Telegraph’s Scottish edition, warned the SNP that they would lose a rerun of the 2014 vote by an “even larger margin”.

 

Yet, despite a recent opinion poll by BMG Research showing that only one in four Scots want a second independence referendum before Brexit talks are complete, the Scottish Parliament voted through a request for a Section 30 order from Westminster, giving the Scottish Government the power to hold a legally-binding referendum on so-called ‘independence’ between the Autumn of 2018 and Spring of 2019.

 

Theresa May is adamant that there won’t be a second referendum… at least not until after the Brexit negotiations have been completed, and the United Kingdom has left the European Union… So another referendum could still yet take place at some point in the future.

 

For the sake of this paper, let’s imagine Nicola Sturgeon eventually gets her way, and the UK Government grants the Scottish Parliament’s request for a Section 30 order. What would a second referendum look like?

 

Timing is everything… And so is the question…

Regardless of your views on ‘independence’, it must surely be fair to both sides of the argument, and most importantly to the Scottish people, that voters be able to make their choice at the ballot box based on full knowledge of how Brexit will work.

 

As First Minister Alex Salmond was more or less allowed to dictate the terms of the first referendum on Scottish ‘independence’ which was set out in the Edinburgh Agreement of 2012.

 

I recognise that the Agreement was signed at a time when the SNP had a majority in the Scottish Parliament so it must have been hard for the then Prime Minister David Cameron to reject the Nationalists’ mandate to hold a referendum following the Scottish Parliamentary elections in May 2011. Two crucial things however did disadvantage the Unionist cause.

 

The first was effectively allowing Alex Salmond to hold a two-year referendum campaign which gave him the time he needed to build support for a Yes vote; a calculation which almost paid off.

 

The current occupier of Bute House is presumably pushing so hard for a second referendum now because she hopes to benefit from a similar time advantage. Sturgeon has an enthusiastic base of core supporters left over from three years ago, and she no doubt wants to put them to good use instead of waiting, possibly beyond 2020, for her second bite at the cherry.

 

This time the Nationalist calculation is that a snap poll in the middle of what will of course be challenging Brexit negotiations can exploit apparent ‘uncertainty’ and deliver them victory – before Scotland is ‘dragged out’ of the European Union ‘against her will’.

 

The UK Government’s position is therefore right. It not only takes away the initiative of the SNP to ‘gerrymander’ the timing in their favour, but it also ensures that any second referendum in Scotland is based on fairness and experience of an independent United Kingdom after Brexit.

 

The second crucial thing was the question; ‘Should Scotland be an independent country?’ The very word ‘independence’ has a positive and proactive meaning which handed the argument to the Nationalists.

 

Objectively, few of us would ever choose to be ‘dependent’, and yet as you will read later, it was completely disingenuous for the Yes campaign to argue in the positive that Scotland would have been ‘liberated’ or ‘emancipated’ when ‘true independence’ was never actually on offer.

 

Undoubtedly, the question handed Nationalists the advantage. Voters were given a binary choice between another Nationalist positive, and a Unionist negative: ‘Yes’ and ‘No’. It was a loaded question, which is exposed as such when compared with the process undertaken to compose the question for the EU referendum.

 

After much debate, and representations from all sides, the UK’s Electoral Commission ruled that a simple ‘Yes’ or ‘No’ vote would not be fair, nor indeed suffice, in a complex and multifaceted debate on whether we should ‘remain’ or ‘leave’ the European Union. In the end, they came up with a neutral, unemotional question which handed neither ‘Leave’ nor ‘Remain’ the advantage.

 

And so it must surely be right that if Scotland does hold a second crucial referendum on our constitution, the UK Electoral Commission be handed the responsibility again of writing the question.

 

The situation is now different from that in 2011: the SNP has no mandate to pursue another referendum, nor a majority in Holyrood. This time, Downing Street is just as entitled to have a say on the timing and question as Bute House.

 

The UK Government should make it clear that Scottish voters have a right to experience life in a truly independent United Kingdom, both the pros and cons of life after Brexit.

 

If there is to be a second Scottish referendum, it should only be held two or three years after the United Kingdom has left the European Union. And only then!

 

But whatever decision the Scottish people make in that ballot, the choices before them will be much more nuanced than last time.

 

The choices before the Scottish people

At this point it is important to clarify what the SNP mean by ‘independence’. Cast your mind back to the Scottish Government White Paper in 2014 and you will remember that they proposed a formal currency union with the rest of the United Kingdom in the event of a ‘Yes’ vote.

 

This was soon rejected by the then UK Chancellor George Osborne, forcing the Scottish Government to propose the ‘Sterlingisation’ option which meant unilateral use of the Pound, but with the disadvantage that Scotland would have no control over monetary policy, nor have a Central Bank which could act as a lender of last resort.

 

In short, what the Yes campaign proposed on the ballot paper was separation, with dependency on the impulses of a foreign power Scotland would have spurned.

 

Scotland would have been unable to set interest rates, print money, or devalue. Ceding the fundamental levers of power which shape your economy does not allow you to claim true independence.

 

‘True Independence’, the preferred option of ‘more committed’ Nationalists who make up a significant tranche of the SNP's grassroots, means full fiscal and monetary autonomy; a Scottish currency with its own central bank and interest rate; and the ability to levy taxes and borrow money.

 

A ‘True Independence’ supporter resists membership of global institutions such as the European Union, some even NATO, and demands a Scottish Armed Forces made up of whatever the UK Government agrees to share with Scotland once she has left the Union. For them her own territorial waters, including the much-discussed North Sea oil and fishing, a land border with the UK and her own immigration policy, are an important part of reclaiming Scottish sovereignty.

 

Without EU membership, a ‘truly independent’ Scotland would of course not be part of the EU’s Single Market to which she exports £12.3bn of goods and services, but free from the rulings of the European Court of Justice. Perhaps more crucially in financial terms, she would no longer be a ‘member’ of the UK's ‘Single Market’ where her exports are worth £49.8bn.

 

The path to ‘true independence’ is rocky, and the SNP know this!

 

It is why when a Currency Union and then Sterlingisation was rejected by the UK Government in 2014, they announced that the latter would be a transition currency. But a transition to what? Official SNP policy up until the 2008 Financial Crash had always been for an ‘independent’ Scotland to join the Euro.

 

The SNP has rather bashfully always put great faith in the idea that the best path to ‘freedom’ is to separate Scotland from the UK and join a Federal United States of Europe. Its belief has always been that the rights of its citizens, security and economic future can be protected inside a Federal Europe, but you could be forgiven for not knowing this. It's not a policy they advertise with any great enthusiasm.

 

In fact, since the then First Minister Alex Salmond was forced to drop his much-vaunted idea of an ‘Arc of Prosperity’ (the proposed economic and trading alliance between Ireland, Iceland and Norway), and then subsequently drop formal plans to adopt the Euro, the SNPs silence has been deafening.

 

Before a second referendum takes place in Scotland, the SNP will need to come clean. If ‘True Independence’ is left off the ballot paper again, then they need to be clear what exactly it is they will be asking the Scottish People to vote for.

 

To me the choice they want to offer Scots is becoming more and more apparent:

 

-       Separation from the UK and dependency on the EU

A second Scottish referendum could end up being a hybrid plebiscite, not so much debating ‘independence’, but answering a refined Brexit question. And that is no bad thing for Unionists.

 

Assuming the Scottish Government were successful, and Spain did not veto their membership, re-entering the EU would mean adopting the Euro – taking the SNP back full circle to 2008; a more honest time for manifesto promises.

 

There is no avoiding the fact that Scotland would have formally to adopt the currency. Scotland would be forced to inherit the European Central Bank’s interest rate, and a monetary policy geared towards maintaining the success of the German economy. Much like Greece, Scottish jobs and inflation would be secondary concerns.

 

But all this assumes that Scotland could meet the convergence criteria of a less than 60% debt to GDP ratio, and reducing the deficit to GDP ratio below 3%. Such a feat is likely to take the Scottish Government years. According to the TaxPayers’ Alliance in 2015/16 Scotland had a deficit to GDP ratio of 9.5% – the highest in the EU, twice that of the UK, and even higher than that of Greece. Scotland under the SNP is some way off meeting these targets.

 

If the timetable remains on track, in two years the United Kingdom will leave the Common Fisheries Policy and Common Agricultural Policy, both of which have caused significant damage to Scotland’s fishing and farming communities. It is clear from reading the Scotland Act that competency over rural affairs and fishing, not to mention the environment, business regulation, and transport, rests with the Scottish Parliament.

 

There can be no doubt that powers and responsibilities returning from Brussels in these areas are going straight to Scotland. The UK Government is committed to this aim, and I am encouraged that it is right, and will happen.

 

Having already created the most powerful devolved Parliament in the world, Brexit is going to make the Scottish Parliament even more powerful.

 

It seems extraordinary therefore that a Party which said in its manifesto, and has argued for decades, that it wants more powers for Scotland, is now committed to giving them away. At a time when the SNP could empower the Scottish Parliament, they are preparing the ground for a referendum which would see them giving newly returned powers back to Brussels. It is a bizarre paradox.

 

Make no mistake, ‘independence’ would not be on the ballot paper. A vote for the SNP’s interpretation of ‘independence’ would be a vote to make Scotland less powerful. Scotland would be anything but an ‘independent nation’, but instead a small separated one with hardly any voice inside the EU and Single Market, while losing access to the UK’s Single Market and the trade deals which the UK is seeking to sign with the more prosperous parts of the world.

 

It is why, following the EU referendum in which pro Leave SNP MPs and MSPs were allegedly ‘gagged’, Eurosceptic Nationalists are finding their voice. The SNP’s former Deputy Leader Jim Sillars has said he would not vote for so-called ‘independence’ in a second Scottish referendum if it meant re-joining the EU after Brexit. In a recent interview with The Herald newspaper he said he would abstain and believed many SNP supporters would follow suit:

 

“I do not want to be run by an unelected, self-serving elite… I, for example, could not vote Yes if on the ballot paper it said, ‘We wish the Scottish state to be a member of the European Union’, and I’m not alone in that… One of the biggest miscalculations by Nicola Sturgeon is to believe that the 1.6m Scots who voted Remain would automatically then vote to go back into the European Union… That means Ruth Davidson, the leader of the Tory party, and all the Tories who voted to Remain, would in fact vote to leave the United Kingdom and take a Scottish state into the European Union. I think that’s fantasy.”

 

Jim Sillars is not alone. Survation estimates that 34.9% of surveyed voters who backed the SNP in last year’s Holyrood elections voted to leave the EU in the UK-wide referendum, presenting Sturgeon with a difficult conundrum.

 

As a Leaver, I share Jim Sillars sentiments towards the EU, and as a Unionist I part company with him over ‘independence’. But as someone who fought hard in 2014 to preserve our precious 300-year-old Union I believe the UK Government must do all it can to find a new settlement that Scotland and the Scottish people can be comfortable with; a settlement that has broad support, and longevity.

 

This is where the second option on the ballot paper can play a significant part in answering the Brexit Question.

 

-       Staying in an independent Federal UK

This second option should be an invitation to Scottish voters to empower their Parliament through Brexit. Scotland is a divided country so this invitation needs to be open to both Nationalists and Unionists alike. With 45% of voters demonstrating very clearly in 2014 that they are not content with the status quo, it will be hard in the future to maintain the Union without reforming the way that it works for all its people.

 

The second option needs to say that if it is independence you crave then look no further than the United Kingdom which, having invoked Article 50 on 29th March 2017, is well on the path to regaining hers, and is committed to sharing sovereignty among the family of nations.

 

The UK constitution has undergone dramatic changes in the last twenty years which has seen the creation of devolution in Scotland, Wales and Northern Ireland, and since then further powers devolved.

 

The Scottish Parliament is the most powerful devolved parliament in the world. In financial terms, it is more powerful than most federal states with comparative legislatures, including Germany, the United States and Australia.

 

Brexit presents Scotland with an opportunity to repatriate to existing institutions even more powers over fishing, farming, the environment, business regulations, transport, and the law.

 

Should Scotland choose this second option she would naturally keep Sterling and continue to be part of the decision-making process which sets interest rates and determines money supply.

 

She would be protected by HM Armed Forces, remain a member of the Commonwealth, NATO and have access to the 30 or so trade deals on offer to the UK which amount to roughly 60% of the world’s GDP. She would also continue to benefit from the Barnett Formula.

 

But if Scotland is to benefit from Brexit by staying in the United Kingdom, then others within the family of nations should benefit too by having the same powers and responsibilities.

 

After years of patchwork reform, we have ended up with a constitutional ‘dog’s breakfast’; an unfair and unclear system where the West Lothian Question remains unanswered and political and democratic inequality exists between the nations.

 

In November 2014, the Conservative MP Andrew Rosindell sought to rectify this by introducing a Ten-Minute Rule Bill in the House of Commons to create a federal United Kingdom, with separate parliaments for each of the four nations, leaving the UK Parliament responsible for defence, foreign affairs, national security, and the macroeconomy. Unfortunately, his Bill didn’t make progress.

 

Many nationalists in Scotland however, and not just those who voted Leave, would be attracted by a second option which incorporates this thinking. Federalism would constitutionalise the existing and newly repatriated powers of the Scottish Parliament, and further enhance its role in deciding policies which the governing party believes will directly improve the lives of the Scottish people.

 

The attraction of the second option to those who up until now have identified themselves as ‘Yes’ voters is an obvious one, as a federal constitutional arrangement inside the UK is a more empowering alternative to the emasculating option that separation and EU dependency offers.

 

Brexit and Federalism can save the Union

In a post-Brexit, independent Federal UK, the new beginning a second option offers would address the problem of our politics being far too centralised, and our country being far too divided.

 

Federalism would clearly set out in statute the powers and responsibilities of the Governments of each federal state, be it England, Scotland, Wales or Northern Ireland, and of course the principle of pooling resources across the nations of the UK.

 

There could be no disputes from nationalist governments in the Celtic fringes playing a game of divide and rule with Westminster, and where there might be disputes, these could easily be resolved by The Supreme Court. We would move towards a more harmonious constitutional settlement.

 

Post-Brexit federalism would see off divisive nationalism and set the glue that would bind us together as one People sharing this new unique island at the centre of the world, and which we all call our home.

 

So, before Nicola Sturgeon calls for another referendum on so-called ‘independence’, let the people of Scotland, and indeed all the peoples of the nations of the United Kingdom, first experience a newly reformed federal country outside of the European Union, at least for a significant number of years. Let Scots experience just how great it could be, before the SNP plunge them back into a divisive, dishonest referendum.

 

Like any Conservative, Unionist, or Leaver, I am optimistic about our country’s future; eternally optimistic that our best years are yet to come. And as I weigh up the opportunities that Brexit will bring, I am filled with great optimism that if we combine it with federalism, we won’t just keep our country together, we will have strengthened it for generations to come.

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The truth only Europhiles can tell about the EU

The EU is on the road towards a single state and is already largely there.

30th March 2017
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The European Union is an attempt to unify Europe under one centralised authority in a fundamentally similar fashion as tried for instance by the Roman Empire and Napoleon Bonaparte. The difference is that this time it's being attempted through a different method.

 

This is not a reference to the words of some eurosceptic as someone might assume. Like for instance a supporter of Britain leaving  the EU. This is on the contrary a reference to a speech by former French President Valéry Giscard d'Estaing, the main author of the European Constitution which was later renamed the Lisbon Treaty and is today the EU's supreme legislation.

 

The former French President delivered his speech on 29th May, 2003 in the city of Aachen, Germany while accepting the Charlemagne Prize for his contribution to EU integration. His words were meant to describe the EU's future with the then proposed European Constitution in place:


 

"Our continent has seen successive attempts at unifying it: Caesar, Charlemagne and Napoleon, among others. The aim has been to unify it by force of arms, by the sword. We, for our part, seek to unify it by the pen. Will the pen succeed where the sword has finally failed? In the scales of history, will the feathered quill outweigh the bloodstained blade?"


 

Last year, during the British EU referendum campaign, now Foreign Minister Boris Johnson pointed out pretty much the same thing while interviewed by the Sunday Telegraph. However, unlike in the case of Giscard d'Estaing Johnson's comments were condemned by EU proponents.


 

Johnson said European history had seen repeated attempts to unify the continent under a single authority. People such as Napoleon, Adolf Hitler and others had tried this with tragic results. Now it was being done through a different method. While Giscard d'Estaing did not refer to Hitler directly he clearly did so indirectly with the words "among others". Whether intentional or not.


 

Giscard d'Estaing went on saying he thought this time the unification of the European continent would succeed "because our success today is based on the free choice of the peoples of Europe to organise their common future. We shall have the answer in the months to come."


 

The EU got an answer when the European Constitution was rejected in referendums in France and the Netherlands in 2005. How did Brussels react to that free choice of the French and Dutch peoples? They decided that the voters of other EU members should not be asked and the European Constitution would be re-branded as the Lisbon Treaty and implemented anyway.


 

The main force driving the EU integration has indeed been the centuries old desire to create a single European state. With or without public approval. It's actually quite hard to find an EU leader in the last thirty years or so who hasn't called for a single state in one way or another.


 

This ultimate objective has already largely materialised. While the EU is not yet formally recognised as a single state it can be argued that in many ways the bloc is today more politically centralised than some formal states such as Switzerland. In fact it has been pointed out that in certain areas the Lisbon Treaty entails more centralised authority than the United States Constitution.


 

However, not everyone can obviously point this out in the eyes of EU proponents. This point can be made in order to justify further EU integration but not to criticise it. That, however, doesn't change the fact that the EU is on the road towards a single state and is already largely there.

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Simplifying Brexit: Maintaining third-party trade deals after Brexit

Memorandums of Understanding, or exchange of notes/letters, can form a key part of the necessary transitional arrangements as the UK moves from being an EU member state to an independent nation.

15th March 2017
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In our report What it will look like: How leaving the EU and the Single Market can be made to work for Britain[1] we explained that it should be relatively easy for the UK to maintain interim tariff-free trade with the countries who have signed deals with the EU, after Brexit.

 

‘The very worst case scenario is that the parties, UK and the [third party country] just need to deposit notification with the UN, or just [formally] inform the other parties if it’s not deposited at UN, that the treaties will continue and apply to UK after our secession. In other words, all these trade treaties don’t need to be renegotiated by an independent UK. Trade with other nations around the globe will continue as before.’

 

Back in December 2016, we also wrote that legal ‘devices’ such as MoU’s and ‘exchanges of letters’ could be extremely useful to the UK, the EU and ‘third countries’ during the Brexit process:[2]

 

‘A Memorandum of understanding (MoU) is an established device in public international law; less official that a treaty but more than a gentleman’s agreement. MoU’s can take various forms and can serve wildly different purposes. They can be short and cover one specific issue or be lengthy, covering a range of topics.

 

‘While they lack the legal certainty of treaties, the semi-official nature of MoUs means that one (or several relating to different areas of co-operation) could likely be signed quickly, without extensive consultation, parliamentary chicanery or ratification delays – as opposed to a potentially lengthy Free Trade Agreement (FTA) ratification.

 

‘These interim documents could help avoid a potential ‘cliff edge’ scenario as the 2 year article 50 period draws to a close in 2019.’

 

A recent report by the House of Commons Foreign Affairs Committee confirms much of what we said.[3]

 

In the report, representatives for The Bar Council Brexit Working Group, Professor Derrick Wyatt QC and Hugo Leith stated that: “There are 30+ countries to which the UK exports tariff-free under agreements between the EU and non-EU countries.”

 

But the Bar Council evidence suggests how this trade could be maintained after Brexit:

 

“In the event of an unplanned Brexit, the EEA agreement will cease to provide a basis for tariff-free trade between the UK and those three (EFTA/EEA) countries. It is likely that in the longer term, the UK will conclude a free trade agreement with these three EFTA states, in similar terms to those which it agrees with the EU. In the immediate aftermath of an unplanned Brexit, however, the UK would wish to carry on trade with these countries as if the EEA agreement were still in force.

 

“The UK might achieve this by an exchange of notes, in the international law sense (That is to say, a binding international agreement in the simplified form of an exchange of correspondence containing or incorporating by reference the terms of agreement), with the countries concerned, agreeing to conduct their trade by reference as far as possible to the EEA agreement, as if it were still in force between the parties concerned. This would in effect amount to a transitional arrangement as regards the UK and the three countries concerned, to be superseded in due course by a free trade agreement between the UK and the EFTA countries.”

 

They also suggested that when it came to relations between the UK and third countries, the UK and the third countries might wish to “put the arrangement on a sounder legal footing. It might achieve this by agreeing in an exchange of notes (in the international law sense) with country C to continue trade after Brexit on the same terms as before, referring to the agreement in question, and to any clarifications or modifications necessary to ensure continuity of performance of the trade obligations under the treaty. By such means, the UK might avoid WTO trade on the one hand, and putting a wholly new trade agreement in place, on the other, which would take time, and would not be achievable before Brexit.”

 

In short then, there is no need to assume that the UK will lose access to the trade deals that we have taken part in during the period we have been members of the EEC/EC/EU.

 

As the UK Government website states:

 

‘Like a treaty, an MoU can have a variety of names and can also be either in the form of an exchange of notes or a single document. However, the formalities which surround treatymaking do not apply to it and it is not usually published. Confusingly some treaties are called memoranda of understanding.’[4]

 

MoUs, or exchange of notes/letters, can therefore form a key part of the necessary transitional

arrangements as the UK moves from being an EU member state to an independent nation.


[1] https://www.brugesgroup.com/component/content/article/8-papers/1243-what-it-will-look-like-how-leaving-the-eu-and-the-single-market-can-be-made-to-work-for-britain?Itemid=101

[2] https://www.brugesgroup.com/blog/mou-the-key-to-a-smooth-brexit

[3] https://www.publications.parliament.uk/pa/cm201617/cmselect/cmfaff/1077/1077.pdf

[4] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293976/Treaties_and_MoU_Guidance.pdf

 

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A challenge to the TED talks: Brexit is ending the control of outmoded hierarchies

Technology is driving changes that remote bureaucrats have yet to imagine. Brexit is about openness. It’s about people realising their global role and forging new links with counties and other people. The British people, through Brexit have embraced what made this country so dynamic; freedom of information and limited top down control.

13th March 2017
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As reported in the Memo Chris Anderson, Founder of the renowned TED talks series of lectures has criticized Brexit and poured cold water on the possibility of Brexiteers speaking at his events. Stating that TED are pro-globalisation. Clearly he has jumped to the wrong conclusions about Britain’s EU exit and perhaps has globalisation very wrong.

Some cannot distinguish between internationalism, working with others, and the brand of globalization being pushed by supra-national institutions. Organisations like the EU are, in the words of Dr Anthony Coughlan in Tackling the EU Empire, ‘imperial arrangements like the Austro-Hungarian Empire, once known as a “prison-house of nations”, where different countries are ruled by a centralized bureaucracy in a far-away imperial capital.’ That model failed then and will fail again.

Supranationalism, what Chris Anderson must be confusing with Globalisation, is according to Dr Coughlan ‘the opposite of internationalism, which is a benign and progressive concept. Internationalism – from Latin inter, “between” – implies the pre-existence of sovereign Nation States. It refers to relations of co-operation between the States that constitute the international community, but with each controlling and deciding its own domestic and external affairs in accordance with the wishes of its people. Recognition of States based on the right to self-determination of nations and peoples is a basic principle of modern democracy and international law.

‘Supranationalism, in contrast to internationalism, implies a hierarchy, with the supranational level on top. Internationalism implies legal and political equality between the parties. Properly understood, internationalism is opposed to all forms of chauvinism and xenophobia. It implies coexistence among progressive “nationalisms” – that is, broad nationalisms rather than narrow, using the positive rather than the negative sense of that word in English. It implies patriotism and love of country, combined with respect for the many national communities into which humanity is divided and admiration for their varied cultural and other achievements.

‘Internationalism delights in the diversity of nations. Supranationalism seeks to erode national differences, either because they threaten the dominance of a particular ruling power or they make it more difficult for transnational big business to establish a world of homogenized consumers and employees. Supranationalism seeks the erosion of State sovereignty. Internationalism seeks to establish and maintain it.

‘The glory of European civilisation has been the diversity of its national components – in culture, science, political institutions, economic actors, legal systems, education systems, tax codes, fashion. In classical Europe emulation and competition between nations, communities and individuals spurred creativity and innovation.’

Britain always has been global, we are fully with the modern world. We invented modernity and took it around the globe. The British, instinctive believers in free trade, understand this and behind Brexit was a desire to reenter the rest of the world free from the Byzantine grip of a sclerotic EU. Britain tried european union, found it not to our tastes and are now seeking new opportunities over-seas.

The EU, just like the trans-national empires of the past, is not permanent. If any time line is extended long enough the chances of survival become zero. An organism, or organisation for that matter, must adopt or die. In the referendum, the British people rejected the EU’s inflexibility and its failure to adapt.

Top down, rent seeking, institutions are the past. Those holding onto the supranational institutions are desperately trying to support a system that kept the old cartels in power. Technology and the people’s legitimate rights to have a government of their own people will sweep away suprantionalism.

The greatest trend in world politics is the near universal demand for diversity and decentralization of decision making and power. Ever more countries are being born and taking their seat at the United Nations, an international body that has at its very core a respect for the nation state.

Whilst transnational empires will fail and new states will be born, there is also the beginnings of a trend towards not just smaller political units but economic empowerment of individuals. Using technology people are becoming free from the tired cartels that cling to supranational governance. Whilst global value chains are growing, people will no longer have to be passive receivers of the proceeds of growth as if they were in some feudal system. 3D printing is just the start. Indeed, even financial institutions may themselves have to adapt to deal with the challenge from crypto currencies and peer-to-peer investment models.

Top down information flows are the past, by rejecting the hierarchical organisation of the EU, Brexit has shown how we can live the information revolution. In the UK, centralisation is out, we have embraced the new world of horizontal information channels. In this exciting age of technology and easy communications across the globe, it is absurd that our lives were being managed by grey men in their ivory towers in Brussels.

Technology is driving changes that remote bureaucrats have yet to imagine. People are deciding how to live their own lives for themselves. Brexit is about openness. It’s about people realising their global role and forging new links with counties and other people. The UK has re-joined a world we helped to shape. The British people, through Brexit have embraced what made this country so dynamic; freedom of information and limited top down control.

If TED wants to remain relevant then it needs to be open to the new ideas at the heart of Brexit. This may require Chris Anderson to take a leap of faith and be open to the ideas that are driving the most exiting political movement in a generation – Brexit. Chris Anderson needs to look beyond the pseudo-globalisation of political, corporate and market hierarchies attempting to ensnare us in their web, whilst masquerading as enlightened progressives. The TED talks need to embrace the coming Cambrian explosion of devolution, fewer hierarchies, more markets and more information channels.

How we choose to live our lives and interact can no longer be controlled by old structures like the EU. It is not the big that beat the small, it is the fast who beat the slow.

If we can question the old tired structures of supranational governance, which come from the early 20th Century, and break free from it, then Chris Anderson can step up to the plate and listen to what Brexiteers have to say. It may take him out of his comfort zone, but I suspect that he will realise that despite the inevitable bumps on the road we point the way forward.

The French economist, Professor Jean-Jacques Rosa, in the Bruges Group publication, Saying No to the Single Market, summed up what is so wrong with the supranational version of globalization which the EU personifies. His arguments are summarised below. The EU is little more than organisational sclerosis.

The attempt to construct a third superpower by combining the former imperial nations of France, Germany, Italy and possibly even Great Britain was intended to reinforce and consolidate the Western Alliance. But the last quarter of the century saw a sea change in organization, coming from the information and communication technological (ICT) revolution.

The organizational trend underwent a complete reversal from the mid-1970s onward, changing the structure of most hierarchical organisations, and boosting the development of markets everywhere. I claim that the optimal organisation of the public sector and also of private businesses has been revolutionized by an informational tsunami during the past three decades in favour of smaller hierarchies and larger markets. And that is the reason why the old project of centralizing Europe by building an additional level of political organization above that of the nation states is now not only obsolete (the remnant of a former era) but also moving more and more afar from the modern (information era) optimal political organization. For that reason, it is deeply detrimental to growth and economic dynamism.

A problem of Centralisation
The single market itself is another step in that wrong direction, alongside with other centralising policies, whether effective, such as monetary policy (the creation of the euro) or projected, such as a single tax policy intended to suppress tax competition among governments. They all belong to the general category of anti-competition policies.

The single market really means European-wide centralisation of national regulations, a regulatory centralisation that decreases competition and consumer welfare.

It creates huge new rents for centralized European regulators and for business interest groups and oligopolies.

The centralisation of regulation ignores the difference of tastes in various countries. It also ignores the difference in economy conditions, such as the local (national) elasticity of demand, the elasticity of supply, the density of population in various countries, and so on. These factors explain the differences in the demand for environmental regulations from one country to another. Fixing the same standards for the whole of Europe ignores these differences in demands: one size does not fit all and the consumers are less well served. Thus, centralising regulation distorts competition instead of increasing competition.

Interest groups versus consumers
A regulation in fact is a tax plus a subsidy. The question is: is the centralisation of regulation increasing the overall volume of regulation? I say yes of course.

Why? Well take the European Union. The total population of the 28, soon to be 27, countries is about 500 million people. A large enough firm will now have its former lobbying budget available to lobby not 28 regulatory bodies but just one central authority and with greater outcome. It becomes more worthwhile to lobby. So there is an overall increase of the money spent lobbying and of course the regulatory authorities are influenced by the spending of lobbies and that’s what the late Professor and Nobel Prize winner George Stigler showed and called the “capture” of regulators by the regulated firms and their lobbies. The regulatory authorities are not completely independent of the actions and spending of the lobbies. Bureaucrats controlling access to a 500 million people are obviously more actively lobbied than bureaucrats controlling a market of 18.5 million people.

Rent seeking will increase and that’s bad news for consumers. That’s good for some businesses, that is good for the bureaucrats, but it is bad news for consumers. And so, the incentives for forming cartels, the collusion between firms, are much increased. As we know, cartels are good for business and bad for consumers: they result in higher prices and lower quantities.

There is a second important real effect of the centralisation of regulation, it comes from the dilution of democratic control. The formerly hard won national democratic control is reduced through the extension of the voting area and voting population, and that’s exactly what happens in business firms when you dilute the capital by the creation of new shares. You increase the capital and you dilute the power of the former owners (voters or shareholders). The control that these “owners” can exert on managers, that is, in this example, the politicians and bureaucrats, is lowered in the same proportion. Accordingly, the politicians all over the EU are not going to resist the trend towards more centralisation. On the contrary, they receive some personal benefits and increased independence vis-à-vis the electorate by that very diluting process.

My conclusion is that the centralisation of regulation brings about an extension of the size of central bureaucracies and this is the case even more when you consider that existing bureaucracies usually do not disappear when new ones are created.

Look at the European Central Bank. The ECB has been created and is now working in a huge expensive building in Frankfurt. But the French Central Bank still exists, it didn’t decrease its employment or budget and I suppose it’s the same for other national central banks in the Eurozone. So there is a net addition of monetary bureaucracies with the centralisation of monetary regulation and the creation of one more level in the political hierarchy, which results in an increase of the overall size of bureaucratic Europe.

On the business side of that process, the development of lobbies mainly benefits existing established firms because they are the only firms that can create a lobby. “Potential” firms obviously cannot, nor do the new entrants. The extension of lobbying thus favours existing firms. Existing firms are large firms, and the older they are the larger they are. It follows that centralisation of regulation and increased lobbying promote the concentration of business firms and business interests and that’s not really an advantage for consumers either.

This is not good for the creation of new firms and for the general dynamism of the economy. Indeed, it is the source of sclerotic organisation in the EU. It enforces and enhances the rents of large, older business firms and bureaucracies and freezes the hierarchical structure of both industry and political production at a moment when innovation, new small firms, and lighter government are required. It is a recipe for accelerated decline.

Organisational sclerosis
During the first three quarters of the 20th century there was a trend towards centralisation, concentration, increase of the size of hierarchies both public and private (big firms, big states). Industrial organisation economists call it the “fordist” era after the name of the American carmaker that invented the continuous production line, but it was also the era of socialism and centralisation of the state and of the increase of the size of state bureaucracies everywhere, including in the democratic “market economies”.

But from the mid-70s on, a reverse track upset organisational structures everywhere. Big conglomerates disappeared in the following decade, very large and inhomogeneous countries dissolved: the USSR first and then Yugoslavia, Czechoslovakia, while regionalist and secessionist movements multiplied in Spain, Italy, and elsewhere in the world.

Something big happened in the 1970s: that was the dawn of the information era. Suddenly information costs fell vertically because the drastic fall in the cost of storing, processing and communicating information due to the microchip, the computer, and radio transmission of the internet. An economist would say that when the cost of information is going down more information should be used. But a more intensive use of information is going to impact profoundly the structure of organisation of all productions.

When the cost of information goes down dramatically as it did in the 1970s, then the market becomes more efficient than the hierarchies. So hierarchical Europe is to shrink its hierarchies: they should be divided and reduced, and at the same time markets should expand, and that’s what happened in the 1980s, worldwide. It was even more the case in highly centralised economies such as the USSR. They simply went broke because their organisational structure had become uncompetitive and obsolete. They did not take advantage of the sudden fall in the cost of information. They did not realize that a new and abundant resource (information) was available for maximizing growth. Or if they did they weren’t able to change their outdated organisational structure to benefit from the new cheap resource and they lost to information intensive competition from the U.S.

Adam Smith called attention to the invisible hand of the market and the American economist Alfred Chandler explained in a symmetric fashion that the “visible hand” of the big corporation, the existence of large hierarchies, was characteristic of the 20th century businesses. What one could observe today is that since the last quarter of the past century large hierarchies are shrinking: the information era is the era of the “shrinking hand”.

Against this general background what are we doing in Europe? The EU is still extending the public (or political) hierarchies and contracting markets, a directly dysfunctional and unproductive strategy. The relative prices of factors and information tell us that they should be doing the opposite. We live in an extraordinary abundance of information, and the deluge is increasing.

The current European orientation towards increased centralisation is itself increasingly questioned and will be reversed just as in the last part of the 19th century, the previous British trend towards free trade and small hierarchies was replaced by a new trend towards centralisation, including both big firms and big state. I think that current European policies are a legacy of this period (the 20th century) but that they are counterproductive in the new era of the information age. What we need to avoid a growing organisational sclerosis is a radical about face of policy, a great reversal if you like.

A uniform union-wide regulation (and the underlying model of centralisation of everything) is just like the Ford Model T: the choice of the car paint is up to every buyer, provided it’s black. This could be a productive, wealth enhancing, policy in the price context of the past century. But it won’t do today.

With the falling costs of information, centralisation is out, variety is in and centralisation becomes directly unproductive and will lead to failure in a very short term as the information revolution proceeds at an accelerating pace.

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Another nail in the coffin of the Single Market

Last month, an event occurred which got little fanfare, but is likely to have a significant effect on the future of the UK, especially after Brexit. What happened was that the WTO Trade Facilitation Agreement has now entered into force.

10th March 2017

The Single Market

Lord Lamont, the former UK Chancellor of the Exchequer wrote in The Telegraph:wto

‘The single market is open to all advanced economies, in exchange for paying a relatively modest tariff of 3 to 4 per cent, something that evidently does not stop non-EU countries from selling within it.

‘Every developed country has access to the single market. The EU has a relatively low external tariff with the exception of certain goods such as agriculture.’[i]

When taken prima facie, Lord Lamont’s comments are seemingly correct. Only those countries who are essentially rogue states or have violated international agreements don’t have the ability to conduct trade with the EU, and the EU’s external tariffs are fairly low.

But Tariffs are only half of the story.

The problem of tariffs could be easily addressed by the UK signing a goods Free Trade Agreement (FTA) with the EU. Given the high volume of UK- EU 27 trade, this is seemingly a given.

A basic FTA need not take long to complete. The EU’s earlier iteration the European Economic Community (EEC) concluded basic FTAs in the early 70’s that took 6-7 months to agree, sign and come into force.

But the other half of the story relates to non-tariff barriers (NTBs), sometimes called "Non-Tariff Measures (NTMs)". These comprise everything else that can slow down trade or make it more expensive or complex.

The European Commission describes the Single Market as:

‘…one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. The Commission works to remove or reduce barriers to intra-EU trade and prevent the creation of new ones so enterprises can trade freely in the EU and beyond. It applies Treaty rules prohibiting quantitative restrictions on imports and exports (Articles 34 to 36 TFEU ) and manages the notification procedures on technical regulations (2015/1535) and technical barriers to trade.’[ii]

So the Single Market goes beyond tariff reduction, and encompasses far more than just a Free Trade agreement. This is why the ‘remain’ side in the EU referendum campaign were so concerned about the UK leaving the European Union’s Single Market.

‘Remainers’ believe that after Brexit, even if the UK does get a Free Trade Agreement, our importers and exporters will be deluged with red tape, endless forms, checks and other barriers to entry as we will be operating outside the Single Market.

These are valid concerns, but we believe they are largely exaggerated – and here are the reasons why:

wcoThe EU has signed up to the WCO

In July 2007[iii], the EU signed up to the World Customs Organization (WCO) which works to enhance customs co-operation between signatory countries and works to simplify issues such as Rules of Origin (ROO).

From the European Commission’s own press release:

On 30 June 2007, the Council of the World Customs Organization (WCO) decided to accept the request of the European Union to join the WCO as of 1st July 2007. This decision grants to the European Union rights and obligations on an interim basis akin to those enjoyed by WCO Members.

‘The WCO plays an important role in promoting international customs co-operation and addressing new challenges for customs and trade. It is deeply involved in designing and implementing policies worldwide that integrate measures, which help ensure supply chain security, combat counterfeiting, promote trade and development, as well as guarantee efficient collection of customs revenues. Membership of the WCO highlights and confirms the central role and competence of the EU in international discussions on customs issues including customs reform. EU involvement in the WCO will focus on the full spectrum of customs issues, in particular the following broad areas:

  • Nomenclature and classification in the framework of the Harmonised system;
  • Origin of goods;
  • Customs value;
  • Simplification and harmonisation of customs procedures and trade facilitation;
  • Development of supply chain security standards;
  • Development of IPR enforcement standards;
  • Capacity building for customs modernisation and reforms, including in the context of development cooperation;
  • Mutual Administrative Assistance for the prevention, investigation and repression of customs offences.

‘The EU is a contracting party to several WCO Conventions, and contributes to the work of this organisation, including by ensuring presence and coordination with the Member States in defining and representing EU positions in the relevant bodies managing these conventions.’

The UK signed up to the WCO in the 1950’s and is a signatory in its own right, so will be able to address customs issues with the EU via this body after Brexit.

 

Harmonisation with EU rules

The UK’s rules and regulations are already synchronised with EU/EEA (European Economic Area) regulations and standards after decades of membership. This will also be true on the day after Brexit due to the Great Repeal Bill. Hence a strong (if not overwhelming) argument for ‘rules equivalence’ can be made.

 

The WTO Agreement on Rules of Origin (ROO)

This agreement encourages WTO countries (including all EU countries) to have fair and transparent rules pertaining to Rules of Origin:

 wtostructure

These rules state that:

‘Rules of origin shall not themselves create restrictive, distorting, or disruptive effects on international trade.  They shall not pose unduly strict requirements or require the fulfilment of a certain condition not related to manufacturing or processing, as a prerequisite for the determination of the country of origin….rules of origin are administered in a consistent, uniform, impartial and reasonable manner’.[iv]

 

Guidelines in the EU treaties

treatylisbonArticle 8 of the Lisbon Treaty states that:

‘The Union shall 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.’[v]

As the UK will become a new ‘neighbouring country’ after Brexit, the EU is compelled to deal with us according to the Article 8 terms.

 

WTO Technical barriers to trade Agreement

The TBT agreement is key – it means that signatories (again, including the EU) agree to abide by rules about international product and technical standards. From the European Commission’s website:

The TBT notification procedure helps prevent the creation of international technical barriers to trade. It was introduced by the Agreement on Technical Barriers to Trade (the TBT Agreement), a multilateral agreement administered by the World Trade Organisation (WTO). It gives participants advanced knowledge of new technical regulations or conformity assessment procedures envisioned by other countries. The EU’s participation in the TBT Agreement helps businesses in EU countries access markets outside the EU.’

 

 

Aim of the TBT notification procedure

To avoid any potential technical barriers to trade, WTO Members submit national legislation at draft stage to other members of the TBT Agreement. They can then assess the impact on their exports and identify any provisions breaching the Agreement.

While allowing all WTO Members to maintain their right to adopt regulations, the TBT Agreement aims to:

  • prevent the creation of unnecessary and unjustified technical barriers to international trade;
  • prevent the adoption of protectionist measures;
  • encourage global harmonisation and mutual recognition of technical standards;
  • Enhance transparency.[vi]

The commission somewhat downplays the TBT agreement, however. What it actually states is that:

‘Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.

‘Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.

‘Where technical regulations are required and relevant international standards exist or their completion is imminent, Members shall use them, or the relevant parts of them, as a basis for their technical regulations. Members shall give positive consideration to accepting as equivalent technical regulations of other Members, even if these regulations differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations.’[vii]

Since UK regulations and standards will be equivalent to their EU counterparts from day one, and will continue to meet international standards going forward, it will be extremely difficult for the EU to reject UK products sold into the EU market.

 

WTO Trade Facilitation Agreement

The most recent agreement, the WTO Trade Facilitation Agreement (TFA) will further increase trade co-operation.

As the WTO website states:

‘The TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.’[viii]

Perhaps especially important for Northern Ireland post-Brexit, the TFA also states that:

‘Each Member shall ensure that its authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods cooperate with one another and coordinate their activities in order to facilitate trade.

‘Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade.’

The WCO welcomed the ratification of the TFA agreement in their press release of 22 February 2017, in which they wrote:

‘The World Customs Organization (WCO) congratulates the World Trade Organization (WTO) on the entry into force today of the WTO Trade Facilitation Agreement; an agreement that will expedite the movement, release and clearance of goods, including goods in transit, and which sets out measures for effective cooperation between Customs and other authorities, as well as provisions for technical assistance and capacity building in this area.

‘The WCO takes this opportunity to highlight that it will continue to seek improvements throughout the global supply chain to obtain the highest levels of safety, security and integrity, which will enhance trade facilitation for compliant actors. This will ultimately have a positive effect on the relationship between all border agencies and the Private Sector.

‘The entry into force of the Trade Facilitation Agreement (TFA) is an important milestone for the international trade and Customs community, coming about as a result of the fact that it has been ratified by 110 WTO Members, which pushes it above the threshold needed to take effect, namely ratification by two-thirds of the WTO’s 164 Members.’[ix]

 

In conclusion:

  • The volume and UK and EU will likely at least sign a basic goods FTA; meaning tariff-free goods trade will continue.
  • The UK’s rules and regulations are already synchronised with EU regulations and standards. This will also be true on the day after Brexit.
  • The UK and EU are signed up to the WCO, which exists to help simplify and resolve customs issues.
  • The WTO TBT agreement prohibits the EU from banning UK goods that meet international standards.
  • The WTO agreement on Rules of Origin means that the EU will have to ensure rules of origin are administered “in a consistent, uniform, impartial and reasonable manner” when dealing with exports from the UK.
  • The WTO Trade Facilitation agreement means the EU must co-operate with the UK on issues around the “movement, release and clearance of goods”.

When we combine these factors together we see that after Brexit, UK trade with the EU will be very similar after Brexit as before Brexit.

The EU has signed up to many agreements and treaties which in effect reduce the uniqueness of the single market.

Britain can therefore essentially have almost duplicate trade relationship by falling back on these international agreements (if necessary) which would mean that the UK could have the majority of the benefits of Single Market membership, but be free to choose which rules to obey when not exporting to the EU 27 countries or for domestic sale.

The TFA might not then be the final nail in the Single Market coffin (it is still useful to EEA members), but it is one substantial step towards reducing the importance of the Single Market to a post-Brexit UK.


[i] http://www.telegraph.co.uk/news/2016/06/13/not-only-can-britain-can-leave-the-eu-and-have-access-to-the-sin/

[ii] https://ec.europa.eu/growth/single-market_en

[iii] https://ec.europa.eu/taxation_customs/business/international-affairs/international-customs-cooperation-mutual-administrative-assistance-agreements/world-customs-organization_en

[iv] https://www.wto.org/english/docs_e/legal_e/22-roo_e.htm

[v] http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-1-common-provisions/6-article-8.html

[vi] https://ec.europa.eu/growth/single-market/barriers-to-trade/tbt_en

[vii] https://www.wto.org/english/docs_e/legal_e/17-tbt.pdf

[viii] https://www.wto.org/english/tratop_e/tradfa_e/tradfa_introduction_e.htm

[ix] http://www.wcoomd.org/en/media/newsroom/2017/february/wco-welcomes-entry-into-force-of-the-wto-trade-facilitation-agreement.aspx

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Robert Oulds
Thank you for your comment. That was covered first in the Bruges Group paper What it will look Like: https://www.brugesgroup.com/m... Read More
Thursday, 16 March 2017 23:31
Robert Oulds
Earlier we also covered those points here: http://www.brugesgroup.com/blog/trade-issues-which-must-be-solved-by-david-davis-brexit... Read More
Monday, 20 March 2017 10:09
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Norway's Progress Party set to reject EU membership

The Progress Party of Norway seems set to reach a significant milestone at its national congress in May when it comes to the party's policy on the European Union.

8th March 2017
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To this day the Progress Party has in fact not had a policy whether the country should join the EU or not. The party has simply had the policy that the Norwegian people should decide whether to join the bloc or not.

 

However, this seems about to change fundamentally in May. A Progress Party committee, tasked with drafting the party's foreign policy for the national congress, has suggested adopting the policy of rejecting EU membership. Furthermore the committee has also suggested reviewing the EEA Agreement which Norway has been a member of for almost a quarter of a century.

 

The leader of the Progress Party, Siv Jensen, said at a party meeting last Saturday according to the Norwegian daily Nationen that she had voted for Norway to join the EU back in 1994 when the country last voted in a referendum on whether to join the bloc or not and rejected membership. However, she said that should there be a referendum today she would say no.

 

This is also a milestone in the sense that this will be the first time a Norwegian centre-right political party will reject EU membership. The traditional centre-right party in Norway, the Conservative Party (Høyre), is the party most in favour of joining the EU. The fundamental reason for this is quite simple. It has to do with the fact that Norway is in many ways a very socialist country.

 

The centre-right political parties have traditionally considered EU membership as a way to make Norway somewhat less socialist. However, this viewpoint is in fact based on the outdated notion that the EU is simply about economic cooperation and trade. As Jensen recognised in her speech last Saturday that is simply not the reality anymore as others have realised before.

 

The leader of the Progress Party said the EU wasn't about trade and less regulations anymore (when was that?) but more regulations which were furthermore beyond the power of the nation states. The trade and peace project, she said, had become a bureaucratic project. This is of course something which happened a long time ago and has since then moved fast in that direction.

 

Things have developed differently in Iceland. There the traditionally largest political party is the conservative and eurosceptic Independence Party while in Norway the traditionally largest party has been the Labour Party. Unlike in Norway centre-right voters in Iceland believe EU membership would among other things move the country further to the left making it more social democratic.

 

The milestone, which seems about to be reached by the Progress Party, is also important for those who reject EU membership since to this day there has in fact never been any organised opposition to joining the bloc on the centre-right in Norway. The cross-political eurosceptic organisation Nei til EU is almost entirely made up of people on the centre-left of Norwegian politics.

 

Whether the Progress Party actually will alter its policy on the EU or not in May remains to be seen. But even if it doesn't happen this time it is probably just a question of when. The party has to this day referred to the will of the people. For the last twelve years every single opinion poll published in Norway has had a vast majority against EU membership or around 70-80 percent.

 

However, if the Progress Party will adopt a policy rejecting EU membership that will without doubt put much pressure on Høyre as the opposition to joining the bloc is widespread on the Norwegian centre-right just as most everywhere else in the country. Even though Høyre remains in favour of EU membership the majority of the party's voters are not and have not been for a long time. With a new policy the Progress Party would become an alternative for eurosceptic Høyre voters.

 

Hjörtur J. Guðmundsson is an Icelandic historian. He holds a master's degree in international relations with focus on European, defence and security studies. Twitter: @Hjortur_J

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Will the Netherlands be the next domino to fall?

Opinion poll shows Dutch opposition to the EU is strong and can win.

56% = Support Nexit (EFTA + FTA)

Only 44% = Support for EU

26th February 2017
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A new Dutch poll commissioned by the Bruges Group, carried out by www.peil.nl, shows that more Dutch people prefer the alternatives to the European Union than they do EU membership. As the alternatives are already gathering more support than EU membership a concerted campaign in the Netherlands, which could force a referendum[1], will mean Holland voting to leave the EU.

 

The Dutch general election will take place on 15th March and the question of the EU is becoming increasingly important. The Netherlands’ terms of EU membership are already being questioned by an increasing amount of political parties; namely the Centre Democrats (Netherlands)‎, ChristianUnion, Party for Freedom‎, Party for the Animals, Libertarian party, Reformed Political Party, and Socialist Party (Netherlands). Which can make gains. The issues are immigration, who makes law, and size of the Dutch financial contribution.

 

A new party, Forum voor Democratie (FvD)[2], which helped organise the recent Dutch Ukraine referendum is a supporter of exiting the EU and joining the European Free Trade Association:
https://forumvoordemocratie.nl/standpunten/europese-unie

 

Across the continent of Europe and beyond people want to take back control of their lives. A concerted campaign for Nexit, along the lines that we saw in the UK, can overtime, just like it did in Britain, move the Netherlands towards the exit. Britain will welcome our allies, the Dutch people, in a new post-EU Europe.

 

The question asked respondents which of 3 options they preferred, the results are below:

39% = EU

23% = EFTA (European Free Trade Association)

27% = FTA   (Free Trade Agreement)

11% = Don't Know

 

Without Don't Knows

56% = Nexit (EFTA + FTA)

44% = EU

 

1,174 people were polled over 14-15/2/17

 

The results show also (without Don't Knows):

Men 56% Nexit (EFTA +FTA), 44% EU

Women 57% Nexit (EFTA + FTA), 43% EU

 

Also all age groups 25 and over support Nexit options

And all regions prefer Nexit, even in the large cities a majority prefer the alternatives to EU membership.

 

In past referendums in the Netherlands, people have voted for less EU:

61.6% said Nee in 2005 to the EU constitution and 64% voted against the EU-Ukraine Association Agreement in 2016.


[1] Referendums, known in Dutch as volksraadpleging (people's consultation), can with political pressure, as in the UK, be held.

[2] FvD Press contact: Jeroen de Vries

Number: +31 642807493

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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Youth activists talk with leading Brexiteers

Leading businessmen, politicians and academics talk with Paulina Sienniak and Ben Michael about how Brexit will work and what it means.

24th February 2017
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Rt Hon. Peter Lilley MP, Former Secretary of State for Trade and Industry, and Social Security.

Peter Lilley talks to Paulina about the single market.

Johan Eliasch, Co-Founder of Cool Earth and Chairman and CEO of HEAD.

Paulina talks to Johan Eliasch about Brexit.

Morten Dam of Denmark's FolkeBevaegelsen Mod EU (People's Movement against the EU).

Morten Dam discusses the EU.

Richard Tice, businessman and founder of Leave Means Leave, and co-founder of Leave.EU.

Paulina Sienniak speaks with Richard Tice.

Christie Davies, author of the Mirth of Nations, Professor Emeritus University of Reading.

Ben Michael talks to Professor Christie Davies.

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Why Brexit Should Be Accompanied by Irexit (Ireland exit)

Ireland’s political Establishment is only now realising that Brexit really does mean Brexit and that the case for an accompanying Irexit is overwhelming. Irish opinion is likely to move in this direction over the coming two years and UK policy-makers should encourage that.

Dr Anthony Coughlan

22nd February 2017

For forty years from 1973 the Republic was a major recipient of EU money through the Common Agricultural Policy. Since 2014 the Republic has become a net contributor to the EU Budget. In future money from Brussels will be Irish taxpayers’ money recycled. This removes the principal basis of Irish europhilia, official and unofficial.

If Dublin seeks to remain in the EU when the UK leaves it will have to pay more to the EU budget to help compensate for the loss of Britain’s net contribution. A bonus of leaving along with the UK on the other hand is that it would enable the Republic to get its sea-fisheries back - the value of annual fish-catches by foreign boats in Irish waters being a several-times multiple of whatever money Ireland got from the EU over the years.

As regards trade and investment, the Republic sends 61% by value of its goods exports and 66% of its services exports to countries that are outside the continental EU26, mostly English-speaking. The USA is the most important market for its foreign-owned firms and the UK for its indigenous ones. Economically and psychologically it is closer to Boston than Berlin and to Britain than Germany.

ireland1ireland2ireland3

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Robert Oulds
The authors of the report are Irish and live in the Republic. They, along with others, see the advantages of Irexit and reinstatin... Read More
Tuesday, 04 July 2017 16:28
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The UK is stuck in a quagmire over EU Defence Union

EU Defence Union has gathered pace since late 2016 and the UK is deeply involved. Ministers have so far failed to explain why they are agreeing to the plans and how they will regain control.

15th February 2017
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A senior EU Commission official boasted in January that the EU "has done more in defence in the last seven months than in the previous decades".

 

It certainly looks like they have stepped up the pace since the Brexit vote.

 

Two major plans outlining military union were released in November and approved by EU Governments in December, including the UK under advice from Sir Ivan Rogers, who was until January the top UK diplomat in Brussels who was so admired by pro-EU politicians.

 

Anyone who thinks these plans won't affect the UK could be in for a nasty surprise.

 

The plans create a central EU defence budget for the first time, make a grab for defence industries and procurement strategy, they plan for the acquisition of EU assets in space and surveillance, they invite EU member states to conjoin their defence forces permanently under an EU banner, they place obligations on member states’ intelligence services and they assert the "defence autonomy of the EU from NATO".

 

The EU uses typical guile, complexity and sheer volume of words so it's no wonder the media have barely picked up on them - as a journalist, where would you even start? Then there's the complexity of how the EU is turning the plans to reality, which is advancing daily and involves the EU Parliament, think tanks, defence industry and the EU’s deep reach into member states’ defence structures.

 

Veterans for Britain first spotted what was happening when on 15 November 2016 Federica Mogherini presented the first of the plans, known as the Security and Defence Implementation Plan, to a combined EU Council meeting of foreign ministers and defence ministers. The UK, represented by Sir Michael Fallon and Boris Johnson, approved this plan to “avoid playing dog in a manger”, i.e. avoid preventing other countries from participating when the UK had no desire to do so.

 

There are a few immediate problems with this stance.

 

Firstly, agreement places obligations on signatories to be involved – even if the UK has no desire to be involved it will be involved at least for the duration of its remaining membership.

 

Secondly, when we unpick what was said by ministers in the days after the EU Council agreement, we find that Foreign Office minister Sir Alan Duncan had written to MPs saying that the UK had signed not because it didn’t want to be involved, but because it might want to be involved – a clear contradiction to what Boris had said on the day of the agreement.

 

Thirdly, the agreement has certain repercussions for the UK beyond Brexit in 2019, most notably UK defence industries and control of defence procurement, while other post-Brexit implications in intelligence, military structure, funding and assets are only ‘likely’ to affect the UK, but depend on the UK Government’s desire in 2019 to claw back the control it has just given away.

 

Fourthly, the EU is not considering special exemptions or caveats for the UK. All the talk of a combined EU defence output includes figures which could only include the UK, such as a 100-billion-euro defence industry.

 

When Mogherini’s SDIP was approved by the UK, the defence correspondents of national newspapers had all been conveniently flown to Iraq for a week by Sir Michael Fallon’s MOD, to be embedded with UK forces. Any defence journalists who were still in the country on 15 November might have been forgiven for thinking that SDIP hadn’t been approved by the UK at all. At Veterans for Britain, we weren’t sure so we phoned the EU Council’s staff to find out. They told us that Sir Michael Fallon and Boris Johnson had indeed subscribed to the plan because they had offered no objection to the joint conclusions that the UK representative Sir Ivan Rogers had co-authored with his counterparts. In EU Council contexts, joint conclusions by member states in support of a document constitute agreement.

 

It’s useful to look at some of the details of Ms Mogherini’s SDIP. It calls for EU member states to enter ‘Permanent Structured Cooperation’ in defence (PESCO), an idea which has been lurking in the Lisbon Treaty and is described by its EU federalist architects as “the foundation for an integrated EU Armed Forces”. SDIP also calls on member states’ to propose new ways their intelligence services might correspond with a new central EU intelligence agency known as the Single Intelligence Analysis Capacity (SIAC), and proposes a new focus on the EU’s military intelligence body known as INTCEN.

 

Two weeks after SDIP was announced and approved, the EU Commission released a report, titled the European Defence Action Plan (EDAP), which includes an explanation for how EU officials propose to fund Ms Mogherini’s plans.

 

An EU Defence Fund will divert cash towards joint EU military units and EU defence research. It will be funded by the European Investment Bank, in which the UK is joint top shareholder. The EU Commission will also invite member states to contribute, with the promise that any such payments will not be governed by EU-imposed austerity rules. Apparently a great way for poorer EU nations to divert cash from their own militaries and still meet the NATO 2% requirement.

 

By the way, we know these EU plans sound outlandish to anyone who’s not heard about them before, which is why we at Veterans for Britain always take copies of the EU’s plans into meetings so that politicians and journalists know that we’re not making it up.

 

Mr Juncker’s EDAP describes EU’s push “towards Defence Union” and the creation of a single market for military equipment, which sounds fine until you realise it comes with the imposition of centrally-coordinated defence industry strategy and points to the removal of the member states’ current right to build their own ships and safeguard domestic defence supply.

 

Even more worrying is that Juncker’s EU Defence Fund (starting at five billion euros) will be in a position to offer free money to UK companies who want to participate in EU-led procurement projects, therefore putting a financial incentive on UK defence industries to demand involvement in the EU-controlled ‘defence single market’.

 

Mogherini’s SDIP and Juncker’s EDAP appeared on the agenda of the 12 December EU Council heads of government meeting, as point number 2 under the more generalised topic of ‘Security’.

 

The 28 heads of government including PM Theresa May were asked if they agreed with the previous agreement made by their foreign and defence ministers and Mr Juncker’s EDAP. They all did agree. Once again, there were no complaints, exemptions or caveats for the UK.

 

The UK's approval means it has signed up to at least two years of military integration with the EU and faces an ever bigger task after exit to unravel itself from the EU military equipment market or prevent UK intelligence services’ relationship with the Five Eyes network being compromised by demands to provide information to the EU’s SIAC intelligence service. There has so far been no statement from defence ministers to explain how the UK will extricate itself from EU decision making in two years’ time or whether it will resist potentially far-reaching changes in military structure, procurement, intelligence and funding between 2017 and 2019.

 

These plans had been preceded by three statements which created the mood music around defence union: the Merkel-Hollande-Renzi joint statement on the deck of an Italian aircraft carrier; a Mogherini statement in July on the forthcoming EU Global Strategy; and Juncker’s State of the Union address which alluded to a desire to expand the EU’s role in defence.

 

The EU Commission’s activity since SDIP and EDAP reflect their intention for an "unprecedented level of engagement". In January, they appointed administrative teams to implement every strand of the two plans and liaise with military and defence industry counterparts.

 

Ms Mogherini, who simultaneously acts as Vice President of the EU Commission, head of the European Defence Agency and head of the European External Action Service (the EU’s ‘foreign ministry’) is expected to announce the first EU member states participating Permanent Structured Cooperation (PESCO) on 25 March, the 60th anniversary of the 1957 Treaty of Rome which created the European Community.

 

At the end of January, the EU Parliament carried out a flanking operation in support of PESCO in which MEPs called on their national parliaments to be involved. In the same breath they went several steps further, calling for the ‘technically-intergovernmental’ European Defence Agency and the forthcoming PESCO to be annexed under the EU Commission’s remit. They also called for the EU Battlegroups to be considered part of PESCO, which will be worrying for the UK as British forces have participated four times as a lead nation on a rolling deployment since 2005.

 

What is happening in the UK following SDIP and EDAP? The EU has named two ‘hubs’ in the UK as part of the EU Network of Defence-Related Regions (ENDR) and one of them ‘Marine South East’ will specialise in ‘dual use’ robotics and maritime technology. Marine South East has been paid by the EU Commission to host an event in April featuring EU Commission, MOD and defence industry staff to explore what ‘More Europe in Defence’ will look like.

 

At the same time, pro-EU groups in the UK such as the Centre for European Reform and the (EU Commission-funded) Royal United Services Institute are going into overdrive either promoting the case for Defence Union or running down the UK’s prospects in defence autonomy.

 

Meanwhile, MPs will eventually hear a snapshot of what is contained in the EU’s military union plans when they are discussed by the Foreign Affairs Committee, Defence Select Committee and Exiting the EU Committee in the weeks ahead. They will have this opportunity because Sir Alan Duncan’s aforementioned note was escalated and marked as ‘politically important’ by Sir Bill Cash’s European Scrutiny Committee.

By David Banks, Veterans for Britain

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A Global Education System

How the UK should reorganise its university and research programmes

Robert Yee

9th February 2017

The UK has the ability to leverage current networks, continue to fund its current research programmes, and expand funding for scientific innovations. Going forward, the country will have to restructure its funding and knowledge-transfer programmes with its EU allies, and maintain an open environment with visas for people working on high-impact research projects. Furthermore, and almost simultaneously, the UK will need to look to partners in the US and the rest of the world for new programmes as well. Thus, a three-pronged approached is necessary for the UK for the future:

1. Encourage study at UK universities for both EU and non-EU countries

2. Promote international collaboration and innovative research ideas

3. Provide funding and financial aid to programs covered in #1 and #2

The government should support universities and research projects and prove that the country is willing and able to become a key powerhouse of academic prowess for the twenty-first century.

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Brexit and the Supreme Court

The Supreme Court has no jurisdiction in preventing the Prime Minister from invoking Article 50 to leave to EU. Its ruling is wrong. Jurisdiction was passed to the People, who have primary authority, by Parliament.

25th January 2017
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One must now wonder whether in his memoirs Lord Neuberger, President of the Supreme Court will say, of the unintended consequences of the Court’s Brexit decision, “Of course, the People had made a valid decision to leave the EU but at the time it seemed the right thing to send it back to Parliament.”

 

We are now ruled not by law but by legalisms.

 

Lord Neuberger and those Justices who voted with him are wrong.  Parliament is not sovereign.  Parliament is an administrative system for carrying out the will of the People.  In the final analysis, the People are sovereign.  That was established by the French revolution of which the French are justly proud.  In this county, for better or worse, Oliver Cromwell acted for the People at the time of a useless Parliament and an extravagant King.  

 

Similarly, it is the role of the Courts to codify the will of the People.  It was not the Courts that, in their love of justice, forced legislation to give women the vote or to abolish slavery on a protesting People.  If the Supreme Court is to create law as it is said to have done in this instance, it must be in accord with the wishes expressed by the People.

 

Brexit is a matter in which the Courts have no jurisdiction.  The Attorney General should not have stipulated that they had jurisdiction following Parliament’s clear decision to mandate the People to decide the matter.  One can hardly expect such august, learned and powerful men to draw limits to their own powers.  The Courts lost jurisdiction when Parliament handed the Brexit decision to the People and implementation to the Government.   That was what the People were told and that is the position.  David Cameron said publicly that in the event of a referendum vote to leave the EU he would give Article 50 notice the next day.  Clearly, he expressed what Parliament intended and his powers in the matter.   That he resigned rather than give Article 50 notice speaks of his ethics rather than the legal position.

 

Let us be plain about the situation.  The Prime Minister, Theresa May, underestimated the degree of disdain for democracy in this country.  Delay in giving Article 50 notice while combatting the whining, demands and invective of the Remainers permitted time for the rich and influential to devise means to keep a system from which they benefit but the People and the United Kingdom do not.  The Prime Minister is acting with honesty and integrity, with the good of the Country and the People’s wishes in mind.  Unfortunately, honest persons often underestimate the duplicity and unscrupulousness of the rich and powerful who seek only their own interests. 

 

It was always foreseeable with whom the Supreme Court would side.  Its statement that Parliament is sovereign is a smoke screen.  Parliament unequivocally passed an unqualified, simple, majority decision to the People by the 2015 Act and statements by Government Ministers.  All the evidence is that this is so; there is nothing to the contrary.  The Supreme Court has failed to uphold democracy, the consequences of which are not clear, but they will not benefit the country.  The Court has permitted an opening for delay and manoeuvre by those who wish to remain in the EU.  I understand that their Lordships have considered this matter, by intention, without consideration of the possible consequences of their ruling.   I would inform them, unqualified in law as I am, that law is always about consequences.  That is its purpose.   We have the case of the Iraq war as an exhibit.

 

It was clear the day after the referendum result on 23 June 2016 that a situation like this would occur when the Remainers immediately said that the referendum was ‘advisory’.  On 12 July I wrote a letter to the Chairman of the Treasury Select Committee that was considering the referendum result.  Perhaps inevitably it counted for nothing, but it was clear what had to be done.  The position is unchanged.  The Court is wrong.  Here is the letter:

 

*    *    *

 

It is a sad and extraordinary day when one must say that our Supreme Court is wrong.  We are experiencing events indicating that we are living in extreme and unstable times.  We must deal with the times with confidence in our abilities and culture against the trouble-makers and back the Prime Minister in doing so.  There is no-one else remotely capable of doing it.

 

By Christopher King MSc DipM DMS

 

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Robert Oulds
Its also bad law. The ECA 1972 was amended when the Lisbon Treaty was put through Parliament to incorporate Article 50, it was cle... Read More
Thursday, 26 January 2017 22:49
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Independence or incoherence? Why the Scottish government is misleading Scots

Scotland’s former First Minister Alex Salmond and (then) Deputy First Minister Nicola Sturgeon in 2007, at the launch of Choosing Scotland’s Future – a White Paper on a possible independence referendum. Picture by The Scottish Government.

Scottish First Minister Nicola Sturgeon has commented on several occasions in recent weeks on the subject of a second Scottish independence referendum. She first warned that she was not “bluffing” about calling another referendum, should the United Kingdom also leave the European single market. She then ruled out holding such a vote in 2017, effectively holding the threat of it over the British government as it moves ahead with Brexit.

There’s nothing wrong with many in Scotland, as in other European regions like Catalonia, wishing for independence. Indeed, notions of sovereignty, identity, and more representative democracy were all integral to Britain’s vote to leave the European Union (EU). Where such movements lose coherence, however, is in their insistence on remaining in the EU.

Why?

Many, many laws pertaining to the UK, including Scotland, originate in Brussels. Though the exact proportion of British laws stemming from the EU is hotly contested, it is likely quite large, with some estimates ranging up to 62%. What is more important, however, is how significant some of the EU’s competencies are. An “independent” Scotland within the EU would face the same quotas on its fisheries, abide by the same agricultural policy, honour the same trade deals signed devised in Brussels, and have absolutely no control over its borders. Its government also intends to continue using the British pound as its currency. In this sense, the stated intention of being “in the driving seat of [Scotland’s] own destiny and to shape [its] own future” loses its meaning. Without full control over essential areas like borders and monetary policy, a nation is not independent.

Moreover, the EU has always made clear that to secede from a member state is to secede from the Union. As such, Scotland deciding to leave the UK in order to retain its EU membership is not only impossible, but dangerously misleading to Scots.

Beyond the glaring incoherence of the Scottish government’s position, Scots have already decided on the matter of independence, and it is irresponsible for the Scottish government to use the threat of a future referendum as a political shuttlecock. It is common practice to hold referenda once in a generation, especially if their results are as decisive as the last time Scots were consulted, in 2014 (55% in favour of remaining in the UK). Sturgeon’s postponed threat of another Scottish vote depending on how “hard” Brexit ends up being is more of a bargaining chip than a true expression of Scotland’s will. This cynical approach to politics serves no one. Scots wishing to remain in the UK are under constant threat of a second referendum, while Scots wishing for independence are being manipulated for narrow political gains.

The desire for independence is unambiguously good. All willing nations deserve to gain their sovereignty, including most recently the United Kingdom. The Scottish government’s position rejecting Westminster while embracing Brussels does not reflect a genuine yearning for independence. Rather, it smacks of political opportunism. The people of Scotland –both for and against independence– deserve better.

This article first appeared on http://theeurosceptic.com

 

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What it will look like: How leaving the EU and the Single Market can be made to work for Britain

The PM, Theresa May, must focus on eliminating tariffs and clearing the EU's burdensome barriers to trade

17th January 2017

The Bruges Group report What it Will Look Like: How leaving the EU and the Single Market can be made to work for Britain details the potential challenges the UK faces when it leaves the EU. The report also explains how these problems can be addressed by Her Majesty's Government, ahead of Theresa May's planned Brexit speech on Tuesday 17th January 2017.

Only by knowing the potential pitfalls can the Prime Minister hope to mitigate and eliminate the EU’s burdensome trade rules and bureaucracy. The UK can then take advantage of the global opportunities that await us.

Drawing upon decades of research and analysis, this report clearly explains how:

  • There is no such thing as a truly 'Hard Brexit' - but there are significant obstacles.
  • A UK-EU trade agreement, focused on tariff reduction and clearing customs, could take just 18 months to complete.
  • The UK's bargaining position is stronger than many commentators believe.


This report deals with the top ten issues of withdrawal from the EU. It explains that specific, easily reached agreements on the mechanics of trade in both goods and services will not only resolve any problems that may arise when exporting to the EU but such arrangements will also protect and enhance our trade with the EU.

Theresa May needs to address in her EU speech the solutions outlined in this report. Brexit negotiators can draw on the findings of this new Bruges Group study which sets out a bold vision for Brexit and how exiting the EU, and even the single market and the customs union, can be made to work.

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Freedom of Movement and the Cruelty of the Euro

To escape the damage caused by the euro, and the resulting problems of mass migration, Brexit is essential for the UK

9th January 2017
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Summary

 

1.      The euro prevents EU countries with weak economies using currency exchange rates to adjust their competitiveness within and external to the EU.  The EU therefore has a policy of  ‘rebalancing’, or ‘internal devaluation’.  Rebalancing relies on the failure of uncompetitive industries.   The result is unemployment, lower wages and lower prices together with austerity justified by high levels of sovereign debt.  These pressures on the population are intended to force the creation of competitive trading industries and reduce non-trading activities.

 

2.      Regional EU payments are bureaucratically allocated and managed.  They are inadequate, inappropriate and inefficient compared with simple and automatic floating exchange rate adjustments.

 

3.      Freedom of movement theoretically reduces the unemployed population by moving labour to stronger economies that have labour shortages.  This is the reason for its importance to the Euro model.

 

4.      Rebalancing involves severe dislocation and widespread hardship.  The relief of hardship by EU welfare provision is inadequate and counter to the desired pressures to bring about rebalancing.  The EU policy of rebalancing is entirely unethical, repressive and manipulative.  It is a cruel policy reminiscent of Stalin’s forced 1930/40s population transfers.  Moreover, in practice it does not work and therefore nor does the euro. 

 

5.      By contrast, Brexit is ethical and traditional in seeking to develop local economies without dislocation and with whatever support is needed.  It incorporates normal exchange rate adjustments and acceptance of skilled persons of any origin through controlled immigration.  Many who voted for Brexit voted for jobs and standard of living.  The characterization of controlled immigration through Brexit as racist and discriminatory attempts to disguise the cruel nature of EU internal ‘rebalancing’.

*    *    *

Freedom of Movement and the Cruelty of the Euro

 

1.      It is a false accusation that the UK’s wish to control immigration is racist and discriminatory.  That accusation is intended to disguise a vicious and cruel EU policy.  Freedom of movement is asserted by the European Union to be a privilege and great benefit.  That is not true.  Its fundamental purpose and the reason for the EU’s insistence that the UK accepts it as a condition of market access following Brexit is to enforce use of the euro.

 

2.   It is well known that prior to adoption of the Euro the weaker economies of Southern Europe, such as Greece, were able to maintain rough competitiveness with the stronger states such as Germany by currency exchange rate movements.  After adoption of the Euro this was no longer possible, either within the EU or in relation to countries outside the EU.  The IMF, ECB and European Commission therefore adopted a policy of ‘rebalancing’.

 

3.      The rebalancing or ‘internal devaluation’ model assumes that when competitive trading differences arise between countries, the less competitive industries will fail.  There will be unemployment, less demand and a consequent fall in wages and prices.  Austerity is a tool to reinforce this process.  Where these conditions occur, the countries affected must develop more competitive production methods and move resources from non-trading activities to trading production.   Those persons made unemployed by this process or who cannot find work should be able to emigrate to EU countries that are more competitive and where there are labour shortages. This is the reason why freedom of movement is essential to the EU.  It reduces the economic pressures that are desirable for rebalancing. 

 

4.    Unemployment, euphemistically called ‘labour shedding’ is regarded as essential to rebalancing.  The ECB at present purchases company debt to sustain the financial markets since even negative interest rates and money printing have failed to give growth.   The EU regional funds that are given to Greece and Spain for social and economic purposes are inadequate, inappropriate and are inefficiently bureaucratically allocated and managed.  In practice they do not materially reduce the pressures for rebalancing/internal devaluation.  The only large scale assistance offered is more debt, additional to the debt that is a major part of their economic problems in the first instance.

 

5.    The traditional simple and automatic rebalancing of competitiveness by exchange rate movements involves little or no drastic economic reorganization or social disruption.  That is not the case within the Eurozone.  Eurozone rebalancing is driven by closure of industries, unemployment and migration.  The creation of new competitive industries is merely an aspiration.  The notion that competitiveness can be equalized between Greece and Germany, for example, by these means is absurd.

 

6.      The simple unemployment rate does not, of course, reflect the quality of employment taken up by employees from failed industries.  Their first option will be to take whatever employment is avalable, which will probably be at a lower income and living standard.  This is part of the ‘rebalancing’ process.

 

7.      The closure of uncompetitive industries with theoretical development of new competitive industries is euphemistically called ‘structural reform’.  In the real world, uncompetitive industries within the Eurozone definitely close; in competition with Germany and other Northern states, competitive industrial development of the southern EU states definitely does not and can not occur.  This is the source of the present imbalances within the EU.

 

8.      Apparently, the EU rebalancing policy has developed from a United States model.   If so, it is wholly inappropriate.  The United States is homogeneous for language and culture.  Even so, unacceptable within-country imbalances have occurred as they also have in the UK.  It is these that have given rise to the protest votes for Donald Trump and Brexit.  The EU is not homogeneous for language, culture and many other factors.  For these reasons, Europeans are much more attached to their locality of origin than Americans. 

 

9.      In any country, a major rigidity is that the unemployed usually have low skills.  They cannot afford to move or are unwilling to leave an uncomfortable but manageable situation where housing, family and familiar support networks exist and move to another country having a different language where there are great uncertainties.

 

10.  Persons who are skilled and have money will regard freedom of movement as beneficial, for holidays, or retirement for example.  Many of these would wish to relocate for career reasons in any case.  They would be welcomed by receiving countries, as the UK welcomes such persons from any country and would do so following Brexit.  Young persons with qualifications and without family will also emigrate readily, although their loss disadvantages their countries of origin.  It is evident however, that those often older persons who are displaced from failed industries will be least able or willing to emigrate.  This is what can be seen in practice.

 

11.  Adoption of the euro has therefore generated economic imbalances that will not be rectified automatically.  Worse, the rebalancing policy based on the euro has created hardship for millions of people in Southern Europe and the Republic of Ireland.  It is a cruel policy that ignores human welfare and rather than encouraging prosperity, is indifferent to the pain that it causes. 

 

12.  The human cost of the EU’s rebalancing policy, that is driven by industry failure and unemployment, has always been known to the institutions of the EU but they have chosen to ignore it.  The UK’s Brexit is based on positive policies to create employment by assisting existing industries and developing new ones with, of course, exchange rate adjustment of external competitiveness.  Not only is the EU’s rebalancing policy an ethical disgrace, the attempt to disguise its true nature and purpose by labelling those who do not accept it as racists is despicable.

 

13.  Together with these considerations, many EU states have very large public and private debt that will never be repaid.  This requires separate consideration but, briefly, debt permits control by the EU central institutions, particularly the ECB and IMF.  Its most obvious outcome is the sale of state assets, further weakening states that are undergoing ‘rebalancing’ stress.  It is these destructive debts knowingly given by the banks and underwritten by the ECB and IMF that provide the rationale for austerity.  Austerity is intended to reinforce ‘rebalancing’.

 

14.  There may be said to be four broad groups of people affected by Brexit:

 

i.                 People who are aware that they are suffering, or at least are not benefiting, due to EU policies.  They tend to support Brexit because their local industries have vanished and they want jobs and a reasonable living standard.  They are often not well educated and do not understand the technicalities of the Euro or how the EU functions.  Although not articulated in these terms, their views contain implied strategic factors as well as self-interest.  They identify uncontrolled immigration as evidence that the UK no longer controls its own economy and their destiny. This enables pro-EU activists to label them as ignorant, racist or espousing ‘the politics of hate’.

 

ii.            Educated and well-informed persons who understand that the EU is undemocratic, administered by a super-rich elite with dependent politicians, a large dependent bureaucracy and a dysfunctional currency.  They understand that the BIS, ECB and banks generally control the EU.  They might know, for example, that Mario Draghi came from bankers Goldman Sachs, achieved Presidency of the ECB and after his term of office returned to Goldman Sachs.  They might know that Goldman Sachs conspired with Greek politicians to hide Greece’s debts in order to obtain EU entry, so laying the foundation for the present economic misery of the Greek people.  They may view the EU to be on the path to tyranny, which would not be unusual in some EU countries.

 

iii.            Usually middle class persons who support the EU and believe that it is beneficial because their jobs depend on EU trading, are publicly funded or EU funded.  These apparently do not understand how the EU operates or do not care. Their evaluation is based on their immediate interests rather than whether  the EU system is democratically legitimate or benefits the UK. 

 

iv.             The rich and high level executives in international companies, banks, the ECB and IMF who understand the EU.  They will fight to retain the euro because it is they who have designed it in their own interests to make them richer and to give them political control of the EU through its economy.  This group believes in ‘realpolitic’ rather than democracy and will support tyranny as it has in the past.

 

13.  Because it is clear that the existing banks are hostile to Brexit, a priority for Brexit planning must be to organize a banking system independent of the ECB and the existing big banks.  Ideally local mutual units would be best for SMEs with a large central unit for major development and export finance.  The role of the Bank of England needs close examination.  The recent actions of the Royal Bank of Scotland in asset-stripping vulnerable SMEs indicates where the interests of all bankers lie.  It is noteworthy that Richard Branson who cultivates his image as ‘a man of the people’ has recently publicly opposed Brexit and is financing an opposition group.  The EU operates for the very rich.

 

14.  Those who designed the EU’s euro ‘rebalancing’ policy view people as theoretical economic units without human needs, feelings and attachments to family and locality.  Theoretically, it is not desirable to give welfare to because this would lessen the economic pressure that is essential to rebalancing.  In any case, the levels of welfare assistance would be impossibly large for the EU to accept.  This neglect of welfare is to the extent that in Greece large numbers of people are homeless and actually starving and in Spain youth unemployment is 45-50 percent.  ‘Rebalancing’ is not based on a democratic, egalitarian view of society.  It is a policy of repression and manipulation without any ethical content.   For this reason the euro does not work and nor does the EU.

 

15.  The creation of the EU and Euro is a far development from the Common Market that the UK joined.  The Common Market has moved from national directly elected parliamentary democracies to a centralized bureaucracy managed by a political and economic elite.  This elite, most visible in central banks, the ECB and IMF has little if any connection with or responsiveness to the immediate needs of the population.  It is not at all clear that the first priority of the EU is the welfare of its population.

 

16.  Brexit has a democratic and ethical foundation based on centuries of trading, economic development experience and the democratic development of society.  It will be traditionally designed to give benefits with the minimum of dislocation possible, to develop local skills and industries and to welcome skilled workers from all other countries.

 

17.  It is the writer’s view that on present trends, full EU integration based on the euro and supremacy of the banks over the public interest can only be achieved by political repression and a police state, that is, tyranny.  That is a form of government that often occurs in Europe.  The EU and UK parliament have permitted the spying and financial infrastructure of tyranny to be assembled under the guise of fighting terrorism.  The democratic Brexit decision is now being labelled ‘tyranny of the majority’ (John Major) and ‘populism’.  It is a bad sign.

 

By Christopher King MSc DipM DMS

 

Most of the following are discussion papers, not official ECB or IMF papers.

Official IMF report 2015 http://www.imf.org/external/np/pp/eng/2015/110915.pdf

http://voxeu.org/article/rebalancing-eurozone-internal-adjustments-won-t-be-enough )

http://www.imf.org/external/pubs/ft/sdn/2014/sdn1407.pdf

https://www.imf.org/external/pubs/ft/wp/2014/wp14130.pdf

http://www.economonitor.com/blog/2013/11/europe-the-failure-of-internal-devaluation/

 

 

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Will Donald Trump save or kill the Euro?

The EU's single currency, the Euro, is being unbalanced by the strength of the German economy. The undervalued Euro is used by Germany in a beggar-thy-neighbour policy to expand its exports; hurting not just the other members of the Eurozone but also countries further afield, including the United States. If the USA forces Germany to abandon this policy, it will mean Germany leaving the Euro. This will either be the end of the single currency experiment, or its salvation.

4th January 2017

During the election campaign Donald Trump highlighted a structural flaw in the US economy, namely, the country’s huge structural trade deficit, which he claimed is hurting many Americans.  Trump’s message was very simple: if instead of importing products the US exported them there would be more highly paid jobs in the US. Trump claimed that not all of the US’s trading partners are trading fairly with the US.  The implication being that some countries are taking US jobs unfairly.  Angela Merkel was clearly worried about this rhetoric.  Although Trump did not name Germany, she is clearly concerned that Germany will be exposed as having an unfair trading advantage with the US because it is benefitting from an under-valued Euro. 


Although no one would claim that Germany abandoned the Deutschemark in favour of the Euro in 1999 to gain an unfair trading advantage, this is undeniably what has happened.   As can be seen from the following table this has increased Germany’s current account surplus with the rest of the world.


Germany’s exports are now 30-35% cheaper in US dollars than they would have been if the country had retained the Deutschmark. This calculation is based on the assumption that the Deutschmark would have maintained its value against the Swiss franc.  And, it ignores the fact that Switzerland has intervened in the foreign exchange markets from time to time to depress the value of the Swiss franc against the US dollar and other currencies.   The Euro has become a disguised form of protectionism for the German economy, by making its exports cheaper and imports more expensive. Moreover, this is not a problem that is likely to disappear. The longer the Euro exists, at least in its current form, the greater the problem will become.  The question is what, if anything, will the new Trump Administration do about Germany’s unfair trading advantage and its ever growing current account surplus with the US. 


Under the Obama administration, the US enacted the Trade Facilitation and Trade Enforcement Act 2015. One of the purposes of this Act is to identify those countries which are trading unfairly with the US. This Act focusses on individual EU member states rather than on the EU as a single entity.  Title VII focuses on currency manipulation (sections 701-2).  Section 701(a)(2)(A)(ii) seeks to identify any major trading partner of the US that has:

(1) a significant bilateral trade surplus with the US (economies with a bilateral goods surplus of at least $20 billion (roughly 0.1 percent of U.S. GDP) are regarded as having a “significant” surplus);

(2) a material current account surplus (current account surpluses in excess of 3 percent of GDP to be “material”); and

(3) engaged in persistent one‐sided intervention in the foreign exchange market (net purchases of foreign currency, conducted repeatedly, totalling in excess of 2 percent of an economy’s GDP over a period of 12 months to be persistent, one‐sided intervention).[i]


In its October 2016 report, the US Treasury Department identified seven countries as satisfying the first criterion (China, Germany, Japan, Mexico, Korea, Italy and India), four countries as satisfying the second criterion (Germany, Japan, Taiwan and Switzerland) and two countries satisfying the third criterion (Switzerland and Taiwan).

Germany satisfies the first two criteria because it has a bilateral goods surplus with the US of $71.1bn, which represents 9.1% of its GDP, well above the thresholds of $20bn and 3% respectively.   Germany would only fall foul of the third criterion if the ECB sold Euros on a persistent basis in the foreign exchange markets.   Germany would fail to satisfy the third criterion even if the Euro conferred a much greater advantage to the Germany economy than it does today.  This is because the Obama administration has adopted the definition of currency manipulation which is used by the IMF.  This definition predates the formation of the Euro zone.  It assumes that the only way in which a country is able to artificially reduce the value of its currency to gain a trading advantage is by intervening in the foreign exchange markets.  This fails to recognise that another way of achieving the same objective is to join a currency union, such as the Euro. What is important is not how a country achieves an under-valued currency, but rather whether it has one, or not.


Ideally, the IMF would take the lead in addressing the deep seated structural problems of the Euro zone, and the serious threat which the Euro zone will ultimately pose to the global economy. Unfortunately, this is a problem that the IMF is unable to view objectively.  This is because European countries enjoy a disproportionate share of the votes on the IMF’s board.   This is illustrated by the fact that the IMF is currently headed by Christine Lagarde, a former French politician, and the previous ten managing directors of the IMF have all come from EU countries, with many being former politicians.


The new Trump administration, namely, Steven Mnuchin (Treasury Secretary), Wilbur Ross (Commerce Secretary) and Robert Lighthizer (US Trade Representative) cannot expect any help from the IMF in addressing the unfair advantage that Germany has in its trading relations with the US, and other countries. This is most unfortunate because it means that if the US wishes to address this problem it would have to take unilateral action on what would be a politically sensitive subject with an important European ally. However, if the new Trump administration is able to show beyond any reasonable doubt that Germany is benefiting unfairly in its trading relationship with the US from being part of the Euro zone it will have the moral authority to take action.  In such circumstances, Donald Trump is also more than capable of highlighting the shortcomings of the IMF in not addressing this problem.  The question is: what action could a new administration take to address this problem? 


An obvious answer is for the new administration to change the definition in the third criterion of section 701(a)(2)(A)(ii), so that it captures any country that is benefiting from a persistently under-valued currency against the US dollar.  If this change were made Germany would fall foul of all three criteria.  In such circumstances the Act states (section 701(b)(1)(A-D)) that the “President, through the US Treasury Secretary, shall:

(A) urge implementation of policies to address the causes of the undervaluation of its currency, its significant bilateral trade surplus with the United States, and its material current account surplus, including undervaluation and surpluses relating to exchange rate management;

(B) express the concern of the United States with respect to the adverse trade and economic effects of that undervaluation and those surpluses;

(C) advise that country of the ability of the President to take action under subsection (c); and/or

(D) develop a plan with specific actions to address that undervaluation and those surpluses.”


If the US is unable to persuade Germany to take steps to address this problem the President is able to take the following limited action under the Act (section 701(c)(1)(A-D)), and in particular (C) and (D):

(C) instruct the US’s Executive Director of the IMF to call for additional rigorous surveillance of the macroeconomic and exchange rate policies of that country and, as appropriate, formal consultations on findings of currency manipulation, or

(D) instruct the US Trade Representative to take into account, in assessing whether to enter into a regional trade agreement with that country or to initiate negotiations with respect to a regional trade agreement with that country, the extent to which that country has failed to adopt appropriate policies to correct the undervaluation and surpluses described in subsection (b)(1)(A).


As mentioned, the new US administration cannot expect any assistance from the IMF in this matter.  The subject of Germany benefitting from an under-valued currency could be another reason for the Trump administration not signing T-TIP, as to do so would undermine its bargaining position on this subject.  


More generally, if both President Trump and Congress wished to escalate this dispute they could take the ultimate sanction of increasing duties/tariffs on German goods to counter the benefit which this country is receiving from an under-valued currency.  Although the President and Congress do not currently have the requisite authority to take this action they could acquire this authority by passing the necessary legislation.  It has been suggested that the US might target currency manipulation by imposing a countervailing duty. Germany and the EU would no doubt complain to the WTO about the US’s action, but such disputes tend to take a long time to resolve.  Furthermore, there is some ambiguity as to how such a dispute would be settled.


If the Trump administration were to focus on Germany’s unfair trading advantage it is likely to negotiate in a tough, but realistic manner with Germany and the EU.  They know that Germany and the EU are unable to solve the problems associated with the Euro zone overnight.  They will no doubt want Germany to make concrete proposals that will address the problem of the country’s every growing trade surplus with the US.  At present, the IMF is doing Germany’s bidding and only requiring the Club Med countries in the Euro zone to embrace structural reforms.  The US will no doubt want Germany to also make structural reforms, because its current economic policies are supressing domestic demand, which means that its economy is overly dependent on the demand from other countries such as the US.  It can be expected that the US will urge Germany to adopt policies to boost domestic demand.  Initially, Angela Merkel and Wolfgang Schäuble will no doubt resent the interference from the Trump administration into their domestic affairs and will find their proposals deeply unpalatable.  However, on reflection they will hopefully see these proposals as a constructive way of easing the tensions in their trading relations with the US, and also benefitting their EU partners.  Angela Merkel being a pragmatist will appreciate that the Trump Administration could force Germany to leave the Euro.  This could be achieved by either imposing a countervailing duty on German goods or by removing Germany’s most favoured nation status and imposing tariffs on German goods.  Germany would then be faced with a choice of either remaining in the Euro and suffering a duty/tariff on their exports to the US, or leaving the Euro.  In either event, Donald Trump’s intervention on the issue should be welcomed as addressing an unsustainable structural flaw in the global economy.

 


[i] https://www.congress.gov/114/plaws/publ125/PLAW-114publ125.pdf (Trade Facilitation and Trade Enforcement Act 2015)

https://www.treasury.gov/resource-center/international/exchange-rate-policies/Documents/2016-10-14%20(Fall%202016%20FX%20Report)%20FINAL.PDF (Foreign Exchange Policies of the Major Trading Partners of the United States, Report to Congress, US Department of the Treasury Office of International Affairs, October 2016)

 

 

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