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Tel. +44 (0)20 7287 4414
Email. info@brugesgroup.com
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.
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.

Two-Stage Withdrawal

DashedIrishBorderQuestion

Disaster is just around the corner. Payroll problems will prevent us receiving our salaries, banking systems will fail leading to a meltdown in financial markets, hospitals services will collapse and aircraft will fall out of the sky.

Because of a no-deal Brexit? No.This was the original Project Fear, in the late nineties, as the world woke up to the approach of Armageddon when computer clocks were expected to misinterpret the new millennium as the year 1900. The feared 'Millennium Bug'.

But what exactly did happen, worldwide, on 1 January 2000? Well, the US Naval Observatory noted the date on its website as 19100, flight information for small aircraft failed in Japan, ticket-issuing machines on Australian buses failed, the Federal Reserve Bank in Chicago could not transfer tax payments for one day, some customers in the Netherlands were prevented from post-dating their payments, seven nuclear reactors in the USA suffered minor glitches but only in non-threatening support systems, Internet Explorer and Hotmail displayed the year 3900, a customer at New York State Video Rental received a bill for $91,250 for renting a video for one hundred years, 170 people were ordered to attend court in South Korea on 4 January 1900, and US spy satellites transmitted unreadable data for three days ... but this last was caused by a botched fix for the millennium bug, not the bug itself.

Some say this proves that pre-emptive patches to eradicate the bug were hugely successful, others that there never was very much to fix and that tech companies made a great deal of money from exploiting people's unrealistic fears.

So, as the likelihood of a no-deal Brexit increases, perhaps we should all take a deep breath and have confidence that the sky is not going to fall down on top of us on 30 March 2019

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Exit Strategy

As long ago as 2004 I published on the Bruges Group website a paper, Exit Strategy, the first analysis of the practical challenges of leaving the EU. It is still held in the archives.

The opinion I formed then, that the EU has so intertwined itself in our national life that exit must be a two-stage process, has not changed in the following fourteen years. Indeed, it is gratifying that one of the things I proposed in that paper was enacted by Parliament this summer: the temporary transfer of all EU legislation into British law so that transition is smooth and we can repeal unnecessary regulation at our leisure in the years following Brexit.

But for months the Government has been going round and round in ever-decreasing circles, giving away one concession after another for no advantage, at a time when it should be presenting to the EU a simple straightforward plan for our exit, a plan requiring no negotiation. If the EU is allowed to continue to hold the initiative, we will end up in the worst of all possible worlds, subject still to EU law and the integrationist bias of the ECJ while having no influence at all.

More and more, negotiations seem set to produce a dog's dinner, acceptable to nobody: not to Brexiteers, not to Remainers, and not to the DUP. Theresa May has thus achieved a quite extraordinary coup: against all the odds, she has unified all political factions against her plan.

In this situation, two-stage withdrawal suddenly becomes the only sensible option, one that defers economic issues so as to focus on the more important political withdrawal. How does it work?

Two-stage withdrawal recognises that the EU is fundamentally a two-headed beast: there is the political EU, and then there is the economic EU. At its core, the proposal is very simple. On 29 March 2019 we leave the political EU, paying nothing at this stage other than subscriptions to those organisations we wish to continue to be a part of. For the time being, we remain full members of the single market (by virtue of our existing membership of the EEA) and the customs union. In the years that follow, we negotiate a different economic relationship with the EU-27 without the constraint of any looming deadline, and only at the conclusion of those talks do we sweeten the deal with financial support.

Very little is certain about negotiations between the UK and the EU-27. Just one thing. Withholding payment is the only way to focus the mind of the EU on what the UK wants in the way of a future relationship.


The Big Lie

It has been repeatedly claimed that we cannot remain in the economic single market after we leave the political EU. Remainers, and some Leavers, push their agenda by saying that we have only a binary choice: stay in the EU or leave both the EU and the single market. To opt for the Norway solution, they claim, would require rejoining EFTA, which in turn would require the unanimous consent of its four remaining members.

Whether or not it is desirable to adopt the Norway solution, even if only for a few years, is a separate debate, and not one I intend to enter here. The point I make, and have done from 2004, is that, if we choose to, remaining in the single market requires nobody's consent. Joining does; remaining does not. If the Government wishes to pause the trade negotiations and maintain the economic status quo so as to avoid dislocation to business, while still withdrawing from the political EU on 29 March 2019, it may do so unilaterally, without requiring anybody's permission.

The EEA (the single market) is an entity which exists parallel to but distinct from the EU. This is clear because when in 2004 the Central and Eastern European nations joined the EU, there was a flurry of signings of the EEA Agreement quite separate from the accession ceremonies. The existing members of the EU, including the UK, consented to the new nations joining the EEA by countersigning the Agreement as sovereign nations, merely noting their membership of the EU beneath each signature. The EU as an entity did not sign in place of the member states.

The EU and the EEA are also known to be distinct and separate entities, not directly linked or dependent on each other, because of the peculiar status of Croatia. EU accession talks concluded in June 2011. But Croatia did not start EEA accession talks until September 2012. As a result when Croatia joined the EU on 1 July 2013 it was not yet ready to join the EEA, in spite of the fact that all EU members are required to be members of the Single Market via the EEA. So, by special decree of the EU Commission, since May 2014 Croatia has been merely "participating provisionally" in the Single Market while awaiting formal ratification of its joining by the parliaments of all the members of the EEA and others. By June 2017, the EEA Agreement had still been ratified by only 17 of the 32 parties.

The UK is presently a member of the EEA. Because the EEA is separate from the EU, leaving the EU does not of itself remove the UK from the EEA or Single Market. So, if the UK leaves the EU without a deal, the UK can default to pure Single Market membership if it does not wish to go all the way to WTO terms straightaway. For it is accepted that it is possible to continue participating in the Single Market without being a member of the EU, EFTA or EEA because this is the solution the EU Commission has proposed for the microstates, Andorra, Monaco and San Marino. Like Croatia, the UK can declare that it is "participating provisionally" in the Single Market.


Article 28

We hear repeatedly from Michel Barnier, Donald Tusk and others that the four freedoms (movement of goods, services, capital and labour) are immutable. This is completely untrue. The fourth freedom used to be much more restrictive. It was changed in 2004 by the Citizens' Rights Directive. This change shows that nothing in EU legislation is necessarily carved in stone. If the new version of the fourth freedom is too lax, the previous version (Article 28) can be reinstated, if the member states so agree. For in the EU, we find that the four freedoms are only immutable if the proposed change is something disliked by the integrationist EU Commission.

Article 28 is a sensible compromise which returns control of immigration to member states except in the case where a business specifically makes a job offer to an EU citizen. Business gets the flexibility it wants: government gets a means to stop the unemployed drifting over on the off-chance of finding work later.

Article 28 can be found on page 13 here: http://www.efta.int/legal-texts/eea .

1. Freedom of movement for workers shall be secured among EC Member States and EFTA States.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of EC Member States and EFTA States as regards employment, remuneration and other conditions of work and employment.
 
3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of EC Member States and EFTA States for this purpose;
(c) to stay in the territory of an EC Member State or an EFTA State for the purpose of employment in accordance with the provisions governing the employment of nationals oft hat State laid down by law, regulation or administrative action;
(d) to remain in the territory of an EC Member State or an EFTA State after having been employed there.

4. The provisions of this Article shall not apply to employment in the public service.

5. Annex V contains specific provisions on the free movement of workers.

Because of the lax Citizens' Rights Directive, freedom of movement now is commonly referred to as "of people". But, as the first words of Article 28 remind us, it was always intended to be only "of workers", a subtly different thing.

Article 28 defines three significant limitations on the freedom of movement of labour.

First, the freedom is "subject to limitations justified on the grounds of public policy".  Second, and most importantly, the right is "to accept offers of employment actually made", not to merely turn up and hope to find a job after arrival. And third, the freedom "shall not apply to employment in the public service." (though of course it can do if the state so chooses, for example in the NHS).

Together, these three limitations offered very substantial controls on immigration.And note that these controls are over and above the infamous 'emergency brake' that so bedevilled Cameron's negotiations.The 'emergency brake' is found at Article 112 Paragraph 1.

On 7 February 2018 Professor Yarrow confirmed to the Commons Committee on Exiting the European Union that remaining in the EEA (Single Market) via an EFTA-like Association Agreement which replaces the Citizens' Rights Directive with Article 28 of the EFTA-EA Agreement "ticks all the major Leave boxes".

It is my opinion that what the Government should have been doing these past months is lobby member states to reintroduce Article 28 for the whole of the EU. Hungary and Austria would certainly welcome a return to greater national control, and any nation with a growing eurosceptic movement would likely also support the move, seeing an electoral advantage in consigning the Citizens' Rights Directive to the dustbin of history.


Northern Ireland

The border between Northern Ireland and the Republic of Ireland appears to be such an intractable issue only because the negotiators are stuck in a groove, each unable to see beyond Establishment ideas of one-dimensional borders, each unable to think outside the box.

As I pointed out in Borderline Sanity, held in the Bruges Group archives, the solution is to create a two-dimensional border. A two-dimensional border is one where different borderlines mean different things to different people.

Here, it means having three partial borders instead of one unitary border: a second partial border between the Republic of Ireland and the Continent, and a third partial border in the Irish Sea. Between the two outer borders, the island of Ireland becomes a Special Economic Zone.

It works like this:

The existing border between the Irish Republic and Northern Ireland becomes a customs border only for vehicles registered in neither the Irish Republic nor Northern Ireland (thus protecting the spirit of the Good Friday Agreement). Citizens of the Irish Republic, Northern Ireland and Britain on foot or in cars pass freely under the terms of the existing Common Travel Area;

The new border between the Irish Republic and the rest of the European Union is a customs border only for citizens and vehicles registered in Northern Ireland or Britain;

The new border between Northern Ireland and Britain (i.e. in the Irish Sea) is a customs border only for commercial vehicles registered in the Irish Republic. Citizens of the Irish Republic on foot or in cars pass freely under the terms of the existing Common Travel Area.

The critical element of the third paragraph is that the new partial border in the Irish Sea does not affect citizens and businesses in Northern Ireland. For them, it is not a border at all. It is invisible, thus satisfying DUP concerns.

The new Special Economic Zone will allow citizens and businesses based in the Irish Republic and Northern Ireland to ignore the Irish border exactly as at present. The Irish border becomes a hard border only for commercial vehicles from outside the island of Ireland. Tariffs are not applied to intra-island trade (i.e. trade originating and ending in the island of Ireland).

Implementation is straight forward. At or close to the Irish border, the number plates of commercial vehicles registered to businesses (using trusted trader rules) in the Irish Republic and Northern Ireland are used by Automatic Number Plate Recognition (ANPR) cameras to confirm their right to pass freely, in exactly the same way as payment of the London Congestion charge is checked.There are no barriers.Vehicles are not stopped at the border.

Thus the proposal made in Borderline Sanity resolves the Irish issue by separating a conventional border into three strands.It is as if two giant hands have grasped the Irish border and stretched it north and south, to create between the two outer strands not no-man's-land but Irish-land.

What goes on in the island of Ireland is a bilateral issue.The doctrine of subsidiarity should ensure that the EU accepts whatever mutually beneficial agreement the two nations come to (though unfortunately the EU's record on complying with its own doctrine is very poor).The success of the Le Touquet agreement on Calais shows what can be achieved when good will on both sides creates a flexible attitude to a line on the map.

This post is an abridged version of the major points made in Exit Strategy, Emergency Exit, The Art of the Possible, and Borderline Sanity,  For a fuller discussion please retrieve these papers from the archive.

Leaving on WTO terms
Post-Brexit EU control over UK Defence
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