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Alan Dukes responds to my LTE

by Frank Schnittger Wed Oct 19th, 2016 at 01:30:27 AM EST

Alan Dukes, former Leader of Fine Gael, Leader of the opposition and Minister for Agriculture, Finance and Justice has responded to my letter to the editor criticising his original Irish Times article purporting to advise Theresa May on Brexit:
Preparing for realities of Brexit

Sir, - Frank Schnittger(October 17th) raised some objections to my "tongue-in-cheek" advice to Theresa May about Brexit ("Whitehall's Brexit advice to Theresa May", Opinion & Analysis, October 14th).

He is, of course, right to point out that the EU regards the four freedoms as indivisible. I agree with that, but the EU cannot demand that a state which is no longer a member should continue to take the same view. The EU trades with many states that do not attach the same value to the combination of these freedoms. The purpose of the UK's proposed "Great Repeal Bill" is clearly to lay the groundwork for an agreement with the EU on mutual recognition of standards post-Brexit unless and until the UK makes any specific change. It would be extremely difficult for the EU to argue that standards which it accepted up to the point of Brexit would no longer be recognised on the day after. Such recognition would not require the conclusion of a new trade agreement; all it needs is a bit of common sense.

Mr Schnittger casts doubt on the possibility of the UK simply taking over the terms of existing EU agreements with other trading partners. He does not explain why any other country would decide to treat the UK differently in trade matters simply because it had exited the EU. True, the situation in regard to new trade agreements with the UK would be more complex, but consider the CETA agreement with Canada. Conclusion of that agreement between the EU and Canada has (so far) been stymied as a result of its rejection by the regional parliament in Wallonia - EU ratification requires unanimity among the member states, and Belgium cannot now ratify because of the decision in Wallonia.

My guess is that the UK would signal its agreement to CETA post-Brexit. I hardly think that Canada would not welcome such a decision. Australia has signalled that a UK-Australia trade deal would happen post-Brexit. The UK is leading a group of northern European member states in an attempt to moderate the commission's proposals for tough anti-dumping measures against China. That could facilitate a UK-China understanding post-Brexit.

Mr Schnittger correctly points out that I made no mention of passporting rights in the EU and euro zone for UK financial service providers. I did, however, suggest that the City of London might not be without leverage in a negotiation.

The purpose of my "tongue-in-cheek" piece was to point out that there are viable options for the UK, for which we should be prepared. - Yours, etc,

ALAN DUKES


I am glad Alan Dukes has responded because the purpose of his original article was unclear and the content very one-sided, resulting in a risk that many readers would have gotten a very misleading view of the likely outcome of Brexit talks. Everything he says above by way of clarification is arguable, but that does not mean there aren't any counter arguments.  For instance:

  1. "The EU trades with many states that do not attach the same value to the combination of these freedoms". Yes, but the EU doesn't give them access to the Single Market.

  2. The purpose behind "The Great Repeal Bill" - perhaps more accurately termed "the Great Retention Bill" because it seeks to incorporate the vast corpus of EU regulation into domestic UK law post Brexit - may indeed be to "to lay the groundwork for an agreement with the EU on mutual recognition of standards post-Brexit".  But it cannot provide for a situation where either the UK or the EU decides to change a regulation in the future or where either jurisdiction decides to take a very different approach to enforcement. Would the EU necessarily agree to (say) the UK adopting a "light touch regulation" approach to banking regulation or where corporates choose to declare their profits? I don't think so.  Mr. Dukes suggests that it would only be "common sense" for both to agree to future mutual recognition, but that would be to give the UK a virtual blank cheque on how it chooses to interpret and enforce those regulations in the future. As any such enforcement in the UK would be subject to adjudication by the UK supreme Court rather than by the ECJ, the risk of divergence over time is clear.

  3. "He does not explain why any other country would decide to treat the UK differently in trade matters simply because it had exited the EU." Actually I did.  I pointed out that a third country might not be willing to make the same concessions for access to the UK market of c. 60 Million people as it had been forced to make for access to an EU market of 500 million people.

  4. "I did, however, suggest that the City of London might not be without leverage in a negotiation.".  There is no mention of the City or its leverage anywhere in his original article.

There is, however, one point in M. Dukes' response with which I agree.  It may very well be easier for the UK to conclude new trade agreements with third countries, because such agreements will not have to be ratified separately by the remaining 27 member states of the EU. He suggests the UK could make rapid progress on ratifying the CETA agreement with Canada and that by moderating the commission's proposals for tough anti-dumping measures against China the UK could reach an accommodation with China. He also suggests (in his original article) that the UK could be more accommodating to US interests in the TTIP negotiations. But are these concessions supposed to be a good thing? I think it rather underlines my point that the UK, acting alone, will have considerably less bargaining leverage in negotiating trade deals than it had as part of the EU .

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I am thinking of responding to Alan Duke's LTE with another LTE on the lines above. However the Irish Times may not publish another long letter on what, to many people, will seem an increasingly obscure topic. Any advice on responding more succinctly to Mr. Dukes' LTE would be much appreciated.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 19th, 2016 at 01:36:12 AM EST
You are both discussing this as two civilised and rational people. Being that so rare right now it might compel the editor to feed the discussion a while longer.

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Wed Oct 19th, 2016 at 02:11:21 PM EST
[ Parent ]
I see you already wrote your response, so this may matter little now, but if I were you I would focus on the most important/interesting bullet point and stay with it. I think the sprawling nature of the conversation might get it finished by the editor.
by fjallstrom on Wed Oct 19th, 2016 at 03:02:44 PM EST
[ Parent ]
Given that Alan Dukes has named me three times in his response, I think I can claim a right of reply, and therefore get away with a longer response.  I have also broken my response into 4 parts, so the Times could edit my response if they wish. Personally I think this is an important conversation, with Mr. Dukes and I effectively acting as proxies for the UK and EU in the forthcoming negotiations.  However the editor may not see it that way!

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 19th, 2016 at 03:24:21 PM EST
[ Parent ]
I have decided to respond while the iron is hot in the hope that the Irish Times will be more likely to publish a letter which forms part of a current discussion. The text of my response is as follows:
Sir - I am glad Alan Dukes (October 19th) has responded to my letter (October 17th) because the purpose of his original article ("Whitehall's Brexit advice to Theresa May", Opinion & Analysis, October 14th) was unclear and the content very one-sided, resulting in a risk that many readers might have gotten a very misleading view of the likely outcome of the Brexit negotiations.

There are however still some problems with his clarifications:

Firstly he states that "the EU trades with many states that do not attach the same value to the combination of these [four] freedoms". Yes, but the EU doesn't give them customs free access to the Single Market - the achievement of which is the point of his advice.

Secondly he states that purpose behind the "masterly" Great Repeal Bill - perhaps more accurately termed the Great Retention Bill because it seeks to incorporate the vast corpus of EU regulation into domestic UK law post Brexit - is "to lay the groundwork for an agreement with the EU on mutual recognition of standards post-Brexit".

However that Bill does not provide for a situation where either the UK or the EU decides to change a regulation in the future or where either jurisdiction decides to take a very different approach to enforcement. Would the EU necessarily agree to (say) the UK adopting a "light touch regulation" (enforcement)  approach to banking regulation or to transfer pricing which determines where global corporations choose to declare their profits?

I don't think so.

Mr. Dukes suggests that it would only be "common sense" for both to agree to future mutual recognition, but that would be to give the UK a virtual blank cheque on how it chooses to interpret and enforce those regulations in the future. As any such enforcement in the UK would be subject to adjudication by the UK supreme Court rather than by the European Court of Justice, the risk of divergence over time is clear. This is partly why the negotiation of trade deals is so complicated and tends to take many years.

Thirdly he claims that I did not "explain why any other country would decide to treat the UK differently in trade matters simply because it had exited the EU." Actually I did.  I pointed out that a third country might not be willing to make the same concessions for access to the UK market of c. 60 Million people as it had been forced to make for access to an EU market of 500 million people.

Fourthly, Mr. Dukes claims that he "did, however, suggest that the City of London might not be without leverage in a negotiation."  There is no mention of the City or its leverage anywhere in his article.

There is, however, one point in Mr. Dukes' clarifications with which I agree.  It may very well be easier for the UK to conclude new trade agreements with third countries, because such agreements will not have to be ratified separately by the remaining 27 member states of the EU.

He suggests the UK could make rapid progress on ratifying the CETA agreement with Canada and that by moderating the commission's proposals for tough anti-dumping measures against China the UK could reach an accommodation with China. He also suggests (in his original article) that the UK could be more accommodating to US interests in the TTIP negotiations.

But are these concessions on already controversial trade deals supposed to be a good thing? I think they rather reinforce my point that the UK, acting alone, will have considerably less bargaining leverage in negotiating trade deals than it had as part of the EU .



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 19th, 2016 at 09:24:26 AM EST
These proposals or advices regarding an hypothetical over-reaching FTA between the UK and the EU are invariably founded on two assumptions:

a) The UK is to get different conditions to those provided to neighbouring countries already partially integrated in EU trade (Switzerland, Norway, etc).

b) Such an agreement will finished and ratified within the 2 years time frame set by Article 50.

None of these assumptions are realistic, which makes this letter written by Mr. Drakes and many similar pieces published daily in the UK media not much more than wishful thinking.


You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Wed Oct 19th, 2016 at 02:21:36 PM EST
Interestingly, according to the recent Ernst&Young Capital Confidence Barometer (pdf), for the first time in 7 years, UK is not among the top 5 countries attractive to foreign investors...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Thu Oct 20th, 2016 at 02:09:51 PM EST
There's lots of anecdotal stuff of investors pulling out of the UK (despite devaluation) and wanting to set up in Ireland or elsewhere.  Mostly this is at the enquiry or planning stage and won't register in any official statistics for a while.  In the meantime Dublin's chronic lack of top quality office space, living space, transport infrastructure and schools doing international baccalaureate are becoming major issues for public policy.

It's worth noting that in the short term, the UK's near 20% devaluation of sterling is quite advantageous for the UK even it denotes a complete devaluation of the UK's economy and personal wealth relative to the EU - and presages an upturn in inflation and wage costs later on.  The negative impacts of Brexit for the UK will take a longer time to manifest themselves.  Meanwhile Irish mushroom and other agricultural and food exports to the UK are taking a big hit because of narrow margins and one company has gone bust.  

In other words, most of the costs of the Brexit vote have been externalised to date and will only be felt much more gradually in the UK.  In the meantime Irish exporters are being forced to diversify away from the UK and so the adjustment to a hard Brexit has already begun whereas it is only at the planning stage in the UK.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 20th, 2016 at 03:08:15 PM EST
[ Parent ]
Yanis Varoufakis on How to revitalise progressive politics in Brexit Britain.


"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Thu Oct 20th, 2016 at 03:04:37 PM EST
It is interesting to note that those progressives who argued for Grexit are now warning of the huge difficulties of Brexit. But if Brexit poses huge difficulties for a large trading economy with its own currency, how much greater would the difficulties have been for a much smaller economy without a modern industrial base which was also part of the Eurozone.

As for Varoufakis' proposal, he assumes that an "off the shelf" Norway option will be offered to the UK.  It may not be on offer...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 20th, 2016 at 03:19:24 PM EST
[ Parent ]
No way the Norway option is available.  Too much has to be undone with the UK that didn't have to be undone with Norway, and the Norwegian electorate was and is much more accepting of EU regulations than the UK electorate.
by rifek on Thu Oct 20th, 2016 at 04:20:34 PM EST
[ Parent ]
Varoufakis did not want to leave the EU.
Having a parallel currency is not the same as leaving.

Also, the "alternative" of BAU was somewhat more horrific for Greece than for the UK. That was a major the reason for wanting out...

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Oct 20th, 2016 at 04:29:21 PM EST
[ Parent ]
Yes, but many leftist commentators argued that Greece should leave the EU rather than accept continuing austerity as part of the bail-out conditions.  They advocated for both Grexit and default.  I'm just pointing out that the reality of Brexit has brought into sharp focus how difficult such a strategy would have been to implement.


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 20th, 2016 at 10:21:31 PM EST
[ Parent ]
Grexit was used as short-hand both for Greece leaving the Euro and Greece leaving the EU. But I think it was more used for Greece leaving the Euro.

I think Greece getting kicked out of the EU (in real terms, less so in formal terms) because of leaving the Euro was and is still a relevant scenario.

by fjallstrom on Fri Oct 21st, 2016 at 07:34:16 AM EST
[ Parent ]
I don't think any country being kicked out of the EU over leaving the Euro is a relevant scenario. I could see some aspects and advantages of membership being temporarily denied (even if this would be blatantly illegal and criminal). But there is a huge difference between temporary, extralegal spitefulness and full formal severing of ties. The former requires continuous upkeep to maintain the isolation; the latter requires continuous upkeep to avoid widening isolation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Oct 22nd, 2016 at 08:34:32 PM EST
[ Parent ]
As we all said back then - Britain is not Greece.

The Greek economy has a strong export sector that sells real physical things, many of which are sourced internally.

Britain sources very little natively. Most British "manufacturing" is really assembly of parts sourced elsewhere. This also applies to British services, which are effectively endpoints for financial transactions sourced in the EU and the US.

Greece would have been in a much stronger position to leave the EU. A lot of the arguments the Brexiters are making about British trade would make far sense if the UK had the trading features of the Greek economy.

Unfortunately the UK doesn't. It's not an export-driven economy, and it needs to sell services to stay solvent.

If the UK kills off exports and services, it's going to find that sales of jam and scones aren't nearly enough to sustain a global economy.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Oct 21st, 2016 at 12:45:54 PM EST
[ Parent ]
While the UK economy has all the weaknesses you suggest, I'm not sure I would describe the Greek economy as being in a much stronger position to pursue a go-it-alone strategy. I'd have to do a lot more research on the Greek economy to substantiate that point, however, so let's hope it remains moot for the time being.  Suffice to say that extricating yourself from the EU is not a trivial exercise, even when you have your own currency and all the other opt-outs the UK has enjoyed...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Oct 21st, 2016 at 04:50:10 PM EST
[ Parent ]
Is Dukes really that disingenuous?  Does he really believe 1) the UK can get effectively unconditional most favored nation status from the EU, and 2) the UK can both adopt the EU regulatory scheme and rapidly implement bilaterals with third nations?  Wow.  Just wow.
by rifek on Thu Oct 20th, 2016 at 04:17:06 PM EST
Dukes' is just trying to anticipate the arguments the UK will make, with a view to better preparing the EU for a response.

I watched a BBC Newsnight special on Brexit last night, with a hapless John Bruton at the end of a video-link trying to present the EU (and Irish) position to a bunch of Brexiteers.

The level of mutual incomprehension was just incredible.  Lord Lamont kept trying to explain it was in the EU's best interest to give the UK and City special access to the Single market because of their wonderful skills and innovations. The irony of Brexiteers claiming to speak for the EU's best interests seemed totally lost on him.

John Bruton's attempts to explain why the EU wouldn't just roll over were also totally over the Brexiteers' heads.  Cue lots of anger and incomprehension at the EU's procrastination and failure to just see the wonderful British common sense.

The EU is just playing politics as far as the Brexiteers are concerned.  What the hell do they think they are playing at, and do they not realise that the EU IS a political project?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 20th, 2016 at 04:47:05 PM EST
[ Parent ]
I fear that this is a sight we're all going to have to get used to in the next few years. Men born to certain assumptions watcing as all their most cherished delusions crumble into dust.

Sadly, it will all be too late and n awful lot of people are going to have to live with the consequences of their stupidities.

New Statesman - Julia Rampen - Team Remain has finally worked out how to put David Davis on the spot

For weeks, the Tory government has been sketching out a Brexit fantasy, where authoritarian immigration policies can somehow be combined with effortless free trade deals.

In this (some might say dystopian) vision, Britannia rises again thanks to a booming export market of selling naan bread to India, sparkling wine to France, and bottled English countryside air for £80 to gullible shoppers the world over.

Never mind the fact the EU considers freedom of movement a red line in negotiations over access to the single market. Never mind that business investment has slowed, unemployment has risen and the plunging pound means food prices are almost certain to rise. The Brexiteers, unhindered, spoke.



keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 20th, 2016 at 05:35:37 PM EST
[ Parent ]
It's like trying to discuss reality with a Trump supporter.
by rifek on Thu Oct 20th, 2016 at 07:55:38 PM EST
[ Parent ]
Ireland is 'ideal home' for European banking regulator after Brexit
Dublin enters battle to provide home for authority, currently based in London, and for European Medicines Agency
Michael Noonan, the Republic's finance minister, announced that Dublin wanted to be considered an alternative location for the European Banking Authority (EBA), which oversees banks across the EU.

The Irish government also gave formal approval for a proposal to relocate the European Medicines Agency (EMA) to the country.

Irish politicians fear economic disaster could hit the nation, following the 23 June referendum, due to the close links between the Irish and UK economies.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Tue Oct 25th, 2016 at 09:43:12 PM EST
Brexit: Ireland has no agreement with UK on use of Irish ports

"We do not know yet what the British government is actually looking for here,'' he said.

"Is it a hard Brexit exit from the customs' union and the single market and control at their own borders, or is it something else ?''



Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Oct 26th, 2016 at 03:16:00 PM EST
I'm pretty sure that absolutely nobody in Govt had a thought in their heads about Ireland during the whole of the referendum.

Now it's beginning to look even thronier than the Scottish question.

tbh I could have finished that first paragraph after "heads"

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Oct 26th, 2016 at 03:42:09 PM EST
[ Parent ]
thronier? so plety of poisoning and stabbings? sounds about right

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Oct 26th, 2016 at 07:01:14 PM EST
[ Parent ]
thronier relates to Sovereignty, as in should Scotland become independent or should N. Ireland swap UK sovereignty for Irish...:-)

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 26th, 2016 at 11:32:44 PM EST
[ Parent ]
yes, I meant thornier, but thronier does have much better connotations

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 27th, 2016 at 09:42:10 AM EST
[ Parent ]


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