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Brexit by the numbers

by Frank Schnittger Tue Apr 11th, 2017 at 09:21:40 PM EST

The Economist has produced an index which lists all EU member states by their stances on what the Economist claims are the four key issues surrounding the negotiations (h/t Bernard):

Article 50 of the Lisbon Treaty provides that any Brexit agreement has to be passed by qualified majority vote on the European Council as well as by simple majority in the European Parliament. This raises the interesting question as to which EU member state leaders Theresa May must win over if she is to get any agreement. I do the maths below.


Let us assume for the moment that the Economist is broadly correct in its assessment of where each country stands at the moment, and that it has correctly identified the key issues which will determine the final attitude of each member state to an agreement. I, for one, was surprised to see Spain not listed amongst the 7 hard core hard Brexit proponents. If there is much more jingoistic warmongering talk over Gibraltar, I suspect the Economist might soon be moving Spain into the "Hard Core" column.  However we can adjust the maths as the negotiations progress, and as national attitudes become clearer.

The European Council qualified majority voting procedure is defined by Article 238(3)(b) of the Treaty on the Functioning of the European Union as follows:

a) A qualified majority shall be defined as at least 55% of the members of the Council representing the participating Member States, comprising at least 65% of the population of these States.

A blocking minority must include at least the minimum number of Council members representing more than 35% of the population of the participating Member States, plus one member, failing which the qualified majority shall be deemed attained;

(b) By way of derogation from point (a), when the Council does not act on a proposal from the Commission or from the High Representative of the Union for Foreign Affairs and Security Policy, the qualified majority shall be defined as at least 72% of the members of the Council representing Member States comprising at least 65% of the population of these States.

Under both sections (a) and (b) above, therefore, countries representing at least 65% of the population must approve a proposal. In addition, under section (a) at least 55% of member states must approve.  That goes up to 72% if the proposal does not have the support of either the Commission or the High Representative of the Union for Foreign Affairs and Security Policy. Bizarrely, a Commission Press Briefing appears to assume that that would be the case.

Let us stipulate, for the moment, that any putative Brexit agreement would not be put to a Council vote without the support of either the Commission or the High Representative, and so the 55% of members rule would apply. This means that any 13 Member States could form a blocking minority if the 55% is based on the full 28 members, or 12 Member states if it is based on the 27 remaining members.

Article 50 of the Lisbon Treaty continues:

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

Does this mean that the UK is effectively excluded not only from the vote, but from the calculation of what constitutes 55% of the Member States and 65% of the population? The European Council Qualified majority voting calculator makes no reference to this unprecedented situation and bases its calculations on all 28 member states, so I will use that as the basis of the calculations below.

The Economist lists 8 countries as favouring a "soft Brexit" - Cyprus, Denmark, Estonia, Ireland, Latvia, Lithuania, Sweden, Poland - who make up 8 out of 28 = 29% of EU members and 13% of total EU population - much less than the blocking minority of 13 member states or 35% of EU population that is required to block an agreement. They would not therefore be sufficient to prevent the European Council approving a "hard Brexit" agreement.

However the 7 counties identified by the Economist as Hard Core hard Brexit proponents - France, Austria, Belgium, Bulgaria, Germany, Romania, Slovakia - make up 39% of the EU population and could thus block any Brexit deal not to their liking. To get a deal approved by the Council, the UK would have to persuade either Germany or France to approve it, or failing that two or 3 of the smaller countries in this "hard core" list of 7.

A tall order. If Spain or some other country not currently listed in the "hard core" column joined this group, overcoming a blocking minority would become next to impossible. Achieving the required simple majority in the European Parliament should be relatively easy by comparison, although that would depend on the attitude taken by the major political groupings within the parliament, which remains to be seen. Nigel Farage has not exactly been going out of his way to make friends in the European Parliament.

So the bottom line is that the "Hard Core" hard Brexit countries hold an effective veto on whatever Brexit deal might come out of the negotiations. Effectively that means the UK must convince either France or Germany of the merits of the deal, and given that Germany regards itself as the guarantor of the integrity of the EU and Boris Johnson has gone out of his way to antagonise the French, that means any deal has to be seen to be very much in the interests of the EU. That in turn means it has to be very clear to all EU members that the benefits of membership very much outweigh the benefits of leaving.

Perhaps recognising this reality, Theresa May has already been repeating that "No deal is better that a bad deal". Based on these numbers, that is very likely what she will get. The question then becomes "what comes next" after a cliff fall exit. Will the EU seek to apply tariffs on UK exports to recover the budgetary monies it claims it is owed? How will the EU respond to an erosion of its competitive position that a massive further devaluation of Sterling would create? What do people mean when they say WTO rules would apply when there is no WTO agreement on tariffs and quotas between the UK and the EU?

The EU was created to secure peace and prosperity on the European continent after the horrors of two world wars. The UK may be about to discover what happens in its absence.

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From what I'm reading on ET it seems the default position is the Britain* leaves with no bilateral agreement and it's up to May & Co. to better that.

* I am putting odds of 6/5 (and pick 'em) Scotland dissolves the Union

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Apr 12th, 2017 at 01:11:38 AM EST
If the Tories remain pigheaded I suspect you are right - absent some serious event with present government leadership.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 13th, 2017 at 03:48:11 PM EST
[ Parent ]
Do Tories know any other way to be?
by rifek on Sun Apr 16th, 2017 at 10:00:10 PM EST
[ Parent ]
From what I see in this thread Brexit is likely to be an unmitigated disaster.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Apr 13th, 2017 at 08:00:10 PM EST
[ Parent ]
No! Brexit will mean the return of empire! Britain will be great again - the global lynchpin of a vast humming hub of freely trading entrepreneurial nations, united by a common respect for greed, venality, criminality, dictatorship, and arms dealing.

Oh. Sorry. Did I let a hint of cynicism and disbelief slip through my Official Brexit Enthusiasm Face?

Ah. Well. Oops.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Apr 15th, 2017 at 11:34:00 PM EST
[ Parent ]
I was hoping it was cynicism and not a bad batch of shrooms.
by rifek on Sun Apr 16th, 2017 at 10:00:46 PM EST
[ Parent ]
Ahem ... the global lynchpin of a vast hub of subject dependencies whose local industries were deliberately destroyed.

As opposed to a hollowed-out post-industrial husk whose only purpose is to provide familiar looking and sounding drones and servants for the financial lords and masters.

by Zwackus on Mon Apr 17th, 2017 at 12:41:27 AM EST
[ Parent ]
A rational thinker would say any deal is better than no deal in the sense that the UK can, at a minimum, always unilaterally opt for the no-deal scenario. No deal is something they can always have. Unless they are the worst negotiators in all of human history, they should be able to get something that is better than that. (With the proviso that it all depends of the relative importance that the two sides place on different issues.)

The flip side of that, is the absence of a blocking minority of "soft Brexit" countries is irrelevant. There is no percentage in them blocking any negotiated deal if the alternative is an un-negotiated no-deal. It would be a bit like saying to the hard Brexit countries: "If you are going to shoot us, we will blow our heads off". Hardly a credible threat.

by det on Wed Apr 12th, 2017 at 06:11:31 AM EST
As oldremainmer48 has noted, there is an influential group of hard Brexit Tory backbenchers who really do seem to believe that the UK is better off with no deal, or at least that they can leverage this position to extract concessions from the EU. They have no difficulty believing that trading under WTO rules is just fine and that the opportunities for a free UK, unconstrained by the EU, out there in the big world of trade far outweigh any losses they might suffer through lack of access to the Single market.

I have yet to see a convincing analysis of what "trading under WTO rules" would actually look like in practice, as the WTO only provides an overall framework within which bilateral trade deals can be negotiated.  As there is currently no bilateral free trade deal between UK/EU - and unlikely to be one for several years - what is to prevent either side imposing tariffs, especially if it feels its economy threatened by a huge additional Sterling devaluation, or if it feels aggrieved by non-payment of outstanding bills?

I have been thinking of doing a diary on this for some time, but would love to see an expert analysis of what, if any, default rules might kick in in the event of a "falling off a cliff" Brexit. What analyses I have seen to date have been less than informative.  Surely someone, somewhere, is thinking this through?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 12th, 2017 at 10:04:58 AM EST
[ Parent ]
Apparently, tariffs aren't the things that really matter: the hot phrase is "non-tariff barriers".

Expert opinion doesn't seem to agree on whether the UK would automatically be covered by the WTO, never mind anything else. It's apparently  possible the membership might have to admit them. Lots of politics, not a lot of automatic stuff.

by Colman (colman at eurotrib.com) on Wed Apr 12th, 2017 at 10:14:43 AM EST
[ Parent ]
That has been my argument all along.  Even minor delays at customs checkpoints can play havoc with cross-national just in time integrated production systems and supply chains.

A bigger issue is mutual regulatory recognition. Within the EU each member recognises each others regulatory mechanisms, so that an insurance company registered in and regulated by the (say) Maltese authorities is allowed to do business in (say) Ireland, and any disputes are ultimately justiciable by the ECJ.

Remove that mutual recognition and such trade becomes difficult or impossible, as customs authorities impound imports so that they can be assured they conform to EU standards. This could involve, for instance, sending pharma products to an accredited Lab to check they meet EU standards.

Seeing the whole point of Brexit is to remove the UK from EU regulation and supervision, it is difficult to see how such trade can continue unhindered.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 12th, 2017 at 03:30:15 PM EST
[ Parent ]
Fig leaf Brexit involves the UK leaving the EU regulatory regime and then keeping up with it as it changes: basically suffering same costs but without the ability to control them. This is apparently "taking back control". And there will be ECJ jurisdiction over external trade.
by Colman (colman at eurotrib.com) on Wed Apr 12th, 2017 at 03:32:45 PM EST
[ Parent ]
This will be fine with the crazy brexiteers because they care more about local employment and environment laws, I think.
by Colman (colman at eurotrib.com) on Wed Apr 12th, 2017 at 03:33:30 PM EST
[ Parent ]
Yes, but how will (say) Irish farmers feel if they have to comply with all manner of EU regulations, and yet have to compete with UK farmers who don't have to comply with such regulations and have the benefits of a much devalued £ as well. The EU could invoke anti-dumping laws to offset a (say) 20% further devaluation of he £ with a 20% import duty.  The UK will scream but, but, but WTO and the EU will respond WTF, we don't have a WTO agreement with you.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 12th, 2017 at 03:50:07 PM EST
[ Parent ]
That won't happen because everyone will just do what the Brexiteers want and consider themselves privileged to serve them. Don't you know anything? (Yeah, there are problems with this approach: I actually think that so long as planning laws and environmental impact for development are dropped the Tory backbench will be happy. Anyway, farmers won't have anyone to work for them.)
by Colman (colman at eurotrib.com) on Wed Apr 12th, 2017 at 03:59:17 PM EST
[ Parent ]
This might have worked if there was any such thing as a Happy Tory Backbencher.

No such animal exists. No such animal can exist.

The whole point of being a Tory backbencher is to justify a life spent in permanent incandescent sneering rage at anyone who isn't comfortably off, English, white, and self-serving.

"Happy" doesn't describe it at all. Maybe go with "borderline psychotic", and see how that fits?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Apr 15th, 2017 at 11:42:35 PM EST
[ Parent ]
From the last two hundred years of British literature there are few 'happy' Tories that I can recall. Mostly dyspeptic old men.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 16th, 2017 at 03:01:03 PM EST
[ Parent ]
Except that any agricultural group that wants to sell into the EU will have to not only confrom to relevant EU regulations, but will have to demonstrate conformance.

As that conformance will have to be done by EU inspectors, ie definitely not UK-origin, it will be an expensive process and so UK producers will hav a problem competing on price. Also, the Tories seem very keen to cut a trade deal with the US to import a whole load of hormone laced additive saturated US meat. That is gonna play hell with a food processing industry that will hav to prove that none of that filth has contaminated anything being sold into the EU. Again, that's expensive.

So, even with normal protection of its producers the EU doesn't have to play hardball to put the UK at a severe  disadvantage.

If the EU don't do this, then I'd imagine every other farmer in the EU would have a right to adopt the rather effective French protesting tactics

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Apr 12th, 2017 at 07:32:04 PM EST
[ Parent ]
This is an important question that few seem to understand. I certainly do not fully understand it, but here are my 5 cents:

  1. WTO sets maximum trade tariffs and reciprocity. This means products going each way of the channel would automatically be subject to equal tariffs, around 15% on manufactured products, up to 40% on food, etc. The EU would apply these tariffs to the UK by default, as at it does to any other third country.

  2. Trade in certain products will become impossible under WTO, simply by the lack of a regulatory framework. This includes things such as livestock, certain foodstuffs, etc on which EU legislation is deeper. Importantly, WTO means no services can be traded between the UK and EU.

  3. Trade in services is ending anyway, either with plain WTO or a bespoke FTA. To this date no trade agreement between WTO members has ever been struck on services. There is no experience on either side on this matter and without ECJ jurisdiction it will simply not be possible to cover services.

  4. WTO membership remains unclear. As pointed various times here at ET and other venues, the UK is not an individual member of the WTO, it is so by virtue of its EU membership. In principle, leaving the EU should equate to leaving the WTO...

About 75% of the UK economy is on the services sector. Backing off to the WTO means relinquishing whatever part of that relying on trade with the EU.


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 Thu Apr 13th, 2017 at 01:18:04 PM EST
[ Parent ]
As far as I can tell, this all boils down to an awful lot of "see you in court and/or binding arbitration" - maybe decades worth.
by Colman (colman at eurotrib.com) on Thu Apr 13th, 2017 at 02:42:39 PM EST
[ Parent ]
I think you have hit on the key point: The UK economy is primarily based on services, and trading in services is not covered by either WTO rules or any FTA negotiated to date. The UK is thus the last country in the world to even consider exiting the Single market, as that is where it gets a lot of its business.  

Conversely, EU exports to the UK are primarily based on manufactured goods and foodstuffs, and these are at least covered by WTO rules, albeit attracting high tariffs. This will hit German car exporters and Irish agricultural exports to the UK hard, but at least they have some warning and some scope to diversify their exports elsewhere. Sterling devaluation has already forced a shift to other markets for Irish exports.

None of the Brexiteers seem to have the slightest understanding of business or trade dynamics.  The UK is the last country who should consider leaving the single markets and there simply is no other framework available to give it access to that market for financial services from outside the EU.  Frankfurt et al will be only too happy to take on the role of the City and what's left of the UK economy will be sitting behind high tariff walls.

Why on earth would you want to do that to your own economy? Who wins in the UK from this stupendous act of self harm? Not the bankers, for sure. What % of City business is EU based?

The paper, drawn up by officials working for the European parliament's powerful committee on economic and monetary affairs (Econ), warns that UK-based financial services account for 40% of Europe's assets under management and 60% of its capital markets business. "And UK-based banks provide more than £1.1tn of loans to the other EU member states," the Econ secretariat's paper notes."


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 13th, 2017 at 03:14:35 PM EST
[ Parent ]
This might not be entirely straightforward, but the Scottish economy is too highly reliant on the services sector. With both the Energy and Banking industries well ingrained, services account for 75% of Scotland's GDP. I believe only London is above that figure.

Scotland desperately needs to remain in the EEA. I am not sure if independence is the best way to guarantee that outcome, but they must definitely do something about it.

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 Sun Apr 16th, 2017 at 07:50:08 AM EST
[ Parent ]
4. WTO membership remains unclear. .... the UK is not an individual member of the WTO, it is so by virtue of its EU membership. ... leaving the EU should equate to leaving the WTO.

The [much maligned] Nick Clegg / Lib Dems have published a series of papers under the title "Brexit Challenge", developed with knowledgable academics. At a time when it was thought that intelligent logical thought might have some influence on the process, in the second paper Clegg discusses future trade relations, including WTO membership and the need for  `schedules of commitments'. To paraphrase a relevant section

Once [the UK is] free to [establish [our] own commitments at the WTO] .... the UK may attempt to expedite the WTO process by simply replicating the existing EU schedule of commitments, rather than starting with a blank sheet of paper.

However, this is unlikely to be plain sailing. The UK's schedule of commitments has to be adopted by consensus among the 164 members of the WTO. Some WTO members may try to secure better access to the UK market than they were able to secure when the UK was part of the much larger EU bloc. Or they may choose to block on wholly unrelated grounds as a means to exert political or economic pressure on the UK.

Even if the UK can agree its terms with the other WTO members, there may be domestic roadblocks to overcome. ..... there may be sectors where the EU currently applies relatively high tariffs, for example on food products, where businesses and consumer groups in the UK may want to make imports cheaper. For example, Tate and Lyle have made it clear that they want to see lower import duties on cane sugar.

The paper goes on to dismiss other proposals by the Hard Brexiteers as unworkable as either they would break WTO rules or leave the UK impotent in further trade negotiations.

In a recent report, "Her Majesty's Revenue & Customs told the Treasury select committee it estimates that the number of customs declarations at Dover and elsewhere could rise from 60m a year to 300m a year after the UK leaves the EU".

Given the history of successful IT projects by UK Gov, there could be some interesting traffic jams around Calais and Dover.

by oldremainmer48 on Thu Apr 13th, 2017 at 04:33:01 PM EST
[ Parent ]
Playing around with the voting calculator some more reveals that if Spain were to join the hard core hard Brexit group, then not even France switching sides to support a deal would save it. Only Germany has a sufficient population to bring the votes (of the other 21 Members) over the 65% of the population requirement to over-ride a blocking minority in that instance. So May badly needs to avoid pissing Spain off even more over Gibraltar, and then it still needs either France or Germany's support to swing a deal. Basically this means Germany's support is crucial to getting any deal done.  And Merkel has already told the German car industry that their interests must be subordinate to the national interest...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Apr 12th, 2017 at 09:43:48 AM EST
The Economist demonstrates its Anglo-American bias witha focus on defense ties, despite this being irrelevant to the EU. We are tied into NATO. The UK was always hostile to having anything to do with an integrated European defense force and so that particular issue would never have arisen.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Wed Apr 12th, 2017 at 07:35:00 PM EST
The Brexiteers seem to assume that Russia facing countries will jump into their arms in the Brexit negotiations for fear of being exposed to Russian aggression. What they don't appear to appreciate is that
  1. NATO is the primary bulwark against Russian aggression
  2. The UK has been to the forefront in preventing the EU from taking on a more active security role
  3. Really only the US, as the lead member of NATO, matters when it comes to countering Russia

It would be a relatively simple matter for "hard core" hard Brexit countries like Germany and France to get the Russia facing states on board by promising the development of a "Euro army" under the enhanced cooperation provisions of EU treaties - once the UK is gone as a blocking force.

Not even Ireland, as a "neutral" non-NATO member, could object to that if it is done under the enhanced cooperation provisions and it doesn't have to take a direct part.

One of the interesting things I have not seen discussed anywhere is how the departure of the UK opens up a whole range of new opportunities for the development of the EU which were previously blocked or extremely discouraged by the UK..

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 13th, 2017 at 03:31:07 PM EST
[ Parent ]
History proves both peace and prosperity at stake in Brexit
Proper commentators are drawing on history to reflect on Brexit. And not just Europe's predilection for bloody violence as the best way to resolve disagreements. One (anonymous) blogger recently drew a brilliant parallel between Brexit and America's flirtation with prohibition.

The drive to ban booze came initially from rural and small-town people who were growing uneasy about the switch from farming to industry and the growth of cities at the expense of the country. Immigrants were widely viewed by such people as threats to the American way of life. Social change - indeed, change of any kind - was feared by the prohibitionists. The banning of booze became a device to express reluctance to change: a cry to "stop the world, I want to get off". Just like voting to leave the EU.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Apr 13th, 2017 at 05:28:52 PM EST
Ireland on course to issue one million passports in wake of Brexit
The number of Irish passports to be issued this year is set to pass the one million mark driven by a surge in applications from Great Britain and Northern Ireland in the wake of the Brexit vote last June.

This follows the Minister for Foreign Affairs, Charlie Flanagan confirming that 250,000 applications have been received for the first quarter of this year - a 26 per cent increase on the same period for last year.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Apr 15th, 2017 at 04:21:57 PM EST
My father, whose father was Irish, has talked from time to time about getting an Irish passport. If we Brits find ourselves having to get ESTAs or whatever to visit EU countries, he'll probably actually do it.

Anyway, a million new passports in a year will be good business for whoever prints Irish passports.

by Gag Halfrunt on Mon Apr 17th, 2017 at 11:39:31 AM EST
[ Parent ]
Any additional thoughts given recent news?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue May 2nd, 2017 at 03:43:22 PM EST
I may be guilty of confirmation bias, but everything I am hearing (e.g. about the Juncker/May dinner) tends to confirm my view that we are likely to see the hardest of Brexits followed by a pretty catastrophic economic decline in the UK as the City looses much of its Euro business and as tariffs are imposed forcing many UK businesses to relocate parts of their businesses within the EU. Scottish Independence and a united Ireland are also looking more and more likely to happen over a 5-10 year time frame. Recent opinion polling also appears to confirm that the chances of a UK U-turn are ever more remote. This is a car crash in slow motion.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 2nd, 2017 at 04:55:00 PM EST
[ Parent ]
"everything I am hearing (e.g. about the Juncker/May dinner) tends to confirm my view that we are likely to see the hardest of Brexits followed by a pretty catastrophic economic decline in the UK as the City looses much of its Euro business and as tariffs are imposed forcing many UK businesses to relocate parts of their businesses within the EU."

Can't argue with that, but I have to hope that there is a bit of a transition period - I have a hunch that we might have to stay in London for one more year than I would have imagined a couple of months ago. Leaving before April 2019 may not be a good option.
So however incompetent you are you mean Tories, please at least manage to get a one year transition!

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

by Cyrille (cyrillev domain yahoo.fr) on Wed May 3rd, 2017 at 12:28:20 PM EST
[ Parent ]
That pretty much everything that has been posted on this site, especially by Frank, is turning out to be true after all. A slow motion train wreck
by Bernard on Tue May 2nd, 2017 at 06:50:07 PM EST
[ Parent ]


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