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Five Brexits

Ben Chu in the Independent describes 5 possible Brexit outcomes. The only interesting ones are 4 and 5.

Brexit 4 is, “Leave the single market and customs union with no free trade deal in place and trade with Europe under World Trade Organisation rules.” Brexit 5 is, “Leave the single market and customs union with no free trade deal – but unilaterally scrap all import tariffs.”

He thinks 4 will make us poor, and 5 is politically impossible because the exporters will make a fuss. I think we will end up with something between 4 and 5, with lots of bluster and threats but ultimately low-ish tariffs because British and EU politicians are not completely self-destructive. But I am a very optimistic person. Of course the tariff structures will be ridiculously complicated and riddled with special interest exceptions.

This is funny, from Brexit 3, which is a comprehensive free trade deal that will somehow require a strong customs border: “There would additionally have to be a customs border between Northern Ireland and the Republic, with potentially serious political consequences.” I think any such border would be for appearances only and eyes would be blind to any goods moving across it. This is because trade deals are not really there to improve anyone’s economic prospects. They are to win favour with voters, so only outward appearances matter. They do not need to be properly enforced. Nobody in charge actually cares about smuggling.

Incidental note: I was thinking of this song when I wrote the title.

Postscript: Further to that, and with apologies to anyone not familiar with the best Megadeth album:

Give me sov’renty, give me liberty,
True autonomy, unilat’rally,
Strong economy, Brexit if you please,
Master all of these, EU on its knees

I master five Brexits, I master five Brexits

I’ll get my coat.

25 comments to Five Brexits

  • Runcie Balspune

    Isn’t it the case that there only needs to be a border between Ireland if there is a tariff charged by Britain, which is going to be highly unlikely (mainly because of smuggling).

  • Alsadius

    Brexit 1 is stupid and would never get the approval of the British public, because both sides would hate it, aside from a few City folks. Still being tied into the EU’s rules, having no ability to change those rules? Still paying into the budget, and not getting anything back out? And leaving the EU, just to piss off the Europhile crowd too. The fact that the author thinks this is the best one is funny.

    Brexit 2 is a plausible implementation, though it’d have to go fairly quickly to keep the Tory base happy, and I doubt the EU will let things happen that fast.

    Brexit 3 is again plausible, but again unlikely to happen any time soon with the EU’s usual speed of negotiation. It’s probably how things will look in a decade or two, though.

    Brexit 4 is frankly probably the most likely right now, if we’re looking at single short-term cases. He’s right that it would kind of suck, but the EU will be in a mood to punish the UK(or at a bare minimum, to look like they are), so it may be the only thing that can really happen.

    Brexit 5 is the sort of thing libertarians like to write about, but it’s political suicide in most cases. Yes, tariffs hurt the locals, but nobody except nerds will accept an open encouragement an unfair trade regime.

    IMO, the most likely case is that it’ll be some combination of 3, 4, and 5. The UK leaves, goes under WTO rules, but tries to singlehandedly impose a free trade deal on Europe by giving them favourable treatment of some sort, until they can come to a formal agreement. Lots of BS and posturing, but assuming you don’t get a CETA-style Wallonian veto, it’ll probably turn out okay.

  • I have perhaps half an idea for a six option:

    How much do we build entirely in this country? I doubt it is very much as a proportion. This means that some producers would benefit from unilateral free trade, offsetting the costs of WTO tariffs on exports.

    Perhaps, just to be vindictive, we declare unilateral free trade but exclude EU nations. UK goods that mix parts from the world market (cars?) might stay relatively close to current prices for customers on the continent, but the prices of EU goods exported here continues to include EU prices for parts AND suffer the cost of UK imposed export tariffs. German cars might become hugely noncompetitive.

    Does anyone with a greater grasp of the detail know how this would pan out in practice?

  • Paul Marks

    I am really tired of this word “Brexit” for British independence.

    Independence means E.U. law will no longer apply in our domestic affairs and with our trade with third parties outside the E.U. – it would (of course) still apply to trade with people inside the E.U. (just as Canadian law applies to trade with people in Canada).

    There is no need for further talk.


  • Mr. Chu has overlooked a fairly likely possibility: the UK government holds another referendum next year, and either the remain side wins the vote or the government starts planning yet another referendum. Repeat as needed until the government gets the answer it wants.

  • Rob Fisher (Surrey)

    Paul Marks: I do wonder why we don’t just repeal whatever act of Parliament got us into all this and just walk away. No article 50. Just ignore them. What are they going to do?

  • Alisa

    Who is we in this case, Rob, and who is they?

  • Rob Fisher

    Me and my imprecise language. I am wondering if Parliament could decide to unilaterally just ignore whatever treaties it had previously agreed with the EU. What could the EU and European countries’ governments do about it?

  • Alisa

    That’s what I imagined you meant, Rob – but then I thought of something else: what if there is some EU-imposed regulation that you or any other UK citizen decided to stop observing, because Brexit (leave me alone here, Paul)? In that case, they would be the UK government, no?

    As to your actual question, Parliaments and governments in general can do all kinds of great things – only usually they don’t, unless forced to. Who is going to force the UK Parliament to follow your particular suggestion?

  • Rob Fisher, October 19, 2016 at 5:59 pm, parliament can indeed repeal the Europe Act when it is put to the vote. That is regardless of treaty. IIUC that is expected to be between now and next March.

    However if the UK government wishes to make treaties in the future, it will avoid treating existing treaties with contempt unless there are strong reasons. Theresa May can announce article 50 when she likes. How then would she justify not using that route? One of the assets of the UK is a greater reputation for probity than most world governments (insert obvious joke about how low a bar that is).

    There are also practical issues to sync up. I suspect “next March” was chosen to be just before the end of the UK’s financial year. Some EU-funded projects which the British government wishes to continue will have their funding change from “money from UK exchequer to EU, thence some back to UK-based project” to “money from UK exchequer to UK-based project” conveniently at a financial year-end, either a year hence or two years hence (or a mix of the two as some areas are handled soon, others later). Coordination in the cutover dates of many such issues will be wanted by both sides.

  • Chu leaves out one of the more sensible options.

    This is an arrangement most similar to Switzerland, as a member of EFTA but not a member of the EEA. The main concern here is that currently EFTA membership requires free movement of peoples.

    But Switzerland voted by referendum in February 2014 and instructed its government to discontinue this arrangement. The action of discontinuance needs to be made within 3 years, ie by February 2017.

    If the EU and Switzerland come to an accomodation on the issue of free movement of peoples as a constraint on free movement with Switzerland still an EFTA member, then such an accomodation would surely also be available to the UK. In fact one might well expect that the EU, the UK and Switzerland are working very hard together on some arrangement that they could all live with.

    That Chu does not introduce any arrangement along the lines of the EFTA (not EEA) option indictaes to me that he lacks something in the balancing of the options he is putting forward. Given this and as his article is published in the Independent, IMHO it is quite clear that his lack is one of impartial sincerity.

    Best regards

  • Alisa, October 19, 2016 at 6:12 pm: (as regards the other meaning you were speculating that Rob might have) as soon as the Europe Act is repealed, all the laws caused by it become British laws, repealable at pleasure by parliament. Those that do not affect trade with the EU can be got rid of as soon as we like, consequence-free. (This does not necessarily mean parliament will junk them all; every statist law has its defenders in government. But we might be able to ignore how curved cucumbers are if destined for intra-UK sale.) Laws that affect EU trade could be repealed as casually but in practice may survive the two-year article 50 period.

    Even after that, of course, whatever we export into the EU will still have to meet whatever standards the EU demands, so UK suppliers, exempt from EU laws as such, may need to demonstrate that they ‘comply’ when targeting that market. EU Law will be replaced by for-EU-export certification – which the UK government may itself manage to avoid having the decisions made by Eurocrats without oversight.

    Of course, the euro may collapse and/or the EU break up and/or the drive out of the Calais end of the chunnel become so dangerous that no-one goes there, etc., etc. But if nothing happens suddenly, the above is what I expect.

  • Lee Moore

    The answer to Rob is that if we pass an Act repealing all EU stuff, but not bothering with Article 50, then we’re out under domestic law, but still in under EU law. Whether being still in under EU matters depends on where enforcement actions could take place in particular actions. In general, most countries think it prudent not to set up such conflicts between domestic and foreign or international law, because they recognise that their domestic might does not run everywhere. And that gaining a reputation for breaking treaties and not ending them in accordance with their agreed terms is not necessarily advantageous.

    In practice it’s far more likely that Mrs May has a majority in her cabinet for activating Article 50 without troubling Parliament than that she has a majority in both Houses for repealing EU law without triggering Article 50. The advantage of article 50 is that it kinda presents Parliament with a fait accompli.

    As regards the costs gf Brexit 4 it’s obviously true that :

    (a) the tariff costs of leaving the EU customs union, even if fully borne by UK exporters ( a highly dubious proposition in economic theory) are considerably less than the UK budget contribution, and

    (b) there are plenty of non tariff barriers too, which have costs to someone (a mixture of UK exporters and their European consumers) – but again these costs are tiny compared to the costs of EU regulation of the domestic economy

    It would be possible to capture the worst of all worlds though, by leaving the single market and simultaneously retaining the full gamut of EU regulation.

  • Alisa

    Those that do not affect trade with the EU can be got rid of as soon as we like, consequence-free. (This does not necessarily mean parliament will junk them all; every statist law has its defenders in government. But we might be able to ignore how curved cucumbers are if destined for intra-UK sale.)

    That is along the lines of what I meant, Niall.

  • Pat

    It has long been my impression that most people speaking for remain had never considered an alternative to EU membership. Judging solely by the newspaper involved, it sounds like some remainers are starting to consider the alternatives. Give it six months longer and a fair few will find they like at least one of the alternatives.

  • Patrick Crozier

    I notice Mr Chu somehow fails to mention the EEA option. This would mean free trade with the EU, the ability to scrap most EU laws and some control on immigration.

  • Laird

    Lee Moore, perhaps I’m mistaken, but isn’t the question of whether Ms. May can unilaterally invoke Article 50 under royal prerogative, rather than receiving Parliamentary approval for it, the subject of pending litigation?

  • Laird, October 20, 2016 at 4:21 am, yes, there is litigation but the posturing is so gross that it makes the people who claimed Blair’s Iraq war was illegal look reasonable, plus it has zero political point. On the one hand, the constitutional position is so well defined that only “whatever the PC people think is the law” types can pretend to doubt it (they are of course good at that). On the other hand, repealing the Europe Act requires a parliamentary vote. If that passes, everyone knows a vote on Article 50 would pass. (If it does not, there will almost certainly be a new election, but Theresa May appears to think she has the votes.) So it is all just posturing.

  • Laird

    Thank you, Niall. What little reporting I’ve seen about that on this side of the pond has implied that it’s a serious case. Is it the general consensus that the suit has no merit?

  • staghounds

    Brexit 6, the politicians slow walk until it dies of old age.

  • Alan H.

    Brexit 6, the politicians slow walk until it dies of old age.

    I think you mean “the politicians slow walk until they get deselected by their local parties to avoid getting exterminated en-mass in the next general election” 😉

  • Lee Moore

    I agree with Niall that the litigation on Article 50 is just political posturing. In the US it would be deadly serious though, as it would be decided solely on the basis of the judges’ political preferences, which would be to block Brexit. In the UK, although the judges are mostly establishment lefties, they’re still judges rather than mere politicians. I doubt they’d stick their necks out this far.

  • Mr Ed

    How about a sixth option: Mrs May implausibly echoing Ronald Reagan and announcing in jest ‘My fellow Britons, I am pleased to tell you today that Her Majesty has assented to legislation that will outlaw the European Union forever, we begin bombing in five minutes.‘.

  • I think you mean “the politicians slow walk until they get deselected by their local parties to avoid getting exterminated en-mass in the next general election”

    That is exactly correct, Alan. If the Brexit referendum has been decided on a FPTP by constituency basis, LEAVE would have won by 67.6% rather than 52%. So if they fuck this up, not even the dismal Tory Party are stupid enough to miss the significance of what that means come the next general election.

  • Nico

    There is one more option: unilateral reciprocal trade policy, where the UK sets tariffs for any one trading partner at whatever they set it for goods and services from the UK (if both do the same, then zero). This leaves the ball squarely in the EU’s court.