Throughout the entire Brexit voyage businesses and their representative organisations have asked over and over again for one thing: certainty. This means having a solid understanding of the changes they will face with adequate time to plan effectively for them. The government's recent actions however, are serving only to remove this possibility.

We are at something of a turning point. Unless something significant changes, in two weeks we will have confirmation that the Brexit negotiations have failed to move on to maters of trade and transition at the second opportunity. This has led the EU to start taking very seriously the prospect of either a no-deal Brexit or a full-scale political crisis here in Britain. Businesses will also very soon be arranging their budgets and plans for the next financial year, and will be doing so with very little confidence in the government's ability to deliver a smooth and orderly Brexit. 

The European Union (Withdrawal) Bill - which is the primary legislative tool designed to ensure this smooth transition - is currently being debated in the House of Commons. It will be debated for two days this week, with a further six scheduled in the future. The bill itself is facing - wait for it - 471 amendments. That's 180 pages. 

A key theme of the amendments is the idea of a "meaningful vote" on the final Brexit deal. This would mean that if parliament deems the deal unsatisfactory, we can maintain the status quo whilst we go back to the drawing board. Being able to secure this arrangement would act as a safety net, allowing the Bill to be properly scrutinised, and would take the thing that businesses fear the most - a cliff edge no-deal Brexit without any preparation time - out of the equation. It would maintain the flexibility required to ensure that the worst case scenario cannot be realised.

If there is one thing this government has done well throughout this process however, it is removing flexibility and backing themselves, and the country, into a corner. Now though, they are making attempts to go further than ever before. First of all, an amendment to the bill was proposed that would enshrine an exit time of 11pm on the 29th March 2019 into British law, regardless of any deal being in place. That we exit on this day is already a matter of law, but if the worst case scenario looks likely, there are ways we can deal with it. This may be an extension of the A50 period - perhaps of a further two years, to allow negotiations to continue, it may be a revocation of A50 altogether, or it may be a last-ditch crisis round of talks to mitigate damage - what I and others have described as a "negotiated no-deal'. If passed, the amendment would remove all of these options, meaning that if less than everything is agreed by that time, we crash out in chaos with no way to mitigate. 

Then yesterday, everyone except for the hard-Brexiteers thought they had landed a big win - the government conceded that there would be a Parliamentary vote on the final deal - in the form of a Withdrawal Agreement Bill. Upon closer inspection though, the move revealed itself as a Trojan horse which would in fact serve to ensure that a meaningful vote on the final deal is an impossibility. 

Not only did David Davis suggest that this vote may not happen until after we have left, it was made brutally clear that if parliament voted against the deal we would exit without a deal at all. One the one hand, the fact that when he said this that other MPs audibly gasped was slightly odd as this has always been the case - no-deal has always been the default. Perhaps though, they were gasping at the fact that the government is seeking to remove any possibility of this changing. Pat McFadden MP described this as "putting a gun to this House's head" - it means MPs have to vote for the final deal or doom the country to crashing out without one.

From a business perspective, this actively ensures uncertainty until after March 29th 2019. An amendment that would maintain the status quo in some way if the final deal is deemed unacceptable would at least give businesses a guaranteed safety net, even if planning for post-Brexit arrangements can only happen much later than would have been ideal. 

In reality though, March 2019 will be too late. Businesses will have made their decisions before then and the extent of the fallout will already be clear. Rather than giving businesses the information and time they need to plan, the Government is set on taking us to the edge of the precipice and is blocking off all escape routes. Businesses will not peer over the edge, but will make escape routes of their own.

I'm sorry folks but we need to talk about no deal, again, because the lies simply won't go away. I'm going to cover three broad issues here, for what I'm sure will not be the final time.

1. The idea that we trade with the rest of the world on WTO terms.
2. Negotiated no deal vs. Chaotic no deal
3. No deal as a negotiating tactic

Let's start with the constantly repeated fabrication, as wonderfully demonstrated above by the unflappably wrong John Redwood, that we trade with the rest of the world on WTO terms. This is such basic stuff, and so far from the truth that I honestly cannot believe we have MPs still saying it. 

​Firstly, the EU has Free Trade Agreements (FTAs) covering around 60 countries - as evidenced in this report by our very own House of Commons (!!). There are many types of trade agreement, but all of them improve upon WTO terms for trade. Below is a map of the EU's Preferential Trade Agreements (PTAs) taken from the WTO website:

And here is a map of the EU's Regional Trade Agreements (RTAs):

So, clearly, the EU has a lot of trade agreements in place. It must be made clear that these are all agreements which the UK currently takes advantage of, and that we will certainly be no longer able to take advantage of if we leave without a deal on trade.

But there is another element to Redwood's kind of thinking: what about all those places where the EU has no FTA? Like the USA and China? This is even highlighted in the Commons Library report linked above:

We trade with them just fine without a deal don't we? No, we don't. This is a misleading and often-repeated oversimplification. Whilst the EU may not have comprehensive FTAs with these places, there are a number of small deals in place all of which improve upon WTO terms and help to facilitate trade. You can check this yourself by visiting the EEA treaties office database here. In the advance search, select the USA and under "nature of agreement" select trade agreement. You will return 24 agreements, as seen below:

Some of these agreements are specific to certain products - such as the ones above for wine or coffee, but some are on matters such as customs cooperation, government procurement and trade in animal products. Even some of the smaller ones provide very important functions and will protect certain domestic standards and industries. Under "nature of agreement", you could also choose to search for "agreement on customs cooperation", or looking beyond just trade, other areas such as data sharing. In total there are 142 agreements between the EU and the USA, all of which would lose access to if we exit with no deal. Search for trade agreements with China and you will find 5 agreements of a total 70. We do not trade with the USA and China on WTO terms alone, we don't even trade with Angola or North Korea on WTO terms alone.

Redwood also seems to assert that the rest of the world trades on WTO terms, which is complete baloney. Every major trading partner we have will also have it's own agreements in place. In fact, the WTO itself recently asserted that no WTO member trades on WTO terms alone:

So, the assertion that the EU (we) trade with the rest of the world on WTO terms is totally false, as is the idea that the rest of the world trades on these terms. No deal would absolutely not be a continuation of the status quo, and the cliff edge is not a myth. Anybody who says otherwise is ignorant or lying, and should not be given a free pass by the media or anyone.

Here we run into the second issue, which is that when most no deal advocates are hyping up no deal, what they actually mean is a bunch of deals.

The majority of no deal advocates come from the free trade angle, and so naturally focus only on the issue of trade. Research carried out recently by the Financial Times however found a total of 759 treaties across 59 different areas of policy that would need to be renegotiated under no deal.

In my eyes there are two types of no deal. First, a negotiated no deal, where we reach the end of talks without an agreement, and so a bunch of small facilitation deals are done and as many treaties as we can are grandfathered to stay in effect. Second, there is the chaotic or true no deal, where we simply walk away and all ties with the EU are severed at midnight March 29th 2019. 

When you dig into the work of no deal advocates, you will generally find that what they are in fact advocating, is a negotiated no deal rather than a true one. Even on trade, they expect there to be some deals in place to maintain movement across borders etc. 

This is dangerous because it leads people to believe that no deal will be fine, or worse, that no deal will not be much different from the status quo. This is compounded by the fact that when the government talks about no deal, it is actually talking about walking away - a true no deal. Therefore, people conflate the two types and are led to the conclusion that what the government is suggesting is reasonable when it is absolutely not. It is just another way in which the language in this debate has been contorted so much as to have lost almost all meaning.

Here we get to the use of no deal as a negotiating tool. The problem with this one is that a bluff only works if at least someone doesn't doesn't realise it's a bluff, but absolutely everyone knows that it is. There is this perpetual idea that we must be prepared to walk away in order to have the upper hand in negotiations, but the logic falls apart so easily that even government officials are basically giving up on making any logical arguments for it.

First of all, what does being "prepared" for a walk-away chaotic no deal actually mean? Phillip Hammond came under massive scrutiny a couple weeks back when he said that no budget would be put aside in preparation for a no deal outcome, but what do his critics actually want here? This piece in the FT highlights the problems that Dover would face under no deal alone. There would need to be completely new infrastructure and computer systems, a new lorry park in Kent, hundreds of new employees, all in a port where there is already no room. That is just dover. What about all the other policy areas? We would need new institutions to replace all the EU ones, they would all need to be staffed, people would need to be trained. We would need completely new systems of governance to be put in place. We would immediately need to have people out there trying to form new relationships for us or grandfather existing ones - aviation, data, science and research etc. etc. Being prepared for a new deal would take countless billions of pounds, and to be ready for 2019 we would have to had started laying the foundations a decade ago. Do people really expect us to do this in preparation for a scenario we are actively seeking to avoid? I actually don't believe they do, but they think we should at least give the impression we are so that we can negotiate effectively. Like I said though, a bluff is pointless if everybody knows it is a bluff, and a man in Calais with binoculars could see that if we say we are prepared, we are telling porky pies.

Even the officials telling us that we must maintain the illusion of being prepared don't believe it. This was revealed most obviously in David Davis' address to the House of Commons last week, in which he gave a progress update on the talks so far. After being repeatedly pushed by Keir Starmer and Anna Soubry to stop talking nonsense on no deal, Davis said this: "we are seeking to get a deal, as that is by far and away the best option. The maintenance of the option of no deal is both for negotiating reasons and for sensible security; any Government doing their job properly will do that".

Does the government and DD not understand that people can hear or read what they say in public discourse? Including people in the EU? Everybody knows it's a bluff, everybody has always known, and now DD basically announces as much in the House of Commons. Could he perhaps explain then, what negotiating reasons there actually are for maintaining this position?

It is telling that following this admission of the obvious, Emmanuel Macron had a few things to say. He told us that not once has May or DD raised no deal as a possibility in negotiations, that the EU commission recognise it as a bluff, and that they are not negotiating with the possibility of a no deal in their minds anyway. In other words, if we held our hands up and said "yeah, it's a bluff", it would not change the EU's negotiating mandate one iota, because they never considered it to be anything else.

But of course, Liam Fox is back from trade negotiation practice to tell us how utterly wrong Macron is to suggest that we are bluffing, deploying the exact same rubbish that Redwood did to start me off on this whole rant, and the Brexit merry-go-round of nonsense continues forever and ever. Fox of course really really wants to be out there signing all these fabulous agreements we need to be a global Britain, whilst simultaneously trying to argue that not having one with our largest trading partner and losing all of the ones we have already would be fine. Nothing makes any sense.

​@GMCC_Alex

Due to me taking some holiday and the rather overwhelming party conference season, it’s been three weeks since the last blog, and a lot has happened. We’ve had Theresa May’s Florence speech in which some progress was arguably made, we’ve had another round of unfruitful negotiations, and we have witnessed the always fascinating and bizarre spectacle of the party conferences in which the Tories started to show some real cracks. Despite many individual headlines around Brexit from these events, there is once again a consistent and unfortunate narrative throughout it all. Things are going very, very badly, and the chances of Brexit being a disaster or not happening at all are creeping up by the day. The government has set us upon a path to self-immolation, and is seeking to absolve itself from responsibility.

Pre-Florence, talks with the EU were at a stalemate. When David Davis agreed to the EU’s proposed sequencing for the talks on day 1, we agreed that substantial progress on the issues of citizen’s rights, the divorce bill and the Irish border must be made before talks could move on to the matter of our ongoing trade relationship with the EU. The speech itself offered very little except overlong platitudes; the detail could have been summarised in a few bullet points. A promise was made that Britain would pay its outstanding financial contributions – a good move, and that we would continue to make payments to the EU budget during a transition period. What May suggested was a transition period of two years following our official exit in March 2019, in which the status-quo relationship would be maintained exactly. We leave, but we continue to pay so that everything remains the same. May also went the extra step of stipulating that we do not seek any kind of existing arrangement – not EEA/EFTA, not CETA, not Switzerland, but something entirely bespoke and just for us.

Quite how the cabinet arrived at the conclusion that this position makes any sense escapes me. First of all, the EU has told us that we cannot retain all the benefits of the single market without also keeping its commitments whilst not being a member of the Union. The government has conceded this point multiple times, but now that is exactly what we ask for. It isn’t just that the EU is playing hardball with this either, it is a position which is legally unprecedented and would create massive problems for the EU, all countries which have agreements with the EU, and the WTO. Secondly, it was reiterated in the speech and again multiple times at the Tory conference that we are still going to leave both the customs union and the single market in March 2019. Yet, May asks for a transition period in which nothing changes. It isn’t going to happen.

Let’s compare what we have asked for to two other strategies: Staying in the EU past 2019, and relying on membership of the EEA and EFTA for a transition period or longer. As members of the EU, nothing would change, like May has asked for, and we would still be able to influence the EU from within. As members of the EEA and EFTA, we would remain members of the single market but would only be accepting around a quarter of the EU’s rules, would no longer be subjected to the political union, would be able strike trade deals with other countries, and would take seats on global trade and regulation bodies, influencing the future of the single market from there. What May is asking for is that we continue to be subjected to all of the EU’s rules, but from outside the EU with no influence whatsoever and nothing gained on the global stage. We have voluntarily asked of the EU that we be put into the most subservient position anybody could imagine. Not only this, it is a position that would have to be completely bespoke, and is thoroughly at odds with the realities of how international law and trade works. We are asking to negotiate from scratch, at enormous expense, a position that is worse in every way than staying in the EU or any of the other options available to us.

Taking a slight step back, the idea of a transition period in itself is problematic for the government, because it implies a transition to a different state. The way the government has approached this is to lock us into two sets of negotiations – one for the transition period itself, and another for whatever it is we will be transitioning to. I’ve addressed the fact that what we are trying to negotiate for the transition itself is impossible and totally unnecessary, but then the plan is to negotiate the most comprehensive bespoke FTA the EU has ever attempted - much more so than the recent deals with Canada or South Korea, and by limiting the length of the transition we are once again making this a time-limited issue with a countdown clock.

Just to summarise what we have so far, we are asking to move to position which is demonstrably worse than being in the EU or any of the other options available, is legally unworkable and crosses the EUs red lines (and arguably our own); and once in this position we are asking to do something which may also be impossible and took something like 9 years the last time the EU did it, and we are setting ourselves a two-year time limit within which to do this or we exit without a deal. We are choosing two time-limited rounds of negotiations, in which to negotiate things that we have been told we cannot have when there are much better options available. As somebody put it on twitter: “this is like somebody dying for a pint at closing time, but refusing to go into the Weatherspoon’s in front of them because it isn’t bespoke enough”.

I have said before that the Article 50 negotiation period is not meant to be used for negotiating anything more than a formal exit from the EU, which could be done in a number of ways with relatively little disruption. Instead, the government is choosing the worst possible position, and is choosing the most difficult possible route to that destination, putting the risk of failure or humiliation as high as it could realistically be. Whatever your thoughts on Brexit, we are handling this about as badly as is possible in absolutely every single dimension.
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Those in charge know this, and they are beginning to squirm. Realising this predicament, there is now an effort by the government and Brexit-at-all-costs leavers to paint the EU as the evil enemy, and in turn to absolve themselves of any blame when this all goes wrong, or any embarrassment if it doesn’t happen at all. This week we hear once again that plans are being made for a no-deal Brexit, leavers like John Redwood are back on the screens telling us there is nothing to fear from no deal, and textbook free-trade advocates are back demonstrating that they have no idea how modern trade works in reality.

Yet again the rhetoric is woven through that any harm caused would be something that the EU has done to us. This is a fundamental and dangerous misapprehension: any tariffs, non-tariff barriers, break down of established systems etc. will be things that we have done to ourselves, entirely of our own volition. The arrogance in ignorance has never been more palpable. I cannot think of a single prominent leave supporter or MP that has come out to criticise how the government is handling this, which is simply astonishing. Any criticism of our strategy, or any implication that we may be at fault rather than them, is “doing Britain down”.

Now we find ourselves in a situation where our government looks on the verge of falling apart over this, and the threat of a general election once again hangs in the air. It is becoming more and more obvious that a significant change in both strategy and approach is needed, and it looks like the only way that this might occur is for something big to happen in Whitehall. Unless something changes, my honest opinion is that we will essentially have to be rescued, Brexit won’t happen at all, Britain will be humiliated on a historic scale, the conservatives damaged beyond repair, and trust in the British political system will fall to crisis levels. If we choose to not do this rather than be forced into the decision some of the damage would be mitigated. If we exit without a deal, it will be our fault and things would be much worse.

I want to finish this by saying that I am not having a go at the people who voted to put us on this ship, I am having a go at the people at the helm. I know that many people who voted leave would agree with everything I have said here, and that what we see of leavers and remainers on TV is far from representative of the range of viewpoints in either camp. Criticism of the government’s approach to Brexit should never be taken as a criticism of somebody’s personal views or reasons for voting, and certainly should not be considered to be “doing Britain down”. The moment that these things are conflated is the moment that democracy will truly be at risk.

Brexit is absolutely possible to achieve without massive disruption, as is remaining in the EU with some of our reputation intact. The path we are currently following however, as dictated by the Conservative government and only pathetically questioned by their opposition, is the worst of all possible worlds, and should be criticised by people all sides of the Brexit spectrum. Unless something big happens and the course is changed, there will be big scary things lurking just over the horizon for many years to come.

@GMCC_Alex

Before we talk about more serious maters, let's get Boris Johnson's latest endeavor out of the way. Last weekend Mr Johnson penned a 4,200 word article setting out his vision for Brexit, in what comes across as an attempt to re-inject himself into the limelight after a period of outcast by causing a headache for his party and Theresa May. His contribution gives us nothing new or of particular note, but comes a week before Mrs May's fateful speech in Florence, and appears to have confirmed that there is no agreement within the party on what she should or will say. It has been anticipated that May would announce a willingness to pay something like £10bn a year for the next three years at least, in order to secure some continued relationship with the single market. Mr Johnson, and Mr Gove too, do not think that this is acceptable. We are currently negotiating only with ourselves, and interjections like this ultimately serve only to waste everybody's time.

One part of Mr Johnson's essay in particular kicked up a nice bit of fuss:
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"Once we have settled our accounts, we will take back control of roughly £350 million per week. It would be a fine thing, as many of us have pointed out, if a lot of that money went on the NHS, provided we use that cash injection to modernise and make the most of new technology."

His reiteration of Vote Leave's infamous £350m a week figure sparked a response from Sir David Norgrove, Chair of the UK statistics authority:

Then, Mr Johnson fired back:

You could argue that Mr Johnson is technically correct here, but it would be a real stretch, because about a quarter of our fee doesn't even leave our accounts, and about another quarter is spent on things we would almost certainly want to continue to fund anyway, but again, this is all a waste of everybody's time. 

A few things which are important have happened. The government revealed its plan for ongoing security cooperation with the EU, which surprise surprise, is to keep everything as close to the same as possible, including our continue participation in Europol and the European Arrest Warrant.

​Theresa May has headed to Canada to fire up trade talks, with the intention of setting up a working group to "swiftly transition" the Canada-EU CETA trade agreement into a new Canada-UK FTA post-Brexit. Easy! This is apparently the approach we are taking with all countries with which we already have a trade deal. This is of course despite the fact that those trade deals involved 29 countries instead of 2 and mostly ignore services, and that those other countries will want to know what our ongoing relationship with the EU is before they sign, and that we cannot legally sign until we have left the EU and the single market. Oh, and also that we could stay in the EEA which would maintain all those trade deals in one swoop.

A letter organised by the CBI and signed by executives of 120 businesses with over 1 million employees has been sent to Number 10 urging a 3 year transition period and warning against a cliff edge. In an unambiguous call for progress in talks, the letter says: “Our businesses need to make decisions now about investment and employment that will affect economic growth and jobs in the future. Continuing uncertainty will adversely affect communities, employees, firms and our nations in the future.” The trouble is that this is already what the government says it is doing its best to achieve, despite its own actions making this outcome less and less likely. Whilst messaging like this certainly puts increased pressure on the government to get things moving, it is extremely unlikely to alter their approach thanks to a lack of detail on how businesses think these things might best be achieved. It is obvious that our team is devoid of reasonable ideas and thinking to this effect, and it may not be enough for us to simply say get on with it. We should tell them how to do it.

On that point, in a late twist the top official in the Department for Exiting the European Union has left his post after just one year. Compound this with the moves by Mr Johnson and Mr Gove, and it really looks like our government still doesn't know what it wants or how to achieve it, putting considerable pressure on Mrs May ahead of Friday's big speech. I suspect there are many more twists and turns to come.

@GMCC_Alex

Last week, the third round of the Brexit negotiations took place in Brussels. The awkward exchange from Davis and Barnier following the talks shone a spotlight on two men mostly talking past one another, and the subsequent comments from players on either side caused all sorts of despair as to how things are currently going. It demonstrated that the issue of Brexit is as furiously opinion-filled as it ever has been. Whilst Barnier said that there was a lack of "any decisive progress on the principal subjects" despite some "fruitful" discussions on the Irish border, Davis remained upbeat about the whole thing , saying that "concrete progress" had been made and that the UK was being "substantially more flexible and pragmatic than the EU".

​The divorce bill is still the issue, with us  refusing to talk seriously about even the methodology by which the bill would be calculated, despite this being the EU's stated priority and despite their scheduling being accepted by David Davis back on the first day of negotiations. It seems that the two parties are coming at this issue from completely different viewpoints, with Liam Fox going so far as suggesting that the EU are blackmailing us. In reality, we will end up paying a divorce bill, and the current stalemate is of our own making. The EU just wants to see sufficient progress on what we have already agreed to pay, not even necessarily what we may want to pay for in the future. The actions of the government in this regard are actively frustrating the process, increasing the time pressure and seriously testing the good will of the other side. 

In some news which seemed to fly totally under the radar, David Davis was in America last week telling his friends that the customs paper was "blue sky thinking", and pretty much admitting that the proposed solutions are dead in the water and the likely outcome is a hard Irish border. How this didn't hit all the headlines I do not know. I can imagine similar comments coming from the mouths of the say Juncker or Verhofstadt in regard to our position papers causing uproar amongst Brexiteers, as indeed they did last week. This follows an increasing trend of people getting angry with reality, or getting angry at the EU when they present us with it. For some reason, people got angry at Michel Barnier when he suggested that Brexit would be an "educational process" and that "There are extremely serious consequences of leaving the single market and it hasn’t been explained to the British people." I get that this feels like him having a dig at Britain but he is completely correct.

There is a way of thinking out there, strangely at it's highest when the negotiations don't appear to be going very well, that any criticism of Brexit or realism about the difficulties Brexit may impose upon us as a country is "talking Britain down". This is nonsense. The moment criticism of a government or a government's approach to a national issue becomes synonymous with criticism of the country as a whole we enter dangerous territory. 

In some better news, Chief of the EFTA court Carl Baudenbacher is in the country for a series of speeches in which he will lay out why we should join EFTA. Baudenbacher also had a visit to Japan, coinciding with Mrs. May no less, to talk to them about how EFTA could assist in forging a Japan-Britain (or Japan-EFTA,as it were) FTA. Icelandic Foreign Minister  Gudlaugur Thor Thordarson even said on the Today show that "Everybody wants to make a free trade deal with Britain" & "that's why EFTA is keen to recruit UK." There have been many discussions before about whether or not the small group of countries would want an enormous disruptive force like Britain coming into it's institutions, but the answer is no as firm a "yes, absolutely" as I think we can get to. 

Next week, the EU (withdrawal) Bill will go to its second reading in the House of Commons next week, and the Commons library have released a lengthy briefing paper on the bill, finding it to be far from complete and full of all sorts of legal conundrums. This blog from professor Mark Elliot also reveals the extent of the work that still needs to be done for the bill to be close to serviceable. 

Finally, Guy Verhofstadt let slip yesterday that there would be "an important intervention" into the Brexit process by Theresa May on September 21st, just  before the Tory party conference and seemingly pushing back the fourth round of negotiations. There are a few plausible guesses, it could be that this is where we see an offer made on the divorce bill, although this would be a really odd move. Why would we choose to do this in a press release rather than in the negotiations? More likely is that May will call for intensified, rolling negotiations, something she apparently wants and that would make sense given the lack of sufficient progress thus far, the Tories' intentions to start talks on trade in October, and just the enormity of the task ahead.

​@GMCC_Alex

Let's pick up where we left off. Last week, a couple of trade reports came out which were roundly torn apart by various commentators. The fun didn't stop there. This blog from FlipChartRick looks at how the complexities of modern supply chains means that a focus on tariffs is dangerous. This blog from ex-Vote Leave staffer Oliver Norgrove is one of the clearest I've come across on why the Minford approach and the WTO option more widely should be thoroughly avoided.

We now have six position papers from the government, some of which are actually quite good. The enforcement and dispute resolution one in particular is very reasonable, and perhaps gives us some hope that the government is aware of the possibilities, putting particular emphasis on the enormously sensible strategy of re-joining EFTA.

The other papers we had last week were on specific issues and did not contain anything particularly controversial. Interestingly,  4 of the 6 papers we've seen are named "Future Relationship Papers" rather than position papers. They read like a menu of options and possible solutions. showing at least that our options are being explored. They will do little however, to actually assist during the upcoming third round of negotiations. EU officials are having to constantly reiterate their position that there must be "sufficient"progress on citizen's rights, the divorce bill and the Irish border issue, before talks can progress to things like trade. The issue of the Irish border is impossible to solve without us understanding the future customs and trade relationships, and even then, many argue it is impossible to solve at all. The 57-odd policy areas that must be negotiated are interlinked such that a conclusion on any one of them will be contingent on the progress of at least some of the others. Still, the EU wants to talk about the divorce bill, citizen's rights and the Irish border, and we are trying to force the issue on customs and trade. The fact that both sides are in disagreement as to how this needs to be done, is, as others have pointed out, very likely to lead to a stalemate, and yet the clock ticks on. The papers the government has released thus far, whilst specific on the objectives, only throw out possibilities rather than positions, and as we have seen by the reactions to the customs and Irish border papers in particular, the possibilities do not hold up to much scrutiny.

As we would expect, the response from Brussels, whilst appreciative of the effort, has not been very positive. One diplomat called the customs proposals a "fairy tale", Juncker said that he's read all of them and none were satisfactory, and Barnier said: “To be honest, I’m concerned. Time passes quickly, we need UK positions on all separation issues. This is necessary to make sufficient progress. We must start negotiating seriously. We need UK papers that are clear in order to have constructive negotiations, and the sooner we remove the ambiguity, the sooner we will be in a position to discuss the future relationship and a transitional period.” With the third round of negotiations about to begin, and the first public update due this Thursday, these comments do not inspire a great deal of confidence.

Here I once again will remind everybody that parking ourselves in the EEA under EFTA jurisdiction would remove us from the time constraint, solve most of these issues at least for the time being, and most importantly, would remove us from the EU. We are facing a gargantuan undertaking and forcing ourselves into a progressively weaker position for no reason whatsoever, with a solution that would deliver an exit from the EU and the commitment to ever closer union right under our noses. 
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In other news, Labour's Keir Starmer has penned a piece laying out the party's new position that they would keep us in the single market and "a customs union" with the EU for a transitional period in order to avoid a cliff-edge. This goes one step further than the Tories' current line, but there is no detail whatsoever about how Labour would seek to achieve such a thing, certainly no mention of the EEA or EFTA. This does throw up the possibility of a parliamentary showdown though, if this is truly a position upon which Labour MPs will rally behind. It is still the position of the government that at some point the Brexit deal will go up for a vote, and there is also the lack of clarity around whether we must formally indicate our intention to leave the EEA. Whilst we are yet to hear from Corbyn or McDonnell on this issue, who have both said previously that SM membership is out of the question, this is potentially another spanner in the works for those seeing a Brexit on the harder side of things.

As I mentioned, we should ghave an update on the progress of the third round of negotiations on Thursday. In the meantime please do check out our podcast (or here for non-iTunes people). It's sounding better than ever and is the only place the really detailed discussions around these issues can be done justice.

​@GMCC_Alex

As they go, last week was a very eventful one. First of all we had the first two of the government's position papers on their plans for future customs arrangements and the Irish border. Then we had two ridiculous papers from the IEA and the Economists for Free Trade (ex-Economists for Brexit). All four of these papers were joyously torn apart on twitter. Thousands of words could be written on the failings of each one, so this week I'm going to let others do my work for me.

The customs paper was bizarre in many ways. The government put forward two highly imaginative suggestions, both of which raised many more questions than they answered. The paper gets a lot wrong. It gets the basic premise of what a customs union is wrong (They are for imposition of a common external tariff and the removal of internal tariffs, rather than removal of non-tariff-barriers[NTBs]), confusing it with customs agreements. It speaks about removal of NTBs (which the single market handles), without mentioning the single market once. It argues essentially for a position which is impossible according to the EU's rec lines, and would ultimately be pointless. The end result it would seem, is to move to a new, technically demanding system that will be an enormous effort to implement, in order to have things stay exactly as they are now, with no possibility of future change. Joe Owen from the Institute for Government does a good job explaining some of these issues ​(click the tweets to follow the threads):

​Richard North does another good fisking over on hisblog. Ian Dunt, I think he would agree, is a relentless pessimist on all things Brexit, but he gothis analysis of this paper totally right. Frances Coppola's take down of the paper's entire premise is razor-sharp.

The issue of the Irish border is inextricably linked to future customs policy, and is useful in illustrating some of the problems with the proposed plans. Both sides want everything to remain exactly as they are today, with there being for all intents and purposes, no border whatsoever. This will not work, because the border will provide a backdoor to the EU for goods and people, something the EU will absolutely not accept. In order for there to be an even remotely frictionless border then, we must align ourselves with the EU and never diverge, as Samuel Lowe explains:

It doesn't make any sense. Both papers not only ask for all the benefits that the single market and the customs union provide without us being in either of them, they necessitate that we bind ourselves to both in such a way that the whole thing is completely pointless. It's an enormous undertaking for no gain. The dangerous aspect of these papers in particular is that for some, any outcome that doesn't allow for things to continue as normal can be said to be the fault of the EU or Ireland, as the fact that we have said "please let's just continue as before" would now put the onus on the other parties to make it so. This is not the case. We voted ourselves into this position and it is up to us to figure out a way to achieve what we want that is acceptable from the point of view of the EU and Ireland. The unfortunate outcome of these papers however, is that the only thing to achieve is to keep things how they already are.

On to the trade papers from both the IEA and Economists for Free-Trade's Patrick Minford.  Both are frankly ridiculous and have been rightly torn apart. Both rely on on traditional libertarian economic trade theory, and take no account whatsoever of the realities of modern trade. The IEA paper in particular also makes some really bad errors around Most Favoured Nation (MFN) rules and what it will mean if we become a third country in trade terms. Both also focus on tariffs, with barely any mention of NTBs. Both hardly mention services, which account for 80%+ of our economy.  Follow the threads below. My favourite trade guy Samuel Lowe goes first. It really is worth reading these threads in full:

Ian Dunt doesn't take kindly to this telegraph coverage. Here he explains how this policy would decimate British industry, and how the policy of unilateral zero tariffs gives away any bargaining power we have in order to negotiate trade deals that remove the real barriers to international trade. It is worth pointing out that a complete decimation of our manufacturing industry is an accepted conclusion in Minford's earlier Brexit works.

Marcus Leroux from the Times points out an obvious error/oversimplification:

The Leave Alliance doesn't hold back on the IEA:

The second report came out over the weekend and was authored by no other than Patrick Minford, an expert in macroeconomics, not trade. Minford's last outing was thoroughly rebutted by many, including a full critique by members of the Centre for Economic Performance at the London School of Economics. Minford's model is heavily assumption based, relying upon pure economic theory without accounting for reality. It also includes a bunch of outright errors:

See here, here, here and here for more criticism of Minford's thinking. The most annoying and dangerous thing about these reports is how they have been routinely covered by media outlets like the BBC without anywhere near enough scrutiny. No serious analysts take this stuff seriously, but they are reported as such. Even more scarily, DexEU's Steve Baker MP immediately congratulated the IEA on their paper, probably because it tells the government exactly what it wants to hear, despite being at odds with reality. This really is dangerous stuff, and I'm glad to see it getting all the negative attention it deserves.

@GMCC_Alex

After last week, some EU officials have been quoted suggesting that the UK government’s approach to Brexit is so chaotic and confused that that it all must be part of some elaborate and cunning plan. One trade attaché said: “I think it’s tactics: they are playing for time on purpose under the pretext of chaos in London. In September they’re going to swamp us with [position] papers on the fault lines — exactly the issues where they know we [the other EU member countries] are divided.” Former diplomat Sir Simon Fraser meanwhile, has said that the negotiations have not begun well, and that cabinet splits are leaving our side without the possibility of a coherent strategy.

Interestingly, whilst I don’t believe that there is a cunning plan at work, the government is set to respond to the calls of incompetence by publishing up to 12 position papers over the next two months. The first two of these papers, on the issues of a transitional customs agreement and how to solve the issue of the Irish border are set to be published next week, and are currently being approved by the cabinet. The papers will begin what ministers are calling a “big push” to counter claims that we currently have no idea what we are supposed to be negotiating. Supposedly, a majority of the work was completed a while ago, although there has been a serious “pick up of the pace” in recent weeks.

If we are to learn about the proposed transition plans as early as next week, it follows that we finally have some agreement within the cabinet on this issue following the flip-flopping of the last few weeks. Bloomberg is reporting that even ardent Brexiteers in the cabinet now accept that a transition is unavoidable, but with the issue of continued freedom of movement still up in the air, how much detail we see next week will be interesting to see. Going on previous releases, there won’t be nearly enough of it. There is also the pretty big question of what exactly we are going to transition to, although the chances of anybody having a clue on that front are even slimmer.

As to the negotiations themselves, the third round is set to start sometime within the next two weeks, with the primary matter of citizens’ rights still unresolved. Despite this, it is the divorce bill which is grabbing all the headlines, with the EU apparently trying to rush through a bill of £36bn over three years whilst many members of the cabinet are on holiday. It is rumoured that Barnier has suggested that the negotiation rounds due for October may not be scheduled until this matter is sorted. The reporting of this has been a bit muddled, with early reports suggesting that we were ready to compromise on the bill in order to progress the negotiations. Downing Street then said that Theresa May "does not recognise" the figure, although her spokesperson did reiterate that a financial settlement is expected. Some hard-line Brexit MPs like John Redwood and Jacob Rees-Mogg however, still insist that we shouldn’t have to pay anything at all. It is all well and good publishing position papers on other issues, but until these two primary things are agreed upon the EU is reluctant to talk about anything else. I expect there to be a major compromise on the horizon, particularly on the issue of citizens rights, but likely also on the divorce bill, if the government wants to make any significant progress sooner rather than later. The clock is ticking.

Finally, the conversation around the possibility of EEA/EFTA membership continues to creep on. This piece in the FT does a good job at explaining the strategy but falls into some of the same traps that others continue to, namely around Norway being “a rule taker, not a rule maker” and continuing to pay into the EU budget. This paper from EFTA4UK is worth reading, doing a good job of showing why things aren’t that simple, and that Norway is in a better position than most realise.

@GMCC_Alex

 Okay, all bets are off. In my last blog I described how it seemed that ministers were adjusting their approaches and that a path may be developing. Last week however, with parliament in recess and Theresa May on holiday, there were a raft of announcements on our Brexit strategy that are almost so contradictory and difficult to draw meaning from that they are not worth analysing. One thing is clear: 13 months on from the referendum we are still nowhere near there being any agreement on Brexit amongst those ultimately in charge of it.

We had announcements last week that Fox and Gove were now accepting Hammond’s line on the need for a transition deal, and that free movement would continue beyond 2019. Now, Liam Fox has said that he has “not been party” to any such agreement with his colleagues and that continued free movement would defy the referendum result. Then, Boris had to deny that he was going to resign over disagreements within the cabinet. Then, yesterday morning, Downing Street attempted to clear things up by saying that there would be a transition, but that free movement would end in 2019. We are expecting some detail on new immigration systems at some point then, but the Prime Minister ‘spokesperson said that "It would be wrong to speculate on what these might look like or to suggest that free movement will continue as it is now”. Ian Dunt put it nicely:

It also seemed just a couple of weeks ago that we were moving closer to an “off the shelf” transition deal akin to the EEA/EFTA model. This message seemed to stem primarily from Phillip Hammond, who had apparently said something similar to business leaders. Now though, another statement from number 10 has said that the UK will not seek an “off the shelf model”, and that the details of any transition period will be a matter of negotiation.
I don’t see how any meaning can be drawn from any of this, except that we still clearly do not have an agreed position within the government. If this is the case, then what on earth is David Davis actually trying to negotiate? The prospect of everything that needs to be done by 29th March 2019 actually getting done by then is looking slimmer by the day, and any confidence I had last week has been swiftly eroded. It’s a shambles.

On the other side of the house, things do not look much better. There is absolutely no agreement within the Labour party on whether or not we should remain in the single market and the customs union, and a clear party line is becoming harder and harder to find outside of the manifesto. One thing that strikes me about this part of the conversation, is that the single market and the customs union are always approached like a package deal, where we should be in both or neither. This misses the point that “the” customs union (it isn’t the only one in the world, and they are all different) really isn’t as black and white as people think, and that there are a number of way for us to cooperate on customs whilst being free from the Common Commercial Policy (the best of these ways being through the EEA). For some Brexiteers, “the” CU is a red line because of the incorrect association with the Common Commercial Policy – which is a separate thing. Whilst for remainers, “the” CU is a red line because of the incorrect association with the removal of internal non-tariff barriers – which are more related to the SM and can be overcome in a number of other ways. Our ongoing customs relationship really isn’t a binary choice, and so it shouldn’t be discussed in such terms.
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If this week is anything like the last one, I may not do a blog. Or I may just put my face on my keyboard and post that.

Last week's podcast was perhaps the best one yet. We spoke about the need for the EEA, trade, regulation, and chlorinated chicken. Listen here.

@GMCC_Alex

What an odd week it has been. I wrote last week of how the Tories’ best option would be to have a big rethink about how they are approaching Brexit, and what they expect to achieve. It felt more than ever that, whatever anybody's personal opinions on Brexit may be, we were reaching peak "they are going to screw this up for everybody, aren't they?" This led to the podcast we recorded last week being absolutely the most depressing yet. I’m not saying any of this has changed, but something interesting seems to have happened.

The idea for this week’s podcast had been to outline how we would do Brexit and to explain what we think we might get out of it; a positive and productive episode to offset the doom-mongering of last week. Broadly, we would outline how our opinion on this hasn’t changed in 18 months, and that the only way to do Brexit successfully is through membership of the EEA and EFTA. At the end of last week’s blog, I mentioned how this strategy had started to come back into the conversation. Michel Barnier seems increasingly keen to make it obvious that this route is a good idea and an acceptable compromise. EFTA representatives are suggesting they would be happy for us to become a member, and there are rumours of increasing support for the idea within the government. Then of course, we had the 2nd official round of negotiations, and everything looked depressing as usual. It was reported that there were significant disagreements over citizens’ rights, in particular because the rights of those citizens will have to be overseen by a supranational court - normally the ECJ, but this would cross one of the Tories red lines and so no agreement was reached. The talks were totally unproductive, it would seem. Then, Barnier was asked a few questions about ways to resolve the issue:

Once again, he made it clear that EFTA was a sensible compromise. The usual response from our side would be to completely ignore the suggestion, as they did, but then something else happened. Our side appeared to readjust their expectations. There was this scoop from the Huffington Post setting out how both Fox and Davis appear to have concede to Hammond’s idea of an implementation period, but more importantly, that freedom of movement would continue for at least two years after 2019, likely until 2022. Now, if that is the case, it would follow that this means single market membership until 2022, wouldn’t it? Then there is this article in the Guardian, where Fox again suggests that a transition period will go onto 2022, and there is this line: “Last week, senior cabinet sources suggested the government was united in its need to seek an “off-the-shelf” transitional arrangement, in which Britain would likely remain in the single market and retain free movement for at least two years after the UK formally leaves the EU in March 2019.” Then there was this article in the Telegraph, reporting that a group of Tory MPs have been meeting Labour MPs in order to push the Norway Option. There seems to be clues everywhere, we are now just waiting for one of the Brexiteers to explicitly address the EEA/EFTA possibility, and put the strategy firmly back into play.

​Meanwhile, Jeremy Corbyn has been on TV saying that “The single market is dependent on EU membership”, which is just bizarre. He then supported his statement by saying that they are “inextricably linked”, which is just completely untrue. I’m pretty sure everybody knows this now, I mean, even a totally uniformed person could disprove this in about 20 seconds. The question is, does Jeremy not actually know what he is talking about, or is he deliberately employing the tactics of say, Vote Leave, in brushing over some important details in order to justify his increasingly untenable position on the single market?

I’ll leave you with a few things to read. The big one is this report from The UK in a Changing Europe, which is a great overview of the horrors that no deal might entail. I wouldn’t say it does a comprehensive job in that regard, but it certainly exposes some of the rubbish still being pushed by some on the same topic, like this. This article in CapX is brilliant on why Norway is the way to go, and Stephen Bush in the New Statesmen is good on the possibility of a transition. Finally, this piece in The Conversation and this in the LSE blog explore the possibility of joining EFTA.

@GMCC_Alex