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):
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):
With the release of the government position paper on customs and lots of words like ‘bespoke’/‘frictionless’/‘interim’/‘ new tech’… 1/
— Joe Owen (@jl_owen) August 15, 2017
1. In talking of the EU Customs Union, today's government paper is an exercise in deceit. https://t.co/wbTAeL7J7y
— RichardAENorth (@RichardAENorth) August 15, 2017
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:
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:
One prerequisite for a frictionless Irish border is that the UK maintains and continues to follow the EU food safety regime ... forever.
— Samuel Lowe (@SamuelMarcLowe) August 16, 2017
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:
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:
I've started reading the actual report, and I'm not yet convinced the author knows how trade liberalisation actually works. pic.twitter.com/8ctn8e0zXF
— Samuel Lowe (@SamuelMarcLowe) August 18, 2017
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.
Second par of this piece is so spectacularly stupid I'm honestly not sure I have the vocabulary to do it justice https://t.co/fOSdTlFWEa
— Ian Dunt (@IanDunt) August 18, 2017
Marcus Leroux from the Times points out an obvious error/oversimplification:
This is pg1 of IEA paper. Either it doesn't understand WTO rules. Or it expects EU to drop all tariffs for everyone. pic.twitter.com/ahXRvvKsIo
— Marcus Leroux (@marcusleroux) August 18, 2017
The Leave Alliance doesn't hold back on the IEA:
1. The Leave Alliance does not in any way endorse the IEA's latest paper...https://t.co/MhUlr4XFmj #Brexit
— The Leave Alliance (@LeaveHQ) August 18, 2017
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:
Earlier this year Patrick Minford wrote a paper claiming unilateral tariff disarmament would be great for UK manufacturing.
— Samuel Lowe (@SamuelMarcLowe) August 20, 2017
Prof Winters critiques the only economic study showing #Brexit will benefit UK & finds it 'doubly misleading': https://t.co/RN35aMb31C
— UK TPO (@uk_tpo) April 24, 2017
An amazing detail from Minford's "Economists for Brexit" paper - they believe there are border checks on the Northern Ireland/Irish border. https://t.co/lms0QKNiGY
— Steve Peers (@StevePeers) August 20, 2017
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.
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