Having voted to leave the European Union in a referendum, Britain is now expected to initiate that process by triggering Article 50 of the Treaty of Lisbon. This was designed to reduce uncertainty in the event of an EU Member State wanting to leave, by providing for a two-year negotiation period.
In fact, it will have the opposite effect. In any political negotiations, both sides tend to adopt extreme positions in order to get the other to make concessions. Only just before the clock strikes twelve does agreement break out – if indeed it does. Such a game of chicken hardly encourages investors, as we discovered during the trade unions v government disputes of the 1960s and 1970s. Article 50 is a recipe for two years of uncertainty – or maybe three or four, knowing how these things are often eked out.
And what will we achieve from all this stress? Probably, two-thirds of diddly squat, which is what David Cameron got from his great ‘Renegotiation’ back in the Spring. The reason is that, if the EU concedes anything to us, it will face demands from other nations, both in the EU and outside, for a bit of the same. Give us a special deal, and everyone will want one.
A third problem is that it is not the leaders of the 27 other nations who will lead the discussions, but the eurocrats in Brussels. How else could it be? You cannot have 28 people round a negotiating table and expect agreement. But, as we have seen, the folk in Brussels are the most intransigent negotiators. They are invested in The Project, and the UK has put two fingers up in their face. Again, concede to us and The Project of ever closer union disintegrates, along with their own purpose, jobs and pensions. (Well, not pensions, of course.)
German carmakers and French food and pharma companies and everyone else who benefits from the UK’s £60-£90 billion trade deficit with the EU might be keen to keep tariff-free trading links open with the UK, fully aware that the UK, as the world’s fifth largest economy, would be good to keep sweet. But those who are actually leading the negotiations have a different, more political, agenda.
So two or more years of Article 50 negotiation will be worse than a waste of time. It will simply generate bitterness between the UK and the rest of the EU, and stir up uncertainty among investors on both sides of the English Channel. So what is to be done?
We could, of course, take the off-the-peg EEA solution, the ‘Norway model’. But that still means paying in to the EU budget and a large measure of free movement of workers, which were firmly rejected in the Referendum. And as Prime Minister Theresa May tells us, “Brexit means Brexit”. But her Great Repeal Bill idea of taking all EU law into UK law – where we can amend or scrap it as we like, on or own timetable, makes perfect sense.
Given that Article 50 will take us nowhere, however, the best thing is simply to invoke it and leave. Goodbye to the single market and the customs union, we will be governed by the WTO rules that actually govern our trade with the other 80% of the world. Since the rest of the world is 60% of our trade and rising (and the EU is 40% and falling), what’s the loss? Would our financial services be ruined because of the loss of passporting? Hardly, we were No1 before passporting, and our biggest single services customer is America, where we don’t have passporting. And in any case, we do not have a single market in services. It’s one of our biggest irritations, but it’s never going to change.
And the true meaning of ‘customs union’ is ‘protectionist club’. The average tariff is only 2.4% – so it is no big deal either way. But the EU raises large tariffs against certain products, especially food products, to protect its own farmers. Outside the customs union, we could buy food from the whole world, much cheaper. Our old Commonwealth partners would be delighted to sell it to us. That is good for us, and good for the poorest in many developing countries in particular. Not only the UK, and UK business, would benefit from us simply leaving, and making an offer to all the world to trade with zero tariffs. Some of the world’s poorest would too. But also, we would end all this Brexit bickering and be able to get on with real life.