Barnier and the Tantalus game


The EU has laid out its negotiating strategy for Brexit. Well, not officially yet, of course - the letter triggering Article 50 won't be delivered until tomorrow, 29th March. But as is its wont, it has made its intentions clear in the press.

In an op-ed in the FT, Michel Barnier, the EU's chief negotiator, has stated in no uncertain terms how he expects the negotiations to proceed. He identifies three crucial issues that must be resolved before there can be any discussion of future trading arrangements between the EU and UK:

  • the rights of EU citizens living and working in the UK
  • continuing funding for current beneficiaries of EU programmes
  • the border between the Republic of Ireland and Northern Ireland. 

The first of these responds to Theresa May's continued refusal to guarantee the rights of EU citizens currently living in the UK. Tellingly, Barnier makes no mention of UK citizens living in the EU. If May won't guarantee EU citizens' rights, he implies, the EU won't protect the thousands of UK pensioners living in Spain, France, Portugal and other sunny South European countries. It will be up to the governments of those countries to decide what happens to them. Nice.

The second is code for "we want our money". This is the contentious 60bn Euros the European Commission says the UK must pay when it leaves the EU. According to the FT, the bill is for "unpaid budget commitments, pension liabilities, loan guarantees and spending on UK-based projects". Unsurprisingly, hardline Brexiters object to this: UKIP's Suzanne Evans told a BBC Question Time audience that Britain "should not pay a penny" when it leaves the EU, and prominent Tory Leaver Iain Duncan Smith outlined a UK claim to a share of EU assets that he suggested would be more than enough to eliminate any UK liability.

It seems likely that the eventual bill will be significantly less than 60bn Euros, but well above zero. This is something of a problem for Brexiteers, who have already had to row back on their promise of an extra £350m per week for the NHS and are now faced with the likelihood that leaving the EU will actually cost the UK money. I'm not sure how they will explain this to the British people, but they will no doubt find someone to blame. Probably Theresa May.

The first two negotiating conditions set by Barnier should come as no surprise. But the third is new. The UK government has so far treated the question of the Northern Ireland border and the Good Friday Agreement as entirely a domestic matter. Barnier, it seems, disagrees. And he has a point. After all, it is the EU's border too, and reneging on the Good Friday Agreement would threaten the security of one of its remaining member states. If the UK can demand control of its borders, so can the EU.

Barnier makes it clear that trade is simply not on the table until the EU's priority issues are resolved:
If we cannot resolve these three significant uncertainties at an early stage, we run the risk of failure. Putting things in the right order maximises the chances of reaching an agreement. This means agreeing on the orderly withdrawal of the UK before negotiating any future trade deal. 
Note that although Barnier has specifically cited three issues, he has not limited the conditions to these three alone. The "orderly withdrawal of the UK" can mean whatever the EU wants it to mean.

Keeping trade off the table until everything else is agreed puts the UK into the same negotiating position as Greece. Before it can have the debt relief it so desperately needs, Greece must comply with all the conditions set by its creditors. And every time Greece seems to be getting close to meeting conditions for debt relief, the creditors set more conditions, or find reasons to claim conditions have not been met. Similarly, we can expect that every time the UK gets close to agreeing terms that would enable trade negotiations to start, further issues will be raised. This is the Tantalus game - and the EU is an expert player.

But why is the EU planning to play the Tantalus game? Well, it is all because of the attitude of the Brexit camp in the UK government. From the start, they have emphasised trade over everything else. They could hardly have made it clearer that for the UK, a new trade agreement is paramount. But the EU has much less need for a new trade agreement than the UK does.

The Brexiteers have repeatedly claimed that the EU will be so desperate for a trade deal that it will give the UK special terms amounting to single market benefits without the costs. "Just think about all those German cars!" they cry. But the evidence is that the UK has far more to lose from departure without a trade agreement than the EU does. And the EU's negotiating stance, as laid out in Barnier's op-ed, confirms that view.

There are overwhelming political reasons for the EU to be extremely unwilling to cut such a deal anyway. Giving a non-EU state the same access to EU markets as EU member states would strike a mortal blow to the EU political project. The Brexiteers cheerfully assume that for the EU, the economics of Brexit would trump the politics, even though their own Leave campaign was successful precisely because in the UK, politics trumped economics. But events in the last few years have demonstrated beyond any possible doubt that maintaining the EU project will be far more important for the EU negotiators than any amount of economic pain for the member states. Politically, allowing the UK to leave the EU with no trade deal is a much better outcome for the EU than giving the UK trade terms similar to those it enjoys now.

By overemphasising trade, discounting political imperatives and overstating the UK's position, the Brexiteers have played right into Barnier's hands. Hello, Tantalus.

Unfortunately, the UK cannot afford to play Tantalus.There was no end to his misery: but for the UK, there will be an end, and it is all too soon. Article 50's hard deadline means that the UK is negotiating with a gun to its head. It is more Tosca than Tantalus. Barnier (perhaps we should call him Scarpia?) spells this out:
The sooner we agree on these principles, the more time we will have to discuss our future partnership.
You only have two years, Theresa. If you wish to save the UK from the trade firing squad, just agree to our terms on everything else.

But the firing squad might proceed with the execution anyway. Even if the EU could agree the terms of a new trade agreement within two years - which is doubtful, since getting EU member states to agree is like herding cats - enacting it on the UK's exit may be impossible for legal reasons. The EU is hoist by its own Treaties.

Article 50 has not even been triggered yet, but the Brexit team has already managed to compromise the UK's negotiating position with its toxic combination of ignorance, arrogance and foolishness. This is a very bad start, Theresa.

Related reading:

Game theory in Brexitland


Comments

  1. It seems to me that the only way that the UK could get an agreement in the time - scale may be for it to be extremely generous to all 27 member states. As far as I can see Poland is looking for British troops near the Russian border plus some extra money on top of the 60bn. This could get very expensive for the UK if it has to buy the goodwill of all 27.

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  2. I read the following somewhere a while back which seems to put quite succinctly the predicament of the UK in what is about to be invoked: -

    "Once article 50 is triggered, there is a two-year time limit to complete negotiations. If negotiations fail to reach agreement, the member state leaves with nothing. This process is generally accepted to leave a seceding member without any bargaining power in negotiations, because the costs of having no trade treaty would be proportionally far greater to the seceding individual state than the remaining EU bloc"

    It seems pretty self evident that the above is the case, yet for some reason it has failed to register with the Brexiteers or indeed the ministers about to start the negotiations. There is a delusion that the EU has as much to lose as the UK, but if a 'no deal' is indeed M.A.D. then the EU 'D' is Damage to the UK's the more traditional Destruction.

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  3. Im unhappy with brexit as I value free movement but I agree with mervyn king. We have to keep it simple. Which means keeping negotiating to a minimum. Brexit is going to be a horrendous distraction from the issues of inequality, health care and pension provision.
    It's the one way to get up the noses of the Brexitier politicians is to tell them it's insignificant when considering whole picture.

    Mpc

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    1. Frances has pointed out the tough EU negotiating position, for example the horrible EU treatment of Greece. It occurs to me that UK government is more than prepared to hand out the 'Greece treatment' to its own citizens. Osborne austerity already had much in common, passing on the cost of 2008 financial failure to those least able to bear it. We can expect more of the same.

      A nice little Cold War with the EU will distract the English British very usefully and will trump economics. The 'class' issue can be put back to sleep with the long term defeat of the Labour Party. No Scottish MPs (see pre-Corbyn general election) means no Labour Government in prospect. The English Working Class or rather its present descendents must get behind a 'wartime' May / Tory government. Expect the worse for the distributive public realm!

      BTW There are more than 3 million non-British EU citizens living / working in the UK.

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    2. «for example the horrible EU treatment of Greece»

      Indeed: the UK government vetoed the lending or spending of even a penny of EU money to help Greece.

      Because of that the Eurozone governments had to spend quite a bit of time and resources creating a set of parallel treaties that did not involve the UK in the programme to help Greece, and very generously prevented the formal bankruptcy of the greek government with enormous discounts on the greek government debt and the supply of a lot of cash to roll them over, without any EU involvement as the UK had vetoed it.
      At the same time the USA also refused to provide any support to the greek government, directly, and only minimal help via the IMF, that never offers any discount on their debt.

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    3. «UK government is more than prepared to hand out the 'Greece treatment' to its own citizens. Osborne austerity»

      That is the usual fantasy pushed by establishment Economists like Simon Wren-Lewis: the G Osborne government handed out the "Santa Claus" treatment to its own citizens, with extremely credit and monetary policy to make property prices boom and even with huge handouts like 4% "pensioner bonds". G Osborne has had a policy very far from mythical "austerity", one of simple redistribution: less for Labour voters, more, much more, for Conservative voters.and affluent swing voters. Similarly to the USA, where an ex-FOMC member wrote:

      globaleconomicanalysis.blogspot.co.uk/2016/01/former-dallas-fed-governor-richard.html
      «What the Fed did, and I was part of that group, we frontloaded a tremendous market rally starting in march of 2009. It was sort of a reverse Wimpy factor. Give me two hamburgers today for one tomorrow. We had a tremendous rally and I think there's a great digestive period that's likely to take place now. And it may continue. Once again, we frontloaded, at the federal reserve, an enormous rally in order to accomplish a wealth effect.»

      When some authors "mistakenly" describe a redistributive policy as an austerity policy the goal seems to me to prepare the ground for a further round of monetary policy loosening, because it is pretty obvious that their apparent advocacy of looser fiscal policy is never going to happen without a pretty large change of politics, which they studiously never advocate, perhaps "because non-partisan" :-).

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  4. This is a rehash of a comment I left over on Flipchart Fairy Tales. As far as I understand Article 50 and the EU position we are just discussing the terms of negotiations over the next two years. We need to choose a framework such as remaining in EFTA or a Norway/Swiss style option. The only other alternative is WTO rules, ie the cliff edge.

    In the event of us actually following through on A50, which we won't, negotiations only start proper after two years have elapsed. bill40

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  5. Article 50 provides the leaving state with the opportunity to agree a leaving settlement - an EU priority - and a framework for future relations with the EU. Nowhere does it mention a trade deal. Which is why the government is talking about a transition arrangement, which could last for decades, while a free trade agreement is negotiated. It is unlikely the UK will leave without such an arrangement - it would be political suicide for the Conservative Party. But then - thinking about it - they could be that stupid!

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    1. The Government may talk about a transitional arrangement but they have also ruled out the most obvious mechanism for it, namely EFTA/EEA. I agree that one is needed to mitigate the economic fallout but the Government appear to have limited their options before TEU50 has even been invoked.

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    2. «agree a leaving settlement - an EU priority - and a framework for future relations with the EU.»

      It does not empower making an agreement on a "framework for future relations", the letter of the article is «taking into account the framework», and obviously "taking into account the framework" does not mean "making a new framework".
      The "framework" to be taken into account is whatever the status will be on day 1 of exit, that is third party status plus whatever other non-EU treaties will still exist, like the WTO agreements.
      Only TFEU art 207 and 218 empower the EU institutions to make new agreements, and only with third party countries.
      I used to be of the opinion that the EU27 governments could take a very imaginative reading of the narrow wording «taking into account», but that was until I read FlipChartFairyTales arguing that any exit agreement and trade deal will be likely challenged in court if not minimal, and reports that M Barnier's confirmed that no trade agreement will be done before exit.
      For the EU27 pushing the boundaries with an imaginative reinterpretation of «taking into account» is simply too risky, for too little gain.

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    3. One of the attractions of a fast hard exit is that it stops all this nonsense. It gets us into a place where we can start to trade with other countries even if only under WTO.

      There is lots of discussion in places about how hard WTO will be with customs and inspections blah blah blah but the WTO exists to facilitate world trade not to stop it, and all those EU regulations and customs rules still give us beef that was actually horse meat and fraudulent diesel tests meaning our cities have been pumped full of deadly particulates, so the bar on customs and regulations on leaving is not very high.

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    4. I agree but for different reasons, I have no objection to horse meat and I have two VW diesels which I am very happy with, My reasoning is that the the only argument the leavers are going to be influenced by will be a hard Brexit which will bring this farce to a rapid conclusion

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  6. It's not just about a longterm 10-15% hit to GDP, a hard Brexit means the UK's trade system falling apart just as surely as Greece leaving the Euro without Drachmas printed in advance would cause massive short term damage.

    The UK lacks a customs code of its own. Dover would become clogged up very quickly due to the increased amount of inspections. Trucks could be backed up to London in fact since France doesn't have enough customs posts. On 23/06/2016, Drivers were left waiting for 12 hours and there were tailbacks for 12 miles as French authorities checked every passport. Imagine this for all transit to the EU, with customs being maliciously conducted at a snails pace.

    All the FTA and mutual standards recognition agreements the EU has negotiated - gone. British exports to Canada would treated exactly like they came from Afghanistan.

    The EU would pursue the UK through every international forum and court to get the money it is owed. It might be allowed to impose punitive tariffs under WTO rules. With such a damaged reputation, the UK would find it hard to negotiate trade deals.

    British chemical firms would be kicked out of REACH and so on.

    Without regulators and EU law properly replaced, the UK would be like 1990s Russia with no idea of what is legal or not and tainted products and services being sold.

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    1. This comment has been removed by the author.

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    2. "It might be allowed to impose punitive tariffs under WTO rules"

      Don't think so. The WTO position is clear: "A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals."

      https://www.wto.org/english/thewto_e/whatis_e/what_stand_for_e.htm

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  7. I think the UK has to remain strong. It is one of the largest economies in the world still. The EU will most likely falter at some point anyway with the impending debt crisis in the Mediterranean states. Germany can't hold everything together on it's own without the UK and possibly France to back it up.

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    1. Ireland would be forced to impose barriers to uphold the customs union and protect the Single Market. The UK is choosing to remove itself from this space of its own free will.

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  10. "He identifies three crucial issues that must be resolved ... the border between the Republic of Ireland and Northern Ireland."

    hmmm. Why? As you point out if the UK and Ireland were left to our own devices we would do the minimum to disrupt trade flow across his border. No matter what the letter says, neither side is going to put posts up and guards and stop everything coming through. So why is he poking his nose in? It is not as though he can do anything to make the border easier to manage than the UK and Ireland can manage together, so presumably he is making this a priority to make this difficult.

    Is he intending to insist on a hard border? And if so how is the EU going to police it? Is he going to send his own officials to construct and staff border crossings? Are they going to start putting fines or punishments on both parties?

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    1. Ireland is part of the EU, the Commission is representing Ireland in the negotiations. I haven't heard any complants from the Irish Government here.

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    2. @1729torus

      According to the Irish Times the border is a concern to the Irish Government.

      http://www.irishtimes.com/news/politics/ireland-to-resist-hard-border-after-brexit-vows-taoiseach-1.2979809.

      You say above that Ireland "would be forced to impose barriers to uphold the customs union and protect the single market". Just to make point, as I live in the SE of England nothing that happens on the Ireland/UK border is going to directly affect me. So the only people who the EU would be punishing with this action are NI who voted to remain and Ireland who haven't voted at all.

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    3. ... and just to correct my last statement, it is a concern to Ireland that much of their exports that currently travel by Lorry across the mainland of the UK from port to port will now no longer be able to do that due to passing out of the customs union. That would be a direct benefit to me as my motorways be less congested. However, as I'm a generous and thoughtful kind of person and wish no-one any ill-will, I'd consider congestion on our motorways a small price to pay if it benefits our neighbours in Ireland. Perhaps the EU might consider some means of permitting transport across the UK and being virtually in the customs union. Number plate recognition technology could verify that the Lorries have not left the motorway system, for instance.

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    4. A border is of concern to SE England and the British economy as well, arguably more so in fact:



      Dover ferry port chaos as delays and 15-hour queues could last until MONDAY | Daily Mail Online

      Cross-country transit is dealt with by the eTIR convention, and the loss would harm the Welsh economy in any case. This was one of the Welsh governments biggest concerns in fact, that Irish traffic would be rerouted post-Brexit, either by ship or transit through Northern Ireland instead.

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    5. I agree with Dipper: what's the Irish border got to do with Barnier? If the UK leaves the EU, the border between Northern Ireland and the Republic becomes essentially the same as the French / English Channel "border". As long as North and South Ireland abide by EU rules, Barnier has no right to object. Moreover if North and South Ireland, after UK exit from the EU, set up an arrangement a bit different to the English Channel border, and that is within the rules of the EU, the again, that's nothing to do with Barnier. In contrast, if the UK and the Republic flout EU rules, then when that happens and not before, then Barnier and his Brussels cronies can legitimately object.

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    6. It could of course be that the Irish asked Barnier to raise the matter. Much of what the Commission does is at the request of member states. If the Irish wanted to be awkward they might wish to have the Commission fronting for them.

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    7. I have looked at the draft guidelines produced for the Council of Ministers by Tusk. It seems pretty clear from those that the EU intends to negotiate on behalf of member states to ensure a united front. Given the UK has shown hopes of employing divide and rule tactics this is hardly surprising even where discussion is on UK /Irish border issues.

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  11. You have stated over a number of posts that you think the government is screwing up their approach to Brexit. What is it you suggest they do? How should they approach the EU?

    You have repeatedly made the point that in your opinion all the cards are in the EUs hands and that if we resist we will get punished. Where do you think this leaves the UK? If we lose this trial of strength what kind of politics would we be left with? What kind of outcomes do people with no power over their own lives generally experience?

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  12. The border between England and the continent is a concern to SE England, but the border between NI and Ireland isn't. Were the EU to insist on a hard border within Ireland that would be like punishing my neighbour because of something I had done.

    Your reference to the article is a bit strange. The logic seems to be that France did this to show what could happen when we leave the EU. But the fact that they've done it whilst we are in the EU shows this is an action they can take any time regardless of whether we are in the EU.

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  13. Unfortunately, the UK cannot afford to play Tantalus.There was no end to his misery: but for the UK, there will be an end, and it is all too soon. Article 50's hard deadline means that the UK is negotiating with a gun to its head.

    The situation is slightly more nuanced, the EU would prefer that the current arrangements are preserved for around 3-5 years or so to allow itself and its members to adjust and adapt to the possibility of Hard Brexit and to build a "firewall". But it also wants to make an example of the UK.

    The solution is simple. If the clock looks like it's about to run out before the EU is entirely comfortable, just offer a six month A50 extension as necessary. The UK will accept because it has no choice [see my other comment], but by doing so it will have admitted that its threat to walk was a bluff, like Greece and the Euro. Boris Johnson and Theresa May will have admitted that remaining in the EU is better than WTO.

    Six month extensions will then be to the UK what ELA was to Greece, for as long as suits the EU and its members.

    This will be a living death for the UK, the threat of the next extension being vetoed will create considerable uncertainty and shorten time horizons everywhere.

    Firms will continue to move to the continent, and be less inclined to invest in the UK unless they can get their money back within 3-6 months.

    The UK would have no initiative in foreign policy at all. It would be able to object to Spain pressuring Gibraltar, or Greece suggesting the Elgin marbles be returned. The Army would have to stay close to Britain to provide emergency support post-Brexit. Any EU member could offer its views on Scottish independence, and the UK would have to keep fairly quiet

    Eventually, by 2021-2024 or so, the UK would likely have the institutions in place to leave and/or call the EU's bluff, but it will be much weakened from being bled, with less leverage over the EU. The EU might arrange for an extension to be vetoed around 2020, just because it was sufficiently diversified

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    1. "Boris Johnson and Theresa May will have admitted that remaining in the EU is better than WTO"

      This is a common thread at the moment, but what kind of a future does that give the UK? If we have tried to leave and failed we will have absolutely no influence over anything again. The Commission's projection of the UK becoming the most populous nation in the EU by 2050/60 becomes a reality, and the nation having had a 25% increasing in population without most of the necessary infrastructure becomes just a dumping ground for surplus labour unable to be employed on the continent due to German deflationary policies.

      Its easy to say we will lose this step, but then we lose the next and the next. So we will not cave in this time.

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    2. Why do we consider Brexit a one off event when? If we are going to mitigate the economic damage, we should be thinking of it as a process.

      The UK has spent the last 40 years integrating itself into EU institutions with the effect that it has lost expertise in many areas as well as the independent institutions that would mirror those carried out in the EU at this time (with respect to trade & customs in particular). Surely it is sensible to adopt a transitional policy by joining one of the off the shelf options already available - EFTA/EEA for example if the current political environment precludes the more obvious single market option. We can then sit in this transitional arrangement while re-building the previously mentioned expertise and intuitions necessary to “go it alone”
      This is would not be “caving in”, it is a sensible and pragmatic approach to withdrawing from an incredibly complex supranational organisation that we have been part of for 4 decades.

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    3. «Boris Johnson and Theresa May will have admitted that remaining in the EU is better than WTO.»

      Perhaps Boris Johnson has just started his campaign to challenge Theresa May as Conservative leader on a "soft exit - single market" programme against her "hard exit - no single market" plan as a recent interview of a Conservative MP may hint:

      /www.theguardian.com/politics/2017/mar/28/tory-mp-says-brexiteers-suppress-opposition-by-branding-it-subversive#comment-95769489

      «Herbert also claimed that a Tory government led by Boris Johnson rather than Theresa May might have pushed for further renegotiations after the referendum and made a “full-blooded Brexit” less likely.»

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  14. «the UK has far more to lose from departure without a trade agreement than the EU does. And the EU's negotiating stance, as laid out in Barnier's op-ed, confirms that view.»

    Ah the usual wild optimism... As FlipChartFairyTalkes.WordPress.com points out, there is a good chance that any exit wrap-up agreement or trade deal will be challenged in the ECJ or in UK courts by UK hard-exiters or by some EU interest.

    The issue is that TEU art. 50 only empowers the EU Council to negotiate an exit wrap-up agreement. For a trade deal the EU council has only powers from TFEU art. 207 and/or TFEU art 218, and these allow only negotiations with third parties, not with members.
    This is a case where the EU institutions and members must move with great cautiousness and never even come close to test or push the boundaries of what the EU treaties empower the EU institutions to do, because the UK allegedly is leaving because of the constant bullying and subjugation of UK powers to a power-grabbing EU. Trade deals as a rule have to be ratified by all memember countries, while wrap-up agreements can be ratified just by the EU council if their scope is narrow. The result is that the EU institutions will make a very sharp distinction:

    https://www.theguardian.com/politics/2017/mar/29/first-eu-response-to-article-50-takes-tough-line-on-transitional-deal
    «A withdrawal agreement, covering financial liabilities, citizens’ rights and the border in Ireland, will need to be accepted by a qualified majority of 72% of the EU’s remaining 27 member states, representing 65% of the population. The agreement would then need to be approved by the European parliament, voting by a simple majority.
    Barnier has said that any free trade deal, to be struck after the UK leaves, would be a “mixed agreement” requiring ratification by the national parliaments of the 27 states, plus consent by the European parliament.
    »

    If the exit wrap-up agreement or any trade deal contain the slightest "subjugation" of UK sovereignty to the EU27 or are negotiated by seemingly exceeding the powers given to the EU institutions, it seems very likely to me that hard-clean exit UK groups like "Leave means Leave" will challenge them in court, which would be a political and public relations disaster for the EU27, never mind the UK government.

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    1. I don't see that hard-brexiters would have any chance in court of stopping a process that had been through parliament and accepted there. On what basis? On the basis of the referendum which famously did not go any further than leaving the EU and legally speaking was only advisory?

      The difficulty of exiting the EU and negotiating a trade deal is one of those issues that clarifies the difference between the two camps. Remainers regard this as evidence that the world is highly complex and risky and it is madness to move out of the protective umbrella of the EU. Leavers regard this as the suffocating stifling nature of the EU and that we need to get completely out ASAP.

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    2. «hard-brexiters would have any chance in court of stopping a process that had been through parliament and accepted there. On what basis?»

      ON the basis that as long as the UK was member the EU treaties were the law in the UK too and the agreements were done in violation of those treaties.

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  15. @Dipper
    "If we have tried to leave and failed we will have absolutely no influence over anything again."
    After we have left and revealed just how weak and palsied the British economy really is after decades of under-investment and short-termism, just how much influence do you think an isolated, increasingly impoverished middle-ranking state on the fringes of Europe will have then?

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    1. «@Dipper
      "If we have tried to leave and failed we will have absolutely no influence over anything again."
      After we have left and revealed just how weak and palsied the British economy really is»

      That is a fairly optimistic argument, the UK is so politically and militarily weak that the US secretary of defense or USA national security adviser can sack the the UK foreign secretary, compare:

      Andrew Marr: “In 1942, as Rommel’s tanks drew nearer, and Churchill was fulminating about Cairo being a nest of ‘Hun spies’, the British ambassador told Egypt’s King Farouk that his prime minister was not considered sufficiently anti-German and would have to be replaced. The King summoned his limited reserves of pride and refused. It was, he insisted, a step too far, a breach of the 1937 treaty.
      Britain’s ambassador simply called up armoured cars, a couple of tanks and some soldiers and surrounded King Farouk in his palace. The ambassador walked in and ordered the monarch to sign a grovelling letter of abdication, renouncing and abandoning ‘for ourselves and the heirs of our body the throne of Egypt’. At this royal determination crumbled. The king asked pathetically if, perhaps, he could have one last chance? He was graciously granted it and sacked his prime minister. Life went on, the war went on.


      Jacob Rees-Mogg: “When Jack Straw was replaced by Margaret Beckett as Foreign Secretary, it seemed an almost inexplicable event. Mr Straw had been very competent -- experienced, serious, moderate and always well briefed. Margaret Beckett is embarrassingly inexperienced.
      I made inquiries in Washington and was told that Donald Rumsfeld, the Defence Secretary, had taken exception to Mr Straw's statement that it would be "nuts" to bomb Iran. The United States, it was said, had put pressure on Tony Blair to change his Foreign Secretary. Mr Straw had been fired at the request of the Bush Administration, particularly at the Pentagon. ... The alternative explanation was more recently given by Irwin Stelzer in The Spectator; he has remarkably good Washington contacts and is probably right. His account is that Mr Straw was indeed dismissed because of American anxieties, but that Dr Rice herself had become worried, on her visit to Blackburn, by Mr Straw's dependence on Muslim votes. About 20 per cent of the voters in Blackburn are Islamic; Mr Straw was dismissed only four weeks after Dr Rice's visit to his constituency.
      It may be that both explanations are correct. The first complaint may have been made by Mr Rumsfeld because of Iran; Dr Rice may have withdrawn her support after seeing the Islamic pressures in Blackburn. At any rate, Irwin Stelzer's account confirms that Mr Straw was fired because of American pressure.

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    2. @Anonymous

      Influence of the UK only has significance for UK citizens if they feel that in some way that trickles down to influence they have over their own lives and the futures they could have, so the influence that a UK has because of its status in the EU but over which citizens have little choice or control is not really influence at all for many citizens.

      One such illustration is the aversion to giving up our currency. Although this was never put to the vote I think it is generally accepted that the UK population were against it despite the fact that according to all the economists and many politicians not going the euro was going to leave us "an isolated, increasingly impoverished middle-ranking state on the fringes of Europe" and we all know how accurate those predictions turned out to be,

      And finally I don't accept that is the fate that awaits the UK now. There is a real sense of optimism in some quarters that once free of the deathly deflationary over-regulated grip of the EU we will get a boom that increases our prosperity and influence.

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    3. «the UK is so politically and militarily weak that the US secretary of defense or USA national security adviser can sack the the UK foreign secretary, compare:»

      I'll add to this a wider discussion that most "Leavers" *and* "Remainers" don't get about the geopolitics of being either an USA protectorate or a member among equals of the EU.

      Post WW2 (and WW1 was already a source of worry) the overriding concern of the english upper classes has been how to keep safe their wealth from the grasping hands of the (Labour-voting) mob (once the even more grasping hands of the nazis and tojos had been defeated), mob which could be mowed down by the army in the past if they became uppity, but could no longer be mowed down if they were the ones piloting the tanks and the bombers as in WW2.

      The "whig", trading, wing of the english elites made a simple choice: to move all their financial wealth to the USA, as they were pretty sure that the USA elites would always win a confrontation with the grasping mob, and they submitted to "protection" by the USA government, surrendering the whole english empire to USA, as a guarantor of their ultimate safety as elites; just like the elites of Qatar, for example, have surrendered control of their military and foreign policies to the USA for the same reasons. The "whig" elites were led in this by W Churchill, who had a "whatever" policy wrt to the USA just like T Blair decades later. Their fortune is already in the USA, and if despite USA "protection" the mob rises, they just take their private planes and move to the mansions and ranches they already own in the USA.

      The more "tory", landed, wing of the elites is made of people like A Clark who are more rooted in the UK, and would hate exile and the loss of the properties they have had for generations, even if of course they too have all their financial wealth in the USA. For a number of years after WW2 they still believed they did not need USA "protection", but a strong relationship with friendly european powers, and this led them to Suez in 1956 and inglorious defeat.

      After Suez the split was even deeper, and the "whig" wing was in clear control with their "protection" from the USA policy. But the "tory" wing have continued being resentful of the loss of empire and control over military and foreign policy to the USA, and continued to push for an european alternative, making the best of the loss of empire and aiming to return to a pre-empire role as an european nation of influence and importance in continental affairs, and integrated in them. After all the "tory" wing has been intermarried with the continental elites for a thousand years, and intra-european wars have always had the flavour of civil wars, especially when dynastic. The "tory" also largely overlaps with the "one nation" tories, per the paternalistic tradition of a part of the landed elites.

      Note: things are of course more complicated, and for example the New Labour elites are clearly "whig" supporters of the USA protectorate, with "whateverist-in-chief" T Blair and P Mandelson as their leaders.

      Obviously the "Leave" campaign leadership, with a few confused exceptions, are all "whig" supporters of the USA protectorate arrangement, people like J Redwood who apparently wants the UK to be a NAFTA member, B Johnson who wants London to be the offshore "dirty deals" haven for New York (even more than it already is), Gove, Farage, ...

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    4. «Obviously the "Leave" campaign leadership, with a few confused exceptions, are all "whig" supporters of the USA protectorate arrangement,»

      For a brief time, with the St. Malo Declaration, it seemed as if the "tory" wing had grown in influence, and the UK was choosing to be a senior and leading partner in the EU rather than a follower and a protectorate in any "whatever" coalition-of-the-willing of USA client states, in part because of the obvious cost of going along with "whatever" the dangerous extremists often in control in Washington decide to do, but clearly the 2016 referendum has ended that. The protectorate policy is clearly top right now, even if the USA suzerain elites with Trump think that "protection" has so far been given for too cheap.

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    5. «once free of the deathly deflationary over-regulated grip of the EU we will get a boom that increases our prosperity and influence»

      From my point of that is purely hallucinatory, probably a consequence of falling victim of establishment propagandists like Simon Wren-Lewis: the UK economy for the past 35 year has been through a monstrous inflationary credit based boom thanks to fanatical deregulation of finance, regardless of EU membvership, as the almost as monstrous credit booms in Spain and Eire and Latvia and Australia demonstrated; and the government of Eire is right now booming up credit once again.

      That the UK in the aggregate has been enjoying a long run of extremely loose aggregate policy is easily demonstrated by the fantastic asset price inflation (that occasionally even spills in wider inflation), the huge (if shrinking) government deficit, surging immigration, the enormous trade deficit, all indicators of wild boom.

      While this has happened in the aggregate, the economy of selected segments of the population, and of selected areas of the UK, has been quite deliberately smashed, with what could be called a highly selective "austerity" policy targeted at Labour voters and trade union areas, this has had nothing to do with the EU; if anything the EU has done something positive by directing regional development funds at those areas that the UK national government would not dream of wasting money on. Also while EU policy does not constrain the taxing and spending policies of member states, the average position of EU governments is not as far to the right as that of the Conservatives or New Labour, and EU influence has so far moderated UK policy.

      Anyhow, an aggregate policy like in the UK of wild overall expansion couple with some targeted austerity is not a «deathly deflationary over-regulated grip» or "austerity", from either the UK government or the EU, it is just a highly upward-redistributive policy.

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  16. @Dipper
    "There is a real sense of optimism in some quarters that once free of the deathly deflationary over-regulated grip of the EU we will get a boom that increases our prosperity and influence."

    And the Charge of the Light Brigade was a triumph disguised as a slaughter. The facts are that the UK is throwing away its major export market and exposing an under-skilled economy with mediocre productivity and third-rate leadership to a predatory world that has no reason to wish it well whatsoever. Vapid optimism from the ignorant and deluded is no substitute for a coherent strategic appreciation of reality.

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    1. just telling you how some people feel. Lots of those people are used to taking risk-based decisions on a regular basis, so dismiss away if you want.

      And that under-skilled economy with mediocre productivity is a consequence of our being in the EU, and why we are leaving.

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    2. The British economy was under-skilled and had mediocre (at best!) productivity long before the EU existed. Trying to blame the EU for Britain's own failures and follies is the behaviour of a child, not an adult. Yes, I do dismiss the "feelings" of the willfully ignorant and deliberately uninformed. No viable company plans on the basis of the feelings of their dumbest worker and a country that attempts to do so has abdicated any claim to success or respect. It might be that Brexit does the British the immense favour of punching home the fact that they are not a special nation and desperately need to recognize their social, educational and economic inadequacy. I wouldn't put money on it, given the endless British capacity for apathetic, drunken self-pity and mental laziness disguised by the endless British bleat of "I'm no good at maths/languages/anything requiring sustained mental effort". The one certainty in this business is that the UK has no cards worth playing. The EU knows this and understands that they have no need to offer Britain anything. They can just wait for the weakness and desperation of Theresa May to produce the inevitable surrender. All the EU has to do is smile, wait calmly and do nothing of substance, and all the while they can snap up the businesses that will move out of Britain to preserve their own market share in Europe. The British will bluster and rant and whine about how unfair it all is, as the rest of the world looks on and wonders just who forced the British to screw up their most important trading relationship because of nationalistic hype and jingoistic delusions of grandeur. That's the reality of Brexit and no amount of vacuous posturing will change it.

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    3. @Anonymous

      what an unbelievably arrogant and dumb comment that is. Ask anyone who has worked for a top company - and I've worked for a few - and they will tell you they don't have a "dumbest worker". Good ideas and thoughtful analysis come from everyone. Your characterisation of the British would be clear bigotry and racism if it was said about any ethnic group. Keep this kind of insulting rant up and comment moderation will surely follow.

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    4. While @Anonymous is a bit OTT, in principle he/she is correct. The history of the last 70 years of British capitalism is one of slow and inexorable decline - which has been little influenced by the EU. I'd be optimistic if I could see any sign that the Brexiteers had a plan for a radical reorganisation of the economy. The only radical change that I have seen proposed is to convert the UK into a floating tax haven.

      This would be entirely in line with the last 70 years, where finance and the City has had too much power and influence. That has starved manufacturing industry of the necessary invest ment, which has led to the inexorable decline.

      You only need to look at the car industry. Once we had companies that made cars. But, through lack of investment and poor management, they lost market share and went under. There's nothing wrong with the British car worker. Nissan, Honda, etc. show that. With superior management and investment, they still turn a profit that UK companies were unable to do. It's the same through many industries.

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    5. @Anonymous. I am in complete agreement with your two posts (assuming the same author). Our country has been in continuous economic decline since the end of Empire, but what is actually more disturbing is the more rent declining level of educational ability -- assessed in terms of minimum and average levels by cohort. The attainments even of university graduates are very poor; school leavers much worse. Only the rich kids in public schools are guaranteed a decent education, access to a good uni, and a likely top job.

      As for British industry: it is a shambles. As gastro george points out, foreign companies that have taken over British ones are doing a much better job. Even Rolls Royce managed to fail -- inexplicably -- and now the Germans own it. The key to all of these problems is the persistence of social class and its explicit relationship with education, privilege, employment and political power. The working class is actually voting consistently for everything against their own interests -- including Brexit -- and refusing to listen to anyone with actual knowledge and expertise. It is, in effect, a form of mass suicide.

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  17. @ gastro - yes, understood.

    The proposal to convert the UK into a tax haven is a negotiating ploy. There is still lots of discussion floating round - e.g. both John McDonnell and Michael Gove have talked about The Entrepreneurial State. Most leavers are aware of our industrial history and see the Brexit vote as transformational. Had we voted to remain there would have been no incentive to change and nothing to halt our continued decline.

    The comment referred to British workers as pathetic, lazy, drunken. A feature of much "left" analysis and discussion which the Brexit discussion has amplified is that the Remainer Left always and up victim-blaming. The workers are at the bottom because they are uneducated lazy bigots.

    Left-thinking people should have as a core belief the notion that Institutions Produce Performance. Great institutions produce great performance. Poor institutions produce poor performance. Lack of institutions produce lack of performance. For anyone on the left the massive under-performance of UK workers should never be down to them and their supposed innate failings, it should always be the lack of appropriate institutions and a lack of political ambition.

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    1. @Dipper

      Not often we agree, but your last para is spot on.

      You'll never see me (hopefully) describing Brexiteers in the usual stereotypes. That victory was won in the suburbs of Dorking as much as the streets of Stoke. The people who need to realise this are the Labour Right, who have no attachment to the "left behind" and are still fighting the last war.

      The Tories never waste a good crisis. IMHO the transformation needed to happen after 2007, but the Tories were happy to blame Labour and push austerity. As you know, I don't share your optimism over Brexit. I expect any transformation to be more of the same.

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  18. Liabilities are a balance sheet item. If we are required to take our fair share of these then by same principle we take our fair share of other balance sheet items like the assets. The EU cannot cherry pick on this as it would set a
    precedent that you cannot trust it to hold to sound financial principles​. The EU is good at finding special cases to support​ dubious decisions, but abandoning any sense that it respects sound financial practices would justify all others dealing with it in the same bad faith.

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    1. There's another possibility - if the rEU can be reasonably said to have breached one of the Treaties (The Lisbon Treaty and the workings of Article 50 for instance) then the UK might repudiate the Treaty and simply walk away. I'm not saying this would be a good thing but it might be better than a prolonged wait while the rEU use delaying tactics.

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