Monday , June 17 2024

Two weeks to agree divorce bill? A reply to Barnier.

Michel Barnier has given Britain a fortnight to offer a divorce settlement if talks are to progress to trade. What should our reply be? We have some suggestions.

Theresa May has made some very generous offers. EU countries will not be out of pocket during a transition period. Reciprocal rights will be maintained for EU citizens living here and British citizens living in the EU.

Yes, there are some sticking points in negotiations. Britain seeks to maintain an agreement between two sovereign states, to allow movement between Northern Ireland and the Republic of Ireland. We propose a virtual border, the EU seeks to force the republic to renege.

As far as we can see, the EU seeks a gigantic divorce settlement. There seems to be no audited justification for such a bill. There does not even seem to be a counter proposal on the table.

The British are known for fair play. When negotiating to join the EU, several concessions were made, not least in access to British fishing grounds yielding something in the order of 60% of current EU fishing rights. We have made a more than fair offer.

Of course, we wish our neighbours to thrive. On the whole, British history is characterised by an outward looking nature towards trade, combined with innovation, both of which have led to long term prosperity.

The British people have decided not to dilute our own sovereignty to return to greater self-determination. Once again we seek to compete and collaborate in global markets. We seek to regain and deepen links with old allies, in the English speaking world, in the Commonwealth and beyond.

Our starting point is that no deal is better than a bad deal for Britain. The EU seems to wish to slow down the process of departing from the EU. Article 50 decrees that the leaving process should be complete within two years. We shall honour that.

Yes, there are complications but in some cases, there do not need to be. We operate systems in the EU that should allow for free trade between constituents’ markets. We have a parallel system for goods from outside the EU but with tariffs and regulations that are adhered to.

In principle, there need be no significant problems in switching from one system to the other. Quite simply, if there is no agreement, we revert to WTO rules. You can place tariffs on us, we can place tariffs on you. No deal means no transition, trade barriers start on day 1.

No deal is certainly better than a bad deal. We have to prepare for the future. Let us consider the practicalities.

No deal means that we leave in March 2019. Article 50 provides no basis for a divorce bill. In the same way, should we have been a net recipient of finds rather than a net contributor, we would be due no recompense. The EU may wish to consider that if a precedent is set, then any further countries wishing to leave the EU, if net recipients, should be due a windfall payment for leaving. Is that what you intend?

Of course, we have to plan for tariffs on our exports to the EU. We also have to plan for tariffs on EU goods. We also have to plan for trade deals with other allies.

We shall see a rise in some prices. French and Italian wine will become more expensive. We look forward to being able to trade more freely elsewhere, expecting a corresponding fall in wine prices from the Americas and parts of the Commonwealth.

Yes, olive oil will become more expensive. However, rapeseed oil is already an excellent and healthy British product. Our farmers will be incentivised to produce more. Roquefort will become more expensive but we look forward to experiencing cheaper Ewe Blue from the USA as well as developing our own excellent products, as we have with Somerset Brie. Who knows, perhaps innovative British farmers are already preparing our own Trewe Blue?

It will be a shame that motor vehicles made in the EU will become 9% more expensive. We recognise that over 80% of new car registrations in the UK come from the remaining EU27. We recognise that those who manufacture in Britain will therefore have a price advantage in domestic markets and are sure that Jaguar, Nissan, Toyota and Honda will recognise the investment opportunity.

We also recognise that when in a position to reach trade deals across the world, Mercedes will be available from Brazil, BMWs from South Africa and VWs from India.

At this point we should stress that from March 2019, fish caught in British waters must be landed on British territory. We may sell licenses to EU fishermen but look forward to further developing fish processing in the UK.

We know that you will consider the position on financial services and that by taking the “no deal” option, passporting is a weapon that you might wish to hold against us. You in turn may wish to consider that EU based companies have several thousand more passports in the UK.

London is a global financial centre with a well developed infrastructure that will take years to replicate in the EU. We wonder how that will impact on the strength of the Euro, given the inevitable job losses around Europe, and the already precarious position of the Southern EU members. It would be a shame if the EU chose to deny its citizens access to global investment markets.

By making the decision for “no deal” now, we give the EU the opportunity to plan your budgets. Our net contribution will cease in March 2019. Whilst Article 50 does not make provision for a divorce settlement, we recognise that you will retain ownership of the EU estate in Brusseles, Strasburg and elsewhere.

On making the generous offers that we have, we have strived to support the EU economy. Your decision to keep the handbrake on negotiations gives us little choice but to decide on a course of action that provides an element of certainty to investors in Britain.

The EU have chosen to risk jobs across the EU, your agriculture sectors will have more price competition from the rest of the world, your car sales will decrease through being less competitive, fishing ports from Spain, France the Netherlands and up to Denmark will lose out.

By giving ourselves some certainty, we appreciate that a decision for “no deal” now gives EU27 states the opportunity to plan for loss of trade and growth in welfare budgets.

As a country we look forward to regaining our role in the world. We look forward to tackling our €50billion trade deficit with Germany. We look forward to reducing poverty in developing countries as we trade more with them. We look forward to becoming more competitive in our corporate tax structure.

We have listened to what you have said. The ball is now in your court. The clock is ticking. You have time to change your position so that we could move ahead on a different basis.

Shall we say a fortnight, Mr Barnier?

This post was originally published by the author on his personal blog:

About Rex N

Rex is a freelance writer in medical affairs, economics and sport. A former teacher and examiner of Economics, his interest in European Union affairs took root when discovering the depths of the Maastricht Treaty. He is a committed democrat having campaigned for a popular vote to decide on further integration measures, based on fact rather than spin.

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  1. Isaac Anderson

    I agree Rex. It’s plain common sense in a well-written fashion. Do you think the fact that Parliament now has to vote on the “final deal” will affect our ability to walk away?

    • Thanks very much for the comment, Isaac.

      Yours is a great question. The answer is basically what becomes quite an interesting set of decision trees with vague estimations of probabilities.

      We have to bear in mind that any deal would have to be ratified by the EU27 as individual nations as well as some of the regions such as Wallonia who have a bit of a record, not to mention the EU parliament.

      In what could be a tight next election campaign, if reports are to be believed, then MPs may have to vote for a divorce bill of £53billion when the public sector has a pay increase limit, parts of the NHS will be in crisis and nobody will be able to make any promises over student debt if the EU27 are prioritised out of British taxpayers’ budgets.

      It could easily turn out that MPs of all persuasions prefer not to have a deal to vote on.

  2. Steve Pierce

    A very interesting piece but we have to consider some stark realties .
    It is perhaps unwise to use fishing as a key point without revealing that most of our fishermen took short term financial gain by selling their quotas to other EU countries. That is is now cheaper to fly fish landed in the UK to Asia to be processed and returned as finished product.
    The city of London has been under threat from Frankfurt for at least 30 yrs.
    The German banks are determine to take over the very lucrative clearing sector of the market. Moves by financial institutions are already underway with the resultant movement of staff and loss of jobs here in the UK
    Even though we have a resurgent motor industry over 70 % of all parts are still sourced from outside the UK and untill we can supply 70 % or more part from manufacturers in the UK the industry is under threat. We must also be under no illusion that both German and French manufacturers are protectionist. Observe what happens with Vaxhall in Ellesmere Port and the recent purchase of our steel production plants.

    I could go on but since the war this country and its politicians have shown no ability to produce a long term business strategy for GB plc. Further , as a retired manufacturer, I can confirm that no bank or financial institution has or currently provides the financial support to British Industry that will ensure prosperity.

    We like to play the game, you cant do that its not cricket old boy. In reality Brexit is simply a huge drain on our very stretched economy. No body gave us the truth about its cost because it would be to hard for us , Joe public , to understand.
    But we are where we are . The banks are making sustained and better profits than they have for decades and yet they want to increase interest rates and don’t give me that bull about controlling inflation nonsense. Millions no Billions of tax payers money is squandered day in day out by civil servants who have no business experience or accountability.

    No lets sort out our own house first. Recognise that we are going to be cannon fodder for global companies and face the facts.

    Frankly I have very little faith in any politicians or civil servants when it comes to business matters.