OK, sod it, EFTA/EEA it is then.

From the BBC:

A post-Brexit trade deal between the UK and the EU "seems unlikely" at this stage, the bloc's negotiator has said.

Speaking after the latest round of talks, Michel Barnier said he was "disappointed" and "concerned". His UK counterpart David Frost spoke of "little progress", amid differences on fisheries policy and state aid rules.

The EU never had any real interest in a trade deal with the UK, and certainly not one that was of benefit to the UK. The UK must suffer, and be seen to be suffer for daring to vote 'Leave', just to dissuade any other Member States from even thinking about it.

Sure, this will cost their economy as well, but the rest-of-EU economy is six times as big as the UK's. If the lost trade costs the EU 1% of their GDP, they can tolerate that, knowing it will cost the UK 6% of theirs.

The UK government is equally worthy of contempt of course.

They are grandstanding idiots who appear to have believed that they could negotiate some sort of mutually beneficial deal, or even that the EU was a reliable negotiating partner in the first place. Whatever the UK agrees with the EU's 'head office', each Member State and the EU Parliament still has a veto, so it's pointless.

The penny hasn't dropped yet, even after four years of time wasting and uncertainty.

If he'd been taking his duties as PM seriously, Cameron would have started organising our re-entry into EFTA and remaining in the EEA/Single Market long before the Referendum, just as back up in case Project Fear didn't work (it backfired spectacularly). And instead of flouncing off the day after the Referendum, he'd just have made a couple of 'phone calls and set the transition in motion.

EFTA/EEA - half-in, half-out. Most of the advantages of full EU membership (and there are many) with most of the advantages of not being a Member State (of which there are equally many). What's not to like?

Reader's Letter Of The Day

From today's City AM (my emphasis):

Re: Deadlocked MPs reject soft Brexit as Tory MP quits party in protest

It is a sad comment on the state of our politics when 261 MPs are prepare to vote for a proposal which is a legal impossibility.

I refer to the crazy plan promoted by Nick Boles MP, under which we would join the European Free Trade Association (EFTA) and therefore be required to remove all customs duties on goods from other EFTA states, while continuing to allow the EU to determine what customs duties we would apply, including on imports from other EFTA states.

So, to take on example, the EU dictates that we must impose a 13 per cent tariff on Norwegian smoked salmon and continuation of that tariff would obviously be incompatible with the zero tariffs which operate within EFTA.

The legal impossibility of this 'compromise' scheme was pointed out by a Norwegian politicans in a UK national newspaper as far back as December [2018] saying: 'It is not an option for the UK to stay indie the customs union... if you are part of the EFTA platform.'

But Mr Boles chose to ignore that, and now his suggestion has rightly been rejected.

Dr D R Cooper, Maidenhead

I emailed Denis Cooper to say well done, he said he didn't think rejoining EFTA was a good idea anyway, so we disagree on that, but hey - I always thought there was something fishy about Boles' plan.

"Norway and Switzerland have to accept EU laws..."

I voted Leave and was vaguely hoping that the UK government would do the obvious thing and just rejoin EFTA (and stay in the EEA), which would give us most of the advantages of being in the EU as well as most of the advantages of not being in the EU, thereby "respecting the outcome of the Referendum" which was a score draw.

Leavers and Remainers both say that rejoining EFTA is a bad idea because "Norway and Switzerland have to accept EU laws despite not being members in order to trade with it".

FullFact comes to the conclusion that "This is about right. Both Norway and Switzerland keep out of some EU activities, such as the Common Agricultural Policy. But they bring many of their laws into line with EU rules, on the single market in particular. Norway incorporates single market rules as they’re made, while Switzerland accepts EU law from time to time in return for more market access."

There's a bit more to it than this, but it's partly a numbers thing.

The population of the EU (incl. UK) is 511 million against a total population in EFTA countries of just over 14 million, a ratio of 36:1.

Had the UK rejoined EFTA (I doubt that they'd still want us now), the numbers would be 445 million and 80 million, a ratio of 6:1. EFTA countries would still be outnumbered, but the imbalance would be considerably less and so the argument would have considerably less weight.

If then a couple of the less Europhile Member States follow the UK, the ratio would be lower still, once it drops below 3:1, the two blocs would be negotiating as equals.

Two apparently unrelated headlines.

From the BBC:

Car sales plunge as Nissan warns on Brexit

That's two quite distinct issues which have distinct causes. One did not cause the other, despite what the BBC's headline implies.

Why have car sales 'plunged'..?

Since 1 September, all cars sold in the EU have had to undergo a new test known as the Worldwide Harmonised Light Vehicle Test Procedure. This has replaced all existing tests of emissions and fuel economy and has caused carmakers to struggle to cope.

SMMT chief executive Mike Hawes said: "With the industry given barely a year to reapprove the entire European model line-up, it's no surprise that we've seen bottlenecks and a squeeze on supply. These are exceptional circumstances, with similar declines seen in other major European markets. The good news is that, as backlogs ease, consumers and businesses can look forward to a raft of exciting high-tech cars and a market keen to recover lost momentum."

So, because of the EU rushing through some new regulations.

What are Nissan (and most other manufacturers) worried about..?

The carmaker said that frictionless trade as part of the EU single market had enabled the growth that had seen its Sunderland plant become "the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU".

It added: "Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like. As a sudden change from those rules to the rules of the WTO will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade."

And rightly so, the UK government and the EU are equally to blame for messing manufacturers around like this.

(Simply rejoining EFTA and remaining in the EEA would solve most of this at the stroke of a pen; why Nissan assume the UK will leap straight to WTO rules instead of shouting "Rejoin EFTA" from the rooftops is unclear.)

No retreat! No surrender!

An article at Lib Dem Voice points out:

There is however a ready-made solution that could sort this [Brexit] mess out, and that is for the UK to join the European Economic Area (EEA) and the European Free Trade Association (EFTA)*.

This arrangement already works well for Norway, Switzerland, Iceland and Liechtenstein, and it could work well for Britain too.

The author suggests that the Lib Dems should get behind this idea and unite moderate Leavers and Remainers... the comments are mainly hard core Bremoaners shouting the idea down.

Via @paulknight85, an article at ConHome says the Tory government:

... have no alternative but to look for a Plan B. Here is one.

The Government tears up Plan A, and seeks to park the UK in the EEA* for, say, four years. At the end of that period, the UK would trade with the EU on basic WTO terms, if a David Davis-style Canada Plus Plus Plus deal had not been agreed.

... the comments are mainly hard core Brexiteers shouting the idea down.

I suppose this is some sort of reverse Indian Bicycle Marketing, either way, I'm sick of extremists on both sides.

* The first author gets the order wrong, you have to join EFTA first and thus are eligible to join the EEA, and the second author glosses over this completely, or is ignorant of the fact that to be in the EEA, a country must be a member of EFTA or the EU, but hey.

OK, Norway/EFTA option it is then.

Faced with an unexpected narrow majority for Leave in the Referendum, The Powers That Be adopted a simple strategy, make such an unholy mess of it that all but the most hardcore Leavers throw in the towel and say, sod it, let's just stay in. This strategy appears to be working, but only marginally.

My preferred option would be unilateral free trade, that's nice and simple, but it's unlikely that a UK government would ever do something that simple and obvious. As a democrat, I've got to accept that there was only a narrow majority for Leave - we have to respect the 48% as well as the 52% - and a lot of those will have voted Leave out of sheer bloody mindedness in response to the endless Project Fear crapola, which was obviously without substance.

I suppose to some extent, a lot of people who are sticking with Leave are doing it because
a) the EU has revealed its true nature, playground bully from Hell and
b) because they enjoy watching the UK government squirm.

Staying in clearly isn't an option either, that just puts us back to square one, and who knows what vicious treatment the EU will mete out if we go back begging to stay in after all.

Therefore, I personally have decided to bow to those greater minds who really have been looking at this in a fair and dispassionate way for a longer time than I have and think we should try to rejoin EFTA (if they'll still have us), also known as the Norway Option/flexcit, stay in the EEA, and fudge everything else. Given how useless our government is at negotiating, at least we are going for a known known.

Will it be perfect? Depends on what you view as perfect. Will it keep Leavers and Remainers equally un/happy? I would guess so.

Or put it another way, had Cameron come back from his last gasp failed attempt at renegotiation in early 2016 and said "Fuck it, that's it, we are triggering Article 50 right now and applying to rejoin EFTA" I personally would have been over the Moon. I don't see why the context changes that.

Or, even more hypothetically, let's imagine the UK had just stayed in EFTA back in 1973, I guess most people would be happy with the status quo, a few Federalist nutters would be clamouring for full EU membership; a few rabid outsiders would be calling for us to leave EFTA and go it alone, but I doubt that I or the vast majority would be that bothered either way.

Gordon Brown talks sense: shock!

I missed this from a week ago, in The Telegraph:

Ms Sturgeon has promised to examine all the options for keeping Scotland in the EU, and to table plans for a second referendum [on Scottish independence] if there was no other way of achieving this.

But Mr Brown argued this was too narrow a process as it excluded any assessment of the value of the UK single market, so that Scots can decide which political union is more important economically.

Exports to rest of UK are worth £48.5 billion compared with £11.6 billion to EU while 250,000 jobs are linked to the single market compared with one million linked to the UK market, he said.

Mr Brown added that total of 1,000 companies from Europe are based in Scotland, compared with 3,000 from rest of UK, and pointed out the leaving the UK for the EU could mean changing currencies. While 250,000 Scottish jobs are linked to the EU single market, he said that at least a million are connect to trade with England, Wales and Northern Ireland.

Which leads me on to a wider point I have been meaning to make for a while.

Logic and observation confirm that the smaller the country (or area under consideration), the higher the proportion of imports and exports to GDP, and also that most imports and exports are to or form very nearby countries or surrounding areas. The Scottish figures illustrate this.

If Scotland left the UK 'single market' and Scotland and rUK imposed sanctions, quotas or tariffs on each other, it would have a small negative impact on rUK but would more or less finish off Scotland.

So we can bully them more than they can bully us.

It's the same with the EU vs the UK. The Eurocrats are insisting that if we want 'free' access to the EU single market, then we have to pay for it in terms of cash contributions and accepting free movement - the same as Norway (free movement is seen as a 'cost' for political reasons, not economic reasons).

Well fair enough, Norway's economy is tiny relative to the EU so they have to roll over and pay the ransom payment (in the same way as Scotland's GDP is tiny relative to rUK's - less than one-tenth).

But...

a) the share of imports/exports relative to the UK's GDP is surprisingly small (it is a large nation and an island). According to the regression analysis in the post linked above, it is about half of what we would expect.

b) only about half our imports/exports are to/from other EU Member States and they export more to us than we export to them.

c) the UK's GDP is about one-fifth of the total GDP of the other 27 Member States. So we are in a weaker bargaining position than rEU but in a much stronger position than Norway or Scotland.

So my thinking is - if the UK rejoined EFTA, the total GDP of all EFTA countries might add up to one-quarter of rEU GDP. In which case, rEU can't clobber us quite so hard. If sufficient countries were to leave the EU for EFTA so that total GDPs of each bloc were similar, then each bloc could demand an 'access fee' from the other, which would net off to a much smaller payment in one direction.

Which is why the EU has been so negative about Brexit, they want to frighten all the other more EU-sceptic countries into staying in - the class bully doesn't want people leaving his gang and joining a rival bully's gang. It seems to be working for the time being (h/t MBK).

Life outside the EU

1. I am not dead.

2. Point of disclosure I live in Switzerland (if the UK wants to bum rape slum kids made good to pay for Essex millionaire grannies it can do so without my triple mortgaged brain footing it. Interesting legal point for another day, if born into society have you "accepted" to abide by the law or is it foisted on you?).

3. I am not really anti Europe. And if you stopped reading here then I will take comfort in fact that you have probably gone off to rot your brain with corporate welfare pleadings dressed up as news in the Telegraph.

But enough of that. As you may know Switzerland is not in the EU. It is in another odd little club with Norway, Iceland and the only German speaking country to not border Germany, Liechtenstein, called the EFTA (European Free Trade Association). If you were going to say EEA, then make a dunce hat and wear it. WEAR IT I SAID!. Fun fact: the UK used to be a member of this too, from about 1960 to 1973 but decided more cash could be made from the EEC).

For the people who cry "but Britain would be something circa Mad Max Fury Road" (really awesome film but terrible place to live) Switzerland, and to be fair the other members of the EFTA, present something of a problem.

First off, some quick background. Switzerland is only about twice the size of Wales, fairly mountainous and with a population of about 8 million. It has 4 (well 4 and a half) languages of which German is the most prevalent, followed by French, then the Italian speaking canton of Ticino and lastly a few bits of Graubünden where Romansh is still in use. (the half is English because it is basically the default for forrins too dumb to learn German).

Swiss unemployment hovers around the 3-4% mark with half of that broadly acknowledged to be people with serious conditions like non functioning alcoholism or drug dependency who are never really going to hold down a job anyway.

The median household income is in the region of £50,000. The average in Germany, the richest country in Europe is about £30,000.

The biggest export partners for Switzerland are Germany (about 20%) and the US (about 10%) and like most small European countries (looking at you Sweden, Netherlands and Lux) it has a very active and approachable diplomatic service that is quick to assist and support domestic businesses in their foreign adventures.

Much to the almost constant ire of the US, Switzerland point blank refuses to criminalise people who download copyrighted material and has successfully resisted various barbed demands over the years to change this policy. Make of that what you will in the "But how can we stand up to the US" arguments, apparently all it takes is a spine. (though if you post copyrighted material expect a serious bill in the post with a fairly blunt but polite note).

While the apparently still shooty UK can press its military reserves if really needed for a combined weight of about 250,000 personnel, thanks to a history of giving every teenager an assault rifle and pointing them at the nearest border the Swiss can mobilise almost 3 million troops surprisingly quickly. Almost every Monday morning my commute is met by a dozen or so late teens/early twenties boys with huge kit bags and aforementioned assault rifles slung around their persons. My neighbour explained that if you are issued with a gun you need to keep 50 rounds of ammunition with it just in case for example France decides it wants to have a go. the 50 rounds are to get you to your barracks where you "tool up". He then pulled out something that looked like it was the prototype for the blunderbus, but in fairness he is bluddy ancient, and waved it around until his tiny wife called him an idiot.

It should also be borne in mind that Switzerland (along with Iceland and Liechtenstein) is not oil or particularly mineral rich so has no easy money (like the slovenly Norwegians who really have caught the resource curse) to smooth the road and so must rely almost entirely on international trade for its wealth.

All in all therefore life outside the EU is pretty decent, even when you are literally surrounded by the EU.

Except, it's not the whole story. The really odd thing is that the rabid, EU can do no wrong loons, would love the UK to look like Switzerland while those in UKIP's core vote who have that whole "let's go back to the 50s, I like my food boiled and boiled some more and was rampant racism all that bad" would absolutely hate it.

The Swiss rejected the EU in the early 90s and the economy did suffer growth was certainly slow but the country did not become an economic waste land by any means. One of the biggest grudges attributed to that decision was the fact that Swiss Air got gobbled up by the rampant monster Lufthansa (which now has its own legacy problems, so go figure).

The Swiss therefore did what any sensible European country outside the EU would do (hint) and that was to spend 4 years arguing about association agreements. the upshot of this is that Switzerland today has borders which are more open with the EU, than the EU member UK has. i.e. I don't have to go through stupid passport control when I fly to the Netherlands for business or Austria for a cheap McD's (since I can throw a stone from Sumo HQ) but to go back to the UK I need to add an hour onto my journey time to stand in a boxy room and be stared at by a bored guy who we all know failed police school who doesn't even record the entry and exit.

I do need a work permit, but because I am an EU citizen I can hang around for 3 months looking for work and if I apply for a permit I am guaranteed to get it. No quotas (well there has been a referendum so circle back in 18 months, generally west of Vienna = okay). I also have access to the Swiss benefit system which, unlike the complex "throw various packets of cash at everyone unless they have a beard and then bitch like a child who had to share the toys they weren't using" UK system, is simple and sensible. If you work for (I think) 18 months then you are eligible for benefits if you become suddenly unemployed. This stops people turning up and demanding benefits. This stops teens living on the dole post school and this stops any argument about discrimination since everyone has to meet the same standard. As it is very easy to hire and fire that unemployment has to kick in quick and because nobody wants to piss around with lots of benefits, the unemployment benefit is just 80% of your salary from the year before you were canned.

It's a nifty trick because by not handing out things like housing benefit nobody is getting a private landlord to give them a house and no bank is giving a mortgage, meanwhile if you were employed you can still pay your rent but that 20% will be biting.

While the Swiss legal system is quite open, business friendly and pretty much WYSIWYG, many things, such as Art.253b of the Swiss code of obligations gleefully slap rent controls into an otherwise quite free market economy.

So there we have a quick over view from outside the EU, nowhere near a disaster zone, in fact, in comparison to much of the EU, things "actually work" however the UK would be starting from a very different position and would certainly need to endure some initial pain as it found its feet and got its house in order. It very unlikely that the UK would cut all ties to the EU and that pretty much means that free movement of people is never going to go away.

Reader's Letter Of The Week

From The Evening Standard (Monday 9 September, page 53):

In his rush to warn us of the "danger of the debate about Britain's place in Europe... being hijacked by extremes", Lord Wolfson neglects the possibility of remaining in the Single Market via membership of the European Free Trade Association (EFTA).

This so-called "Norway option" would protect our competitiveness, exports and jobs. Contrary to assertions made elsewhere, it would give us a considerable degree of control over the formulation of trading regulations, despite losing our vote in the EU Council.

In relations between EFTA and the EU, the are multiple opportunities for consultation and negotiation on new rules. As one Norwegian politician recently told me, the politics is done long before a vote is taken.

Most SIngle Market measures are in any case approved by Council without a vote (on the so-called A-List) while Britain within the EU is easily overruled under the Qualified Majority System (QMV).

Outside the EU, Britain can enjoy the fruits of globalisation, not least among them the fact that an increasing number of trading regulations are made at a global level, and handed down to the EU for implementation.

Ironically, Norway is fully represented on these bodies, with influence equal to that of the EU, alongside which it sits. Britain's voice, as one of 28 countries represented by the EU which negotiates a "common position" is often drowned.

Richard North, EU Referendum blog.

Mr North knows what he is talking about.

To cut a long story short, let us assume that free trade is A Good Thing (I accept that there are those who think it is A Bad Thing). If the EU were a Single Market but every other country ran a protectionist system, then as far as free trade is concerned, we'd clearly be Better Off In.

But the world is now divided up into ever-larger free trade blocs, like EU/EFTA, NAFTA, Mercosur, ASEAN/AFTA, COMESA, and they are all under the WTO/GATT umbrella and are merrily signing free trade agreements with each other. And the EU itself has plenty of free trade/preferential agreements surrounding countries.

To give an example, the UK itself has always been a mini-free trade area, so let's assume Scotland vote for independence and Westminster says "Right, in that case we are going to put limits or tariffs on trade between Scotland and the rest of the UK, ha ha, that's you buggered", then all Scotland has to do is join the next larger bloc (let's say the EU or EFTA) and it is still better off.

So all a country leaving the EU has to do is to join whichever is the next larger bloc, let's say EFTA, and if EFTA won't have you, then you are still in the WTO/GATT system, and if they won't have you as a full member, then it can't be too difficult to haggle a free-trade agreement with them on a unilateral basis, which then applies to all countries who are members etc.

Fun Online Polls: Next General Election & 'Government by international treaty'

There was a very high turnout in last week's Fun Online Poll; results as follows:

Days - 0
Weeks - 10
Months - 131
Years - 56
Other (please specify) - 5

I voted 'months' as well, FWIW, so now let's sit back and see what happens...
--------------------------------------
This week's Fun Online Poll is based on this fine diagram showing some of the international organisations of which the United Kingdom is a member, see also my post of a couple of days ago.

It's multiple choice, and you can choose from The United Kingdom, Euro-zone, European Union, Schengen Area, European Free Trade Association, United Nations, G7 to G20, IMF and World Bank, World Trade Organisation, NATO, and last but not least, 'None of the above or Other, please specify'.

Vote here or use the widget in the sidebar.

UPDATE: Oops. Lola points out that I forgot to include 'Commonwealth', so I'll assume you'd like to stay in that, unless enough people say otherwise.

Where would you like to see The United Kingdom?

Woman On A Raft linked to an excellent diagram in the comments a week ago, which looks like this:It doesn't show a lot of the other organisations and treaty bodies of which the UK is a member, such as NATO, UN, G7, G20 and so on; neither does it show that there are four constituent nations in The United Kingdom itself, but it's a good place to start.

Personally, I'd like to see the UK in the outer pale pink circle, or even better in the dark blue area at the perimeter.