The Institute of Economic Affairs has produced a document setting out a post-Brexit ‘free trade’ plan which would abandon ‘regulatory barriers’ that, it says, hold back British exports and stymie imports. Sean Swan (Gonzaga University) argues that it would have dangerous consequences for the NHS, manufacturing and food hygiene, and is not what British patients and consumers want.
The hard Brexiteers’ desperate search for a Brexit policy was again on display in a Telegraph column (paywall) by Boris Johnson. He has found a new man and a new policy. Forget Chequers: there ‘is a far better solution’, he advised his readers, ‘a SuperCanada free trade deal broadly on the lines set out by Shankar Singham in an IEA [Institute of Economic Affairs] paper’. The paper to which Johnson is referring is a 150 page document entitled Plan A+: creating a prosperous post-Brexit UK.
John Crace, writing in the Guardian, dismissed the plan as deserving an ‘A+ for idiocy’. However, as it is being seriously pushed by some members of what is, after all, the governing party, it deserves a closer inspection. This is especially so as aspects of it are not simply stupid but are the dangerous product of libertarian ideological fanaticism. To understand this ‘Plan A+’ document properly, it needs to be read in conjunction with another IEA hors d’oeuvre on which it partly relies: The ideal UK-US free trade arrangement. While much could be said about this document, it is worth focussing on one element of it in particular: it connives to remove not just regulations against GMO and other synthetic foodstuffs entering the food chain, but seeks to prohibit ‘technical barriers’ to trade.
A particular example of this includes labeling regulations for synthetic biology (genetic modification and other gene technologies) products. These provisions will ensure that any labeling requirement is not deployed in ways that are disguised barriers to trade (p 22).
In other words, the intent is to prevent the accurate labelling of foodstuffs containing GMOs or other ‘synthetic biology’. Consumers are to be kept in the dark about what their food actually contains or consists of. This attempt to keep consumers blind arises again in the Plan A document. It attacks Theresa May’s White Paper for accepting EU sanitary and phytosanitary (SPS) standards on food safety and labelling. This is because the White Paper approach does “not recognise that most of the trade complaints about EU agricultural policy lie precisely in the SPS area”. (p 46) Yes, but such complaints come from foreign purveyors of chlorine washed chicken and ‘synthetic biology’ food, not from UK consumers.
This abandoning of standards in food hygiene and labelling constitutes a radical departure from current EU/UK regulations. It makes inspections of UK goods at EU borders unavoidable and thus makes a ‘hard’ border in Ireland inevitable. This, however is not a problem for the IEA:
the UK could elect not to impose checks on goods trade at the Irish border, and apply zero tariffs on agri-food, on an MFN basis for all imports, and selectively reduce and eliminate tariffs on other goods.
This is a jolly wheeze. The EU would still be forced to create a hard border under these circumstances, but hey, that’s neither our problem nor our fault. The EU is unlikely to find this funny and it will not enhance the prospects of the UK getting a free trade deal. The UK currently has a flock of birds in its hand in the form of the existing EU market: the IEA want to give them all up for the hope of the bird in the bush that is a US-UK free trade agreement. But then, they appear to imagine they can have both, and
if the EU refuses to recognise UK regulations on day one of Brexit, the UK should be prepared to take action in the WTO for violations of the General Agreement on Tariffs and Trade (the GATT) and the Agreements on Technical Barriers to Trade (TBT Agreement) and Sanitary and Phytosantiary Measures (SPS Agreement).
Except it is not a question of ‘recognising’ standards, it is one of not being happy with them. Were it just a question of ‘recognition’, chlorine washed chicken would already be on the shelves in the UK as the EU ‘recognises’ US regulations, they just don’t accept them as conforming to EU sanitary standards. This WTO argument is getting to be an old fox. It has been shot several times already. For example, on suing the EU for not accepting future UK sanitary standards, Bloomberg’s Therese Raphael summed it up in August: “good luck with that; the EU would fight any attack on its single market rights vigorously and it would all take a very long time to resolve”.
Nor is scepticism about all this just the position of ‘Remoaners’. On the subject of the WTO option pro-Brexit Leave HQ concluded that
One can say, unequivocally, that the UK could not survive as a trading nation by relying on the WTO Option. It would be an unmitigated disaster, and no responsible government should allow it.
The economic policies suggested by the IEA and their ERG fellow travellers also have damaging consequences for the NHS. Page 228 of the US-UK trade plan states that
health services are an area where both sides would benefit from openness to foreign competition, although we recognize any changes to existing regulations will be extremely controversial. Perhaps, then, for other areas the initial focus should be on other fields such as education or legal services, where negotiators can test the waters and see what is possible. That said, we would envisage a swift, time-tabled implementation of recognition across all areas within 5 years.
The implications of this for the health service are that continued state funding of the NHS could be prohibited as a ‘state subsidy’ constituting ‘unfair competition’. In plain language, this would potentially mean the end of the NHS as we know it. The Leave voter was told that leaving the EU would mean an extra £350 million a week for the NHS. What they now risk getting is no NHS at all. It is time that people woke up fully to the fact that the ERG and Farage are profoundly ideologically opposed to the NHS. The taxation system post-Brexit takes up little space in the ‘Plan A’ document, just enough to argue for reduction in taxation on banks and corporations (p. 70).
If the economic and diplomatic implications of this plan are disastrous, the full political implications of it are worse. The destruction of British manufacturing industry is an inevitable consequence of policies like these. This has been admitted by Patrick Minford of the Economists for Free Trade group, who added sanguinely that “this shouldn’t scare us”. It should scare the West Midlands. Jaguar Land Rover’s three-day week is just the taste of things to come. All of this combined will serve to deepen economic inequalities between people and between the regions and component nations of the UK. It might, or might not, suit the south-east of England; it will devastate the rest. Separatist pressures will become unstoppable. The irony of it all is that those proposing this all loudly tout their unionism and commitment to the UK state.
This post represents the views of the author and not those of the Brexit blog, nor the LSE.
Sean Swan is a Lecturer in Political Science at Gonzaga University.
LSE take note.
There is clearly less and less interest in the scaremongering from this and many others blogs.
The people are now bored silly.
Maybe, just Maybe one of your selected academics could talk about some of the benefits of Brexit!
Whilst I am big enough to agree that some on the leave side lied. No one on the remain side that I have seen has admitted the lies on remain campaign.
Your sincerely
George Osborn
@Dennis to be honest, I’m actually agnostic on Brexit. But it’s a question of what sort of Brexit it ends up being. It’s about avoiding messing up the Good Friday Agreement, about not seeing Scotland’s views ignored and about not letting right-wing ‘free-market’ fundamentalists use Brexit as an excuse to further reduce taxes on banks and big corporations while threatening the very existence of the NHS. Nor do I see the sale of mutant beef and chlorine washed chicken as good for people. As for the WTO option, it means the death of British manufacturing industry – this isn’t even disputed by pro-Brexit economists. This isn’t ‘scare-mongering’, these are just facts.
Half the problem is that Boris ‘fuck business’ Johnson has ambition and charisma, but no talent. He is an economic illiterate. Desperate for some form of policy, he is being spun by economists who are either chancers, quacks or extremists. He doesn’t really care, he just wants to be PM
I’m in business as well.
Just returned from Europe planning to do business with them. And why wouldn’t we?
They want our business and it was agreed that the panick going on around the country is by people who are not used to business brinksmanship.
I am!!!!
This issue is all about politicians playing politics for their own self interest. Corbyn being the chief protagonist.
It will happen full stop or consequences will be much more serious.
As for other blogs about the leavers being lied to, what surprises me is that anyone is surprised to find any politicians lie!!!!
The lies were prevalent on both sides of the fence.
George Osborn stands out, David Cameron stands out, Obama stands out.
And so did many of the pro leave.
On balance both sides lies were 50/50, thankfully most people could see that at the time and voted for their own personal reasons.
Accept it!
If you don’t accept it then you don’t accept democracy.
To argue that we didn’t know what the final deal/consequences would be is nonsense.
We still don’t know until the deal is final, the final deal will not be known for at least two years.
What will we vote on then?????
I can see the tv debates now.
Chaotic.
Dennis,
If you accept democracy, you must accept that it can change its mind, particularly when the facts change – as they have done. If you accept democracy, you must accept that people will, in time, make educated, reasonable choices rather that for bullshitty reasons like national and ethnic pride. Thus a 2nd referendum would be very reasonable, with an option (if the EU allows it) to rescind Art. 50 and remain a full member.
And of course the reason for your “chaotic” was raising the issue of EU membership in the first place. It was always blindingly obvious that remaining in the EU and moving towards an ever-closer union was in the best interests of both median and lower quintile of UK residents – the people that must really matter, not the top 10% or 1%, and certainly not UK private sector businessmen.
Gegenbeispiel
I suggest you read this.
https://campaignforanindependentbritain.org.uk/britain-europe-bruges-group/
It’s getting tiresome repeating the same point, but democracy in the uk userps any business deal.
Firstly what would the subject of a second vote be?
If second vote went for stay, that would be one all!
Third vote please?
I hope none of them are close, because if they are then the loosiing side can claim it doesn’t count.
You defeat your point when you say “if the EU allows it”
How can we submit to such a dictat that we have to ask their permission to do anything?
Moreover how did we get ourselves into such a position?
Your derisory comments about private business requires a response.
Private business is the biggest employer in the world,
Maybe you should try it some time.
Working round the clock, personal sacrifice beyond what most can imagin.
Entrepreneurial
For you information
Hour for hour most business owners are paid less than minimum wage and less than the employees.
Consider yourself lucky that we don’t live in a dictat where you can do what you do.
Freedom to speak your mind!
Currently in Europe we are heading in that direction where your right to speak will be and is being supressed.
You could also ask why isn’t their more scrutiny of Ed Miliband and his manifesto? The answer of course is that he lost and stepped down from important political jobs. Brutally nobody is interested in losers.
You have got to accept that Leave won the referendum years ago and the campaign is over. Nobody cares about the losers. The question now is: what type of Brexit are we going to have?
Unfortunately on this critical issue Leave won based on a lie: “we can have our cake and eat it” and “trade will be exactly the same”. So we need to start accepting trade-offs.
At least the IEA have come up with a plan, although as the author points out, many Leave voters would be unhappy with the plan to abolish the NHS within 5 years!
@Dennis Why would the EU give the UK a good deal based simply on all the trade? The simple answer is because the EU has a strong political incentive not to. The last thing it wants is to encourage other states to think leaving the EU would be either easy or beneficial. Thinking purely in terms of business won’t help you understand that.
Leave won the referendum, but that’s not the point. The point is what sort of Brexit is it to be? Boris’s Brexit would be a disaster even if it succeed in economic terms (which it wouldn’t) it would come at the cost of destroying British manufacturing, damaging the NHS, destabalising the Irish peace process, and allowing the sale of Frankenstein food in the UK – without that even being allowed to be put on the label.
Don’t give me a ‘business’ argument. There is NO Brexit that is going to be better economically than what already exists, But I doubt that your commitment to Brexit stems from a belief that you’ll be able to export to India or something post Brexit. You support Brexit for political reasons – sovereignty, immigration, whatever – not economic ones. And others oppose if, or different forms of it, for political reasons too – that’s why arguing it in business terms and ‘they must give us a good deal because of our imports’, misses the point. This is not a business deal. This is geopolitics. It’s a different game.
Boris’s half-baked arguments are not about getting the best Brexit, they are about his ambition to be Tory leader. He is ambitious, but fairly economically illiterate. So he borrows ideas from any crank or chancer who whispers something plausible-sounding into his ear. Yesterday it was the IEA, today he wants to build a bridge from Scotland to Ireland as a panacea for Brexit. Do you know where that idea originated? An art school in Glasgow…not exactly the CBI, is it?
Sean, I very much admire your original article and it’s noticeable that none of the Leavers who hang around here have tried to engage seriously with your arguments. (Dennis seems to want to turn this into a discussion about who did the most lying.)
But let me try. The main argument in your latest comment is “Why would the EU give the UK a good deal based simply on all the trade? The simple answer is because the EU has a strong political incentive not to. The last thing it wants is to encourage other states to think leaving the EU would be either easy or beneficial. ” To which I say, why? If people can only be held within the EU by threats of economic ruin, this would be the strongest argument there is for abandoning the EU altogether. If you run a Saturday football team and someone doesn’t want to play any longer, the grown-up attitude is not to go around and spray graffiti on their house, but to shake hands, wish them good luck, and then make them very envious when your team gets to play at Wembley..
Let’s engage in some fantasy. Suppose there really were a solution to the Northern Ireland border question. For example, Private Eye suggested that leprechauns should check exports from NI to the Irish Republic for contraband. Why shouldn’t the EU allow a Canada-style agreement with the UK, allowing frictionless trade (the leprechauns would find all the contraband). So what if some other nations in the EU27 decided such deals made being outside the EU more attractive? Let them go, and let those who still believe in the EU carry on with European integration and show those countries who’d left they’d really have been better off staying.
In the real world we don’t have leprechauns and I don’t believe there are going to be any ideal solutions to all the issues of trading between the UK and the EU27. Leaving that aside, I think a lot of the questions you raise can be answered by referring to democracy. I don’t know about these things and don’t know whether bans on, say, importing chlorinated chicken are a good thing or not. But couldn’t one reasonably argue that this is something that should be decided as close to home as possible, meaning rather at Westminster than at Brussels? Of course we all know the IEA will want to burn all regulations and allow everything, but that’s not what (as I read it) Brexit was fundamentally about, but rather about whether such decisions get made in Brussels or Westminster.
Alias
(Dennis seems to want to turn this into a discussion about who did the most lying.)
Absolutely not.
There is constant assertions that we thickies have fallen for the lies from leave borisbus.
I am merely pointing out that remainers were lied to as well.
And it could logically be drawn that remainers fell for the lies from such as Osborn as well.
As I said
I’m
Surprised that anyone is surprised to find politicians lying!!!
I’m in business, businesses lie as well.
Let’s tske landrover.
After the 2008 crash, the government devised lots of methods to help the ailing car industry and to therefore encourage spending by public.
Land Rover wrre all over it and spun a sub story about how they would crash and lay people off.
It turned out after the dust settled that they were thriving, world wide sales were off the scale order booms were full.
Here we are, land Rover at it again claiming disaster hard Brexit.
Cmon get real.
Hard Brexit means tariffs both ways.
That means BMW, Porch,VW and Mercs alll face tariffs in their biggest market in the world. U.K.!
That means landrover have huge opportunities to make a killing against their main competition.
Ditto ditto ditto the product that we make in this country, but buy from Europe.
Oportunities galore,
Step up to it business, stop moaning and show just what we can do when we try.
Failure to try in actually the biggest failure in life!!!!!
Good God! Are you Jeremy Hunt?
I assume the ONLY reason you stay married is NOT because there might be a messy divorce in which your ex was less than keen on letting you have the CDs AND the vinyl AND custody of the children? That is, marriage is not a prison, though breaking up can have negative consequences and former partners be less than fully obliging. Ditto the EU – nobody forced any of the 28 member states to join – in fact, the UK had to try VERY hard to get in, General deGaulle would not have it at any price.
During the Scottish referendum campaign, the UK gov was very unhelpful. It refused to discuss issues such as the currency and the debt, which left the Yes side in the invidious position of being unable to answer question on these issues during the campaign.
On the other hand, the US does not allow states to secede at all.
There’s a difference between a ‘fair’ deal and a ‘favourable’ deal, the EU has a strong incentive to give the UK the former but not the latter. What would be the point of a rule-based system and the Four Freedoms if you could pick and choose the ones that suited you? Yes to free movement of goods, services and capital, but no to free movement of labour? No sir, you’re in or you’re out, you can have Four Freedoms or No Freedoms, but you can’t have Three . The EU could not allow a precedent like that to be set. That possibly expresses the essence of it better than in my previous post.
As to decisions being made about food hygiene…if something is a risk to health it is a risk to health. Would you agree that, for example, it should be left to individual parishes to decide if smoking should be allowed in pubs and restaurants? Don’t misunderstand me, I’m all in favour of subsidiarity, but when it comes to matters of public health the precautionary principle and uniform standards work best.
But why stop at Westminster? Would you not agree that decisions as to whether or not chlorine chicken is sold in Scotland should be taken in Holyrood?
Obviously it will be entirely up to the government to decide, post-Brexit, if it wants to drop food hygiene standards in order to facilitate a UK/US free trade deal. Equally obviously that will rule out a UK-EU free trade deal. Considering how much trade there is between the UK and EU – actual trade happening now – compared to the much smaller volume of potential (bird in a bush) UK-US trade, this would be a bad trade off. And that’s without considering potential impact on the NHS.
As to the Irish border, the best solution would be to let NI and Scotland stay in the Single Market. Brexit is an English thing. England wants its Brexit – and deserves to get it good and hard.
Alternatively, Boris is talking about a bridge…a veritable new giant’s causeway…an idea dreamed up by an art school in Glasgow. Yes, Boris, the Billy Bunter version of Churchill, will lead us to the sunlit uplands of Brexit, free of all that horrid manufacturing industry and with a chlorinated chicken in every pot and a visit to the doctor costing only 10 guineas.
Sorry, I’m being less than fully serious now, but it’s occasionally hard to take Boris seriously….
“Good God! Are you Jeremy Hunt?” Oh no, rumbled at last. But please don’t call me Jeremy. Gosh, these party conferences are boring.
What I think the IEA and its fans want is Canada+leprechauns. Approximately (I’m not on top of the details of CETA) this means free trade in goods plus leprechauns or some other non-existent technical solution to ensure frictionless trade. The leprechauns would be in place on the Irish border or in Calais to check rules of origin or for chlorinated (or should that be chlorinised) chicken, but legitimate traders would not notice them.
Apart from the fact that leprechauns don’t exist, why should the EU object? Movement of services, capital and labour would not be covered under this, only movement in goods to the extent of CETA. And nobody thinks CETA violates the four freedoms.
Without leprechauns, what I could imagine happening if the IEA gets its way is that the Irish Republic will be forced to put up border posts with customs officers and require all freight vehicles crossing the border wanting to be waved through to previously submit electronic manifests. A sample of vehicles (say, 5%) would have to be stopped at the border posts anyway. Because of the wriggly nature of the Irish border it might make sense to put the border posts some way back, creating areas of the Republic (County Donegal?) where they don’t bother to stop smuggling. This does at least seem to my lay imagination to be vaguely feasible, though it’s a long way from being a “frictionless border”.
“Would you agree that, for example, it should be left to individual parishes to decide if smoking should be allowed in pubs and restaurants?” Why not, actually? I’m a big fan of the smoking ban in the UK, but this seems to me an argument for subsidiarity. If the power had not been devolved to Holyrood, which of course banned smoking in pubs before Westminster did, maybe the ban wouldn’t have happened at all.
“But why stop at Westminster? Would you not agree that decisions as to whether or not chlorine chicken is sold in Scotland should be taken in Holyrood?” Or I could of course argue the other way. Why stop at Brussels? Why not delegate all health and safety decisions to the WHO (the UN organisation, not the band) or the Red Cross or some kind of World Government? Or the Galactic Council on Rigel IV?
“As to the Irish border, the best solution would be to let NI and Scotland stay in the Single Market.” But then you replace the Irish border question with a Scottish border question.
Dennis, ‘Brexit’ is really a word like ‘animal’. It;s not very exact and doesn’t tell you very much – except that it’s not a vegetable or a mineral. You need a bit more information, like is it a cat or an elephant or a horse?
So what ‘Brexit’ are you talking about? If you mean a WTO Brexit – and I THINK that’s what you mean – you’re going to discover that tariffs are the least of your problems. Tariffs don’t prevent trade, they just make it a bit more expensive. The real obstacles to trade on pure WTO terms are differing regulations. For example, Japan is a member of the WTO, It doesn’t seem to import many cars though. Why is that? Is it because of tariffs, or something else? When you have the answer to that question, you’ll be better equipped to talk about global trade – and less likely to see the WTO option as a good one.
You also seem to think that Land Rover have introduced a three day week – with full pay – as some kind of anti-Brexit stunt, But if Brexit was going to be good for the car industry, why would they do that? You’d probably say ‘to get money from the government’, but they, and other manufacturers, are not asking for money. They just don’t want a hard Brexit.
A hard WTO Brexit will do to British industry what Thatcherism did to the coalmines. Nobody disputes that, not even those economists who advocate the WTO option. Optimism has its place, but not mindless optimism. Finally, the UK is NOT the ‘ biggest market in the world’ for BMWs, China, for example, imports more than twice as many as does the UK.
Sean
I like debate, only intelligent debate, only because I want to better myself.
Given that I’m not an academic.
I have spelt out elsewhere in these blogs just why I am a brexiteer.
I’m not a sheep, but capable of thinking for myself.
I’m also not adverse to hearing others views and thinking/considering them out.
One blogger asked the question, just what do brexiteers think they will benefit from Brexit?
1/ a say so in who makes our laws!
2/ reinstatement of my freedom of speech. ( no one questioned me on that so I won’t do detail)
3/ preservation of my democratic vote ( no matter how small that is)
4/ a say so if I wish to be a part of the federal state of Europe ( controlled by unelected beurocrats )
5/ self determination ( I will live with the consequences )
6/ our governments ability to subsidise if we choose an industry without asking permission of Brisssels.
7/ freedom to trade with the rest of the world ( without the need to ask Brussels permission.
Will I be inconvenienced by wanting these
Absolutely
You are right.
WTO rules means more expensive ( and just a little more ) but I can live with that.
And then just on Eu product.
It does not mean product unobtainable!
But let us not forget the huge boost to chancery funds from tariffs.
Let us not forget that if we chose we can spend pourrez money elsewhere.
Businesses can thrive in the city because we can set our own corporation and financial taxes.
If eu aren’t gonna play ball and Paris goes for it we can trump them anyway.
Japan I don’t know, it’s a collection of islands, that can affect trade, it has superior manufacturing of it’s own, and the populous are very loyal.
We could learn from that!!!!!
Landrover.
I’m merely pointing out that Brexit can be beneficial
No one else appears to see the benefits only the gloomsters who have a crystal ball.
In any case.
My crystal ball tells me that a final deal will be done.
I’ve been on the brink countless times.
This scale is much bigger, but the principle is the same.
To paraphrase.
They will not shoot themselvs in the foot just to prove they have a gun.
Because the unelected dictators in Eu represent business interest and surely not their own?
Let’s not kid ourselves that the deal will happen this year or even next.
There will be a fudge short term and suck it and see deal that will take many years to evolve.
I’m sure you will agree
Thank god we didn’t join the euro,
One medicine for many ailments cannot work.
EU planners know that, but it’s a great tool for United federal republic of Europe, dictated by the strongest nation!
@Denis
“WTO rules means more expensive ( and just a little more ) but I can live with that.
And then just on Eu product.
It does not mean product unobtainable!”
You’re still hung up on tariffs – tariffs hardly matter. But why do you think WTO rules would only apply to trade with the EU? What rules would govern trade with China, for example? And you’re right, it would not mean ‘product unobtainable’, that’s not the point – it would possibly mean ‘product unexportable” though. You see the UK can, ultimately, control its imports – it can’t control its exports though.
“But let us not forget the huge boost to chancery funds from tariffs.
Let us not forget that if we chose we can spend pourrez money elsewhere”
It’ll be a tiny amount. In fact, Naughty Nigel and co want it to be zero..
“Businesses can thrive in the city because we can set our own corporation and financial taxes.
If eu aren’t gonna play ball and Paris goes for it we can trump them anyway”
The UK could always set its own tax rate – did you think the EU set the tax-rate?.
“Japan I don’t know, it’s a collection of islands, that can affect trade, it has superior manufacturing of it’s own, and the populous are very loyal.”
No, Dennis, nothing at all to do with any of that. It has to do with something called ‘non-tariff barriers to trade” – as I keep saying, tariffs barely matter in all this. A hard Brexit will be a disaster, but not because of tariffs.
I think we’ll leave it there, but maybe you could see if you can find out what the differences are between 1) a free-trade area, 2) a customs union, and 3) the Single Market. Oh, and maybe a little about phytosanitary and sanitary regulations. You’d understand all this much better then, and would perhaps be more critical of plausible spivs like naughty Nigel.
Thanks for the conversation.
I see the link to the ‘Plan A’ document has expired – possibly because the IEA took it down out of sheer embarrassment – here’s a web archive link to the original (the LSE might want to update the article with this link)
https://web.archive.org/web/20180929192148/https://iea.org.uk/publications/plan-a-creating-a-prosperous-post-brexit-uk/
Thanks Sean! ^Ros