Prosperity and Democracy – the future for Britain in the post BREXIT era

Tristan Jervis
May 25th 2018

Taking back control brings crucial benefits beyond taking back our democracy - we will gain the freedom to show the world what Global Enterprise Britain can achieve

How things have changed so dramatically. Back when I was Public Affairs Officer at the Eurosceptic think-tank, the European Foundation (EF), the serious political ramifications of Britain having ratified the Maastricht Treaty two years earlier were causing deep tensions inside the Conservative Party and across the nation.

Leading Eurosceptic, Sir Bill Cash, EF Chairman and Chair of the House of Commons European Scrutiny Committee, and Russell Lewis, former Director of the EF and the Institute of Economic Affairs, argued and warned against the massive loss of sovereignty that the Maastricht Treaty presented. Maastricht was the engine designed to drive a faster pace of EU integration – establishing the European Union (EU), its citizenship and amongst other centralizing factors, a timetable for European Economic and Monetary Union (EMU), a Common Foreign and Security Policy (CFSP), the first phase towards the creation of a Common Defence Policy (CDP) and the “common provision” of “social cohesion” by which the European Court could force Britain to accept a host of regulations that the commission defines as “social” – despite our opt-out from the treaty’s “social chapter” – which was later signed up to and formally inflicted on British businesses by Blair’s Government anyway. Unlike France and Denmark, we British were unfortunately not granted a referendum on this Treaty.

Blinkered EU officials seemed content to pursue their political project at all costs – however much it was so obviously flying recklessly in the face of economic reality and logic. Maastricht built on the political integrationist aspects of the Single European Act (SEA) that established a politically driven single market (SM) and customs union (CU) – with qualified majority voting (QMV) diminishing the veto and supranational power structures established for the unelected European Court and Commission. The SEA had in turn given sharper teeth to the Treaty of Rome’s political union agenda. The British public had been told in the 1970s that joining the European Economic Community would incur no significant loss of sovereignty as Britain was purely joining a common market. But the politically motivated drive towards economic integration was always there, embedded in the clauses, couched alongside the obvious allure of free trade. European federalism fast emerged as code for centralization. Brussels determines what decisions are made at the EU level - handing down what’s left to national, regional and local authorities.

Following Maastricht, despite being told by the then Foreign Secretary, Douglas Hurd, an EU enthusiast, that we would face “Maastricht and no more”, the integrationist juggernaut continued apace with the Labour Government’s ratification of the Amsterdam Treaty. Amongst other measures, Amsterdam took power over immigration legislation, the adoption of criminal and civil laws and enacting the CFSP away from national Governments, transferring it to the EU’s European Parliament institution. Then came the Nice Treaty which further weakened the power of national Governments by continuing to dilute the veto - extending QMV in decision making at the Council of Ministers and removing national vetoes in thirty nine new areas. Moreover, Nice took the construction of the CFSP to a new level – creating special representatives and enshrining into Treaty law the idea that the Council should negotiate on behalf of all members at international meetings. The Treaty was also in part designed to make sure that all British courts are subservient to the ultimate jurisdiction of the European Court of Justice – bolstering the supremacy of European law.

And, as if all that came before wasn’t enough, the Lisbon (EU Constitution) Treaty was enacted – taking the concept of ever-closer union (subtle cover for EU centralization) to a new level. True to form, its federalist architects decided not to call Lisbon’s “constitution” a constitution following rejection by the French and Dutch – using their deception to secure ratification and re-run referendum approval. This Treaty further weakened the powers of national governments in the Council of Ministers by yet more dilution of the veto with qualified majority voting extended to at least another forty-five policy areas. Moreover, the EU made the QMV voting threshold especially toxic by adopting a “double” simple majority system. This device makes it easier for the Commission to have its measures passed by the Council of Ministers – doing so over the heads of individual Governments including Britain with deep concerns about specific regulatory/legislative proposals – in situations where a simple majority of members support it, if that majority also happens to reflect a simple majority of the populations of the EU. Lisbon also established a “legal personality” for the European Union, a President of the European Council and a High Representative of the Union for Foreign Affairs and Security Policy. It was full speed ahead towards the construction of a European Republic.

We eurosceptics highlighted how the EU project was politically, not economically driven and how opposing it actually made us practical Euro-realists. We positively argued for European cooperation, enhanced inward and outward trade and for the EU to change direction. But the eurocrats continued to build a political superstate – a single quasi state structure - dismissing economic reality if it stood in the way of their single minded EU integrationist agenda. They hijacked the single market – creating a bureaucratic machine that constantly churns out excessive streams of regulations. This served to reinforce and bolster their political influence and hasten the eventual construct of fortress EU. It did not matter to them if their overly burdensome interference made the EU globally uncompetitive – trade and commerce was always a secondary goal to their political one.

And what was supposed to be “free movement of goods, services, capital and labour” in the single market became the free movement of “people” instead – proof again of the superstate objective. When the European Exchange Rate Mechanism – the precursor to the single currency – collapsed, the eurocrats, instead of learning obvious economic lessons, pressed on regardless with EMU – dogmatically pursuing their political goal. The EU’s dictatorial imposition of technocratic rule on Greece was even more alarming – doing so in the name of financial discipline whilst wasting billions on so-called bail-outs to keep states locked inside the failing EMU construct. The EU’s political project was put first. The cost – vast numbers of people and economies suffering - was a price eurocrats were willing to inflict to keep their flawed single currency alive.

All seemed lost – the project’s fanatics kept trampling over reasoned voices. The march towards a potential implosion kept pace. The EU was looking inward - increasingly shutting itself off from the interconnected, expanding and increasingly competitive global market place outside. It was becoming more and more distant from European people – dangerously out of step with feelings of national identity and faith in close national Government. The concept of nation state democracy was constantly being weakened and diluted. Britain trapped inside a European superstate that was set to become a single European country in all but name seemed depressingly unstoppable.

Over the years, myself together with enthusiastic political colleagues, organized informed debate on the European Union and the diminution of the nation state. Parliamentary patrons and speakers including Boris Johnson, Liam Fox, David Davis, Michael Gove, Bernard Jenkin, Iain Duncan Smith, John Whittingdale, Nigel Evans, Owen Paterson, Theresa Villiers, Daniel Hannan, Lord Tebbit, the late Lord Parkinson, Michael Portillo, David Heathcoat-Amory and other talented UK legislators. led discussions on this crucial issue. But we all felt the uphill struggle.

Then something changed. We euro-realists succeeded in securing an in/out EU referendum – and then, against a ferocious barrage of EU propaganda and pressure, the Leave campaign won – 17.4 million British citizens and a majority in the 2016 referendum voted to take back democratic control and make Britain a self governing nation state again. In terms of the campaign, even the IMF’s boss, Christine Lagard, admitted that the ‘in’ campaign’s outrageous scare stories were in fact false.

So we now have an historic opportunity. Article 50 has been triggered. Britain should leave the EU. The BREXIT negotiations have started. It is essential that, from this moment on, we stand firm against attempts by EU integrationist officials to try and make BREXIT as difficult for Britain as they can. Political negotiations are always tough – the art is to hold your ground resolutely so that the EU comes to accept and respect our position. We must stick by the red lines that are still in place and let the EU know that they can’t undermine them through ruthless negotiation tactics. This is a high stakes political poker game that requires Britain to be just as steadfast and determined as the EU if it is to gain ground and achieve its objectives. The European Union’s negotiators need to appreciate that we can play just as ruthlessly as they can whilst positively seeking the end goal of a great trade deal. I see the necessary conviction, strength and political skill in the key BREXIT players: our Secretary of State for Exiting the EU, our Foreign Secretary and our Secretary of State for International Trade. The EU thinks that Britain will blink first – we must show that when it comes to the crunch, we won’t.

The Great Repeal Bill was drawn up, laid before Parliament and successfully passed its second reading. It is the constitutional role of MPs and Lords to scrutinize legislation and to suggest and vote on amendments. However, we are currently facing a barrage of legislative amendments, a number of which have been instigated by a rump of fervent anti-Brexiteers – dogmatically committed to the EU and motivated by the goal of thwarting BREXIT. These fanatics refuse to accept the democratic result and outcome of the EU referendum – a binary once in a generation decision to leave or remain in the EU that the British people were handed sovereign authorization to make by an Act of Parliament. Consequently, this group of politicians is sadly looking to amend the repeal bill with the aim of weakening and even undermining the Government’s position and its hand in the negotiations, cynically hoping that this will result in Britain remaining in the European Union. I am confident, however, that their efforts will fail and we will achieve a proper, actual BREXIT in the national interest.

On finance, our Government has made a very generous £36-£39 billion offer to the EU as a separation bill. Frankly, I think that Britain deserves the best possible financial settlement on exiting the European Union given that it is the UK, together with just Germany and France, which have effectively funded the political project over all the decades of our membership. Britain has already paid a staggering net figure of £375 billion to the EU since we joined! It is the EU that should be grateful to us. With the principle in mind that we should not pay out a penny more of UK taxpayers’ money than we are legally obliged to, it is important that we continue to scrutinize the demands made by eurocrats against factual monetary realities.

Britain will commence leaving the EU on the 29 March 2019 with a 21 month transition period running to late December 2020 – providing our businesses with time to make commercial adjustments and put in place any new trading systems required. We are then set to leave the single market and customs union.

I see BREXIT as an exciting opportunity for Britain/the UK. Yes – we will regain the democratic authority to have our laws made by our own elected Government and Parliament – enforced and not dictated by our courts – with Britain’s national and economic interests at heart. Yes – we will control our own borders and fully determine our immigration policy – ensuring that it is tailored and honed to the specific needs of British based businesses and the economic, infrastructural and social realities of the UK. Yes – we will take back control of UK taxpayers’ money that Britain, as a net contributor, currently pours into the EU’s coffers – spending it instead in Britain on British priorities. Yes – we will regain control of UK fishing waters and determine our own agricultural and fisheries policies. We will, for example, have the capability to reduce wasteful discarding and enable our fishermen to sell more of their catch/product to their customers and consumers whilst at the same time taking less fish out of our waters. We will also be able to grow and produce more food in the UK.

And we will have the democratic capability to build Global Enterprise Britain – establishing a host of new commercial opportunities to increase our nation’s prosperity through higher volumes of trade across the world. We will have the freedom to negotiate our own free trade deals - rigorously pursuing them across the US, Canada, China, Australia, New Zealand, India, Japan, Singapore, the Middle East and elsewhere. And, as senior EU officials have conceded, trade deal talks with the EU can progress forwards. That’s because the realities of interconnected markets and international business ultimately transcend the political obsession to construct a single federalized state.

I am confident that the EU will make the rational decision not to harm its own businesses and citizens, maintain its lucrative export market with the UK and opt to go down the positive path of signing up to a comprehensive trade deal with Britain – even if it waits until Q1 of next year to do so. It is clearly in the overall economic and commercial interests of businesses, industries and consumers based in the European Union, for the EU to maintain tariff free trade with the UK. The EU exports far more goods and services to the UK than vice versa. Office of National Statistics (ONS) figures show that the size of the trade deficit was as high as £72 billion last year with the UK buying EU imports worth £348 billion - significantly more than the £276 billion in exports that Britain sold to the other 27 EU members. By contrast, the UK’s on-going trade surplus with the rest of the world reached £43 billion. Of course our trade with EU based businesses and consumers is very important but equally, so is all the trade we have successfully build up with a multitude of other countries. 44% of UK exports in goods and services went to the EU last year. This percentage share has declined by 10% since 2006 as a consequence of exports to countries outside the European Union increasing at a faster rate. 56% of total UK exports now go to businesses and consumers located in nation states outside the EU. In the case of the UK car industry, for example, approximately 60 per cent of exports now go to the rest of the world.

Our UK financial services industry is important not just to our economy but to the commercial well being of the EU as well. As Phillip Hammond, the Chancellor of the Exchequer himself makes clear, it is in the EU’s own economic interests ‘“to ensure that EU businesses and citizens continue to access UK financial services. The UK financial services hub is an engine that powers the real economy, not just in the UK, but right across Europe – it is not just a British asset, but a European asset too, supporting businesses, savers and citizens.”

And the EU’s negotiators should be aware that failing to secure a trade deal with Britain would have costly implications for the Union. Professor Minford’s Economists for Free Trade (EFT) report estimates that it would cost the EU in excess of £500 billion if it turned down the opportunity of a mutually beneficial trade arrangement with the UK and Britain left the EU in full on 29 March 2019. This includes incurring a huge net loss in tariff costs – caused by the size of the UK/EU trade deficit – paying tariff revenues of £13bn a year to the UK Treasury through to 2030 under the World Trade Organisation (WTO) rules that would be applied. In addition, it would face a one off loss of both its balance of trade surplus with the UK – worth an estimated £36 billion – and the £38 billion financial settlement payment that Britain would keep. In contrast, the EFT predicts that the UK would be in pocket by up to £650 billion. This includes a net gain of £433 billion in tariff revenues. Add to this a trade driven increase in GDP of up to 9% – equating to up to £180 billion – and the £38 billion saving, and it is clearly hugely in the EU’s interests to avoid this scenario.

Britain must leave the EU Single Market and Customs Union for many reasons. Outside of the SM, the UK will gain the power to set its own regulations and take a much more global perspective on regulatory impositions – aligning them where it is overall in the economic and commercial interests of British business to do so and, equally, in time, dis-aligning where our UK based businesses would fair better commercially as a result. For decades, the UK Government has had no choice but to accept an avalanche of EU regulations governing multiple areas of UK economic, commercial and trading activity, even though the proportion of our GDP generated by exports to the EU is little more than 12%. Taking back regulatory control will become especially important as we establish new trade deals beyond the EU region – making use of the freedom to take a broader geographical trading outlook.

As Mark Carney, Governor of the Bank of England, has stated, Britain will have the ability to, for example, free its banking system from the burden of excessive EU red tape – focusing instead on significant rules which keep the financial system safe. Moreover, the EFT group, has estimated that EU regulations currently cost UK industry and business an alarming £120 billion annually – equivalent to 6% of our GDP. And if, as expected, the pace of EU economic and political centralisation (federalisation) continues at its present trajectory, regulations, including the overly burdensome ones, are forecast to amount soon to a staggering £240 billion imposition. Consequently, we will at last have the opportunity – once freed from the single market – to assess the impact of each regulation on our businesses on a case-by-case basis and to then liberate our industries from the EU’s excesses. We will be able to iron out unnecessary regulations and cut costs by anything up to a third – saving UK based businesses billions “boosting GDP by up to 2 per cent and our growth rate in line.”

Furthermore, outside of the CU, we will no longer be held back from building and maximizing trade with countries outside of the EU’s jurisdiction. Crucially as well, Britain has to exit the Single Market if it is to control the level of migration from the EU into the UK.

There are other important reasons why Britain must not stay constrained inside the Customs Union. Many of the external tariffs in the CU are protecting inefficient continental manufacturing and continental agriculture that has no benefit for UK consumers or businesses. In the long-term, such protectionism harms the businesses it purports to help. Britain, once outside the CU, will have the power to reduce and phase these tariffs out. Moreover, staying in the Customs Union, under the restrictive terms of the so-called “customs partnership” compromise, would render the UK akin to a colony – raising taxes for the EU without having any say on the levies. The British Government would be left imposing tariffs on goods entering Britain from outside the EU at the levels the European Union sets, collecting the money raised and then handing it over to EU officials. No EFTA country would ever accept such political subjugation.

As Jacob Rees-Mogg, chairman of the European Research Group has outlined, post BREXIT, the UK could use its new tariff setting powers to zero rate certain goods imported from anywhere in the world. We would of course make sure that we do this in those circumstances where the UK has no domestic production on any significant scale or if the tariff rate is below 15% - in which case such British based domestic producers will have already benefited through the fall in the pound, which will compensate them for the tariff removal concerned. Such forward looking measures will benefit the least well off UK consumers most since the highest levies are applied to food, clothing and footwear – products that take up a larger percentage of the lowest household incomes.

Just as importantly, Britain must exit the single market, in part so that it can set its own VAT rates. We could, as John Redwood has recommended, choose, for example, to remove the tax from winter fuel payments and for specific goods such as female hygiene and “green” products.

And crucially, let’s call the EU’s bluff on the Irish border question. In the practical world of commercial reality, the last thing that the Republic of Ireland wants or needs is a hard border with the UK from which it could face massive tariffs on key export products supplied to Britain. Ireland already has seamless and invisible borders in place for VAT, excise duties, corporation tax and for different currencies - the euro in the Republic of Ireland and the pound sterling in Northern Ireland/the UK. Consequently, creating a tariff free customs border utilizing modern technology and innovation is an obvious and practical solution that could be built into a wide-ranging trade deal.

So, from 30 December 2020 onwards, the UK will at last become a fully self-governing nation state once more - in control of its laws, regulations, borders and finances and with the freedom and capability to strike its own trade deals worldwide. The invisible but very real hand of free trade and enterprise – identified by the renowned economist, Adam Smith, opens up a plethora of prosperity-generating international opportunities for the UK that will turn our nation into a global enterprise beacon.
Prosperity and Democracy – the future for Britain in the post BREXIT era
Tristan Jervis
May 25th 2018

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