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Prepare for a WTO Brexit and Liberation – Part I Posted by Guest Author | Jan 8,

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Offline the leveller

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The author of this article – first published in “Briefings for Brexit” –  is Robert Lee, former Chief Economist, Board of Executors (South Africa), now an economic consultant in the UK and a private investor.
Hard political facts, the ticking clock, and the now rapidly progressing preparations for a ‘No Deal’ WTO Brexit next March combine to make this the most likely – indeed, the only likely – outcome.Brexit is shrouded in a fog of confusion. The government seems adrift, the Tory Party is fighting itself, Parliament is hopelessly divided, and the Labour Party has more positions on it than you can shake a stick at. It is easy to become despondent, but isn’t this apparent chaos simply a sign of a robust democracy, grappling with complex challenges? And is the future really that unclear?
There is an old adage that “A fox knows many little things, but a hedgehog knows one BIG thing”. There is one BIG thing about Brexit that gives perspective to current events: in the absence of a Withdrawal Agreement ratified by both the UK and EU Parliaments, the default legal position is that the UK will leave the EU without a deal at 11.pm on March 29th 2019. Former Brexit Secretary, David Davis, insisted that the date was on the face of the EU Withdrawal Bill. Furthermore, Article 50 stipulates that all treaties of the EU cease to have effect in respect of a departing member state after two years.
Examining all possible Brexit options in the light of this I conclude that the UK is now likely to exit the EU on WTO terms in March 2019. The main alternatives to a WTO Brexit seem to be:
Parliament ratifies Mrs May’s deal (The Deal) or a tweaked version of it.
Parliament votes for a second referendum.
Parliament votes for an alternative deal (e.g Norway, or Canada plus).
The Government attempts to revoke (or extend) Article 50.
There is a general election.
The default position
Mrs May pulled the vote on The Deal to avoid massive defeat, and has since failed to obtain meaningful changes, so it is unlikely to be ratified. The Irish government’s “no deal” preparations show that they don’t plan to erect a hard border even in those circumstances. This exposes the Irish Backstop as a transparent – to all except the UK government apparently – attempt to tie the UK as closely as possible to the EU post-Brexit. This should further solidify Parliament’s opposition to The Deal. Ironically, its best hope now is if the EU is spooked by the UK’s ramped up WTO Brexit preparations, and offers major last minute concessions.
All options that involve Parliament taking back control (to coin a phrase) suffer from major drawbacks. Most critically, the default legal position of a WTO Brexit can only be averted by the passage of new primary legislation, a time consuming process that requires government support. A clear Parliamentary majority opposes a WTO Brexit, but lacks consensus about what replaces it or how to achieve that. To coin another phrase “the clock is ticking”. All alternatives to a WTO Brexit have the fatal defect that time is running out.
The second referendum fantasy
A second referendum would take up to a year to arrange and be highly divisive (how to agree even on the question?). British voters would probably give two fingers to the idea that they got it wrong the first time. The Norway route offered a workable compromise until it was hijacked by those who want it to be permanent and include customs union membership – in this form it is worse than The Deal.  Time has run out for that option as well, as it has for a negotiated Canada plus FTA before exit day. The ECJ has issued a ruling (the speed of this decision, and its timing, demonstrate just how political this Court really is) that the UK could unilaterally revoke Article 50 and thus remain in the EU. However, since Article 50 was invoked by the passing of UK primary legislation, revocation (or extension) must also require such legislation. Any attempt to do otherwise would be taken to appeal, and the government could hardly try revocation without holding a referendum first.
Mrs May is stoutly resisting both the referendum and revocation options, but given her track record she cannot be relied upon. Thus the Cabinet has a collective responsibility to prevent outcomes that threaten the health and integrity of UK democracy, as well as the survival of the Tory Party. The government is therefore very unlikely to call a second referendum, or revoke Article 50, and without that they cannot happen. The Tory Party is riven with Brexit division but has few (if any) MP’s who would take the nuclear option of bringing the government down. The DUP would only try to do that in the unlikely event that The Deal was passed. The Labour Party is trying to engineer a General Election by bringing a no confidence motion before Parliament, but without DUP support it will almost certainly fail.
(Part II will be published here in INDEPENDENCE Daily tomorrow)


 
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