The Government's Brexit White Paper: Unworkable and Bad for Britain - People's Vote

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The Government's Brexit White Paper: Unworkable and Bad for Britain

Overview

On Thursday 12 July, the UK Government published its paper on the future relationship between the United Kingdom and the European Union building on its 3 page blueprint plan for the future UK-EU partnership  which had been agreed to at the Chequer’s meeting on Friday 6 July.

On Thursday 12 July, the UK Government published its paper on the future relationship between the United Kingdom and the European Union building on its 3 page blueprint plan for the future UK-EU partnership  which had been agreed to at the Chequer’s meeting on Friday 6 July.

In this People’s Vote campaign briefing, we outline 10 key problems with the proposals, all of which strengthen the case for giving the public a say on any Brexit deal:

  1. This is a hard Brexit that would damage our economy
  2. It won’t deliver the ‘exact same benefits’ as EU membership
  3. It would be devastating for our services sector
  4. It would turn the UK into a rule taker
  5. The proposed customs system is unworkable
  6. It wouldn’t even deliver the Government’s promises about new trade deals
  7. Ending free movement would hurt our economy and young people’s life chances
  8. The white paper says nothing about the future of the NHS
  9. The proposals risk damaging our security
  10. There is no majority for this type of Brexit in the House of Commons

Top Lines

  • The package of proposals announced at Chequers are unworkable and bad for Britain. They cross Theresa May’s own red lines, fail Labour’s six tests and are a million miles away from the kind of Brexit people thought they were getting – whether they voted Leave or Remain in 2016.
  • They are also an admission that the Government’s promise of delivering a deal with the ‘exact same benefits’ as EU membership simply cannot be delivered. Instead, this hard Brexit proposal, which would see the UK crash out of the Single Market and the Customs Union, would inflict severe damage on our trade, our economy and our public services.
  • And in a sign of how this government priorities are of out of touch with the British people, the NHS isn’t even mentioned in the document except a passing reference in the Prime Minister’s forward.
  • Today’s proposals - which are unlikely to be accepted by the EU - do not meet the deep concerns of many businesses and trade unions, particularly those representing the services sector, which accounts for 80 per cent of our economy, who are desperate for the UK to remain fully in the Single Market and Customs Union.
  • And they do not meet the desire of hard liners who want Britain to operate independently of all EU regulations – instead they would leave us as rule takers, paying for the privilege of being half-in and half-out without any influence at the table.
  • With Parliament incapable of resolving this, the only way out of this mess is a People’s Vote, once the terms of the Brexit deal are clear.

1. This is a hard Brexit that would damage our economy

Government approach:

  • "[T]he UK is leaving the EU, and as a result will leave the Single Market and the Customs Union."

Problems:

  • The Government’s decision to take the UK out of the Single Market and the Customs Union will have profound implications for our trade and our economy, as the Government’s own analysis has shown.
  • Analysis by the Global Future think tank found that the Government’s preferred ‘bespoke’ deal will hit the economy by £40bn a year by 2033-34, or £615m a week in today’s prices.[1]
  • Jonathan Portes, professor of economics and public policy at King’s College London, has assessed that this outcome would cost the economy "about 3 percent of GDP over 15 years", resulting in a hit to the public finances "in the order of £40bn a year, or £770m a week".
  • The EU27 is unlikely to accept a deal based purely on the free trade in goods. Michel Barnier has repeatedly made clear that the EU sees the four freedoms as indivisible.

2. It won’t deliver the ‘exact same benefits’ as EU membership

Government approach:

  • “At the same time, the UK recognises that the Single Market is built on a balance of rights and obligations, and that the UK cannot have all the benefits of membership of the Single Market without its obligations.”

Problems:

  • This is a major departure from the promises made by Ministers and leading Brexiteers. Both the Prime Minister and the former Brexit Secretary, David Davis, have previously promised a deal that secures the “exact same benefits” as EU membership.
  • “What we have come up with—I hope to persuade her that this is a very worthwhile aim—is the idea of a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have.” David Davis, Hansard Vol 620, 24 Jan 2017
  • "It will be a different relationship, but I think it can have the same benefits in terms of that free access to trade." Theresa May, BBC interview, 29 March 2017

3. It would be devastating for our services sector

Government approach:

  • “The UK is proposing new arrangements for services and digital that would provide regulatory flexibility, which is important for the UK’s services-based economy. This means that the UK and the EU will not have current levels of access to each other’s markets…The UK can no longer operate under the EU’s “passporting” regime, as this is intrinsic to the Single Market of which it will no longer be a member.”

Problems:

  • The UK economy is overwhelmingly service-based, accounting for roughly 80% of GDP.[2] In 2016, services exports to the European Union, accounted for £53.267bn of all UK service exports (37% of all UK service exports), making the EU, the largest UK services export market. [3]
  • The Government’s approach is simply not good enough for an economy which is largely based on services and where the EU is the UK’s largest service trading partner.
  • The approach outlined in the white paper, which proposes using the General Agreement on Trade in Services as a basis for future UK-EU trade is in no way as strong as current membership of the Single Market.
  • The City of London Corporation today described the white paper as “regrettable” and a “real blow for the UK’s financial & related professional service sector”.[4]

 

4. It would turn the UK into a rule taker

Government approach:

  • “The UK and the EU would maintain a common rulebook for goods including agri-food, with the UK making an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods, covering only those necessary to provide for frictionless trade at the border…the UK is seeking participation in EU agencies, as an active participant, albeit without voting rights, which would involve making an appropriate financial contribution.”

Problems:

  • This approach would turn the UK from being a rule maker into a rule taker, with no say whatsoever on key decisions affecting UK businesses, food standards and regulations.
  • The ECJ will continue to play a role in the UK, without the UK having a judge on the court. This flies in the face of the promise made by Brexiters and the Prime Minister to end the jurisdiction of the Court of Justice in the UK. “we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain.”[5]
  • And should the UK ever choose to diverge from any EU rules, this would jeopardise the entire agreement.

5. The proposed customs system is unworkable

Government approach:

  • “The UK’s proposal is to agree a new FCA with the EU. As if in a combined customs territory with the EU, the UK would apply the EU’s tariffs and trade policy for goods intended for the EU. The UK would also apply its own tariffs and trade policy for goods intended for consumption in the UK.”

Problems:

  • This proposal is immensely bureaucratic, reliant on technology that doesn’t currently exist, and is almost certainly unworkable.
  • The EU rejected both of the Government’s previous customs proposals – the ‘max fac’ option and the ‘customs partnership’ option – and it seems likely that this will be rejected as well. EU officials have described it as “nuts”[6] and Michel Barnier has reportedly told EU foreign ministers that “none of [the UK’s customs proposals] are realistic, no matter which one they choose.”[7]
  • It would be almost impossible to distinguish between goods destined for the UK market and those for the EU27 market and could encourage tariff arbitrage, where exporters could claim they were exporting to the UK and then shift their goods, tariff free on to the EU27. This would prove highly problematic for the EU27 as it would lead to a loss in customs revenue.
  • As Sam Lowe, trade expert at the Centre for European Reform has pointed out on this point, “there are numerous opportunities for fraud baked in, and questions remain over things such as revenue allocation, quota management, and the application of trade defence measurers.”[8]
  • The proposal may not even be legally compliant with international trade rules. The International Trade Secretary, Liam Fox, yesterday conceded it is uncertain whether the World Trade Organization would give legal approval to the UK proposal.[9]

6. It wouldn’t even deliver the Government’s promises about new trade deals

Government approach:

  • “In the context of trade negotiations, a common rulebook for goods would limit the UK’s ability to make changes to regulation in those areas covered by the rulebook.”

Issue:

  • The Government could not be clearer – the very same common rule book is its proposing will limit the UK’s opportunities to have an independent trade policy.
  • Any common rules which the UK has with the EU will hinder any trade agreements with other trading partners, including with the United States, as has been hinted by Wilbur Ross, the US commerce secretary.[10] This undermines one of the main driving forces of Brexit which was for the UK to be able to negotiate its own trade deals.
  • In the Foreword to the white paper, the Brexit Secretary says the proposal would allow the UK to strike new trade deals around the world, “in particular breaking new ground for agreement in services.” Yet trade deals in services are virtually unheard of in world trade – aside from the EU’s Single Market, which the Government intends to leave.
  • The Government make the bizarre proposal that the UK could look to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Yet UK trade with the 11 members of this agreement accounts for just 6% of our imports and less than 8% of our exports.[11]
  • The white paper doesn’t even mention how or whether the UK will roll-over all of the trade deals we currently enjoy as a member of the EU, nor how the UK will replicate the EU’s trade diplomacy functions.

 

7. Ending free movement would hurt our economy and young people’s life chances

Government approach:

  • “The UK’s proposal for the economic partnership would…end free movement, giving the UK back control over how many people come to live in the UK;

Problems:

  • Ending free movement would make it harder for UK citizens to live, work and study elsewhere in the EU, as they are currently able to do visa-free today.
  • EU citizens play a vital role in sustaining our public services, not least the NHS. Ending free movement would make it harder to attract staff to an institution already at breaking point.
  • The Government’s proposal of ending free movement, whilst effectively remaining in the Single Market for goods, is unlikely to be accepted by the EU, which will regard it as ‘cherry-picking’. The EU is fundamentally opposed to the splitting of the four freedoms – free movement of labour, capital, goods and services.

 

8. The white paper says nothing about the future of the NHS

  • It is a sign of how this government priorities are of out of touch with the British people, the NHS isn’t even mentioned in the document except a passing reference in the Prime Minister’s forward.
  • Not only is the Brexit dividend a myth – it seems the Government have decided the futures of thousands of NHS staff, access to research and medicines and future investment in the NHS matter so little they don’t feature in their plan for Brexit.


9. The proposals risk damaging our security

  • On Security, the white paper acknowledges “that leaving the EU means the security relationship between the UK and the EU cannot continue on the same basis as before.” This is not good enough, especially given promises were made during the referendum that security cooperation would be unaffected by leaving the EU.
  • The Government acknowledge that the kind of relationship the UK is seeking in a number of areas, including participation in EU projects and agencies, is unprecedented for non-EU members. This includes the Schengen Information System, the European Arrest Warrant, the European Criminal Records Information System as well as Europol.

10. There is no majority for this type of Brexit in the House of Commons

  • The Government’s proposals do not meet Labour’s six tests, and it is now clear that many in the Conservative Party are also opposed, meaning there is no majority for this type of Brexit in the House of Commons.
  • Furthermore, the Government will have to make substantial further concessions if an agreement is to be reached with the EU, meaning eurosceptic MPs will be even less likely to back any deal in Parliament.
  • With Parliament incapable of resolving this, the only way out of this mess is a People’s Vote, once the terms of the Brexit deal are clear.

 

[1] https://www.theguardian.com/politics/2018/apr/18/each-brexit-scenario-will-leave-britain-worse-off-study-finds

[2] https://ig.ft.com/sites/numbers/economies/uk/

[3] https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/bulletins/internationaltradeinservices/2016

[4] https://twitter.com/BruceReuters/status/1017386906798252032

[5] Theresa May, Lancaster House speech, 17 January 2017 https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech

[6] https://twitter.com/Peston/status/1017405464345104384

[7] https://www.irishtimes.com/news/world/uk/may-invites-conservative-mps-to-briefings-to-discuss-brexit-1.3495759

[8] https://www.cer.eu/in-the-press/first-coherent-brexit-plan-britain-has-produced-eu-will-never-agree-it

[9] https://www.ft.com/content/07c30254-8529-11e8-96dd-fa565ec55929

[10] https://www.theguardian.com/business/2017/nov/06/trump-ross-says-uk-us-trade-deal-eu-brexit-chlorinated-chicken

[11] https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/unitedkingdombalanceofpaymentsthepinkbook/2017 & https://www.gov.uk/government/publications/exporting-to-peru/exporting-to-peru & https://www.gov.uk/government/publications/exporting-to-vietnam/exporting-to-vietnam