Saturday, July 11, 2020
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TCW’s Brexit Watch

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Our regular report from Bern, Switzerland

BORIS Johnson has enjoyed a good press this week in Switzerland. No surprise that Weltwoche, the Swiss weekly magazine, picked Boris as their Head of the Week. Nor that the magazine compares the British Prime Minister’s approach to negotiating with the EU with their own government’s recent under-the-table dealing with Tante Ursula in Davos. The Swiss don’t like this kind of *** (American spelling) licking any more than British voters do. Mrs May doomed herself with her clumsy country house coup on behalf of the EU. A significant part of the Swiss media will keep reminding the public of that Davos bargain right up to the vote on the Swiss People’s Party amendments to the immigration and social insurance rules. This takes place in May. [You can find my translation of this article below.]

The establishment want the amendments rejected – against EU freedom of movement – while the Swiss People’s Party say that their country is not in the EU and makes its own rules.

Meanwhile Swiss voters have a ringside seat for the Brexit trade war, so far only a war of words. Boris has to play this right if he wants a revered place in the history books, certainly in this ancient Alpine confederation of just over two dozen small independent democracies called cantons. These are really groups of the three thousand smaller democracies that make up Switzerland. Swiss are citizens of these three thousand miniature democracies, not the confederation nor the cantons. These people are not going to crumple under pressure from bullying by the big canton to the north.

As my old Ambassador here, John Wraight, used to say, ‘Always remember, Adrian, the Swiss like winners. That preference can make a big difference to whether they buy our cars, our consumer goods, our jet fighters and indeed our pound Sterling.’

That aside, Boris Johnson is a classicist and like our daughter very logical – we hope. Classicists are known to listen and ask intelligent, probing questions. When I first met Boris, we chatted for an hour, just the two of us, long enough to gain a sense of each other. I don’t know what he made of me but I liked him. I thought he would go places. And he did, Mayor of London and a super Olympic Games.

Sontag Zeitung has a page on how Brexit may influence the talks between Switzerland and the EU. The FDP – Liberals – via a member of the Swiss Senate/Upper House named Ruedi Noser (you couldn’t make it up) suggest a wait and see if the British and EU reach a deal. The FDP are EU joiners. Noser points out that the EU is offering the British a framework deal. Johnson refuses to go along with this. By June or July the Swiss will know whether there will be an agreement or not. The paper also has a very good interview with the former Swiss representative to the EU who now represents Economie Suisse, one Paul Aenishaenslin, who does not understand why the Swiss team agreed to parts of the framework agreement. 

NZZ reports that London is on a collision course with Brussels. [My translation follows at the end of this article.]

My own view is that the EU are far more concerned about political and economic control of the UK after 31 December 2020 than anything else – even fishing takes a back seat. A clear signal was Tom Enders, former Airbus CEO, now running an institute in Germany, suggesting that Germany should financially underpin the French nuclear deterrent when it needs modernising. 

Tomorrow evening I will have my monthly dinner with local friends and diplomats where no doubt, among the dodgy stories and jokes, there will be considerable interest in how the talks are developing and British politics. And no doubt someone will ask if I think Boris will back down: is he bluffing?

My answer will be that he knows that if he backs down, he will have done his country immeasurable harm, harm that cannot be swept under an oriental carpet and hidden from the voters. Not only should he resign but go all the way back to Turkey. 

Supplementary question answer: I don’t think he wants that fate and the way to avoid it is clear as daylight.

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My translation from Weltwoche:

What Switzerland can learn from the British Prime Minister for negotiations with the European Union

By Pierre Heumann

Since this week, the British have been negotiating with the EU about the bilateral relationship following their withdrawal from the European Union. There are already major differences between the Federal Council’s strategy and that of Brussels. Firstly, London, unlike Bern, is not prepared to compromise even before the negotiations have begun. Secondly, Prime Minister Boris Johnson insists on the sovereignty of his country. He therefore categorically rejects automatic recognition and adoption of EU law – in other words, an institutional framework agreement. Thirdly, the British value their sovereignty more than the actual or merely supposed economic advantages of membership in the European Union. The recognition of the EU Court of Justice or supranational rights of control of the EU is out of the question for the British. Fourthly, the British see independence from EU regulations as an opportunity to be able to react to disruptive technologies at any time without having to wait for decisions from the EU bureaucracy. And fifthly, London – unlike the Federal Council – does not rely on confidential protocols when it comes to relations with Brussels.

Johnson has appointed David Frost as chief negotiator for the Brexit negotiations. The career diplomat was already familiar with the mechanisms of the EU in the 1990s. He later became ambassador to Denmark. When Johnson was Secretary of State, he brought in 55-year-old Frost as an adviser. Frost knows the interests of business very well. At the beginning of 2019 he became head of the London Chamber of Commerce and Industry. Johnson’s credo as chief negotiator, free of fear psychosis, was formulated by Johnson’s man for Brexit two weeks before the start of the negotiations. He did so in the middle of Brussels, near the power centre of the EU, during a lecture at the Université libre de Bruxelles. Although there were students in the auditorium, his target audience was obviously EU politicians and his opponent, the Frenchman Michel Barnier. Even if Switzerland and the United Kingdom differ in many respects, Frost’s pragmatic Brussels speech could serve as a compass for the Federal Council, which has no aim in relation to the EU.

Independence – Unlike the Federal Council, which regularly apologises in Brussels for the need to respect direct democracy and the sovereignty of the cantons, Johnson’s Brexit man first explains to the students (and the EU) his fundamental belief that Britain is an independent country. He therefore insists on the right to legislate the laws that apply in Britain – a right that every non-EU country has. If the EU believed that London would tolerate a superintendence in the free trade agreements to control the maintenance of a level playing field, it did not understand what the British were after.

This claim is not just a tactically motivated starting position in the negotiations, in which Frost will make cuts over the next few weeks under pressure from the Europeans, but the core of the whole Brexit project. Frost clearly states, ‘This is the point of Brexit.’ The EU, demands Frost, must understand and acknowledge that countries that geographically belong to Europe could also be independent states if they so wished. Independence does not simply mean limited freedom in return for adopting the laws of the headquarters in Brussels. Johnson therefore has a clear timetable. By the end of the year, he wants to have regained 100 per cent political and economic independence.

British turn the tables – Submissive behaviour is far from the British. Frost firmly rejects Brussels’s demand that fair competitive conditions must prevail in trade between the EU and Great Britain and that Great Britain must adopt EU standards. The Briton is turning the tables: How would the EU feel if, at London’s behest, it had to harmonise its laws with those being enacted in Westminster, and how would the EU feel if London insisted that the EU adopt British laws?

Sovereignty – At its heart is sovereignty and the ability to make your own rules for your country. This includes declaring higher and better standards than those required by the EU to be binding. Outside the Union, the UK can adopt more organic farming practices than those required by the EU and which are better suited to the UK’s climate than those of France. Those who oppose diversity, according to Frost, also implicitly say that EU laws are perfect and never need to be adapted. But especially in an era of upheaval and the advance of disruptive technologies, it is important to be able to react quickly to new developments. With Brexit, Great Britain has secured the competence to act quickly in crucial areas. Frost believes that those who are responsible for their own policies ensure better results.

Adaptability – Great Britain cannot be blackmailed economically, Johnson’s man for the EU Brexit makes clear. In contrast to the Federal Council, which wants to retain direct access to the EU market at all costs, Frost is not going to the negotiating table as a petitioner.

He doubts the accuracy of the numerous studies that paint a black scenario for Great Britain after its withdrawal from the EU. These studies overestimate the impact of non-tariff trade barriers and the effect of customs costs, ‘in some cases by several orders of magnitude’. The prophets of doom wrongly assume that the productivity of the British economy will be lower after leaving the EU. There are many reasons to believe that productivity will increase after being freed from EU bureaucracy, that trade will receive a new boost. This effect can be seen again and again in countries that open up to the world market after having been ruled for a time by an authoritarian regime. Most Brexit studies ignore this mechanism or play down its importance. Moreover, long-term forecasts of adjustment processes at the consumer and business level are not reliable. Modern complex economies are adaptable systems. They always find solutions that nobody had expected before.

Frost is therefore relaxed about the negotiations with the EU. The risk of friction or higher barriers does not scare him. He is willing to accept it. Because Johnson’s Brexit man is convinced that the UK will fare better outside the EU. With this announcement, he limits the scope for compromise right at the start of the talks. He resolutely rejects the assumption that his economic confidence is merely a tactical manoeuvre. His resolute defence of British values is not a tactical stance, but stems from a deep conviction.

Not an object of veneration – Frost knows that Brussels does not take the British scepticism about the EU seriously. Brussels attributes the Brexit movement not only to an irrational, unrealistic consciousness, but even to a fundamentally false worldview. He is not intimidated by this. The chief negotiator confidently defends the British decision and explains what makes them tick. They distance themselves from the EU because the EU has changed from a partnership agreement for free trade to an ‘object of reverence’. The institutions of the EU are abstract and remote to the British: ‘we could never identify with them’. They have felt like a guest in the EU who has had enough of a party and is looking for the way out because he or she cannot identify with the aims of the party.

Transparency – For Frost, leaving the EU is a revolt against the EU system and against the EU’s policies, which are all over the place for the entire continent, and a revolt against a policy whose key texts are incomprehensible to the average citizen.

Mistrust of power – Frost describes the withdrawal from the EU as a revolt of the democrats. He is referring to one of the great British political philosophers, the conservative thought leader Edmund Burke. He proudly admits to his ideas. What Burke wrote in the late 18th century is still considered relevant by Johnson’s government today. Family cohesion and neighbourly structures are more natural in Burke’s worldview than abstract, egalitarian systems that are removed from the grassroots. The state, according to Burke, must allow for different habits and cultures. This is particularly important for Great Britain, a union consisting of several states.

The prudence and wisdom of those in power must be visible to citizens, because politicians are not just delegates but trustees of the common good. For Burke, distrust of power and the powerful is the driving force of democracy. By leaving the EU, Britain wants to reaffirm these principles.

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My translation from NZZ: 

London on collision course with Brussels

Markus M Haefliger, NZZ correspondent London

The British government has adopted the mandate for negotiations on a Trade and Cooperation Agreement with the EU. Prime Minister Johnson wants to give Brussels just four months to establish the basic lines of a bilateral treaty. 

The negotiations between London and the EU on a trade agreement and future co-operation in political areas are imminent. It is therefore not surprising that both sides are currently making maximum demands. On Tuesday the EU’s European Affairs Ministers agreed on a negotiating mandate, followed two days later by the British side. The papers are similar in many ways. But there are also differences. Brussels and London are on a collision course when it comes to establishing and defining so-called fair competition conditions, dispute settlement and fishing rights.

Not at the price of sovereignty

It is the ‘vision of a relationship based on friendly co-operation between sovereign equals’, says the 30-page paper of the British at the beginning of the conference. From this it follows that the United Kingdom does not enter into any obligation that would call into question its powers over its own laws and policies. Behind the wording is the refusal to commit to European standards in worker protection, food and environmental policy. In this regard, London rightly claims that the UK has equally strict, if not stricter, standards. The situation is somewhat different with the ban on state subsidies. Boris Johnson wants to support former industrial cities in the North, and it is obvious that he wants to free himself from the Brussels ban.

Brexit negotiations three years ago had promised a free trade agreement ‘like with Canada’. It would be largely free of tariffs and quotas, but trade in services would remain unregulated and would be made more difficult. The EU argues that because of the volume of trade and the geographical proximity of the UK, it is impossible to simply copy the Canada Agreement (Ceta) – hence the call for a guarantee of competitive conditions. The Ceta also contains so-called non-regression clauses, bans on reducing protection levels. If the EU and London find a compromise, then the dog is buried here.

Another point of contention is the British fishing grounds. The EU demands access as before, London insists on sole control. The EU’s fishing fleets are to be allocated quotas on an annual basis, a procedure that Norway and Iceland also use.

Johnson gives the EU an ultimatum

The opposing mandates illustrate the uniqueness of the negotiations, which will begin on Monday. Normally, states or trade zones come closer to each other in such talks; at the beginning, both sides harmonise and emphasise the common goal, only towards the end do the conflicting interests come to a head. This was the case in the bilateral negotiations between Switzerland and the EU. In the coming British-European talks – ten rounds of negotiations at three-week intervals – the reverse is true: previous close relations are being relaxed and resolved. The psychological conditions are correspondingly different.

If the talks fail, the rules of the World Trade Organisation (WTO) will apply in future. They would make the exchange of information very difficult. The British government document sets out a tight timetable. By June, the outlines of an agreement should be laid down so that it can be concluded by September. London wants to assess in June whether it is on the road to success and then decide whether to continue negotiations. If not, WTO rules will apply from next January, after the end of the Brexit transition phase.

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Adrian Hill
Adrian Hill
Adrian Hill. Former soldier and diplomat, afterwards member of CBI Council and author.

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