UK Asks the Rest of the World to Be Super Duper Nice and Act as Its Old Deals Are Still Valid Post Brexit

You cannot make this stuff up.

At the end of this post is embedded a technical note from the UK government, addressed to no one in particular, in which the UK asks the rest of the world to let the UK keep the same terms of any bi-lateral deals with the EU in place with respect to them too during the transition period. The note acknowledges that multi-lateral deals are a different kettle of fish.

The legal fudge in numbered paragraph 7 looks pretty desperate:

This approach is underpinned by international law and practice, including Article 31 of the Vienna Convention on the Law of Treaties (VCLT), which provides that a treaty is to be interpreted in its context, which can include a subsequent agreement between the parties regarding its interpretation or application.

Help me. The UK wasn’t a party to any of these agreements. It was the EU. So the Uk can’t be one of the parties per the language above because it did not enter into the original agreement.1

So what does this mean in practice?

It is another demonstration of utter UK incompetence. How long has Theresa May been talking about her pet implementation period, and only now does anyone in her Government realize that it (along with Brexit generally) entail other moving parts besides getting an eventual pact on trade and services with the EU? The Financial Times was onto this last May, in , yet the Government has apparently been trying to stick its head in the sand since then. Key sections from its account:

While Brexit is often cast as an affair between Brussels and London, in practice Britain’s exit will open more than 750 separate time-pressured mini-negotiations worldwide, according to Financial Times research. And there are no obvious shortcuts: even a basic transition after 2019 requires not just EU-UK approval, but the deal-by-deal authorisation of every third country involved.

“The nearest precedent you can think of is a cessation of a country — you are almost starting from scratch,” says Andrew Hood, a former UK government lawyer now at Dechert. “It will be a very difficult, iterative process.”…

Each agreement must be reviewed, the country approached, the decision makers found, meetings arranged, trips made, negotiations started and completed — all against a ticking clock and the backdrop of Brexit, with the legal and practical constraints that brings. Most inconvenient of all, many countries want to know the outcome of EU-UK talks before making their own commitments….

***

At its most granular level, the sheer administrative scale of the “third country” question is striking. Through analysis of the EU treaty database, the FT found 759 separate EU bilateral agreements with potential relevance to Britain, covering trade in nuclear goods, customs, fisheries, trade, transport and regulatory co-operation in areas such as antitrust or financial services.

Some of the 759 are so essential that it would be unthinkable to operate without them. Air services agreements allow British aeroplanes to land in America, Canada or Israel; nuclear accords permit the trade in spare parts and fuel for Britain’s power stations. Both these sectors are excluded from trade negotiations and must be addressed separately….

“The logistics are terrifying, even just to go through these commitments and treaties and scope them out,” says Hosuk Lee-Makiyama, a former trade official for Sweden and the EU now at the European Centre for International Political Economy. “Do you want revisions? Do they? Do you go there? How many visits to Chile will this take? That’s a massive logistical operation in itself.

Everyone with an operating brain cell will use this opportunity against the UK. The UK’s failure to understand what Brexit means in practice and make adequate preparations means it has given the countries that are parties to these pacts a free option: you can fudge and honor the current terms with the EU, or you can do what you really should do, which is insist on a new agreement and use Brexit as an opportunity to demand better.

So where might countries leave the present arrangements in place? Where they work to their advantage and they deem it to be too much trouble to fuss. But any government worried about having its position covered in the relevant be clear and properly protected will likely want a new agreement and pretty pronto, just as a matter of good order.

And so merely because they are going to have to go to the trouble of papering up new treaties, most countries will probably seek to improve terms, particularly since the UK will be overwhelmed and not in a position to argue. And those other countries will be even more motivated if they think they are getting the short end of the stick or deem it worth the trouble to take advantage of the UK’s desperate position and demand more, they will.

As the Financial Times noted last May:

“There will be a lot of countries with a beef with the EU or the UK and will see this as a golden opportunity to bring up a nuisance issue. They might not get anything, but they have to try,” he [Hosuk Lee-Makiyama] adds. “There will probably be an accident in areas you cannot predict.”

And in the Financial Times’ account on this mess today, readers offered other reasons why some nations would be keen to sport with the Brits. For instance, from Felix Drost:

Who expects countries like China and India, that have humiliation by Britain on their national curriculum still, to be more generous to Britain than to the EU, the largest single market?

The Financial Times got its digs in on this sorry situation in its headline, , and was if anything understated in the article proper:

Sam Lowe, a research fellow at the Centre for European Reform, said the move marked a U-turn from previous British policy to renegotiate UK-only versions of the deals.

“It is not great for our credibility as a reliable negotiation partner,” he tweeted.

Michel Barnier, the EU’s chief Brexit negotiator, warned last month that there was no guarantee that the UK would be able to continue benefiting from the agreements once it left the EU. He said that was something in the gift of the 100- countries with whom Brussels had negotiated the agreements.

“Our partners around the world may have their own views on this,” he said.

As Lambert put it, “The UK seems to think the rest of the world operates like one of their stupid Westminster private clubs.” They are going to get a rude awakening.

_____

1 No, sports fans, the full text does not give the UK any more reason to be hopeful:

Article 31, GENERAL RULE OF INTERPRETATION

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

(b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

3. There shall be taken into account, together with the context:

(a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

(b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) Any relevant rules of international law applicable in the relations between the parties.

4. A special meaning shall be given to a term if it is established that the parties so intended.

Technical_Note_-_International_Agreements_in_the_Implementation_Period_-_CLEAN
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95 comments

  1. Conrad

    I’m struggling to think of any comparable self-inflicted disaster in diplomatic history ever. The UK holds no cards at all. Every third party state will potentially be able to bargain for whatever they wish, and there seems to be a complete lack of preparation by the UK to deal with the consequences in any sort of orderly manner. The incompetence and wishful thinking of the Brexiteers is truly staggering to behold.

    1. Oaf

      …Its like divorcing one’s parents; while hoping to keep the trust fund!….And Dad?, may I please have the keys to the Ferrari?

  2. Pavel

    I am in the UK now and am bemused how most people are just sleepwalking towards a catastrophic Brexit. Perhaps things will get so alarming they will in fact call for a second referendum (which might prevent Brexit but cause a virtual civil war with the Leavers).

    History should never forget it was the dishonest, corrupt David Cameron who caused this disaster (egged on by Boris Johnson), and now May is constantly making a bad situation even worse through her total incompetence. “Strong and Stable” indeed!

    Lambert’s comment about the private Westminster clubs is a good one. There has always seemed to me a peculiarly British upper class attitude that “we’ll just muddle on and sort it out, old chap”.

    The NHS is in absolute crisis already. God knows what will happen if all the EU docs, nurses, and support staff start leaving.

    BTW Yves, there may be a missing closing tag at the start of the FT quote?

    1. PlutoniumKun

      Lambert’s comment about the private Westminster clubs is a good one. There has always seemed to me a peculiarly British upper class attitude that “we’ll just muddle on and sort it out, old chap”.

      The thing is, they’ve always applied that attitude to each other – it’s with anyone else the English ruling class have been extremely ruthless. They problem is that they’ve failed to understand that that type of arrogant ruthlessness only works when you are in the position of power. When you are the supplicant, it is precisely the wrong approach. And its an even worse one when you are supplicant to countries who have been nurturing grudges for a long time.

      1. Colonel Smithers

        Thank you, PK. Spot on, as always.

        I have heard South African officials and bankers talk of getting a good deal out of Britain. Even the Afrikaners seem to relish the forthcoming round. Memories are long in the former Boer Republics. Just ask ABSA’s Steve Booysen.

    2. c_heale

      I am also a Brit and was back there a couple of weeks ago. Just from talking to family and a couple of friends (anecdotal I know), most people have no idea how bad it is. It doesn’t help that the BBC, and the press are not doing their job and informing people. Even reading the broadsheets in the UK is a complete waste of time.

      1. Colonel Smithers

        Thank you and well said.

        This negligence helps those of us getting our parachutes ready.

    3. Colonel Smithers

      Thank you, Pavel, and well said.

      A second wave of EU27 citizens is planning to leave hospitals and care homes in Buckinghamshire, my home county. It’s not just east Europeans. One unit at Stoke Mandeville hospital has a dozen Spanish staff and a handful of Africans. There are no others, no Brits. All the Spaniards are leaving this summer.

      Greetings from sunny Madrid. I there to help with the transfer of business from the London Branch of my EU27 bank employer to its Madrid Branch. The work is going, but I am staying in London for the transition and will probably get my marching orders at the end of next year.

      1. Pavel

        I honestly don’t know what the NHS will do. After years of bad work conditions (esp long hours) many junior docs trained here are leaving (or “buggering off”) to Australia or NZ or Canada. They were “replaced” often by EU docs wanting training or English skills but they won’t come after Brexit.

        It is already very difficult to hire nurses and midwives. A friend who is a central London GP says it is impossible to get new GPs (and also support staff). I am familiar with one large teaching hospital and a lot of the support staff are EU or other migrants. Things are in crisis already but after Brexit I just can’t imagine.

        Oh, but of course according to BoJo the NHS is getting another £350M per week post Brexit, so that’s all good then.

  3. PlutoniumKun

    As Yves suggests, countries like China and India will be rubbing their eyes in disbelief with the opportunity this gives them to hammer the most humiliating possible deal with the UK. Expect, for example, India to insist on limitless access to the UK for Indian citizens for work and business as part of any deal. China will want the right to buy whatever is left of British business and technology.

    The catch of course for the UK is that the more they concede to non-European countries, the more they will be shut out of EU trade. The EU will not let the UK act as a backdoor to Europe for trade. Its a complete trap, one entirely self inflicted. And they can’t just blame the Brexit vote alone, that was 18 months ago and they still haven’t even started proper preparations.

    1. The Rev Kev

      “18 months ago and they still haven’t even started proper preparations.”

      Who could have possibly believe that the UK’s establishment would do to this to the UK as well as themselves? Eighteen whole months of irreplaceable negotiation time wasted. That light at the end of the tunnel is not daylight. It is the light of an oncoming train!

      1. vlade

        I said even before the referendum that the UK had no skills and people to deal with all the negotiations that would need to happen to exit.

        But even I assumed some trivial level of competency on pols side, so it’s much worse than the disaster I expected.

      2. Nell

        Who could have possibly believe that the UK’s establishment would do to this to the UK as well as themselves?

        Option 1: Establishment is against Brexit and waiting for the opportunity to stop the farce whilst keeping themselves in power (Corbyn is a problem). Option 2: Our great leaders are human, and the current crop are cretins.

          1. subgenius

            As far as I can see, it’s all May (et al) amazing throwing a temper tantrum and smashing what they believe was their shiny toy so the plebs can’t play with it.

            1. JTFaraday

              I don’t think they deliberately want to smash it. I think they are neoliberal incompetents and beneficiaries of legacy systems who think things really work like their magic of markets ideology suggests things do, thus do-nothings because there is nothing to do. Harboring delusions of imperial grandeur, unwilling to be a mere one of 27, they imagine they can sit atop a renewed empire without, again, actually having to do anything to get there, because it already belongs to them by right.

              It’s all wish-fulfillment fantasy. I’ll be surprised if there is any sort of Brexit at all.

    2. John A

      Would be fun to see China forcing Britain to open opium dens here. Or maybe secretly, May, Davies et all, are already opiumed up to their eyeballs.

      1. Which is worse - bankers or terrorists

        The possibilities are endless really. What about slave trade reparations as a trade concession? Maybe reparations to France, Spain, and Germany for war damage for the last 500 years? Financial crisis reparations for all of garbage derivatives sold out of London last decade. Special exemptions for English law in the case of sovereign default.

  4. Foppe

    Unless I’m missing something, they did ‘as the UK’ (ratified in 1970, 3 years prior the UK’s accession to the — politically much more limited in scope — EEC), though the treaty only entered into force in 1980.
    (I don’t know what legal/juridical consequences the creation of the EU in 92/93 had for membership of existing treaties, as a supranational body. But since the EU isn’t a party to say bilateral treaties between EU member states and non-EU states, I would imagine that it changed too much, due to the subsidiarity principle that’s part of the Maastricht Treaty.)

    1. PlutoniumKun

      The Vienna Convention set international law about how individual treaties are to be upheld in the context of International Law. In other words, it sets the contexts under which multinational and bilateral treaties and agreements are interpreted. The UK is a signatory to the Vienna Convention as a country, but the problem is the 700 odd other deals and treaties which were signed on behalf of the UK by the EU, and which have to be interpreted in the context of the Vienna Convention. It is this Convention, signed by the UK, which says, to paraphrase ‘a deal only exists between the two parties who sign it’, and there is no lawyerly wiggle room out of this.

      So in response to this memo, any country can just say ‘sorry lads, look here, our deal is with the EU, thats what it says on the document, I don’t see the letters ‘UK’ anywhere on it, so tough, under the Vienna Convention, it doesn’t apply to you. But we may be willing to offer you something similar. If you are nice, By the way, we can’t help noticing you haven’t been buying any of our chicken, its very good, scrubbed well with chlorine, you can hardly taste it…’.

        1. PlutoniumKun

          No worries, its a bit early in the morning here for understanding international treaties! After all, the UK government doesn’t and they’ve had 18 months to get their minds around it.

          1. c_heale

            Economic treaties only apply to the little countries in the eyes of the people running the UK (who were too stupid to realize they are a little country). I think Brexit will become the new definition of hubris.

      1. Bugs Bunny

        Exactly none of these treaties would have been signed with identical material substance if it had been bilateral. Ya gotta admit, it took some intestinal fortitude to put this in writing.

    2. BannedNDC

      To be fair, they might have the beginnings of an argument if they framed themselves as a successor state.

  5. PlutoniumKun

    I can’t find this reported elsewhere right now, but this is pretty big –, the EU are insisting that NI will be subject to EU Rules for the transition period and longer.

    From the Guardian article:

    UK negotiators have been warned that the EU draft withdrawal agreement will stipulate that Northern Ireland will, in effect, remain in the customs union and single market after Brexit to avoid a hard border.

    The uncompromising legal language of the draft agreement is likely to provoke a major row, something all parties to the negotiations have been trying to avoid.

    They are also insisting on a ‘sunset clause’ to prevent cheating during the transition period.

    “There will be no wriggle room for the UK government,” said Philippe Lambert MEP, the leader of the Greens in the European parliament, who was briefed in Strasbourg earlier this week by the EU’s chief negotiator, Michel Barnier. “We are going to state exactly what we mean by regulatory alignment in the legal text. It will be very clear. This might cause some problems in the UK – but we didn’t create this mess.”

    This creates a huge political problem for May – the Northern Ireland DUP, her ‘partners’ in government will fight this tooth and nail (although they may find they themselves will be at risk as their Brexit stance isn’t universally popular with their supporters). And no doubt the Scots will be looking within intense interest at the possibilities.

    1. vlade

      yes,I saw that. It seems to me that EU decided if no-one on the UK side is going to pick up the ball, they will. Not sure it will really help, as my prediction now is still the same – either the UK will roll over and cancel Brexit (which at least some EU pols are still saying is possible), or hard catastrophic crash out.

      There’s a third option, where EU basically tells the UK “this is what you get, take or leave, you squadered the time” but given that the UK parliament got a vote on that, it’s going to drop to one of the above.

      1. PlutoniumKun

        Yes, Barniers approach seem to be ‘ok, we’ll take everything you say at face value, but when you apply all your red lines, X is the only logical option. Therefore, X it is, take it or leave it’. They did this with the Canadian option, and now they are doing it with Northern Ireland. I suspect they know full well this is likely to force the UK to make a quick decision about either crashing out, or making a humiliating reversal – the transition period seems shakier and shakier by the day. I don’t think they care anymore which one they choose.

        1. Yves Smith Post author

          It would be vastly better if I were wrong not just for the global economy train wreck potential. The UK is a small open economy with a outsized banking sector. Recall Willem Buiter calling it “Reykjavik on the Thames.”

          Even with UK banks and US/EU banks that have operations in London moving in a serious way to get in front of a hard Brexit, I am not sure most are adequately prepared for a “no deal crashout,” which is a much worse outcome, in March 2019, which is looking more and more likely by the day. One big not well capitalized institution getting itself screwed could have serious knock-on effects. Witness Credit Anstalt. I also don’t like seeing our many NC readers in the UK being subjected to distress and a permanent decline in the UK’s standard of living.

          But having said that, the utter disconnect from reality of the UK leadership and the press means the odds of a second referendum in time seem vanishingly small. There has to be a sense of an impending train wreck to give the pols air cover for reversing themselves. As so many readers have said, they very little understanding of what is really happening among the general public.

  6. Frenchguy

    I am not sure if the fact that the UK is not formally a signatory of the treaties is really important. It seemed to me that the cardinal rule of international law is that if the parties agree something is legal, it is. So they could amend the treaties the way the UK wants it anyway. On the other hand, even if the UK were a signatory, the other parties are not forced to amend it the way they want.

    So yes the overall point stands that the UK is in a tight spot and will have to make concessions. But I doubt that a more careful write-up of the treaties would have helped. Even if the UK had been mentionned explicitely as a member of the EU, what would have changed ? The UK would have said “look I’m still here” and the other parties would have said “yeah but you’re not in the EU so the situation has changed”. The legal position would have been slightly better but would the outcome be different ?

    1. vlade

      The point is “if parties agree”. I.e. both.
      If say there’s a China-EU agreement, and China believes it can get a better one, it has grounds to say so. I.e. as Yves says, the agreements that will stay are those that are already good for a third party, or too much hassle for too little gain to renegotiate.”

      1. Frenchguy

        I agree completely with Yves’ conclusions. I’m just wondering if the point about the UK not being explicitly mentionned in the treaties is really an important factor in what will play out…

        If the EU-China treaty had said: “the EU (which is composed of Germany, the UK…)”, wouldn’t China say that Brexit means that the UK is out even if it is mentionned ? As I said, the legal position would be slightly better for the UK but enough to change the outcome ?…

        1. vlade

          EU treaties never (to my knowledge) enumerate – becuase it would put a serious cramp on them in the case of extension (which, unlike A50 which was I suspect meant to be ornamental, actually happen).

        2. Clive

          I think you encapsulated the nub of this originally in your first comment — “if the parties agree it is lawful (in international law) then that’s what the law is”. Certainly that’s the approach which has got the EU a long way historically.

          Very little (I can’t find anything substantive) of what the EU did as part of Enlargement has been tested in the international courts. When a new member state acceded to the EU, it automatically inherited the agreements which the EU had in place (as the article rightly points out, there’s a stack of them, all negotiated and enacted with different variations of the EU and even back to the old EEC or European Coal and Steel Community days) without either the EU or the other party to the agreement explicitly consenting. The EU goes around acting like it’s a sovereign nation state, even though that isn’t what it is at all. But because that’s how it acts — and that’s how the counter parties are happy to treat it — the agreements aren’t challenged even though technically the EU varies them via enlargement.

          If the EU isn’t a sovereign state, what, then, exactly, is it? With regards to international law, there’s never been anything like it before. It’s a sort of Switzerland on steroids. This will undoubtedly give rise to all manner of legal fun and games as people (and, I imagine, businesses with contracts written in specific member states’ jurisdictions) assert rights to various EU benefits or provisions granted by the EU in its capacity as a quasi-sovereign. The family getting to have their right to be an “EU Citizen” (a construct which is only legally defined and accepted by the EU, not in international law) upheld is going to be fascinating to watch. It won’t be the last.

          Talk about opening a can of worms.

          1. vlade

            I doubt it would stand, as EU makes no bones it’s an open club, so any complaints “but you enlarged” are unlikely to fly.

            That said, the “EU citizen” is an entirely different matter, and indeed an interesting one.

            1. Clive

              No, they are agreement-specific. I’ve been researching, just because I know the constitutional and legal system contexts, Japan-EU agreements. Just to find out where they have commonality of terms or “boilerplate” drafting. There’s nothing giving the EU (or the U.K.) broad-brush validation (or invalidation, for that matter).

              Take the oft-cited Euroatom agreements. Notice how for Japan (see “ARTICLE 8”) even this notionally Japan-EU agreement references the U.K. and has U.K.-specific clauses within this EU-instigated deal.

              1. vlade

                Article 8 says that the agreement will follow some existing sub-agreements – but also says “of safeguards by the Community
                pursuant to the Euratom Treaty”. In fact, in point (b) it says “hereinafter referred to as the Safeguards Agreement for the Member States of the Community other than the United Kingdom of Great Britain and Northern Ireland and the French Republic”, after enumerating the states in EU at the time. That said, that point also only references and older treaty, which is pretty much signed by anyone in Europe (on non-proliferation).

                UK and France arealso singled out later on due to the fact that they have nukes – for example, say if Italy got nukes and detonated them, technically Japan could not terminate this treaty, although I suspect it would say that the spirit of the treaty was to cover all EU countries.

                Parties to the agreement are defined in Article 1 as Japan and all territories where Euroatom applies. So, for example, even if the treaty specifies the UK, once UK is not subject to Euroatom, the treaty parts in its respect become null and void – i.e. if the UK tests a nuke, but is not subject to Euroatom, Japan does not have a legal grounds to leave this treaty

                1. Clive

                  But then ARTICLE 12 goes on at great lengths (I won’t quote it all here) to say that the U.K. — Japan bilateral agreements will, where they exceed the EU-Japan agreement, allow “those rights and obligations will continue to be
                  implemented under the said bilateral agreements”.

                  I’m not using this as an example to suggest that there isn’t a world of pain in unpicking EU-Rest of the Word agreements for Brexit but I am saying that all agreements are bespoke and some will give the U.K. a large amount of unilateral autonomy post Brexit under the existing agreements (like Euroatom in respect of Japan) whereas others will be dead and buried on Brexit day.

                  There’s no universal Get Out of Jail Free Card under international law for either the U.K. or even necessarily the EU or any of the counter parties (depending on the prices terms of the agreements’ wordings). Each agreement will need to be looked at by each party individually and impact assessed on a case-by-case basis.

                  Either that, or they can accept the UK’s serving of Brexit fudge (the rather strained reading of the Vienna Convention). The U.K. is offering them a get-out clause, if they choose to accept it. But if they want to give the U.K. a poke in they eye, Brexit has potentially given them a nice sharp stick to do it with — although the exact sharpness of the stick will still depend on the specific agreement.

                  1. vlade

                    Yes, but that’s on existing Japan-UK bilateral agreements (some of which may well be replicated by Euroatom treaties).

                    As you say, there’s a lot of unpicking, but I’d also say that parties to the EU agreements, where one “party” is defined as “EU” or similarly to the Euroatom (“where Euroatom applies”) will have upper hand in any negotiations with the UK, as a definition of a party to an agreement is fairly critical.

                    Where a lot of the unpicking will have to be done is how these agreements overrode (or not) any existing bilateral agreemnts – like in this treaty, there clearly was a previous UK-Japan one, and likely would continute. Woudl it be sufficient? Who knows.

          2. Katsue

            The Holy Roman Empire and the Soviet Union bore some similarities to the European Union, though unlike the EU both had non-sovereign members as well as sovereign members.

            1. PlutoniumKun

              The UAE is actually quite similar, it exists only really as a ‘foreign policy’ entity, the individual emirates are pretty much independent units.

              In reality, there are many types of ‘States’. Even within the EU, federal countries like Germany (where most of the big decisions are made at Lander level) or Belgium are very different from more centralised nation states like Sweden or the Netherlands.

              1. Clive

                The key difference being these really are states, unlike the EU which has a lot of the properties of a state, but isn’t in fact one.

    1. ambrit

      Sorry to tell you but, to we ‘deplorables’ in the US, crazy is crazy, period. It will be very bad for the ‘average’ person in the UK. It already is very bad for the ‘average’ person in America. Once we descend to the ‘crazy’ dimension, no matter where we are, everything goes 11 dimensional pear shaped. (Like those D’Tesseract pears that come in the Klein boxes.) Wonderfully Lovecraftian optics, but no nutritive value.

      1. Yves Smith Post author

        Yes, you still have an NHS even if it is starting to come apart at the seams, you don’t have an opioid crisis, your life expectancy is now better than ours and you don’t have falling life expectancy. But a hard Brexit or a no-deal Brexit would change all that.

        1. ambrit

          Do you think that a hard Brexit will teach American politicians anything? (Serious question. You have connections to that stratum of society.)

          1. jsn

            The mass market information flows in the US are politically/economically managed to the same or larger degree as in the UK. The purpose, as in the UK, as best as I can tell is to preserve to the extent possible for the longest possible duration both the current profits distribution and the trend toward the concentration of that profit distribution. It’s not really what anyone intends, but an accidental artifact of the rich and powerful having retooled all the informational institutions to facilitate their narrower aims.

            Financialization of everything financializable has corrupted the information flows by biasing all the credentialed sluices, wheels and spillways with perverse incentives, from school administrators to journalists and stringers. Only the physical intrusion of external events that cannot be “re-framed” can end this system, essentially by obliterating all credibility. Think Yeltsin shelling the Duma, that kind of reality intrusion.

            The best outcome I think the US can hope for is that a “mosaic” strategy, whereby in the crucible of some precipitating external shock, innumerable grass roots efforts are able to coordinate an effective power grab by “turning” enough of those individuals in “the establishment”, who are not completely rotten people, to assert a coherent counter narrative and have it distributed and sustained. A successful take over of the Dems by the Sanders wing is one version of what that might look like, and a good illustration of how hard it will be.

            1. jsn

              The short answer is that American politicians are handsomely paid to not learn anything. They will continue to not learn until that structure is changed by whatever means and as an external event I don’t see Brexit changing that structure.

        2. mosschops

          We do have declining life expectancy I believe. US and UK the only two major developed countries to share that particular achievement.

          1. PlutoniumKun

            , although the trend for a decline in mortality has lessened, leading some to think it might stabilise or reverse.

          2. begob

            Last time I checked it was in stall mode – think Gorbachev’s Russia. The decline in the US is among U-65s, I believe, which is doubly upsetting.

  7. guurst

    Sign of the times: you can order a cocktail Oxenstierna – three parts beefeater gin, one part bovril – at the Rivoli Bar and Cocktail Lounge ( The Ritz/ London) . Bottoms up !

    1. ambrit

      Oh good heavens. It sounds almost as bad as our college ‘broke night party’ drink of Cepacol mouthwash and cheap vodka. It’s not as bad as it sounds. After two or three, you kinda, sorta, get to like it. An acquired taste to be sure.

    1. ambrit

      Yes. Wasn’t the UKs perennial policy towards the Continent one of “Divide and Rule?” Once the EU got its’ act together and united, the old Anglo Imperial policy became moot, but no one in Whitehall took sufficient notice. Now their noses are being rubbed in it.

  8. K.

    Brexit is the best thing to have happened in years. Sure, for middle and upper class doomsday preachers fed om Guardian lies and half-truths, it’s all going to hell. Life has been very hard under EU for lots of people, but you never had any sympathy for those people anyway. EU is a neo-liberal hell, and why the left in the UK (if it exists any more) isn’t feeling this is their golden opportunity is incomprehensible. Corbyn used to be anti-EU, he might be still. The sooner EU will collapse, the better. Just a shame the so-called left is noe right-wing.

      1. PlutoniumKun

        I always find it disheartening that a significant number of left wingers in the UK actually buy into many of the UK press propaganda. It shows how pervasive it is *

        *I’m not suggesting all left wing eurosceptics are victims of right wing propaganda – Corbyn and his wing of the Labour party have always had an intellectually consistent argument against Europe. But this is different from people who spout about ‘European neo-liberalism’ without knowing what they are talking about. I’ll give a clue – where was classic ‘liberalism’ invented?

      2. MK

        A judge I regularly practice before (as an attorney) will stop proceedings on a dime if anyone uses the phrase “with all due respect” in his courtroom.

        He says to the offending party something along the lines of – Don’t use that phrase again in my courtroom lest you want to be held in contempt. If you want to tell someone to ‘go fcuk yourself’ at least have the courage to use the phrase. Which will also land you in contempt of court. (and he does say fcuk, but he is the Judge).

        1. Yves Smith Post author

          “With all due respect” is accepted in polite Democratic party passive aggressive circles. It’s a marker for saying, “I disagree with you and don’t buy your reasoning.” I don’t see it as rude, I see it as way of saying you disagree fundamentally. It may be ruder than that in the UK. I will admit I upped the ante with the propaganda comment.

          If you’ve read this site, you should know I am regularly more frontal than that. I have a lot more notes in my register between “With all due respect” and “Fuck you”.

    1. EoH

      That life has been very hard for lots of people in Britain I agree with. Blaming membership in the EU instead of long-standing neoliberal policies and priorities seems to score a three when what’s wanted is the treble twenty.

  9. Enrico Malatesta

    Although this is a very simplistic view, it seems to answer why PM May is prosecuting Brexit the same as a US Prosecutor goes after a Police Officer indited for a crime…

    Brexit brings about financial pain, but also healing for the forgotten lowest third of the population, and very few in power in the UK have the least interest in promoting such a thing – Mark Blyth offers some clear, pithy insights into Brexit, Greece, and the EU:

    A pretty watchable 4 minutes of YouTube –

    1. vlade

      Brexit is likely to bring only more of the same to the lowerst third of the population – that is, except of some satisfaction that the other two thirds (less some small percent on the top) life quality will drop as well.

      UK is not, and cannot be, an autarky. It needs to trade – including for food. Under almost any scenario imaginable, food will become more expensive (or much worse quality – cf chlorinated chickens, or both) for as long as is reasonably forecasteable (say up to five years, and that’s pushing it) – fundamnetally it will be because of much weaker pound, and not enough exports to pay for all that is being imported now.

      There was no cogent and believable argument that would cover all relevant facts (i.e. how the trade will function, what will UK export and who will do those exports etc. etc., what would happen to the pound if Labour started trying to run MMT on an open economy etc. ) that would improve life of the poorest in the UK short or medium term.

      Sorry – there was one. Turn the UK on war-like economy footing, which would likely give the bottom 20-30% better lifestyle if everyone was dropped below the current average. But the likelyhood of something like this is about zero.

      1. Mark P.

        Vlade wrote: UK is not, and cannot be, an autarky. It needs to trade – including for food.

        In the time frame we’re concerned with, absolutely true for the UK.

        However, since we can’t do anything for the UK’s current situation by agonizing on NC about it, I want to digress slightly, and think about the future and this concept of autarky by pointing out that David Ricardo’s doctrine of comparative advantage has always been less than fully convincing —

        see forex

        — for all that it’s the central shibboleth of modern economics.

        To be sure, ever-greater flows of global trade and finance controlled by financial centers in superstates like the U.S. or EU — or in its time, the British empire — have provided larger capital flows for elites to tap into and thereby enrich themselves more greatly. One can see why Ricardo, a financier and speculator who himself benefited enormously from precisely this process*, would propagandize for them.

        Today, consequently, we’re taught to regard Ricardo’s doctrine of comparative advantage as an unquestionable law of human existence. But suppose that it is not, any more than — to paraphrase Ursula LeGuin on capitalism — the divine rate of kings, taken as such an unquestionable law in its time, turned out to be.

        Heresy, I know. But Ricardo’s doctrine was always problematic in the ways that, forex, Keen’s article outlines, and going forward it becomes more so ….

        How so? Well, to start with, as we’re now finding out, one problem with ever-larger financial centers like the City of London and Wall Street centralizing and controlling capital flows is that eventually ‘the revenge of the places left behind’ occurs — thus, Brexit and Trump, which are effectively giant two-by-fours picked up the left-behind masses to swing at elites’ heads.

        Then too, going forward, it also will be increasingly unclear what the purpose of all this increasingly globalized distribution of manufacturing is supposed to be in a world where, for instance, many advanced designs will be be downloadable via the Internet and built via 3D printers, and where, say, meat that is healthier than animal-derived meat can be synthesized for $11 per hamburger (as one company I know is now doing).

        21st century technologies will, in other words, increasingly make autarky viable — not just for smaller states like the UK, but for city-states and towns and villages.

        Additionally, these technologies will be emerging just as climate change heightens so that our just-in-time global supply chains become increasingly vulnerable to disruption and failure, possibly with catastrophic results for some populations, and their energy-inefficiencies become increasingly pertinent. (e.g. in many cases, is it really worth shipping cheaply-manufactured goods across the Pacific as we do?)

        So the general plausibility of comparative advantage, together with the viability (or lack of it) of autarky for a given socio-political grouping (e.g. as it applies to Scots’ or Catalan independence), is going to be increasingly due for reconsideration.

        *David Ricardo made his fortune by speculating on the Battle of Waterloo. Prior to the battle, Ricardo sent an observer to communicate the early results of the battle. He then deliberately created the impression of a French victory by initially selling British securities so that a market panic ensued. He then bought British securities at a steep discount and made himself a million pounds, an enormous sum at the time.

        In light of this, to what extent was Ricardo’s promulgation of his doctrine of comparative advantage simply another self-interested act of social manipulation?

        1. Synoia

          I believe a autarky may require more land and more energy to be available than the UK possess.

          Energy shortages are predictable. Land shortages make housing affordable, or transfer the cost from land to energy (high rise buildings).

          I believe the oil producing nations’ leaders are somewhat fond of hard money, especially when deposited tax free in a foreign bank account.

          1. Mark P.

            Synoia wrote: I believe a autarky may require more land and more energy to be available than the UK possess.

            You may believe that and today it’s obviously true. In the future, not necessarily — that’s my point. Admittedly theoretical, because with the people and mindset that are currently in power in the UK, you can’t get there from where the country is now.

            Regarding the question of land —

            There’s enough. Land requirements for cell-cultured meat, for instance, would be negligible — nothing like the amount of land required today for animal agriculture. The real questions if a society shifts to cell-cultured meat are: (a) how expensive will the inputs be? Can the technologies involved scale sufficiently? We don’t know yet.

            For regular agriculture, there’s vertical farming —

            Regarding the question of energy —

            Well, we know that can be done. There’s been a solution for national autarky in terms of energy for decades. After all, France has at points in its recent history generated approx. eighty percent of its electricity via nuclear.

            As an Indian nuclear engineer once said to me, “You people don’t like to talk about it, but nuclear is one of the best options a country like India can have for self-sufficiency.”

            And a Chinese engineer once laughed, and told me people in the West were stupid and the Green anti-nuclear movement was principally a tool of the fossil fuel industries. In China today, they’re throwing up nuclear reactors —

            So, yeah, in principle the UK could become an autarky. The technologies exist today.

            But in practice it’s not going to happen with the existing UK mindset and incompetence. And even if those were to change, it won’t help to get the UK self-sufficiency in any Brexit-related timeframe.

            1. Yves Smith Post author

              Help me. The UK is not suitable, climate wise, for growing many staples, such as grains, save maybe oats, barley, and rye. nor for lots of types of fruits and veg. I lived there in the early 1980s when a lot less food was imported than now. There was shockingly little in the way of vegetables and even most of that was imported.

              Plus eating meat, which is higher up the food chain, is costly in environmental and food chain terms. What do cows in the UK eat? Corn and ground up sheep. Where do you think that corn comes from? The US.

            2. EoH

              Food self-sufficiency in the UK is as pie-in-the-sky as the argument that Britain would be better off with a hard Brexit.

    2. Jack

      Enrico, good share. But I don’t think Blyth was postulating any healing for the bottom 30%. Rather he was saying it is all about screwing the bottom 30%.

    3. PlutoniumKun

      I admire Mark Blyth a lot and I don’t miss his presentations, but he is irritatingly wrong consistently on Brexit because he (like Larry Elliot) seems to be unable to tell the difference between the EU and the Eurozone.

      1. Mark P.

        PK wrote: …he is irritatingly wrong consistently on Brexit because he (like Larry Elliot) seems to be unable to tell the difference between the EU and the Eurozone.

        Are you sure?

        Or does Blyth just fail to differentiate between the EU and the Eurozone in the same way as you do, because he believes the macroeconomic and social effects of a Greater German Prosperity Zone make the distinction between them that you make moot in the slightly longer term?

        1. PlutoniumKun

          I can’t say for certain what Blyth really believes, but the reality is that the EU and Eurozone are very different constructions. The Eurozone is much more German dominated, which was a political necessity at the time, but with hindsight was disastrous as it lumbered every country in the Euro with Germany’s particular hangups, without the benefit of Germany’s engineering knowhow.

          To flip casually in analysis from ‘the EU does X’ to ‘the Eurozone did Y’ either shows a lack of understanding of the structures in Europe or is a dishonest form of argumentation. To point out the stupidity of austerity and the sociopathy of what was done to Greece is a strong argument against the eurozone as constructed. To use it to argue against the Common Market or Single Market or other related EU structures is simply incorrect and is to fall into the exact sort of fallacy promoted by the likes of Nigel Farage.

    1. vlade

      BBF’s Silly Money (which I heartily recommend) was the best explainer of the GFC bar none on the UK TV.

      So it doesn’t surprise they managed this too..

      RPI John Fortune:( – if he were still alive, there would have been so much material for him..

  10. Expat

    I still fail to understand why any Brit would believe hard Brexit is a good thing. The choices at this point are:
    1. Sober up and admit that the tequila-fueled decision to leave the EU looks bad in the light of day
    2. Leave anyway but beg and plead for something, anything to cushion the blows.
    3. Walk away proudly with head held high and live in squalor and despair…but proud squalor and despair.

    1. Synoia

      Sober up and admit that the tequila gin-fueled decision to leave the EU looks bad in the light of day

      1. Expat

        Touché. Certainly an appropriate change of alcohols, but given Britain’s long history with gin, I chose tequila because it is a foreign concoction which caught the Brits off guard. I think a gin-fueled party would lead to Britain altering the definition of LBW in League Cricket, something as profoundly shocking to the British soul no doubt, but less important in the long run.

  11. ChrisPacific

    New Zealand will certainly have a deal ready for the UK to sign on day one, because we’re good like that. However it will probably look less like the EU deal and more like the old preferential access agreement from 50 years ago before the UK joined the EEC. We have a special cultural bond and shared history, after all! We should be given exclusive access to supply all your consumer needs for dairy products, wine etc. at low low tariff-free prices!

  12. Patrick Donnelly

    All this hysteria about what will happen is just helping the UK to lower its currency, the whole point of this farce.

    Interesting to see who is actually helping the UK in this regard ….. the less the hype, the less their currency will drop.

    Stay Calm And Carry On!

    1. Yves Smith Post author

      Lowering the value of the currency does not help the UK’s trade balance, so you’ve got the wrong model if you believe this is a good idea. We’ve discussed this before:

      http://cfdtrade.info/2016/06/the-sterling-depreciation-of-2007-2008-and-its-implications-for-brexit.html

      And on top of that, have you managed to miss that outside finance, the next source of exports for the UK is manufacturing transportation goods, where the UK is part of extended supply chains? Most of the goods produced imported from and exported to the EU. That becomes way too unwieldy in a world of hard borders. Japanese automakers have effectively said they are leaving the UK with a hard Brexit. European automakers have excess capacity in Europe, so it won’t be hard for them to move a lot of production back to the Continent.

      And the City will lose, not gain, from Brexit. Europeans won’t buy more financial services from London because the pound went down.

  13. Synoia

    UK Asks the Rest of the World to Be Super Duper Nice and Act as Its Old Deals Are Still Valid Post Brexit

    Jahowl, Mien Herr. Bitte liefern Sie Ihre Finanzindustrie und ihre Schlüssel nach Frankfurt.

  14. RBHoughton

    When the complexity of necessary future trade arrangements is laid out as Yves has done here it makes me wonder whether UK might reconsider its former imperial aspirations and prefer, at least for a time, isolation and the restructuring of the domestic economy.

    It was in the late 18th century that the country became a nett importer mainly due to the then Corn Laws and the dependence on British landlords in Ireland. Then we had all the spin-offs of industrialisation and our assumption of international trade in the mighty struggle with democracy which together gave us many advantages.

    Now it seems all that has come to an end. Where is the amazing invention today with which to dazzle the world? What we might do is emulate The Peoples Republic of China after the Revolution and withdraw from foreign adventures for a few decades while we review our situation.

  15. EoH

    A second Brexit referendum . What’s united about Britain or its government now? And what would be wrong with avoiding hundreds of billions of pounds in costs if Brexit were reversed?

    ? UK business moves fruit growing to China, supposedly amid Brexit uncertainty. The fear is that growers will be unable to find UK nationals willing to accept the meager wages offered to nationals from the eastern EU. A knock-on effect, one might suppose, from the buying practices in Main Street shops. Lower costs in general probably play a role, too.

    Food quality, especially the use of pesticides, and the ability and willingness to manage it, is likely to suffer. Then there are the added risks of managing the “just in time” supply process. Fruit is not the same as IV bags or drugs, but the lack of resilience in the process is.

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