11 September 2018

Just what is so wrong with the PM’s Chequers plan?


Why are so many Eurosceptics (both openly and – if in Government – in pectore) so downbeat about the Chequers plan? To understand that we need to follow the advice of a certain singing
nun and start at the very beginning – not of the clauses, but from the drafting process.

As with the court of the Sublime Porte, key is who holds the Sultan’s ear. Here, the whole David Davis opera demonstrated that the Technarchs have held sway. Their compass heading determined that the route has been one of managing administrative change, rather than developing opportunity and pursuing strategic ambition. The project set was short term; tactical not strategic; was underscored with repairs rather than rebuilds; and was reinforced by a huddle of corporate lobbies that had campaigned to Remain.

The terms of the Chequers draft correspondingly reflect the low road trodden. On the detail, we explored in a Red Cell paper some of the key fault lines when it came out. There is not
space here to repeat the many problems identified in that paper, and points highlighted in other locations such as the Jacob Rees-Mogg letter and latterly by Nick Boles. But it may be
useful to silhouette the trend.

Take the Common Rule Book. It is generally a cautionary moment for consumers where someone comes up with a new brand name simply to replace an existing one. In this case, the
expression merely masks that alien term acquis, the body of law that the UK will now still remain signed up to. Rather though than making it just an issue for those of its businesses that
export into the EU, which is standard trade practice, the route chosen means that the burdens are still imported to everybody – including the vast majority of businesses who concentrate
on, to them, the far more significant UK Internal Market.

Perniciously, this mechanism carries with it the burdens of what the “Single Market” really is – a Common Regulatory Union. It is one, moreover, that is not merely content with regulating for hex sockets and wing mirrors, but also seeks to level down, suppressing anything loosely considered to be an unfair advantage and adding business costs and burdens. With remarkable speed after the launch of the Single Market, that project morphed into the socialist leitmotiv of pursuing level playing fields, an arena in which Adam Smith had been shown the Red Card.

It gets worse. Under Chequers the UK’s ability to mitigate future acquis is now to be reduced to a level of influence lower than that accorded to EEA members. There is a mythology about ‘Norway terms’, long put about by pro-EU campaigners, who marketed the country as a ‘Fax democracy’. In reality, Oslo and other countries have more direct and indirect input into the EU regulatory process. What the Chequers Deal does, however, is turn the UK absurdly into precisely the sort of Fax Democracy that pro-EU groups have long complained about.

The British Standards Institution, meanwhile, would be prevented from generating parallel standards that were fit for the UK market. This is significant as it hamstrings prospects for far-ranging Free Trade Agreements with third countries, since it means that there is no latitude to also allow in imports from, say, Canada or the United States on the basis of mutual recognition of standards that were not mirrored by the EU. So much for Global Britain.

This might be palatable but for a root problem, the UK’s effective inability in this model to diverge, gradually and organically, from the EU’s onerous regulations over time. I have argued that a critical aspect of a good deal involves generating an effective ‘Careening Clause’, allowing for managed divergence – a ‘conscious uncoupling’ accommodating business concerns and dropping unnecessary EU regulatory burdens (over which businesses have so frequently and loudly lobbied over the past decades, lest we forget), while reassuring the European Commission and Council that the UK was not hunting a unique competitive advantage through partial and selective opt outs of the EU’s many self-inflicted burdens – at least, not one beyond that which exists in the real world.

Supporters of Chequers will say that it does contain a mechanism to achieve that divergence, and dissuade too onerous new rules. Yet paradoxically, and this is quite an achievement, it is
arguably weaker than what exists under WTO provisions. Where one party changes the rules in a trade deal, in particular by changing tariffs or quota, the global default allows for reciprocal action by the other of equal value. Yet Chequers permits asymmetric escalation by the Commission.

The ambivalence over the extent to which Single Market rights would be suspended sectorally as the consequence of any single legislative divergence will, inevitably, demotivate anyone from pursuing any divergence at all, just as it has in the EEA. It will embolden recalcitrant Europhiles, undermine ambitious free traders, alarm corporate lobbyists, and institutionalise inertia. The UK will gain few of the benefits from leaving the EU, retain most of the costs, and lose almost all of its current ability to mitigate damage.

It will as a consequence be an unstable arrangement, and a lasting sore. This is a peculiar form of ambition to be pursuing – a bit like choosing to disembark from a ship but onto a mooring buoy. Key advisers appear to have repeated many of the same mistakes made when their predecessors (mis)served Cameron – they aimed low, with the ambition only to avoid needing to further barter down.

Even that prospect today looks like a further risk. It is entirely possible that Chequers will end up as Chequers Minus. The question remains then as to whether the UK Government sees
sense, ditches Chequers and instead opts for an FTA deal with bolt-ons. However, precedent for Whitehall strategists has long been to swallow further diplomatic retreat, and push out a PR offensive that tries to sell a purported victory, stage managed with the other side. After 20 years of gameplay, that well-worn track is so bare it would be lucky to survive the day.

The Chequers deal is at bedrock level. It is hard and unyielding and uncomfortable. Further beneath it is unrewarding graft and pain. With luck, Downing Street may yet revert to DExEU’s own preferred option, a developed FTA, and exploit the principles first espoused by the Lisbon Treaty’s Good Neighbour Clause. This would place the UK as it orbits the EU within the optimal Goldilocks Zone, in a setting appropriate for this country’s needs.

But Chequers leaves us exposed, and subject to the full blast and enduring gravitational pull of Brussels. It may be normal European practice, in dealing with EU matters, to push out a derogation, and leave the mess (and the blame) to your ministerial and party successors. In this instance, the country needs a deal that is both enduring and carries the flexibility to deliver divergence in all those areas where businesses say they require it.

The Chequers package is as stable as a dreidel, and will not do.

Dr Lee Rotherham is Director of think tank The Red Cell, Executive Director of Veterans for Britain and Chairman of the appeal to establish a Museum of Sovereignty. He was Director of Special Projects at Vote Leave.