Brexit: the poverty of debate

By Richard North - December 9, 2020

Sometimes, I think the only thing worse than the legacy media not writing about Brexit (and related issues) is when they actually do. Their capacity to resort to trivia and misinformation is endless, the outcome being that they waste far more time than is gainfully occupied in learning about the subject.

I am reminded of the occasional programmes on the Discovery channel, featuring Australian gold prospectors. They have the fortune to be kitted out with high-power metal detectors which enable them to sift the nuggets of gold from the millions of tons of featureless soil presented to them. We could do with a similar device, but one which sounds off when worthwhile information is approached.

Occasionally, though, some of the drivel produced can have its uses, if only to reveal the depth of ignorance of its authors, such as this piece which gives us some insight into the intellectual poverty of our political classes.

The specific point here is that former chancellor George Osborne is commenting on the state of the current EU-UK trade talks, where he bemoans our departure from the “common market” (he means Single Market), which in his book illustrates that the economy “has been sacrificed to maintain the purity of sovereignty”.

With this in mind, he then offers a finely-toned “suspicion” that, “our splendid isolation is an illusion, and that we’ll end up ‘voluntarily’ shadowing the EU rules and standards that we once helped shape”. This is offered as if it was something new and profound, of such importance that it is given pride of place in the sub-heading to the piece.

When it comes to continued membership of the Single Market, I in turn have my “suspicion” that Osborne has forgotten about the speech he gave in April 2016 – two months before the referendum – in which he disparages what he calls the “Norway model”.

Membership of the European Economic Area, he says, is where “you get access to part of the single market but you have to pay into the EU and accept free movement, without any say over either”. And with that, he then gets Liz Truss to tell us that we would have to implement EU legislation but “we’d have no say over the rules”.

This “pay, no say” meme was a classic, trotted out on many occasions by the government and the “remain” campaign, but now Osborne is displaying his own brand of “cakeism”, asserting that, even without the “Norway model” we might still end up implementing EU rules.

It is a great pity that he didn’t say so at the time, especially as he was sponsoring a Treasury analysis which sternly told us that, in order gain significant access to the Single Market outside the EU, “the UK would have to give up its current significant influence over EU decision-making and become a rule-taker rather than a rule-maker”.

The thing is here that if Osborne really had the first idea of how the system worked (then and now), he would know that, in or out of the Single Market, the UK would to a very great extent be a rule-taker, in common with virtually every developed country in the world, and the EU itself.

This was picked up by Pete recently who cited John Braithwaite on Sovereignty and Globalisation of Business Regulation, (in: Alston & Chiam (eds) 1995. Treaty-Making in Australia. Globalisation versus Sovereignty. The Federation Press, Annadale, NSW). Braithwaite says:

In the world system, Australia is substantially a law-taker rather than a law-maker. This process of globalisation of regulatory law has been accelerated by the General Agreement on Tariffs and Trade (GATT). Thanks to GATT, our food standards will now, effectively, be set in Rome rather than Canberra or Sydney. The impact of the GATT is no more than an accelerant of what has been going on a long time.

For years, some of our air safety standards have been written by the Boeing Corporation in Seattle, or if not by them, by the US Federal Aviation Administration in Washington. Our ship safety standards have been written by the International Maritime Organisation in London. Our motor vehicle safety standards have been written by Working Party 29 of the Economic Commission for Europe. Our telecommunications standards have been substantially set in Geneva by the International Telecommunications Union.

Where there is a difference with the EU institutions and agencies is in the process being two-way, with the EU often influencing standards-setting bodies. This interaction is so prevalent that special terminology has been invented to cover it.

The EU is variously said to “upload” rules to, or “download” them from, international bodies. “Downloading” is defined as the incorporation of international “soft” rules (standards, principles, guidelines) into EU legislation. “Uploading” is the incorporation of EU legislation (or parts of it) into international regulation.

Nevertheless, as more and more issues are addressed at regional and global level, the EU is gradually outsourcing its regulatory agenda. More than 80 percent of the EEA acquis (and therefore the EU’s Single Market legislation) falls within the ambit of existing international organisations and agreements, and is thus potentially amenable to this process.

In terms of detail, over 33 percent of the acquis comprises “technical regulations, standards, testing and certification”. Much of this is implemented through standards bodies which will eventually emerge as ISO standards. Another 28 percent of the acquis comes into a category defined as “veterinary and phytosanitary matters”. This includes compositional standards for food and food safety.

However, while the EU is able to influence the global regulatory agenda, so indeed can independent countries, with a piece I wrote in June 2013 illustrating how Norway was a powerful player in this respect, where its economic interests were involved.

It boils down to how much national governments are prepared to invest in the global system, with research money and sponsorship of institutions buying influence and the ability to shape standards long before they become law at EU or national level.

There is every reason why the UK might in the future become an influential global player, and it already plays an important role in the formulation of global financial regulation, particularly through the likes of the Basel Committee on Banking Supervision (BCBS), which produced the Basel III agreement which formed the basis of the EU’s measures on the adequacy of banking capital, known as the CR IV Package.

The BCBS itself is a committee of the Bank for International Settlements (BIS), the latter established in 1930 as a bank under Swiss law. Its share capital is owned by 63 central banks, representing countries from around the world that together account for about 95 percent of world GDP. It is not, therefore, a governmental organisation and has no supranational powers.

Currently, it works alongside the G7 and “top tier” organisations such as the Financial Stability Board (FSB), together with the IMF, the World Bank and the OECD, to provide the template for banking law of global application. And an independent UK is an influential member of all these organisations.

In an evaluation of financial regulation in 2013, a House of Lords Committee found that when it came to EU banking laws, “it is likely that the UK would have implemented the vast bulk of the financial sector regulatory framework had it acted unilaterally, not least because it was closely engaged in the development of the international standards from which much EU legislation derives”.

One might have thought that, as an ex-chancellor, George Osborne might have known this, but one is left wondering what he managed to learn during his period in office. It doesn’t look as if it was very much, and what little he might have learnt he has clearly forgotten.

But when our political elites are so clueless about the way the world runs, it is not surprising that the Brexit debate has been so impoverished. What is alarming though is that these people are so lacking in knowledge that they don’t even begin to realise the extent of their own ignorance.