1/ This morning, we get this thread from @RichardCorbett_ on what a deal with the EU could look like,
These 20 reminders from @GuitarMoog,
and this amplification of part of that thread by @ottocrat,
These 20 reminders from @GuitarMoog,
and this amplification of part of that thread by @ottocrat,
2/ And I’m also constantly informed by various parties such as @edrennie77, @bill1303, @efta4uk, @brexitblogs, @petenorth303, @richardaenorth and others that EFTA/EEA is the only practical solution to the Brexit conundrum.
3/ Whilst the Irish Border is (rightly) taking people’s attention, that has diverted our attention away from the impact that EFTA/EEA would have on the 80%+ of our economy which is services.
4/ The proponents of EFTA/EEA like to claim that the UK would have the right to be consulted and to participate in the formulation of EU policy through membership of the technical and drafting committees. @ottocrat demolishes that idea pretty comprehensively,
5/ I thought I might try, to illustrate the problem with a little thought experiment?
Let’s take, as our experiment, the Financial Transaction Tax (FTX.) This tax has had a troubled history. It’s been proposed since 2014, but it still to get off the ground.
Let’s take, as our experiment, the Financial Transaction Tax (FTX.) This tax has had a troubled history. It’s been proposed since 2014, but it still to get off the ground.
6/ Little pop history here:
en.wikipedia.org/wiki/European_…
Bloomberg reported, earlier this month, that finance ministers from 10 EU countries were going to try again.
bna.com/eu-restart-fin…
en.wikipedia.org/wiki/European_…
Bloomberg reported, earlier this month, that finance ministers from 10 EU countries were going to try again.
bna.com/eu-restart-fin…
7/ What’s the problem?
The problem is that lots of those transactions will take place in London. George Osborne was so concerned by the original proposal he threatened to take the EU to court.
theguardian.com/politics/2014/…
The problem is that lots of those transactions will take place in London. George Osborne was so concerned by the original proposal he threatened to take the EU to court.
theguardian.com/politics/2014/…
8/ The court in question? CJEU.
(He did go to the CJEU and lost theguardian.com/business/2014/… but the court allowed the UK to go back and challenge again once the FTX had been defined.)
(He did go to the CJEU and lost theguardian.com/business/2014/… but the court allowed the UK to go back and challenge again once the FTX had been defined.)
9/ So, to our experiment. Let’s assume that the UK has left the EU and joined the EEA via EFTA. And, let’s further assume that when the EU finance ministers meet, they decide to proceed with the FTX. And that the FTX will have a large effect on the City.
What is the UK to do?
What is the UK to do?
10/ The Bloomberg article makes clear that there will be no exemptions for the UK because of Brexit. If we want access to financial services via the SM, we will have to comply with the FTX.
But, you cry, we have the option to return to the CJEU and challenge it again?
But, you cry, we have the option to return to the CJEU and challenge it again?
11/ Not if we leave the EU, we don’t.
One of the big benefits EFTA/EEA proponents see in their solution is the lack of oversight of the CJEU. Once we’ve left, we have no right to ask the CJEU to rule on the FTX (or anything else.)
One of the big benefits EFTA/EEA proponents see in their solution is the lack of oversight of the CJEU. Once we’ve left, we have no right to ask the CJEU to rule on the FTX (or anything else.)
12/ Aha, you say, we have the right to be consulted on the development of the tax via the EFTA/EEA/EU agreement.
Let’s see what form that consultation takes?
This EFTA document efta.int/eea/decision-s… outlines how EFTA states participate in the decision shaping process.
Let’s see what form that consultation takes?
This EFTA document efta.int/eea/decision-s… outlines how EFTA states participate in the decision shaping process.
13 Since the City is so large in FS terms, it will undoubtedly provide many experts to the relevant committees and working groups. But note, Article 99 (1) EEA, requires the Commission to INFORMALLY (my emphasis) seek advice from experts of the EFTA states.
14 Also note, ‘The Commission invites experts on the basis of their professional qualifications; they are not considered representatives of individual states.’
The experts may well attest that any FTX will have a deleterious effect on the City
The experts may well attest that any FTX will have a deleterious effect on the City
15/ but they won’t be in a position to argue that it shouldn’t happen.
And if the UK, as it undoubtedly will, wants to comment on proceedings and put its case?
And if the UK, as it undoubtedly will, wants to comment on proceedings and put its case?
16/ The above link helpfully points out that, ‘EEA EFTA comments are the typical tool of decision shaping’ and ‘comments are usually handed over … at subcommittee level.’ That’s nice talk for writing a letter.
17/ There’s no compunction on those at the table to pay any attention to written comments from those watching those at the table.
And, in the particular case of financial services, it gets worse.
Here’s the EFTA page for Financial Services efta.int/eea/policy-are…
And, in the particular case of financial services, it gets worse.
Here’s the EFTA page for Financial Services efta.int/eea/policy-are…
18/ The key phrase ‘...and also closely monitors….. Absolutely no hint that EFTA EEA states have any influence in this area, at all.
So, what happens now to the FTX? It’s decided by EU committees and sub-committees and working groups.
So, what happens now to the FTX? It’s decided by EU committees and sub-committees and working groups.
19/ UK experts present their testimony and UK observers write closely argued memos.
And the 10 or so member states march serenely on.
And the 10 or so member states march serenely on.
20/ An FTX is introduced and it has a deleterious effect on the UK’s financial services sector.
But we’re members of EFTA, we can just argue that EFTA doesn’t have to implement nor be affected by the tax. Except, that pesky link on Financial Services, again:
But we’re members of EFTA, we can just argue that EFTA doesn’t have to implement nor be affected by the tax. Except, that pesky link on Financial Services, again:
21/ ‘It ensures that all EEA relevant EU legislation in the field of banking, insurance and securities is incorporated into the EEA Agreement in a correct and timely manner’
And, due to the extra-territorial nature of the tax, it will be relevant, so will be incorporated.
And, due to the extra-territorial nature of the tax, it will be relevant, so will be incorporated.
22/ I know, cry EEA proponents, let’s use our Right of Reservation. So, the UK does. What does the EU now do?
History shows that the EU, when faced with non compliance from a related party, simply ups its pressure until the party gives in.
History shows that the EU, when faced with non compliance from a related party, simply ups its pressure until the party gives in.
23/ If you think the City could withstand any financial services sanctions from the EU for very long, please make that case.
So, even if the UK did use RoR, it wouldn’t be there for very long.
See Norway for an example.
So, even if the UK did use RoR, it wouldn’t be there for very long.
See Norway for an example.
24/ And the City would be subject to a tax that hurt its business, in which the UK had no say in drafting or approving and from which the UK government could afford no protection.
As @ottocrat points out in his thread, this is democratically unacceptable.
As @ottocrat points out in his thread, this is democratically unacceptable.
/ends EFTA is no alternative to membership. It’s a tatty loincloth over the embarrassment of what we’ve given up.
It’s time to stop flogging that dead horse. The only options are either campaigning to Remain, by whatever means or campaigning to Leave on the best possible terms.
It’s time to stop flogging that dead horse. The only options are either campaigning to Remain, by whatever means or campaigning to Leave on the best possible terms.
