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Alex Stojanovic Profile picture
Alex Stojanovic
@awstojanovic
Former @instituteforgov. Trade policy nerd. All views my own.
Birger Leth Profile picture Paul Cairns #FBPE Profile picture 2 subscribed
Sep 14, 2020 • 20 tweets • 6 min read
Is state aid the Brexit hill the UK should die on? Today we publish our new @instituteforgov paper on subsidy control. We go through the arguments for what kind of subsidy system the UK should have and we outline why a compromise with the EU makes sense. Long thread (sorry) 1/ First some context. The UK is not a big subsidiser as the chart below shows. But that could change. Rumours about a new light touch regime to enable more subsidies of UK priorities have been reported - we get to the wisdom of this in a moment. 2/
Jun 19, 2020 • 8 tweets • 2 min read
The nub of the problem is that the actual amount of divergence doesn't matter that much. In state aid the rules could be exactly the same and different authorities could come to different opinions on an issue because discretion plays such a big role in the system 1/ That's what makes state aid complex. The rules can be clear but the flexibility in how they are interpreted is massive. Then if you imagine a UK and an EU authority having fundamentally different interests and perspectives it becomes even harder... 2/
Jun 1, 2020 • 7 tweets • 2 min read
There is a much simpler explanation than all of this ventriloquism:

The UK prizes autonomy and has a minimum demand on this: pretty much everything else is negotiable.

The EU has a minimum demand that a deal should provide common constraints via LPF. 1/ If there is a level of constraint the UK can offer that at the same time provides a flexibility to do things differently the EU can accept there will be a deal.

If not, the things both sides really care about are irreconcilable. Notice that for both it is not about access. 2/
Sep 4, 2019 • 9 tweets • 2 min read
A stripped back backstop by definition won't cover everything the current one does. Therefore it will be a downgrade to the current solution.

But does the backstop have to cover 100% of the issues? Is there a sliding scale where 90% or 80% is better than no deal? 1/ If the question is: What alternative can we have that does the job of the backstop? The answer is NI-only covering agri, industrial goods, VAT and remaining in the EU's customs territory - i.e. the EU's original proposal.

That might not be the question put to Ireland tho. 2/
Aug 27, 2019 • 7 tweets • 2 min read
At this point the main UK-EU dynamic is who can pin the blame on the other for no deal. Proposals are just part of that game.

Both sides have ramped up the political cost of anything less than 100% of what they want, to the point that no deal is preferable to a concession. 1/ On the EU side they have been clear that the backstop has to remain as is. It would be a massive loss of faith and extremely politically damaging to concede that now. On the UK side anything other than removal of the backstop, if not whole passages of the WA = no deal 2/
Jun 20, 2019 • 8 tweets • 3 min read
1. The North/South mapping exercise on the island of Ireland is a sobering reminder of just how much of N/S cooperation relies on at least in part EU law. Anything to do with agriculture, the environment, transport (in part), cross border medicine supply, tourism, research... ImageImageImage 2. Energy (Single electricity market, natural gas), broadcasting, chemicals, cross border police cooperation. How all of this will function has to be sorted out without materially harming the cross-border cooperation that does occur. We are familiar with the options by now. ImageImage
Jun 11, 2019 • 4 tweets • 1 min read
1. I think that this is probably a miscalculation. No deal means large scale deliberalisation very quickly. Once that horse has bolted I'm not sure it comes back. Then you have the time it will take for the EU member states to approve a new mandate under a different legal base. 2. Is the WA acceded to under duress really sustainable? Is there any possibility of conducting a negotiation after that? There would be low-level technical cooperation on the border. The UK would probably agree to pay the money. But it would set in motion a radical divergence.
Jun 5, 2019 • 6 tweets • 2 min read
1. This is so far from any realistic appreciation of what it would take to manage no deal. Advocates should be honest that no deal means no deal. It means severing relations, not agreeing some magic "mutual recognition" and other technical sounding words which mean nothing. 2. There are two things that follow from severing your formal relations with the EU: A diplomatic crisis and an economic crisis. Any residual goodwill from EU member states is gone and relations will be damaged for a long time. That's the context of no deal.
Apr 9, 2019 • 14 tweets • 5 min read
Liam Fox's letter on the drawbacks of a customs union oversimplifies the real trade offs and continually conflates "a trade policy" with "tariff policy." It begins by evoking economic prosperity when it is really an argument about autonomy - and a very partial one at that 1/ The letter starts with the benefits of trade and a basic definition of a customs union. So far so good. The letter then makes a valid point that the UK would not have a veto on EU trade policy and Labour's "say on trade policy" will never amount to this. 2/
Feb 28, 2019 • 7 tweets • 3 min read
NAO have released an update on the UK's border preparedness for EU exit update. The headline: Six of the eight IT critical systems remain at risk of not being delivered on time and to acceptable quality and four relating to the process for embedding them 1/ We have got round the amber-red rating of other systems by stopping reporting them - because they've been "derisked." It was a huge task to get CDS ready and to connect it to the various other systems and they've accepted this won't be possible. (Apologies for table) 2/
Feb 7, 2019 • 8 tweets • 2 min read
There is a real danger of the UK misreading the EU's incentives for a final hour concession. At the macro level, noone wants no deal and it would be illogical for it to happen. But at the individual incentives it becomes more complicated. The EU elections are coming up... 1/ For those that see themselves as a bulwark against the rising tide of anti-EU sentiment from within, caving to Eurosceptic demands is anathema. To them it may undermine the EU project more than no deal. The EU project is the operative incentive 2/
Jan 28, 2019 • 4 tweets • 2 min read
This comment goes to the heart of the max fac problem. For @WeyandSabine the commitments to no hard border mean no checks & controls. But to the UK it means displacing checks and controls such that they do not lead to violence - i.e. not having them visible to the average joe 1/ That this doesn't exist currently is not a good reason for why it's impossible. You're asking for the unprecedented. The problem is max fac is simply the wrong tool. You have a bunch of new legal requirements and the only way to remove them is a legal agreement like SM or CU 2/
Jan 25, 2019 • 10 tweets • 3 min read
I don't see how it would be possible to implement physical checks on the Irish border. Quite aside from the risks of violence it's just not practical. Even away from the border looks unlikely to work - to start with especially. Lets look at how you might try. 1/ 70% of cross-border journeys by NI registered Heavy goods vehicles start at or end in areas close to the border - mainly Newry, Monaghan, Aughnacloy, Dundalk, Middletown. Half of all heavy goods vehicles go through the Newry-Dundalk corridor. 2/
Jan 11, 2019 • 13 tweets • 4 min read
Had a few comments and emails in response to this thread outlining some good counter-arguments for the Customs Union which I think are worth repeating. There are three main ones that came up, largely centred on the underplaying of rules of origin 1/ First, it was argued that the impact of rules of origin in the short-term for specific industries and specific products is obscured by the relatively smaller macro impact. For example see this excellent report for the food and drink industry 2/ fdf.org.uk/rulesoforigin-…
Jan 10, 2019 • 13 tweets • 4 min read
It is rare that I disagree with Peter but I think he puts the case against the customs union too weakly. There are good arguments against for MPs to consider. In macro-economic terms NIESR find it delivers a 1% benefit to GDP in 15 years over and above a free trade agreement. 1/ This could even overstate the benefits. Most studies assume a customs union means no customs costs. It doesn't. It still means a movement certificate and possibly a customs declaration as well. @AnnaJerzewska's helpful diagram compares the two... 2/
Dec 13, 2018 • 11 tweets • 4 min read
So what does the new'better deal for Brexit' say? It's clear the authors don't understand that the backstop is meant to be an insurance policy in the event of no deal. In their world the EU will agree a mutual recognition nirvana, with no UK obligations scribd.com/document/39555… 1/ Put aside the fact this is redundant as the EU will not renegotiate. Let's explore fantasy island for a moment. The tone is set by the first demand on money. We'll pay upon the achievement of milestones related to the FTA. Remember this is money for a meal we've already eaten 2/
Sep 24, 2018 • 9 tweets • 3 min read
The"new" @iealondon report can basically be condensed into 4 points: technology wil solve it 2) we have the same standards as now so no new barriers 3) the potential gains from FTAs are MASSIVE 4) the potential gains from deregulation are MASSIVE 1/ The first point is not totally unreasonable. They note the cost of customs will drop in the future as new technology is brought in. You could reduce the cost over time but it is optimistic and it will not be zero. Even current estimates capture only a part of the cost of admin 2/
Sep 12, 2018 • 4 tweets • 1 min read
To add to this, the ERG are too little too late. There's merit in max fac under two conditions: time and a more permissive definition of the commitment to no hard border. If we somehow get those we're still going to have to sign up to some form of backstop anyway 1) It is not unreasonable to propose solutions that require some flexibility from the EU. This is an unprecedented situation. The problem is that we began with denying there was a problem, and we have continually squandered goodwill since. 2)
Jun 14, 2018 • 11 tweets • 3 min read
1. The problem is not that he advocates "hard Brexit" but that he promises the implausible: We can have a trade deal with the US and adopt fundamentally different "pro-competitive" regulatory approach with no consequences for EU trade... and why? 2. Because at the same time we can agree mutual recognition with the EU or get the WTO to force the EU to recognise the UK's rules. This obscures the real choice ministers must make by encouraging them to believe there is no trade off.
Jun 8, 2018 • 10 tweets • 2 min read
1. Unpalatable is indeed more preferable to unacceptable. But the backstop has to be sufficiently unpalatable for the EU too. Part of the problem is that in order to make UK-wide work it will have to contain broad regulatory alignment with institutions to guarantee it 2. The more comprehensive this alignment is - level playing field provisions, ECJ dispute resolution and Commission oversight - the more the negotiation over the backstop becomes the "fullstop" to use @jl_owen's phrase
May 22, 2018 • 7 tweets • 2 min read
We won't know until we put it on the table and try to persuade the EU it's the best solution. To do that though we get into some difficult territory - e.g. we need reg alignment and probably need to decide on a dispute resolution mechanism which will involve ECJ in some way 1) There's no indication the cabinet have found consensus on this. That's because it does preempt the future relationship. The UK would have to make hard choices now - if we want a basic FTA we'd have to accept a NI specific deal. Post agreeing a UK backstop that seems unlikely. 2)