I am far from sure whether yesterday’s keynote speech in Brussels by David Frost,
Boris Johnson’s policy adviser on Europe, was an opening gambit in what is
likely to be a long and bitter negotiation between the UK and EU or was really
the statement of intent it was made out to be. It was provocative, as might be
expected from one who is a self-confessed supporter of Brexit as he made it
clear that the UK will not accept supervision from the EU as part of a post-Brexit
free trade deal. Worse still, Frost airily dismissed the economics with an “it
will be all right in the end” attitude, without putting forward any evidence to
support his claims. Perhaps it’s all an act or maybe he really has no idea what
he is talking about. But if this is to be the tone of the British government’s
approach to Brexit throughout 2020, it is going to be a long, hard year.
Frost’s attempt to
rationalise Brexit
Frost’s justification for Brexit leaned heavily on the work
of Edmund Burke who, despite being “one
of my country’s great political philosophers”, was born and raised in
Dublin where he spent the first 21 years of his life. Burke was a student of
the French Revolution and one of his most famous works, Reflections on the Revolution in France,
argued that the revolution would end in failure because its foundation on the
abstract notion of rationality ignored the complexities of human nature and the
institutions which were built around it. Academics struggle to interpret this
work. This paper by David Armitage notes that there is ongoing
debate about whether Burke “was a realist
or an idealist, a Rationalist or a Revolutionist.” Frost chooses to
interpret him as a realist by invoking the premise that the formation of the EU
constitutes a revolution in European governance which overrides national
institutions serving the people of individual countries. But whilst Frost’s
view of a monolithic EU has some foundation, his interpretation is not one I
recognise.
He argues that “if you
can’t change policies by voting, as you increasingly can’t in this situation
– then opposition becomes expressed as
opposition to the system itself.” But this is to ignore the fact that
whilst EU laws are drafted by the Commission, they are passed into law by the
European Parliament – comprised of the MEPs we vote for. And whilst it may be
true that “the key [EU] texts are as hard
to read for the average citizen as the Latin Bible was at the time of Charles
the Bold” I can attest that British laws are equally hard to understand for
non-lawyers such as myself. After all, I have (tried to) read a lot more
British law in the last two years than is good for me.
Where Frost does have a point is that European institutions are,
in British eyes, “more abstract, they
were more technocratic.” There is not the drama associated with the
European Parliament that is associated with Westminster, but as the lessons of
the last twelve months have shown that is not necessarily a bad thing. Where I
do not agree is the coda to the sentence in which he states European
institutions “were more disconnected from
or indeed actively hostile to national feeling.” They were perceived as
hostile to national interests, it is true, but that is largely thanks to the
disinformation (or lies, if you will) pumped out by journalists like Boris
Johnson during his time in Brussels.
Nor am I convinced by Frost’s simplistic argument that “Brexit was surely above all a revolt against
a system” where “the system” was the EU. “I don’t think it is right to dismiss this just as a reaction to
austerity or economic problems” may be his view but not one necessarily
backed up by the evidence. The Leave campaign made all sorts of promises that
they could not deliver about the benefits of Brexit and the issues were simply
too complex to be boiled down into a “yes/no” question, as even my
Leave-supporting friends admit. Frost makes the mistake of drawing inferences
about the 2016 vote which were not evident at the time. For an eminently clever
man, Frost’s arguments were little more than a weak post-hoc justification. And
if I can see that, you can bet that the smart people in the EU Commission will
come to a similar conclusion. But if the justification for Brexit was weak,
wait until you hear his economic arguments.
Trying to justify the
economics
Frankly, the economics did not even rate a D+. His opening gambit
was to dismiss the work done by the UK Government and the BoE thus: “I would question some of the specifics of
all those studies. This probably isn’t the moment to go into the detail … But,
in brief, all these studies exaggerate – in my view – the impact of non-tariff
barriers.” Try that in an undergraduate essay and see how far you get. To
apply the Farage tactic (“I could be more specific about my objections but now
is not the time”) is not good enough. Economists are not interested in his view
– they want the evidence that contradicts their own. Indeed, the evidence
suggests that non-tariff barriers can be more restrictive for trade than actual
tariffs. Simple things like technical barriers to trade (regulations on the
content of products) or inspections and other formalities that require goods are checked for various reasons are pretty hard to get around. Indeed, there is a
well-established literature on the empirical costs of border effects[1].
He went on to note that “many
Brexit studies seem very keen to ignore or minimise any of the upsides, whether
these be connected to expanded trade with the rest of the world or regulatory
change.” There is a reason for that: With the exception of Patrick Minford,
whose “analysis” is not worth the time of day, I struggle to think of any study
which points to a net economic benefit from Brexit. Similarly, “there is obviously a one-off cost from the
introduction of friction at a customs and regulatory border, but I am simply
not convinced it is on anything like the scale or with the effects these
studies suggest.” But that’s the sort of reasoning used by those who
believe the Earth is flat: “Because I cannot see the curvature I am simply not
convinced it is anything but flat.”
Ultimately, this speech contained nothing to convince any of
us who believe the economic costs of Brexit are non-trivial that the government
can be trusted to look after the interests of the economy. Frost made it clear
that “we are ready to trade on
Australia-style terms if we can’t agree a Canada type FTA”. Since Australia
has not yet signed a trade deal with the EU he means the UK is prepared to
trade on WTO terms at a time when the WTO has ceased to function properly. But
it gets worse. “We understand the
trade-offs involved – people sometimes say we don’t but we do … Much of the
debate about will Britain diverge from the EU I think misses this point. … But
it is perfectly possible to have high standards, and indeed similar or better
standards to those prevailing in the EU, without our laws and regulations
necessarily doing exactly the same thing … I struggle to see why this is so
controversial.” That last line sums it up. The British government either
does not understand the EU’s position or chooses not to do so. If you want to
have access to the club, you simply have to abide by the rules. This is not a
matter for debate.
The galling thing about the whole speech is that it echoes
the tone of Theresa May at her worst. It was similarly content-light, promoted
a revisionist version of history and made promises which will be undeliverable
if the EU refuses to bend. Johnson will run into the same problem as his predecessor.
Obviously both sides have to sound tough at the start of negotiations but it
really does not have to be like this. What concerns me most is that if this
really does represent the UK government’s position, we are headed for a major
clash before the year is out. And despite what anyone else may say to the
contrary, a hard Brexit is most emphatically not what people voted for in 2016.
It’s going to be a rough ride.
[1] Anderson,
J.E., E. van Wincoop (2003) ‘Gravity with gravitas: a solution to the border
puzzle’, The American Economic Review 93
(1), 170–192
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