Guest Blog from Ian Smale

BREXIT BLOG – A PERSONAL OPINION ON THE GOVERNMENT’S BREXIT NEGOTIATIONS

By Ian Smale – An experienced international commercial contracts negotiator

ian-smale

Ian Smale, is a Director at Colstra Limited

 

I have had a long career in international trade – in the global energy sector – running BP’s M&A team for five years as well as their policy unit on business leadership and acting on global contracts.

 

I voted to Remain. I was more motivated than usual to discuss the politics of Brexit during the campaign. I was disappointed by the outcome, but respect the decision to Leave.

 

Now that is done, how we leave and what relationship we retain with Europe, and other countries, is vitally important. All my experience in negotiation and deal making supports the idea of confidentiality – not showing your hand, playing hard, trading every point to achieve an objective.

 

However, the political nature of the Brexit negotiations, managing the expectations of voters in the UK as well as engaging the support of millions of Europeans as a positive influence on their Governments, will require a different approach. There is an urgent need to change current Government rhetoric in the UK and with Europe.
There is no question this is complicated. But allowing that to obscure a clear vision for what we want and how we might achieve it has led to distressingly bellicose statements. This is poor judgement by the Government and could confound our ability to negotiate the few key but significant issues:

  • What type of access to the Single Market and European customs union do we want?

 

  • What controls on immigration and relationship with EU nationals do we want?

 

  • How do we manage down or away the net contribution to the EU Budget, and manage expectations of what we intend to do with the money?

 

  • How do we become independent but aligned to key EU institutions, the European Court of Human Rights, and others like security, law and order and defence?

While mindful of the difficulties of negotiating through open channels – I believe there is real merit in stating a positive case for engagement and describing a constructive relationship along each of the axes above, without Britain’s current, “It will hurt you more than me!” dialogue.

 

The positions below are my proposal for an acceptable outcome, and set out a positive vision for our future engagement as an independent country with the European Union, as an ally, partner and friend.
Access to the Single Market – Becoming the global Free Trade champion

The relative-based arguments of loss or harm to EU member countries losing access to UK consumers or the UK losing free access to the Single Market belies the point that the UK will always be the junior party in this discussion with EU.

 

The consequences will impact the UK more significantly in the short, medium and possibly long term without free access to the Single Market.

 

Adopting a strong principle and commitment to Free Trade generally would allow a balanced approach enabling a very positive vision for the benefits of trade generally. An open conversation based on facts that recognise, where:

 

  • The UK is strong and can safeguard European relevance internationally (finance and services, IT technology, energy),
  • Where there is deep mutual benefit and interest (manufacturing, especially car and aircraft manufacturing etc.)
  • Where the UK is a net beneficiary as well as a strong market for European production would be a strong case and deserves to be an open, informed conversation.

 

Presenting the positive contribution of trade, the preservation of jobs, the benefits of open markets would allow a very clear statement of intent about the conviction we have as a nation to Free Trade as a core principle of wealth creation – a vision we can then consistently offer to others in the future.
Borders and Immigration – Welcoming contributors to our Growth, Success and Prosperity

Is the objective of access for skills and labour, but not benefits and welfare, so difficult to achieve?

 

Cameron’s negotiation prior to the referendum that sought to define a positive basis for open immigration remains a basis for a future relationship that would be welcome and is reasonable to many in the EU,

 

  • “Yes” to access to compete for jobs and opportunities in the UK’s positive economy,
  • “No” to access to benefits and welfare for a defined period;
  • “Yes” to those already here and of course an expectation of reciprocal treatment for UK citizen’s in the EU.

 

Thinking we are saving a powerful negotiating chip in denying the rights and contributions of those EU citizens already making a better than average contribution to our economy is churlish and short-sighted as well as creating huge uncertainty for very many people.

 

Let’s make the positive case that would flex with the rise and fall of our own economy and debunk the sham of “benefit tourism” and all the other scare stories that exist. We have always had control of our borders, more so than the European Schengen zone – we must continue to make a virtue of this but commit to do effect proper border control in the future.

Net contribution – the Trade-Off

This is our main bargaining chip with Europe, and we should be very careful how we approach this. A settlement that sees the UK continuing to make some contribution or tapering exit would be seen as a very positive basis by our European partners for phasing exit without losing access to the Single Market.

 

The alternative is redistribution to the companies – like Nissan – who will bear the burden of import duties, no matter how protected they may be by the weakness or depreciation of Sterling.

 

Yes, we would be “buying” access, and we will also have to adhere to EU regulations if we want to continue to supply. But this is a very positive and direct trade-off – the alternative will be a myriad of subsidy and complexity – as well as clear State intervention which will further complicate trade and relationships.

 

Politically this will be a challenge given the promises made during the referendum that all the money would go to the NHS, but this must be addressed by our politicians as part of a much bigger positive outcome.
Law, Human Rights; a UK Bill of Rights now please

It’s a shame there hasn’t been more progress on a UK Bill of Rights as an alternative to default EU legislation.

 

The absence of a written British constitution and our commitment as a nation to implement to the letter of regulation makes us victims of our own approach and has helped to deliver the many absurdities that so confound public opinion.

 

This is surely an opportunity for us to define what it means to be British – a Parliamentary democracy that is open, tolerant, steadfast, and defined by commerce and trade and with a commitment to freedom and fairness. Stating the case for how we will continue to engage positively as a partner and ally, while retaining our own sovereignty with dignity and some humility would be welcome at home and abroad. Defining how we will continue to support key institutions that have international reach will also be critical in today’s uncertainty.

 

I realise this is outline is simplistic, but we would do well to keep a visionary, forward looking and constructive position at the heart of everything we say and do.

 

To do that we need a plan!

 

We need to know what our Government is trying to achieve. We should be setting a vision that engages populations here and on the continent as stakeholders to create momentum towards a reasonable outcome.

 

We will not get our cake and eat it no matter what we do. There will inevitably be trade-offs, but perhaps the detail will fall into place in line with common consent.

 

At least we will not fail for want of trying!

 

 

One thought on “Guest Blog from Ian Smale”

  1. Good article this, my overriding comment is that we also have to think longer and hard about the non-tariff barriers, like regulations.
    This will be where the the success or failure of Brexit will land.

    We will need to maintain regulatory equivalence (which make the leave vote so ridiculous) and will have no say in the rules. But firms will have to adapt to this and work with European clients to get favourable changes to regulation. Which is hard/impossible to do.

    Could chat about this for hours…!

    Like

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