Peterhead: The Economy of Brexit

[Sir Peregrine Messervy]

*James Manning speaks in Peterhead, one of the largest fishing communities in Scotland within a constituency which voted 61% for Leave. Behind his podium is a furled Union Jack, and next to it a Scottish Saltire in dark blue.*

“Ladies and gentlemen,

The opportunity ahead of Britain as a result of Brexit is a great one, with huge potential rewards. That is why I backed Brexit in 2016, and why I have continued to urge Brexiteers to keep making the case for Brexit. The referendum was won with a vote to Leave; but with many in the country still not behind that programme, we must all continue to fight the battle as if it is yet to be won; that battle of ideas which sets out exactly what the benefits are and how we can make the most of them, which can carry people - even those who voted Remain - with us.

If Britain squanders the enormous potential of Brexit, limited economic growth could become a permanent fixture of our economy, tied into a European regulatory apparatus which is not responding competitively to the challenges of the modern economic reality. After Brexit, Britain’s regulatory arrangements do not need not to be identical to the EU’s, even if they achieve the same outcomes.

Regulating our own economy can increase growth, wealth creation and wealth redistribution, allow the UK do other trade deals which lower the cost of goods and services, and and create leverage in other negotiations. Independence; true independence, in political, trade and regulatory terms is not an ideological proposition, but the only means by which the majority of the tangible benefits of Brexit can be realised.

At the core of the Conservative vision for Brexit is the pursuit of a competitive, open, liberal and thriving UK economy. Unilateral changes in domestic and trade policy could eliminate EU regulations which are harmful to growth, and support competitive markets and a more competitive environment in such diverse fields as digital, financial services, and agriculture. I have already spoken about the need to eliminate tariffs, quotas and non-tariff barriers on the importation of products that the UK does not or cannot produce. This is of particular relevance to the agricultural sector, and in the context of potential short-term disruption to supply chains following Brexit, where a ‘closed’ approach to imports of products that cannot be produced in the UK such as bananas or avocados raises prices for consumers. In fisheries policy, restoring UK control over our waters and addressing barriers to entry for new fishermen will help to revive a once world-leading seafood industry.

And as we leave the single market and the customs union, eliminating the free movement of workers within the EU and putting an end to passport discrimination, we can introduce a balanced and efficient framework for the movement of workers from around the world, putting recognition of the economic and social benefits and costs of immigration at its heart.

A key failure of the government thus far is to fail to commit to seeking bilateral agreements with others concurrently during talks with the EU. We should seek to replicate the EU’s existing agreements with third countries, and look at developing trade partnerships with major economies such as the United States and India with which the EU does not currently have any agreements. Negotiating mutual recognition of different regulatory environments with the European Union will be challenging, but it is essential: tying Britain to future EU regulations over which we will have no say would not only be politically egregious, but economically disastrous. Demonstrating the strong nascence of an independent trading policy will only strengthen our hand in talks with Brussels.

If the EU does not cooperate with serious British proposals, the government should be prepared to adopt a more aggressive stand. Should Europe refuse to recognise UK regulations following Brexit, action could be taken at the World Trade Organisation to penalise violations of the General Agreement on Tariffs and Trade, the Agreements on Technical Barriers to Trade, and Sanitary and Phytosanitary Measures.

Let me reiterate that regulatory autonomy is a key ‘red line’ for the Conservative Party in Brexit talks. But that autonomy does not mean divergence in all areas immediately, nor does it mean a deregulatory agenda to carve away workers’ rights and environmental protections. I am quite clear that there should be no derogation of those rights and protections after Brexit, even if different regulations are used to achieve the same or better results. But continued harmonisation of regulations themselves as opposed to alignment of their goals would fail to deliver the benefits of leaving the EU.

Britain can and should put forward a constructive offer of mutual recognition, where the UK would immediately recognise EU regulation, standards, and conformity assessments, meaning institutional competition for the UK, commercial competition from EU imports, and avoidance of unnecessary trade barriers on imports.

A key concern for all of us if contemplating a Britain outside of the single market and the customs union is the unique situation in Northern Ireland. It is pivotal that travel between Northern Ireland and the Republic of Ireland remains open and free; that the Belfast Agreement is upheld; and that Northern Ireland’s position as an intrinsic component of the United Kingdom, every inch as much Britain and British as Scotland, England and Wales, is maintained. But there is no reason why leaving the single market and customs union should mean a ‘hard border’ on the British Isles; indeed, the British government should commit unilaterally to imposing no hard border infrastructure whatever the result of negotiations, leaving the ball in the EU’s court to be constructive or destructive.

Bringing together international best practices, and new technologies, can create a border with minimal friction. Such solutions are already in place between the United States and Canada, and between Sweden, which is in the EU, and Norway, which is not. These existing arrangements are not friction-free: but a British-Irish arrangement would go further, be even more high-tech, and be developed to minimise friction even more than these existing arrangements. Standards such as coordinated border management as well as trusted trader and trusted traveller programs can significantly reduce compliance requirements and make borders almost frictionless. Customs and other border control practices that keep the border open, such as release before clearance, deferred duty payments and clearance away from the border, also help keep the border free of traffic and speed up or even remove the need for processing.

Technologies such as automatic number plate recognition, enhanced drivers’ licenses, barcode or RFID scanning, and the use of smartphone apps can all help.

There are challenges associated with delivering a Brexit which ensures true political and economic independence; but that independence is what the British people voted for, and what makes possible the realisation of Brexit gains possible. The government must rise to the challenge and commit firmly to the measures I have outlined today; any alternative which sees the UK locked into either the single market or the customs union, or both, will be vociferously opposed by me and by the Conservative Party.

The problem with the government’s Brexit policy is that whilst it is much acclaimed as highly pragmatic, it is pragmatic precisely because it sets out no clear goals, no red lines, and no vision for what the end state should look like. Harry West and now Annelise Dodds say only that they will negotiate ‘the best deal possible,’ and refuse to spell out what they want such a deal to look like. Their lack of an end goal risks delivering a ‘Bureaucrat’s Brexit,’ where we get a fudged deal in which the EU exploits a lack of clear UK negotiating objectives to foist upon us an agreement which is disadvantageous to our economy. We still don’t know if Labour wants in or out of the single market or the customs union; they simply won’t say.

So whilst the government accuses me of chasing unicorns, let me be clear. Our proposals are clear, our vision is well-defined, and whilst we accept that we may not be able to get everything we want, we are at least able to clearly define the kind of deal that we want to reach. I support the government’s proposals to guarantee the rights of EU citizens and to underpin labour and environmental protections in UK law; but I want them to set out a clear vision for Britain after Brexit. I hope that’s what I’ve done today.

Thank you.”