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More Brexit Backpedaling, UK May Relent on ECJ Red Line for “Transition Period”

This is a big week for Brexit, with Theresa May scheduled to present the outlines of her Great Repeal Bill on Thursday. Pressure on May is building as she will finally be forced to abandon grand platitudes and start putting more concrete Brexit positions on the table. And this is taking place as the polls show support for Brexit having fallen to a minority and businesses more and more worried as they realize even a soft Brexit won’t be a good outcome for many of them.

The Government has already had to retreat from its bluster about what it could get from the EU merely by stomping its feet and pouting. May insisted that the UK would negotiate a Brexit only if it could also work on a trade deal in parallel. That went out the window the day the negotiations started. The UK insisted it wouldn’t accept a Brexit tab. That was and remains one of the first items to be settled.

In another major backpedal, flagged by the Financial Times, the Government has now admitted its red line on the European Court of Justice, that the ECJ would have no say after Brexit, which has been an idee fixe of the hard-core Brexiteers, is untenable:

European judges could continue to have sway over Britain for a “limited time” after Brexit, the British government has conceded, in a development that could pave the way for a softer exit with the UK retaining closer ties to the EU..

Many Eurosceptic Conservatives have long argued that the ECJ — which as the bloc’s highest court has sway over the UK legal system on matters of EU law — is an affront to British sovereignty.

However, on Monday Mrs May’s spokesman said: “The transition rules could involve the ECJ for a limited time. That’s a matter for negotiation.”

The ECJ is the arbiter in disputes involving the single market and is the backstop to dozens of EU regulatory bodies covering sectors including nuclear, medicines and aviation, and agreements on security and justice co-operation…

The EU side had meanwhile dismissed the idea of a “bespoke” transition for Britain, making European courts a clear redline. In their Brexit negotiating guidelines, EU leaders insist that any “time-limited prolongation” of EU rules would “would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply”.

While the Government may actually believe the ECJ shift is only a minor concession, in fact, the UK has no way to escape the ECJ continuing to play a significant role in UK affairs. If the UK is to keep selling goods into the EU, its manufacturers will have to comply with EU standards. For the overwhelming majority of goods, having separate products for the EU and UK would be a costly nuisnace. The EU product would be the one also sold in the UK. Likewise, UK financial institutions will have to comply with European banking regs when operating in the EU, just as they have to adhere to US regulations in the US and Japanese regulations in Japan.

Similarly, the EU insists that EU citizens who stay in the UK as part of a Brexit deal continue to have access to the ECJ. While one can see the UK’s point here, that it ought to be able to police people living in its borders, there are two wee problems. One is the UK is economically dependent on many of those EU citizens. We’ve pointed to the fact, for instance, that 10% of NHS doctors come from the EU. And even lower-skilled workers have come to play important roles. As Colonel Smithers reported yesterday:

Further to Brexit, another tidbit from Buckinghamshire: Many families, mainly from Poland, the Czech Republic and Slovakia, are leaving / have left – and have taken / took their children out of school (mainly Catholic primaries) early. Term ends this or next Friday. Some of the parents work on farms, many of which are owned by aristocratic landowners, and are having to be hastily replaced as the harvest nears. A batch of Sri Lankans have arrived with their families in tow.

As we’ve pointed out, the EU may argue that its hands are tied, that EU citizens have rights which includes access to the ECJ and those rights can’t be ceded without changing EU treaties, which is not going to happen. My guess is the best the UK can get would be some sort of special court to handle EU citizens in the UK, which would follow EU law, perhaps with appeals to courts staffed jointly with UK and EU judges, again enforcing EU law. In other words, there would be some optical gestures to make them look like UK courts but they would still run on EU rules. For the UK to get any other solution, I would anticipate it would have to make a large concession to the EU on another front, and it’s over may pay grade to know what if anything could be traded away to get such a break.

And that’s before we get to another elephant in the room: that a big part of the UK elites have suddenly realized that the now 21 month Brexit runway is way too short for them to get everything sorted out, particularly given the dilatory way May has been managing things. So the new magical thinking is that they can negotiate a “transition deal”. This ignores the fact that major elements of the “shape of the table” have already been settled, and either cannot be reopened because they are matters of treaty or trying to reopen them would cause more delay and require that the UK offer a concession to get the relief.

One of the basic parameters is that the UK cannot negotiate any new arrangements on trade until it has concluded its departure. This is a matter of treaty. The EU has agreed to be a bit nice and allow the UK to start negotiating some of the general parameters of its new arrangement with the EU (and conceivably other nations) if and when it’s wrapped up most of the major Brexit issues.

Allowing the UK to negotiate a “transition deal” (whatever that means) isn’t in the order of negotiating priorities that Brussels presented to the 27 remaining member nations and has had approved. May’s ministers have to know that if they’ve been paying attention (a dubious proposition, I grant you).

Moreover, as much as UK businesses may want a “transition deal” as preferable to the feared “crashing out” scenario, they can’t possibly want to have one set of arrangements (the “transition”) then followed by whatever the final deal would supposedly be. Two (perhaps even more) sets of changes is a lot of disruption, particularly when the shape and timing of later arrangements will be one of those nasty uncertainties that businessmen like to whinge about. And on top of that, it isn’t clear to me that negotiating a “transition” deal, even if the EU would relent, would be all that much easier than negotiating permanent arrangements. Operationally, I’m at a loss to see how the approvals on the EU end would be any different.

Another big fly in the ointment may come from the UK side if Parliament refuses to cede as much authority to the Government as the Tories want. The Times discussed this issue over the weekend; perhaps I missed it elsewhere, but the matter of the so-called Henry VIII rules does not seem to have received the attention it warrants. An impasse could mean a Brexit dead end:

Ministers have been warned by government lawyers that the most vulnerable part of the bill, which transfers European law into British law, are clauses setting up so-called Henry VIII powers. These are meant to enable ministers to nod through hundreds of tweaks to existing laws without making them subject to primary legislation.

“If the powers are watered down, we’ll have to change each and every law on the floor of the House. It could take years,” said one source who helped draw up the Repeal Bill. Another source said: “Unless you make the changes, a huge chunk of British law ceases to function. If that’s the case, Brexit can’t happen.”

Rebel MPs and peers confirm they have the Henry VIII powers in their sights. They will also seek to amend the Repeal Bill to force the government to seek a four-year transitional deal with the EU. “There will be amendments on that and then an amendment to try to stay in the customs union while that’s happening,” a former minister said.

From what I can tell, no one in the Government has broached the “four-year transitional deal” fantasy with the EU, and for good reason. The EU has a simple answer, which as Lambert would say, has the great merit of being true. “The only way out of the EU is the Article 50 process. You set that in motion and that becomes final regardless of whether we reach an agreement or not. There is no alternative path out, as you must understand. All we can do for you now is perhaps let you revoke Article 50, which some EU leaders have said they’d be prepared to entertain but would now be a big ask, given that they’ve spent time and money pursuing the exit you said you wanted.” That basically means the UK could back out of Article 50 at a price, which I anticipate would be sacrificing the budget contribution break that Maggie Thatcher won and getting current on budget arrearages.

That is a precondition for doing anything else procedurally. And having done that, the EU has absolutely no reason to then let the UK have a customized exit process. The whole point of the EU’s negotiation stance was to demonstrate that leaving the EU would come at a very high cost. They have no incentive whatsoever to make it easier for the UK to depart.

Having said that, I don’t see how the UK leadership backs itself out of the Brexit corner even if it what the EU has been saying since the Brexit vote finally starts to sink in. And if it happens at all, it would be such a big reversal that it could not happen quickly. However, the Great Repeal Bill is set to be debated in the House in September and in the House of Lords closer to year end. So that process is also far from speedy.

Perhaps readers can come up with other scenarios, but the only one I can dream up with is a drawn out Tory leadership battle that leads to new elections that produce the last thing they want, a Labour victory. If that happens and if and only if Brexit keeps falling in popularity in the polls (as in support falls to below 45% and stays there), then Corbyn could call for a new referendum. But that’s all pretty remote. And even if something like that were to happen, it would mean Brexit negotiations are pretty much stalled while the Article 50 clock keeps ticking.

In the meantime, Brexit boosters keep grasping at straws. For instance, Theresa May made much of the idea that Trump said he could do a trade deal with the UK quickly. That falls in the category of “Be careful what you wish for.” US bilateral deals do get stitched up quickly because they aren’t negotiated. The US pretty much dictates terms. And a UK desperate to tout a trade deal, regardless of whether it was any good or not, means the US could get even more favorable terms than usual. The president of the Confederation of British Industry, Paul Drechsler, confirmed our assessment. From Politico:

On the subject of striking a free-trade deal with the U.S., Drechsler warned of rushing into a “bear hug” too quickly with one of the “best negotiating teams in the world” for trade deals. “A trade deal is a dog eat dog activity, it’s not a diplomatic activity,” said Drechsler.

Bloomberg’s sources gave even more negative takes:

“The U.K. must be absolutely desperate to demonstrate that it’s able to get something from the United States,” said Peter Holmes, an economist at the Trade Policy Observatory, a research group. “The U.S. will make demands that even a desperate British government won’t be able to accede to.”…

“You can see a Trump administration coming to the U.K. and demanding a loosening of sanitary regulations on food, demanding that the U.K. allow hormone-treated beef to be sold in the U.K. and for the U.K. to accept GM crops,” he said. “There will be quite a reaction against it.”

Similarly, we have Brexit Central, a bastion of Brexit boosterism, misrepresenting Australia. Here is how FastFT reported on the prospects of an Aussie deal:

The Australian prime minister, Malcolm Turnbull, has said he is determined to sign a trade deal with the UK as soon as it is lawfully able to sign one on leaving the EU – but said his country is seeking a similar deal with the European Union even before the UK leaves.

The EU’s position is that the UK cannot negotiate new trade deals until it is out of the EU. Turnbull is not going to jeopardize his higher-priority in magnitude and timing pact with the EU by violating their rules.

By contrast, what is the subject line on today’s Brexit Central daily e-mail? “Australia wants trade deal ASAP.” And from the text:

After attending the weekend’s G20 summit in Germany, the Australian Prime Minister, Malcolm Turnbull, has been in London and had talks with the Prime Minister at Downing Street yesterday morning. After a working lunch, they gave a joint press conference in which Turnbull reminded us that he had been first on the phone to offer a free trade deal after the referendum and pledged to speedily conclude such an agreement.

Now in fairness, the e-mail later says:

Theresa May also explained how she had used the opportunity to meet with a number of her counterparts wanting to forge ambitious bilateral trade deals after Brexit.

But you’d have to not be suffering from pro-Brexit confirmation bias to appreciate what it means to negotiate trade deals “after Brexit”. That means the process starts only after the UK has been cut loose. And while one-sided pacts with the US that don’t involve services (services agreements take much longer to work out) can be agreed in under two years, let us not forget it took seven years to negotiate a Canada-EU deal, and the approvals took longer than anticipated. And it’s not as if there were hotly contested issues in that negotiation.

Gideon Rachman describes likely end-games for the UK in the Financial Times today, none of them pretty:

Things are going badly wrong in Brexit-land. The UK government is weak and divided. The EU is confident and uncompromising. The negotiation clock is ticking and only the wilfully deluded now believe that a “cake-and-eat-it” Brexit is on offer. Instead, Britain appears to face a choice between three different types of humiliation.

The first humiliating outcome is that Britain becomes so desperate for a trade deal that it is forced to accept the EU’s terms, more or less in their entirety. That will mean that Britain agrees to pay a bill of up to €100bn in gross terms, merely to get trade negotiations going. To then secure access to the single market, Britain would have to make further humbling concessions — accepting free movement of people and the jurisdiction of the European Court of Justice.

An alternative humiliating outcome would involve Britain refusing to make an agreement on these terms and crashing out of the EU without a deal in March 2019. British goods and lorries would then stack up at the Channel ports, as they hit new trade and customs barriers — amid general sniggering on the other side of the channel. Job losses would mount in manufacturing and a range of service industries, from finance to pharma. And as investment was diverted to continental Europe, the economy would take a permanent hit…

The third humiliating outcome involves Britain realising that there is no good Brexit on offer and abandoning the whole idea and returning meekly to the EU fold. Even to secure agreement to this outcome from the EU27, Britain might have to give up its cherished budget rebate.

Rachman spends the rest of his column looking at other national humiliations and trying to assess what they imply for the UK. I’m not quite sure I agree that all fall in the same category, since the second scenario, of the UK crashing out and the disastrous knock-on consequences, would be hard to blame on anyone other than the feckless Tories, while scenarios one and three could and probably would produce even more resentment of the EU.

The reality is that many UK citizens haven’t adapted to the reality that England no longer has an empire, and even though English is still the lingua franca, the UK is not a significant power. It doesn’t even matter enough to its biggest trade partners to get special concessions from them beyond the ones it already had garnered as a member of the EU and deemed to be not good enough. But the forced recognition of Britain’s diminished stature may indeed result in a festering wound to the national psyche, particularly after the Tories and UKIP shamelessly played on national ego and stoked the unrealistic vision of a glorious Brexit.

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62 comments

  1. Jeff

    Two more comments.
    1. There is a beautiful tweetstorm out on how stupid Brexit was.
    2. I am still convinced that Brexit entails not only humiliation, as stated in FT, but also a war-like situation on the Irish borders.
    Brexit will be an utter disaster. Just one other example: no ECJ implies no Euratom, implies power shortage: you can’t shut down nuclear reactors and rebuild something else in 2 years (nor in 4), so you lack power just when you need lots of it to rebuild the stuff everyone took for granted.
    Worse, even if the Tories get burned to the ground, and Labour takes over, I am not convinced Corbyn will be enthusiastic to call for an end to Brexit so all can stay in the neoliberal European mindset.
    So one can expect UK to go the way of Estonia, Greece, Portugal…, with able-bodied people leaving in droves.

    1. vlade

      I agree your comment re Corbyn, and it worries me. Not the “not staying in neoliberal mindset”, but more the consequences. I wont’ say there are no good results from Brexit (because that depends on the definition of good), but I will say that there are no painless (for majority of the population) results that won’t last for a decade at least.

    2. PlutoniumKun

      Worse, even if the Tories get burned to the ground, and Labour takes over, I am not convinced Corbyn will be enthusiastic to call for an end to Brexit so all can stay in the neoliberal European mindset.

      I think Corbyn has unwisely painted himself into a Brexit corner. If, in another election, he becomes PM he is already pretty much committed to Brexit and so may well end up reaping the whirlwind (I wouldn’t mind betting that some Tories may be thinking that handing him the poisoned chalice quickly might well be a way for them to get back into power in the following election). The only chance he would have is that as a ‘fresh face’ he might be able to get an agreement for a long postponement of A.50, perhaps with a ‘Brexit, but not yet’ mandate. But I don’t see that happening.

    3. Richard Kline

      Rachman’s First Degrees of Separation are the absolute minimum, best case, outcome for Britain in a Brexit. the UK will pay every penny on an EU-written schedule, and will be subject to final adjudication in the ECJ on ANY matter pertaining to joint agreements. There may be some initial level joint tribunals for disputes, which would actually be to the advantage of the UK as what was necessary to the EU could be thrashed out there without the EU having to wear the black hood and simply rule in its own favor repeatedly. But it is inconceivable that the EU will grant to a detested state with no leverage an out against final appeal to the Court of the Community. Thus Brexit will not gain Britain ‘sovereignty’ from European judicial solutions, but only sacrifice any vote or leverage to shape those decisions, an outcome materially worse than staying in the EU.

      “[The UK] doesn’t even matter enough to its biggest trade partners to get special concessions from them . . .” This could not be better or more concisely said. Just so. The UK are wankers, and everybody gets it but them—but they’ll know it too in 18 months.

      There are three critical points in the Brexit process. The first was the structure of the negotiating trajectory, which frankly needed to be shaped prior to triggering Article 50. And was: the UK did nothing, and the EU wrote the structure. The second key phase is the presentation of Britain’s principal negotiating points and time frames sought. It is truly astounding that not until six months into a hard timeline on exit will Britain even present this crucial body of information. It is far from apparent that the most of what May will propose has even been seriously vetted with the EU, by now, or by then. Regardless, I strongly anticipate, based on how this process has proceeded, that many key elements of the Grand Repeal will be dead and stinking on delivery as unconceedable by the EU. That is, the UK Bill seems likely to be substantially a fantasy exercise rather than a negotiating schema. We won’t know until we see it, but the Torries still don’t seem to know what’s in it so I’m not holding out for sanity.

      The third point comes once it is clear that a functionally negotiated Brexit is not possible. Which frankly, it is not: the process is too advanced, and Britain’s more evident objectives are simply out of the question, meaning that a functional framework won’t even be hashed out until something like 12-15 months remain until statutory exit. I do not think, even then, that any serving British Government will wish to be the agent of a Rescind referendum, even less to attempt a block to Brexit in Parliament. Corbyn does not particularly wish to stay in, so supposing that he is PM he is no panacea against catastrophe. It will take a publicly led and organized Rescind effort to achieve a referendum. That is, an effort that must be proposed outside of Party policy lines. UK business had best get off their collective arses after May embarrasses herself and the country in September, and lead the push for a second referendum. By mid 2018, I suspect that any UK government would concede holding a second referendum so long as they don’t have to call for it themselves. That will be their only hope. Such is my view.

  2. witters

    “So one can expect UK to go the way of Estonia, Greece, Portugal…, with able-bodied people leaving in droves.”

    In the US, I think they use opioids.

  3. vlade

    I’m no legal expert, but ECJ is a bit of a red herring I believe. If nothing else, Germany has quite explictily stated that German constitution is top dog. I.e. any conflict betwen German constitution and european law, German constitution wins by default (which is why now and then the whole EU was looking at what German supreme court decides). Hence should the UK wished, it was possible for it to be still “sovereign” in this. But it didn’t give a toss, probably “because Empire”.

    Re Australia – Australia already has a 60 page MRA with EU which would have to be either copied by the UK, or re-negotiated. As I keep saying, MRAs are more important than FTAs (as the fact, that Aussies traded with EU for decades w/o FTA, but had an MRA in place from 1998 IIRC, confirms).

    1. Clive

      Well, Germany might like to think that (and the German popular press sometimes touts this line) but it is incorrect. The ECJ is a superior court to any national court (where the ECJ has jurisdiction, not all cases are referable to the ECJ but a lot is within its remit).

      Germany does on occasions get its butt whipped by the EU and the Commission doesn’t think twice about getting leave to refer to the ECJ e.g. http://europa.eu/rapid/press-release_IP-15-6290_en.htm when its Directives get flagrantly breached or ignored.

      Those “ECJ is a loss of national sovereignty” arguments by Brexit’eers are valid ones. But as we’ve frequently discussed here (and as is covered again in the above piece), sovereignty is eroded through the mere act of trading in another country and expecting to sell stuff manufactured elsewhere in a country you’re wanting to export to. If you’re happy being an autarky, you don’t need to worry. But autarky’s aren’t necessarily filled with happy bunnies either…

      1. skippy

        Lulz … VoM does focuses the mind…

        disheveled….. then some confuse it with stuff…..

      2. vlade

        The ECJ/GErman constitution is not a settled case (say unlike France, where French courts ruled that ECJ is supreme in the same way as international treaties are supreme to French law). There is a number of examples of EU countries where the ECJ is supreme, because either it has been ruled so by the highest court authority (France), or the constitution makes explicit that international law > national law (Czech republic, Ireland). But even then the constitutionality is often explicitly stated (Ireland).

        Ultimately, there is no enforcing mechanism for ECJ per se, and given how happily EU countries ignored other rulings (on deficits for example, or trade surpluses), in general I’d say it would require a consensus of a number of EU countries to enfoce it in some sensible way, on a specific issue. Closest to that is the pressure on Poland/Hungary recently, but even that doesn’t seem to be getting too far.

        1. PlutoniumKun

          I think you are confusing the issue of supremacy over national law and the competency of the ECJ. The ECJ is the competent court for European law only. In any dispute regarding the interpretation of an EU Directive it is the supreme decision making body in all countries subject to EU Treaties. It is not a ‘supreme’ court when it comes to national competency.

          This creates ambiguity with issues such as the Euro where not all EU countries have adopted it (and in turn, some non-EU countries are part of the Euro). There are also ambiguities regarding areas where there are lacunae caused by poor implementation of EU Directives into national law (i.e. where a national law has not apparently fully covered all possible implications of a Directive into its own legal framework). If there are no EU Directives covering a topic – for example, land ownership rights – then the ECJ has no competency, this is solely a matter for national or regional courts.

          There is a process for resolving such issues – for example, there is a current court case regarding Belgian planning laws concerning the rights of Flemish and Walloon speakers to build houses in certain areas which *arguably* contravenes EU Competition Directives. I’m not an expert on the process, but I believe the first stop is the Commission, which issues an opinion, but there is a right of appeal to the ECJ.

        2. Clive

          The EU does have enforcement mechanisms (like in the case I cited where France was able to stop the sale of Mercedes Benz (Daimler) cars — hitting people and corporations in their pockets is a powerful remedy).

          And the bar to invoke some sort of constitutional conflict is an extremely high one (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61970CJ0011 is the authority) — the ECJ and the German Constitutional Court does and has make determinations as to whether there really is a denial of German constitutionally-granted rights by upholding a decision handed down by the ECJ. Where a plaintiff — and it is usually a German business trying it on — is even tenuously seen to be picking a fight between the ECJ and the German courts, they get short-shrift.

          Yes, sometimes they get away with it because the German government back German business to the hilt. But that cuts both ways — sometimes German businesses want to circumvent German laws to the disadvantage of the German government. Tax treatment is a lightning rod for this subject, and with the big international tax avoidance outfits backing them up, they can and do force the German Constitutional Court into retreat (e.g. https://home.kpmg.com/xx/en/home/insights/2016/03/flash-alert-2016-039.html)

          I’d argue that in the long term, the German Constitutional Court will have to submit wholly to the ECJ’s superiority. The way case law is going, it’s hard to see how it can keep holding out against what seems to be an inevitability.

          1. Richard Kline

            I entirely support Clive’s position here. There is no doubt whatsoever that ECJ has superior competence, and the means to enforce its decisions. The German Constitutional Court hasn’t formally conceded on all issues, but the Solange I and II decisions frankly put it in a poor position to now backtrack without very substantially anomalous behavior by the Community or the ECJ. We would have to have a flagrant breach of bedrock German law on something like a human rights issue AND multiple other EU Member States supporting Germany to even bring this to a debatable point. If the argument is, “Germany could just defy the ECJ,” just stop and think about that. This statement is the scaled up equivalent of “Greece will just take it’s economy and leave the EU if [X].” We saw how that flew: like the proverbial uranium balloon. It is in the interest of most all other EU states for the Germans to lose on that, and frankly many of them would love to see Germany taken down a couple of three pegs in such a case. How much in the way of sanctions/boycotts does it take for it not to be worth Germany’s while to dispute the ECJ? It would be an Article 50-for-real (not for snit) scale crisis. The smart money is on Germany avoiding ever coming to that. And that amounts to tacitly conceding what we see as facts on the ground, that the ECJ has final ruling on any matter it so decides to consider.

            Look, I don’t know that every day thinking has really caught up with reality here: EU Member States are NOT sovereign entities. That level of autonomy has been conceded by treaty, it’s just that that was seldom stated in explicit language. But by structural facts, the federation has supremacy even if something less than coherency. Sovereignty is a thing of the past, and the UK above all has made the error of refusing to understand this reality. It was surrendered to get the benefits of federation: peace, single market, nondiscrimination, personal mobility, equal treatment under law. Anyone betting that Germany would give those up for some piffle of a commercial dispute? I’m not.

            Germany might choose to ignore a ECJ ruling, and it has been in the interests of the EU to take a soft course in such instances wearing velvet gloves. No one wants push to come to shove, but the EU is patient and can outlast temporary defiance. As Britain is likely to now find.

            1. mark

              Re: ECJ v Bundesverfassungsgericht
              There is no question of superiority because both have a different purpose. The Bundesverfassungsgericht only interprets the German constitution not EU law.
              In detail, every city. county and state has the power to enact certain laws, regulations, taxes etc. while also having courts on the same level of administration. These courts have to interpret all laws and offer the opportunity of appeal to a higher court in most cases. When they deal with EU law they can refere the case to the ECJ to get a binding opinion and guidelines how to interpet EU laws in this question from now on. Once the ECJ is done the specific case goes back to the local court. In Germany the highest regular federal courts are the Bundesgerichtshof(criminal and civil law), Bundesverwaltungsgericht (public law), Bundesarbeitsgericht (labour law) and so on. Yet it is also possible for everyone to (try) go to the Bundesverfassungsgericht if they think their constitutional rights have been violated or for some special plaintiffs to check if a law is in violation of the constitution. The limits are high and only a few cases are judged every year.
              The interesting and not yet fully answered question refered to above is: What happens if Germany adapts an EU law or international treaty that is in compliance with all other EU laws but violates the German constitution. In this case the offending treaty and the included transfer of sovereignty would be moot in Germany and everything done with it as a base would have to be rolled back, including possible ECJ competence. So the question is not “Is the ECJ superior?” but “Were German politicians ever allowed to, let’s say adopt the Euro in the firstplace?”, if that is the question before the court. You can imagine that a negative answer to this question would send Germany into a severe crisis which depending on the specific articles the ruling would be based upon might not be resolvable without pulling completely out of Euro in a rather short timeframe.

            2. vlade

              starting from the back. If you look around, my position always wa that sovreignty is a function of strenght, i.e. what others let you get away with. From that perspective, there is no absolute sovreignty, and is unlikely ever will be again. It’s really the same as freedom on personal level – the only absolute freedom you can have is if you’re the last person on Earth.

              On Greece – this is misleading. ECB has some very potent mechanisms to kill Greek banks (and with it Greek economy) overnight. Say all it would have to do is to stop accepting Greek bonds as collateral. ECB is NOT in the same position to the central banks as ECJ is to national courts, by a long stretch. It’s much much more powerful.

              ECJ levers aren’t anywhere nearly as strong, and they are (on smaller cases) routinely ignored for years. Paradoxically, the strongest lever ECJ has is that if a country ignores it, it could (potentially) deny it access to itself. I.e. the lever is that there is a common reqiurement for cooperation amongst the EU states.

              On the constitutionality issue – in a lot of cases it was really preempted, as things that would cause clear constitutional clash tended to be negotiated before any Directives were issued. The willingness or not of Germany (or others) to force the issue is a purely political thing – the fact that the currrent German crop doesnt’ want to challenge it doesn’t mean no-one will ever use it again. I actually have suspicions that this will happen fairly quickly with Poland/Hungary, as there already were noises around that (and so far EU didn’t achieve much with them).

              1. mark

                Re: ECJ v Bundesverfassungsgericht
                There is no question of superiority because both have a different purpose. The Bundesverfassungsgericht only interprets the German constitution not EU law.
                In detail, every city. county and state has the power to enact certain laws, regulations, taxes etc. while also having courts on the same level of administration. These courts have to interpret all laws and offer the opportunity of appeal to a higher court in most cases. When they deal with EU law they can refere the case to the ECJ to get a binding opinion and guidelines how to interpet EU laws in this question from now on. Once the ECJ is done the specific case goes back to the local court. In Germany the highest regular federal courts are the Bundesgerichtshof(criminal and civil law), Bundesverwaltungsgericht (public law), Bundesarbeitsgericht (labour law) and so on. Yet it is also possible for everyone to (try) go to the Bundesverfassungsgericht if they think their constitutional rights have been violated or for some special plaintiffs to check if a law is in violation of the constitution. The limits are high and only a few cases are judged every year.
                The interesting and not yet fully answered question refered to above is: What happens if Germany adapts an EU law or international treaty that is in compliance with all other EU laws but violates the German constitution. In this case the offending treaty and the included transfer of sovereignty would be moot in Germany and everything done with it as a base would have to be rolled back, including possible ECJ competence. So the question is not “Is the ECJ superior?” but “Were German politicians ever allowed to, let’s say adopt the Euro in the firstplace?”, if that is the question before the court. You can imagine that a negative answer to this question would send Germany into a severe crisis which depending on the specific articles the ruling would be based upon might not be resolvable without pulling completely out of Euro in a rather short timeframe.

    2. PlutoniumKun

      As Clive says, whatever the Germans say, the ECJ is the superior court over any German court in areas within its competency (there is some scope for ambiguity over competency when it comes to the German obsession with monetary purity). This is enshrined within all the main treaties. That said, there are plenty of examples where individual countries (including the UK) have simply ignored ECJ rulings when it suited them and either paid the relatively paltry fines or gambled on it not being expedient for strong actions to be taken against them.

  4. Colonel Smithers

    Thank you, Yves.

    London based readers may be interested in a Centre for the Study of Financial Innovation discussion at lunchtime tomorrow. Nicolas Veron of the Bruegel and Peterson Institutes will speak about Brexit and financial services regulations at the Capital Club. If you work for one of the City’s larger FIs or a trade association, your employer is probably a member, so you get in for free.

    There’s another in a fortnight with a Commission official.

  5. Colonel Smithers

    Thank you, Yves.

    With regard to the stat about NHS doctors from the EU, it’s over a third with regard to nurses, a quarter with regard to care home staff and a quarter with regard to social services staff. Half, if not much more, from the EU for construction and maintenance, often municipal, workers. This is just anecdotal evidence from Buckinghamshire, but it is fairly representative. It seems that way in London, too.

    There is a shortage of homes in the UK. This is exacerbated by the lack of qualified construction workers. It’s the same for infrastructure. The Bank of England has informed the government about this housing and public works bottleneck.

    About a quarter to a third of equine stable lads and lasses are from the EU. Horse racing / equestrianism contributes billions to Treasury coffers.

    1. Redlife2017

      Colonel Smithers – from my experience in central London that is very much the case. Every morning around 7am I take the bus through Islington and every morning large groups of men get on at Highbury & Islington to go over to one of the big construction projects close to Angel. Every single one is foreign. I’ll have a nice chat with different gents every now and then, finding out about them, so I feel as if I have a plural of anecdote.

      It’s going to be a nightmare when this happens in 18 months. There’s a whole level of unreality about it. People in the City really don’t want to think about how many jobs are going to be lost. Anecdotally, I’ve heard that there doesn’t seem to be that many high paying jobs on offer. Recruitment for middle to upper salary workers seems to have ground to a halt. When I was recruiting a few months ago, I really had the pick of the litter. I’ll hopefully be chatting with some recruiters to get more of a feel of how things are going on the ground in the next few months.

      1. Colonel Smithers

        Thank you, Redlife2017.

        I have observed similar around (the) Bank (of England) when in the City early and agree with you about the unreality and slowdown in recruitment.

        I have just had a sandwich in Spitalfields with friends working on Brexit for my German TBTF and its British twin and my former employer, Barclays. Both report the infrastructure that exists in London now being replicated in Frankfurt and Dublin and how both have told the Bank of England, in their weekly meetings about Brexit, that much of what takes place in London will be gone within 5 years, regardless of the final settlement. We did talk about our parachutes. The one who works with me showed me, upon our return, that access to careers websites has been blocked at work.

        The commuter region that Clive talks about further down will be decimated. Clive is in Hampshire. I am in Buckinghamshire.

  6. Colonel Smithers

    Further to the issue of farm workers, I will keep the NC community posted about the estate, over a thousand acres and a pub, owned by Ian Duncan Smith’s brother in law near Winslow, Buckinghamshire. One can often find UKIP banners in the fields. One wonders what will happen to their EU farm subsidies and East European workers? As a journalist formerly at the Guardian and now at the Independent said after a meeting with IDS, “Even for a Guards officer, Ian Duncan Smith is very stupid.”

  7. ahimsa

    I find it quite a stretch that the UK be obliged to ensure EU citizens remaining in the UK post-Brexit continue to be afforded the protections and rights of the ECJ. Won’t this create a special category of EU immigrants in the UK with rights potentially preferential to those of the UK’s own citizens?

    Can someone help explain the rationale of this one a bit more?

    1. Clive

      It’s because once you, under a treaty, grant rights then you can’t — even if you revoke the treaty — just pull the rug from under those rights because you feel like it.

      Treaties are governed by international law and you are not able to simply change your mind about what you committed to doing when you signed them. You can’t think of treaty commitments like a pair of shoes that you bought in a store — something that you can take back and get a refund for because you were a little hasty in making your purchase and now you want to go back to how you were before.

      1. Anonymous2

        Yes. An example of this is that the Freedom of Movement currently permits a non-UK EU citizen to live in the UK, move away for a few years and then return to the UK. The EU suspicion, as I understand it, is that unless the ECJ backstops the citizen’s rights, there could be an instance where a UK court post Brexit might deny the UK citizen his or her right of return.

        I am wondering if we are in a situation where the UK government is saying ‘our constitution requires X to happen’ while other European states say ‘sorry our constitution requires us to prevent X from happening’ – e.g. if their constitution requires them to protect their citizens rights.

        This is one trouble with the world as it currently is – once you introduce international aspects, purely national logic may no longer be easily applied.

          1. Clive

            Correct. Without recourse to the ECJ, the UK government could throw EU nationals under a bus. A bus it was driving.

      2. Pictboy3

        In the U.S., this is absolutely the case. International law is considered to be inherently inferior to domestic law and treaties that are contradicted by new legislation are considered void to the extent that there is conflict.

        There’s a remarkably different set of assumptions about international law on either side of the pond. I don’t know if the brits subscribe to our interpretation or not, but if they do, it would explain the confusion here.

  8. Clive

    Here in the heart of Brexit-land (southern England commuter belt but at the periphery where the rural / country set and retirees start to outnumber metropolitan liberals or, more likely these days, neoliberal elite) there’s been a real sea-change since the election.

    Even our hardliner Brexit MP is talking about “transitional periods” lasting “several years” (if you’re made of stern stuff, you can view the latest from the swivel-eyed wing of the Leave camp here, but I wouldn’t necessarily recommend it unless you like unintentional humour — I include the link here just to verify my sources) and trying to combine hard Brexit with soft timeframes. And yes, I want a pony, etc. etc.

    A sort-of consensus is emerging between my circle of Leavers (Brexit supporters) which might sound surprising but makes a lot of sense to us — EU-haters who didn’t dislike what the EU stood for and wanted to achieve in theory but were dismayed and appalled at what it had turned into in practice. Which is: we’d have gritted our teeth and done whatever was needed to leave the EU because it would have been worth it in the end but only so long as this was a view which the majority of the population shared and wished to pursue as a common goal. The election proved that, conversely, the population wasn’t that bothered and, rightly, perhaps, had bigger things to worry about. If the price to be paid was a May administration pushing an austerity agenda as a price which had to be paid (as opposed to a far more statist and interventionist public policy with the aim of ameliorating the negative impacts of Brexit on the people who were least able to withstand them) then sod that, let’s call the whole thing off.

    If the EU is Hotel California, so be it. The EU is proving that is it quite happy to be the stickiest of roach motels. If the UK is in, and can’t easily be out (and this is amplified by the UK government making it even more unpalatable because it wants to impose more austerity with Brexit as an excuse) then fine, we’ll stay in. If that’s what the EU wants (and it holds all the cards here — if it wants to administer a punishment beating pour decourager les autres) then it can certainly do that if it wishes to. But situations are never static and people don’t, usually, fail to respond to events and the EU’s actions will have consequences — namely being stuck with a surly, resentful and obstructive UK. And never, ever again will the EU be able to achieve the indifference and nonchalant acquiescence of a country which had a consensus that the EU didn’t really affect them and we’d just let them get on with it.

    All the failings of the EU (its crazy governance structure, the lack of democratic accountability in the Commission, the graft on the periphery — and even in the long-standing member states too, the ordoliberalism drift) would be front and centre, at least for a while, of the UK’s political landscape. It might even lead to meaningful reform of the EU.

    We’ll see how much traction this idea gets in the next 6 to 12 months.

    1. Terry Flynn

      It might even lead to meaningful reform of the EU.

      I don’t necessarily disagree….but I wonder how this might play out with respect to the constitutional court status issue raised above. Yes de jure the German Constitutional court is subordinate to Europe. However de facto we have seen that issues like OMF have really only gone through as intended when it’s clear the German court won’t declare them to be against the Basic Law – the usual caveats here regarding MSM ‘take’ on things.. I’m (still) very curious as to what will happen if and when a European (likely budgetary) issue is put forward that is clear can’t pass muster with the Germans. After all Germany in 2009 passed a balanced budget amendment to the constitution….and if they won’t even allow their own financial authorities to work counter-cyclically for their own people, I struggle to see how the required reform (namely Federalism if they are to move forward rather than back) can keep German opinion on board. Anecdotally we frequently heard from MSM EU-watchers in years gone by that the Germans appreciated Britain acting as the ‘brake’ (fall-guy!) on Federalism (in financial matters anyway) but if the UK is irrelevant (whether staying in after all or exiting), Germany itself must take the heat on such matters.Interesting times.

    2. Anonymous2

      Thank you Yves.

      I have a question which I wonder if any of the other commenters can provide answers.

      Apart from the constitutional argument, which I think is pretty easily grasped, I have picked up suggestions that one of the reasons for May’s opposition to a continuing role for the ECJ in the UK is that the newspapers (yes, them again) are hostile to it because they see it developing a doctrine of privacy which they dislike (why do I imagine this is for nefarious reasons?). Do other commentators know about this/ have light to shed?

      I am not really clear, apart from the theoretical arguments, why May should be so hostile to the ECJ. After all, the UK has been subject to it for nearly 45 years now and it is hardly as though the sky has fallen in. There is often confusion, in UK discussion on these issues, between the ECJ and the ECHR, which is hardly redolent of an intelligent and informed conversation.

      1. Clive

        To be fair to the Leave side of the argument (which often got itself totally lost in a load of jingoistic and crazy nationalism nonsense) it did always have a valid point. Which is: how far is any EU member state willing to go in giving up sovereignty to the EU — and how much sovereignty is the EU going to require being ceded to it in order for a member state to remain a member state?

        The EU has given confusing, ambiguous and sometimes disingenuous answers to this question. Again, being fair, this time to the EU, it doesn’t have one single unified opinion on this matter. So in many ways, it is a question that it can never really answer.

        And US residents correct me if I’m wrong here, in terms of a union, the states in the US still argue about what the right balance (and even the lawful balance) is between federal and state sovereignty. If you guys haven’t worked it all out after, what, 200 years, what chance does the EU have after only a mere 50?

        1. Left in Wisconsin

          And US residents correct me if I’m wrong here, in terms of a union, the states in the US still argue about what the right balance (and even the lawful) balance is between federal and state sovereignty.

          Indeed. Though I would argue the real driver is what large corporations want – federal pre-emption when consistency suits them, local rule when arbitrage is in their interest. Off the top of my head, I can’t think of a time in my lifetime where a major “state or federal” issue went against what the corporate class wanted.

      2. Darn

        Never heard of the privacy argument, but otherwise the reason to oppose the ECJ seems clear. It’s symbolic of EU law applying to us, and having cases decided by British courts is more palatable. It gets rid of one more thing the Eurosceptic newspapers complain about (even if they have an ulterior motive…). I take it May is pessimistic about dismantling Euroscepticism seeing as she just lost the referendum on the matter

      3. PlutoniumKun

        If I’m not mistaken, its the ECHR which has been pushing for stronger principles of privacy for individuals, not the ECJ. The EU has been active on Data Protection, with a recent updated Directive, but I’m not sure if thats what you mean by privacy.

        1. Anonymous2

          Thank you PK.

          The Data Protection angle might be what the people who referenced it had in mind but I am not sure.

    3. flora

      “. If the price to be paid was a May administration pushing an austerity agenda as a price which had to be paid (as opposed to a far more statist and interventionist public policy with the aim of ameliorating the negative impacts of Brexit on the people who were least able to withstand them) then sod that, let’s call the whole thing off. “

      I’ve wondered how much this is at the root of the matter. I’ve also wondered how much the EU membership negative impacts (EU required austerity) on people least able to withstand them lead to the Brexit vote in the first place. It seems a dilemma to this distant observer.

      1. vlade

        UK austerity was entirely self-inflicted. EU does not really impose austerity on the member states, EUR-zone (single currency) does. Common mistake,. but EUR != EU.

        And, after the Greek debacle, the willingness to take up EUR by some of the new arrivals (Czechs, Poles) is now pretty low, even though arguably in the case of CZ it would be an economic plus (Czech economy is pretty much an extension of German -what is good for Germany is good for CZ, what hurts Germany hurts CZ).

    4. PlutoniumKun

      Y’know, I’m going to go out on an NC limb here and say – The EU doesn’t need much reform. By this I don’t mean that its perfect – of course its not – nor do I think it doesn’t suffer from a significant democratic deficit (even insiders admit that). But I really struggle to see how an organisation which involves the pooling of sovereignty between so many very different countries with such unpleasant histories could be anything but an ugly a patchwork of compromises. And I shudder to think what it would be replaced with if it was to collapse tomorrow for some reason. History suggests it would be either a ‘strongest takes all’ set of bilateral deals, or some sort of TTIP monstronsity.

      I think its a fundamental errror many left wingers are making to think of the EU as a neo-liberal institution. I’ve been reading and studying the EU for many years and I’ve seen nothing inherent in its structures that are neoliberal. I know quite a few people who work in the EU and I’d classify the majority as somewhere on the neoliberal spectrum, but thats no different from any other major organisations I know.

      The EU has being driving a neo-liberal agenda for decades now. But thats because its been driven by the democratically elected governments of all the major countries in the EU. For at least the last 30 years, all the major European countries have been lead by either Christian Democrat infused traditional right wing governments or neoliberal soft centre left governments (Blair, Schroeder, Hollande, etc). How could a transnational organisation which is made up of democratic governments of that ilk be anything but neoliberal in general policy? Its neoliberal because thats what the people of Europe have been voting for since the 1980’s. If they voted for something else, it would be that something else.

      I have been on and off involved in active environmental and trade union based activism (on a peripheral basis) since the early 1990’s in both the UK and Ireland. And I can say straight out that in any issue I’ve been involved in, the EU has been far more open to intevention and dialogue than any national government, at least within the Common Law juristictions I’m familiar with. If you have a genuine case, it is far easier to take a case to the ECJ than it is to either an Irish or British court. Not least, with the ECJ you will not be bankrupted if you fail. In my experience it is much easier to approach MEP’s and get real action than MP’s (partly because so few people, especially in England, bother writing to them). When I lived in Birmingham it was actually much easier to get to talk to, and get a response from, the MEP’s for the West Midlands than even my local councillors when it came to relevant issues (mind you, they were labour and Lib Dem back then, now they are all Cons and UKIP).

      So I think that calling for some sort of deep reform of the EU is a distraction. Its like trying to fight austerity by calling for Civil Service Reform. To change the EU, change the national governments that make up the EU.

      1. Clive

        I’ve always been very conflicted about the EU. On the one hand, historically it has demonstrably done far more for human rights and civil liberties than any national government that I can think of. And take-no-prisoners enforcement of anti-competitive and anti-monopoly policies or prohibiting under-the-table state aid has been exemplary.

        But then on the rap sheet, you’ve got the wanton pauperisation of Greece. And the participation — instigation, even — of the US proxy war in the Ukraine. Those are big ticket wrongdoings and inflict real suffering on real people. Then again, that’s nothing the UK and the US haven’t done in terms of similar bad actions all on their own.

        What really tipped me over the edge was the incipient but growing corruption of the EU governing bureaucracy by whichever big businesses had favours to trade and governmental support. If this harmed another country’s business interests, the EU didn’t care. Greasing the works was the name of the game and those who could apply the most grease to the most cogs in the EU machinery got a leg up. The scandal of the rigged Energy Label standard — which was written by and benefited directly and explicitly vested interest and market-dominating appliance manufacturers — is a worked example.

        The UK’s Dyson was only able to get redress after a long and immensely costly legal battle. Anyone with less deep pockets would have just had to cave. Let’s call this for what it is — corruption and pay-to-play. Turn a blind eye to that and within a generation, you’ll have a society which is obscenely distorted because it’s not what you do that counts, it’s who you know and who you’re paying off that matters. It’d be just like living in Louisiana.

        Japan plays the same game. It’s wrong there and it’s wrong here, too. I can’t do anything about Japan, but I’m not going to put up with it if I can possibly help it.

        1. Clive

          And I’ll throw in (apologies I could not find what I was looking for earlier) another EU Directive which was written by and for EU-based manufacturers to the exclusion of cheaper and less advanced (but still net beneficial in terms of CO2 reduction) Chinese or far-east made HVAC equipment. This one was so totally crazypants it has southern England sharing a climate zone with southern Spain and most of Germany in the same zone as Helsinki. (label is in ANNEX III)

          A shameless anti-competition protectionism gimme to EU big businesses disguised as green do-gooding.

        2. PlutoniumKun

          The UK’s Dyson was only able to get redress after a long and immensely costly legal battle.

          I’m surprised you chose this example, given that Dyson is as near you’ll get to a cut price British Elon Musk. Contrary to what was reported in the UK papers (which basically just regurgitated Dyson press releases) he didn’t win his court case. What he did get was a lower court judgement over-ruled on a technicality. This means everyone is back to square one – no costs have been awarded yet and won’t until the General Court re-hears the case. Seeing as Dyson’s inventions are notoriously energy hungry its not surprising he doesn’t like transparent energy ratings. Of course some ratings are weighted in favour of better connected companies, but thats the nature of these things.*

          *disclaimer. My comments on this are in no way biased from being the pissed off owner of a Dyson vacuum cleaner and finding it to be a very expensive over-designed pile of {family blog}.

      2. Grebo

        Bad neoliberal economics have been baked into the EU treaties. Even members not in the Euro cannot choose a deficit or government debt level higher than the treaties allow. Eurozone countries which cannot even devalue are being emptied out into the less distressed countries to the increasing displeasure of their populations who cannot compete for the dwindling number of jobs.
        The EU as a whole is not inherently neoliberal, it has many good aspects which will be sorely missed when it disintegrates under the self-inflicted strangulation of its economics.

  9. Nell

    I expect the ‘transition’ deal would become the ‘permanent’ deal. It is easier to persuade people to accept shit in the short term for less shit in the long term. That is, the ‘transition’ deal is a political smoke screen.

    1. Yves Smith Post author

      I agree. Any deal will be so hard to negotiate that there won’t be the energy to negotiate yet another agreement. And businesses would not like the resulting “uncertainty”.

  10. JTMcPhee

    So, no way out of all this for the mopes, other than “just die?” All because “trade” and all that it means and portends, which is pretty much purely the agar in the Petri dish of the pathogen-growing labs of the Elites, is in billions of minds the summum bonum of all things? Isn’t “trade” just a synonym for “empires” and all the looting and violence that form of political economy engenders? Now the “empires” are great global collectives of post-supranational corporations, which pretty much own the “brands” and legitimizing forms of pretty much every “nation?”

    Yah, “Fear the Brexit” and all it will entail. Accept that the world is a wholly-owned wasting and wasted “asset” of a very small set of all the human creatures who have ever lived or might live in the future. Niggle over the details, of who gets screwed how, because it won’t be the “bespoke” clique, bet on it. Lay out all the manifold symptoms and pathologies and prognoses for all of us to see and wail over and try to make the consequences of any effort to opt to step off the “trade treadmill” as we mopes fecklessly chase the carrot at the end of the stick, burning our energy stores in a race to the bottom.

    But we can feel wise, perceiving and commenting on the elements of this immediate symptom of the vast working out of a species death wish, applauding ourselves for having accurately portrayed the paths it all will take.

    Where is there any advice on what ordinary decent people, if there are any left, with a true sense of what one recent cognoscento called “dignity,” can do to move the Juggernaut off its course, disassemble the neoliberal neocon global “trade” monstrosity (a very long term project, of course, with a lot of old and currently flowing sh!t leaked past the diapers of Daddy Warbucks to have to clean up) into less parasitic and cancerous and suicidal forms? If that is even possible, given the current moment as the acme of all that’s gone before and all that is in yuuuuge motion, with all the enormous grotesque inertia of “TINA” and “this is what the rules require (rules that are ignored or changed at the whim of those with power) as the starting point?

    Of course as a mope myself, I have no answers.

    Reminded of a joke I heard in law school. A really bright graduate of a prestige law school goes to work for a Big Important Law Firm on graduating. He becomes an “associate” and links up with a particularly predatory Big Partner. After a year or so, the Partner has a Big Speech on “The Meaning and Future of Law” to an Important Assembly of business and law and civic leaders. The associate had planned a long weekend with his family, having worked 100+ hours a week for weeks on end. He gets a call from the Partner on that Friday afternoon. The Partner assigns the associate to write the speech, and dismisses the associate’s cavil that he had plans with family.

    So the associate retreats to his little office. Drawing on all the expensive liberal and classical education he received, he draws a dense verbal picture of the glorious history of civilization and the parallel development of institutions, all dependent on the concurrent development of the great branches of jurisprudence. How all society is held together by a tense social cement called “the law.” How the stresses and challenges of inventive and, face it, greedy humanity have stretched and stressed “the law” to multiple breaking points. And as the momentum of the text builds, in intensity and scholarliness and patent wisdom, the associate writes (for the partner to read) “And my friends, here I offer my advice and counsel for how we all can keep everything together as the future rushes at us:”

    And the associate finishes the project at 9:00 that Monday morning, and prints it out in the required large type face and hands it in a three-ring binder to the partner, who is busy schmoozing. The associate offers to work through the speech with the Partner, to prep him for the performance. The Partner waves him away.

    So the Partner picks up the folder and buzzes off to the evening meeting. He smiles through the grandiose introduction, stands up to the podium, and unrehearsed, starts to read through the speech. He’s getting interested and excited despite himself, as the dee[p commentary and perceptions flow on from the pages. His trained voice grasps the content and makes it his own, building as he approaches the next to last page, which finishes with the promise of the Great World-Shaping Advice to be delivered next. And into the expectant silence of the spellbound audience, he flips that last page and sees, in 20 point type, this:

    “Okay, a$$hole, I’ve got you this far — from here, you should be able to wing it, right? PS: I resign.”

    1. Yves Smith Post author

      You seem to have consumed way too much Brexit propaganda.

      I included this in Links, as did Jeff in the very first comment. It shows that the things that the UK is now complaining about re the EU are almost entirely policies it pumped for, hard.

      https://twitter.com/EmporersNewC/status/884474494512975872

      The “national sovereignity” line is a canard. UKIP and the Tories were pushing for Brexit to get out of EU labor and environmental protections, which are things the overwhelming majority of the public favors. They may also not like immigration due to the pressure it has placed on wages, but guess what? There are more non EU immigrants than EU immigrants. Look at Colonel Smither’s example in the post. The Polish and other Eastern European farm workers are being replaced with Sri Lankans. There will be no net improvement for British workers.

      The reason most people voted against Brexit was to express unhappiness with austerity and Thatcherism. That wasn’t on the ballot but voting for Brexit was their only vehicle for voting against the status quo.

      1. JTMcPhee

        Actually, I was aiming, not very clearly, at another target altogether. I don’t buy the propaganda from any “side” in the Brexit situation. This is clearly a lose-lose choice for ordinary people, as always disserved by owners and rulers in pursuit of personal gain and screw the future. Centuries of imperial activities in support and furtherance of “trade” have made the planet less and less habitable and the world a more dangerous place for ordinary humans. “Trade” is accepted as a Good Thing without much thought, by too many of us. It’s the world the way it is, of course — all the “money” is lined up in furtherance of more “trade,” more elements of the political economy crammed into the narrow cleft of globalization, “flat earth Friedman-ism,” and the despair that causes for the vast majority of us mopes.

        And yes, I read that “the UK” or its then rulers, likely with supporting sentiments from well-propagandized mopes thinking they still were part of an empire, were pumping hard for all the elements of horror that the EU-EC and all that have brought on. And maybe I am too much the romantic, thinking that there is some way of stating a case for a political economy under which not only do the humans get to eat to their reasonable hunger and drink to their moderate thirst, but the rest of the biosphere and the rest of what we humans fell into by getting born onto this planet, gets some respect and dignity as something other than stuff to be extracted, exploited and monetized. The Brits (their owners and rulers, at least, and the many who took the King;s shilling and filled out the imperial buraucracies — not the Luddiites, I must add) and their Companies did a great job of establishing the “trade routes” and charting the “trade winds” and maximizing the racket we Americans have carried on ever since, looting and disrupting in the name of “trade.” And now others, waving other flags, are stepping in to assume the mantle of Models of International Trade and continue the process of “growth” (and crapification, one must add) that only seems to have one outcome. Though the details of that collapse are still dimly perceived, and those perceptions are quashed by the rulers and owners at every opportunity. Got to keep the serfs and wogs in line, don’t you know?

        So there is all this churning of complex thought, about what can be done or not done in this inevitable Brexit mess that “trade” has brought about, and I guess that discourse is wise and informed and meaningful after its fashion, where to put lipstick on the pig, and how, all else failing, to turn the sow’s ear into a facsimile of a silk purse. But as long as the model is “trade,” as in “opium trade” and “triangular trade” and “fair trade” and such, and “trade deals” which can only come out with the world’s mopes getting yet another sh!tty end of the stick, there ain’t but one outcome, which people writing here even hint at: a great collapse.

        But mopes, lacking “agency” and awareness, or lost in dreams of imperial glory or opioid-induced fog, will mope along, eating their “comfort food” with loads of white gravy and grits with buttery spread and faux honey, fattening up on toxins both physical and moral and psychic that can only shorten their sad lives. While a very few get to max out their pleasure centers on every kind of indulgence and titillation.

        So let us all try to find little fixes for the “shortcomings” of the thing called “trade,” which of apparent necessity always incorporates armed violence. And hope that “we,” whether mopes or owners, will live out our lives in that pseudo-peace that “trade between what used to be thought of as nations” has resulted in, to date. And take pleasure in being “right” about this or that fraction or function of the current scenario as those bits play out in the Great Game of “Trade.”

  11. John

    I think the thing missing in this article is that things are changing and bad in the EU too.
    There could easily be a big Euro Banking crisis for example.
    Immigration is a big problem.
    EU Population is aging.
    Economic demand is not increasing.
    EU share of global trade is shrinking as China, India etc become more important.
    It is certainly true that UK will be worse off when it leaves the EU. However I’m not sure that it is better off by staying either. If it stays what will it be like in 30 years time?
    The question is which is the least worse option staying or leaving. We will know in 30 years time. -)

    1. Dan

      Things going south on eu? I do not think so! Not now, not tomorrow, not never! EU is the new heaven on earth and you brits are the stupid ones leaving it and trying to make a leaving without sipping on its milk and honey!

    2. Anonymous2

      I take your point but, to be fair to Yves, that is a whole other major issue. An awful lot to cover in depth in one piece.

      If I can add a comment, as a UK citizen who in days past had very close dealings with the EU in Brussels, I have long followed the discussion on Europe in the English-speaking world with some interest. It is clear to me that the English newspapers give a distorted picture of what is going on. I have had any number of conversations over the last six years with Eurosceptics telling me that the Eurozone is on the point of collapse. To which my response has been to the effect that it could happen one day but that I doubted matters were quite as perilous as they supposed. I have good professional reasons from my own career to suppose that I have quite good grounds to value my own opinion on these matters. Thus far I claim that I have been proved right.

      I do wonder if the US media (which I do not really follow) are over-influenced by the coverage provided by the English newspapers. My impression is that many US media, if they have a Europe correspondent, base them in London. If those correspondents rely on the English newspapers for their European news then they will not be reliable sources.

      I would be very grateful for comments from others better informed than I.

      The English newspapers have their own clear political agenda, driven by ulterior motives, which cause them to slant, or even invent, their reporting on many matters. To my mind that means the UK is not a functioning democracy, as to vote sensibly the electorate needs to be properly informed and in the UK that is not the case.

      1. JTMcPhee

        Please point us in the direction of a “functioning democracy” in humanspace and/or history. Of course syntactically your formulation does not exclude the case that any other place has an electorate that “properly informed,” by its press or by any other means.

  12. Colonel Smithers

    https://www.theguardian.com/politics/2017/jul/11/european-leaders-can-go-whistle-over-eu-divorce-bill-says-boris-johnson may explain why Alex’s odds on becoming PM are lengthening, whilst Jacob Rees-Mogg (Alex without the toxicity and even more of a toff) is earning quotes of 16-1, and a friend, British diplomat in Brussels and, like me, son of Mauritian immigrants reckons he’s not doing as much work as he expected and the UK may storm out of the talks and blame johnny foreigners for being unreasonable.

  13. jabawocky

    A great summary Yves. One further key point is raised by Polly Toynbee in the Guardian article below. The House of Lords (Tory minority) now has an effective veto over the Brexit Bills. May had intended to override Lords rebellions with the Parliament Act, which asserts the primacy of House of Commons decision making over the Lords when no agreement between the two houses can be reached. But according to Toynbee the Parliament Act can only be invoked after Lords have vetoed down commons bills in two parliamentary sessions. But Theresa May has extended this parliamentary session to two years, meaning it outlives the duration of article 50 negotiations. If Toynbee is right (and I am no constitutional expert), it means the House of Lords now has an effective veto over use of the Henry VIII powers, brexit bills, everything.

    https://www.theguardian.com/commentisfree/2017/jul/11/theresa-may-first-year-brexit-europhobes-corbyn

    1. Terry Flynn

      Interesting – hadn’t thought of that. Of course the exception is finance bills which the lords can’t delay…. but I struggle to think how May’s bills could qualify as finance bills.

    2. Terry Flynn

      of course she could threaten the Lloyd-George nuclear option of creating 1000 new peers at a stroke….. but somehow I think that would go down like a bag of sick and merely hasten the end of her govt and the house of lords….

  14. PKMKII

    The post-Brexit bilateral trade negotiations are going to be the first wave of the neonationalist club coming apart. All parties are currently of the mindset that everyone else has been exploiting them and they’re going to renegotiate a “fair deal.” So if May and Trump, or their representatives, both go into the meetings with a “You need me more than I need you” attitude, it’s not just going to create gridlock but could sour US-UK relations. Now repeat with every other bilateral deal in the near future.

  15. Stevlin

    “As we’ve pointed out, the EU may argue that its hands are tied, that EU citizens have rights which includes access to the ECJ and those rights can’t be ceded without changing EU treaties”.

    A somewhat unrealistic argument suggested by Yves Smith. Post Brexit, the UK will have no association whatsoever with the current EU treaties……and one might just as well argue that a US citizen , who naturally has ‘citizens rights’ in accordance with the US constitution/legislation could also expect those individual American specific rights to apply in another country in which he has taken up residence.
    When in Rome……..

    1. Yves Smith Post author

      You really haven’t though this one through.

      If the UK crashes out, you could make that case. But that is not what anyone wants, including Theresa May. And in that scenario, the UK has the millions of well off British who have retired in Spain and France and Italy told they have to leave on the next flight/Chunnel ride back to the UK. Pray tell, how much dislocation that creates?

      The UK very badly wants a trade deal. The condition of that is a deal on citizens. Did you miss that the EU has put that as part of negotiating Brexit and that must be settled before they will even consider a discussion of trade?

  16. RBHoughton

    When Napoleon shut us out of Europe previously we perfected a means of continued trade.

    Today that would be making ownership of our lorries appear to be Dutch / Belgian; our ships Irish and repackaging our goods “Made in Ireland.”

    That’ll take the EU five plus years to sort out by which time we should have a new agreement. Next, please.

  17. Praedor

    Seeking to control your own borders, social, and economic policies is NEVER stops and ALWAYS inherently good, The UK SHOULD be able to say “NO MORE MIGRANTS!” and SHOULD be able to control is own territorial waters (and fishing). The EU is a dictatorship and should be escaped from. It is embarked on intentional destruction of its own component countries, intentionally seeking to destroy all vestiges of separate cultures on the continent, seeking to turn the entire place into a bland, cultureless land where Europeans themselves are a minority (thus ensuring the end of Western Values entirely, to be replaced by Islam and the chaotic violence that WILL create -is inevitable at this point).

    Anyone would have to be insane to intentionally subject yourself to unelected leaders (Brussels) and subjugate yourself to bankers, foreswearing all economic control of your country. Why even have national governments if they cannot set up economic policies, social policies, foreign policies, or regulatory policies? Seriously, the EU may as well just appoint a ruler to oversee the full subjugation of each country in the old Roman style and drop the entire faces of local government elections.

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