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It is usually wise to take a second look at any important policy statement and that is certainly true of the prime minister’s Lancaster House speech which is being hailed by the advocates of leaving the EU as little short of the Sermon on the Mount in its significance. That second look reveals plenty of ambiguities and even internal contradictions; and some hard questions over the choice of priorities.

Was it really wise to give absolute priority to the introduction of immigration controls, as yet undefined, and to rule out from the outset remaining in the single market or the EU’s customs union? By so doing the prime minister appears to have discarded the two options which most economic analysts agree would do the least damage to the UK’s manufacturing and service exports.

And then there is the continued flirtation with the slippery concept contained in the words “access to the EU’s single market”, the one which takes 44% of our exports. But this is not a single concept at all. There is access under WTO rules which is what the US currently enjoys. Your goods pay tariffs, have to be subjected to EU regulatory controls and go through costly and bureaucratic customs clearance checks. It is precisely to avoid all that the US has been negotiating with the EU a transatlantic trade and investment deal and that American and other foreign financial institutions are so well represented in London.

Then there is privileged or preferential access to the Single Market which is what the Norwegians, the Swiss and the Canadians (the latter two without much access for services) enjoy; which exempts them from tariffs and regulatory controls but not all the customs clearance checks. And thirdly there is being in the single market which is where we presently are. To treat these three widely different options as if they were one is either to misunderstand or to mislead.         

Amidst all the sound and fury about escaping from the tutelage of the European Court of Justice it seems to be being totally overlooked that any new relationship of the scope and complexity of what is being envisaged with the EU will inevitably require international arbitration procedures to handle disputes. Not a word about that in the speech.

Trump card?

A great deal is being made of the prospect of negotiating a free trade agreement with the US, about which Donald Trump has expressed some enthusiasm. But the president, in his inaugural address, has nailed his colours to the mast of increased trade protection for the US. How are the two to be reconciled? And at what cost to the UK? And if the prime minister is prepared to walk away from a bad deal with the EU, why not also from one with the US? Perhaps it is fortunate that the answers to these questions cannot be put to the test for several years since such deals cannot be negotiated until after we have left the EU.

The prime minister said how precious she felt the unity of the UK was; and that will have given encouragement to many beyond the ranks of those who want to leave the EU. Unfortunately, her policy prescriptions went in quite the opposite direction. In the case of Scotland, she rejected its government’s bid to remain in the single market. And in the case of Northern Ireland she discarded the simplest ways of avoiding the re-emergence of border controls on both goods and people. It is all very well to assert that the Common Travel Area must remain intact. But, throughout its existence up to now, it has either dealt with both parts of an island outside the EU or with both parts of the island inside it. Now it will have to deal with one part inside and accepting freedom of movement with other EU countries, while the other part is outside and imposing immigration controls. Not straightforward.

A lot of nay-saying, some will allege. But, as we set out on a journey across uncharted seas, we had better try at least to understand the questions which have not been answered.

Edited by Hugo Dixon


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