What Next: How to get the best from Brexit

"I want to emphasise that I was neutral, during the campaign, between Remain and Leave. I have very strong views on some of the economic aspects, particularly relating to free movement and immigration. But I do think that there are arguments on both sides. I try to be as objective as I can in weighing them up. Daniel Hannan’s book illustrates the naïve and fact-free approach, of some people on the Brexit side, to our future outside the EU. As you say, he’s quite good at painting this picture of the UK as a very globalized free trading nation, trading with other countries of the world with very low tariffs—while not being part of any particular economic union itself. But it really fails to engage with the realities of the UK economy—both how the UK economy actually works and how international trade actually works. He has this blithe disregard for any actual facts, so he does have this tendency to simply make things up, which I think is an illustration of what we got from some on the Brexit side. They said things and the fact that they weren’t actually true didn’t really seem to matter. By the time anybody pulled them up on their factual inaccuracies, they were onto the next thing. Hannan epitomises that disregard for facts. It’s entirely sincere. What I think is interesting is that Hannan is clearly an intelligent person. He’s lucid, he’s sincere and he believes in it. And yet, as soon as you start to apply any depth of knowledge into any of the things he’s talking about, it becomes clear that what he’s saying doesn’t add up. He combines intelligence, vision, and honesty with a complete superficiality about how trading arrangements work. For example, he talks about how the EU is this rigid, protectionist organisation that imposes huge tariffs on things from outside the EU—like a 32% tariff on wine. To bring that back to reality—when you were last at the supermarket, did you notice that there was only French and Italian wine and none from Australia and Chile? I suspect you probably didn’t notice the absence of wine from Australia and Chile, because there is wine from Australia and Chile in our supermarkets, despite our membership of the EU. Why is that? Well, as it happens, as members of the EU, we have a free trade agreement with Chile which means that there is no tariff on Chilean wine. Dan Hannan, in fact, tweeted his outrage at the 32% tariff on Chilean wine. One of the nice things about social media is there are all sorts of people—expert and non-expert—who immediately spot people who are talking nonsense. So this was immediately pointed out. “It is not certain that leaving the EU will make us worse off than we otherwise would have been.” He then said, ‘Well, what about the 32% tariff on Australian wine?’ And it turns out that while there is a tariff on Australian wine, it isn’t 32%, again, otherwise it wouldn’t be in the shops. It’s quite interesting because Hannan has been a member of the European Parliament for a long time. He sits on the committees which supposedly discuss free trade agreements and all this detailed stuff that the EU does when making trade agreements with other countries. And, yet, when it comes to these very simple things, he just makes things up. It’s just not true. I find that very odd. He’s clearly given a lot of thought to this stuff, but you don’t have to be a trade expert to find out that the EU doesn’t have a tariff on Chilean wine, and that the tariff on Australian wine isn’t 32%. You’d think that a member of the European Parliament would know that, but you’d be wrong, in this case. There are a few people out there who think it’s awful, and others who don’t. I think, again, it illustrates the superficiality. Suppose you do think it’s a bad thing that the EU over-regulates herbal medicine. The big issue here, in terms of leaving the EU, is that the European Medicines Agency or EMA, which regulates whether pharmaceuticals are safe to sell in the EU, is actually based in London. That’s one of the reasons—though by no means the only reason—the UK has such a large pharmaceutical industry. After we leave the EU, the EMA will not be able to be in London anymore because we won’t be in the EU. It will go off to Dublin or Rome or somewhere else. We are then faced with a choice. How are we going to regulate drugs in this country, including herbal medicines, for that matter? Are we going to set up a British Medicines Agency that will have to approve every drug that’s sold here? “The European Medicines Agency, which regulates whether pharmaceuticals are safe to sell in the EU, is actually based in London. That’s one of the reasons—though by no means the only reason—the UK has such a large pharmaceutical industry.” There are a bunch of problems with this. First of all, it’s going to take a while. It’s going to be expensive and messy, and it’s not something you can do overnight. Secondly, and more seriously, there are two really big pharmaceutical regulators in the world: the Food and Drug Administration or FDA in the United States and the EMA for the European Union. Will drug companies even bother to submit their medicines for approval to the British Medicines Agency? Certainly for the big drug companies based here—AstraZeneca and Glaxo—their priority will be with the EMA and the FDA, because that’s where their big markets are. In the end, what does that mean? Are we just going to say that drugs that have been approved by the EMA are safe to sell here? Well, we might well do that. The net result of the changes is that the EMA has gone off somewhere else, our drugs are still approved by the EMA—except that we no longer have any vote or voice or influence on how the EMA is run, or what procedures it follows. We’ve gone from a situation where there are a bunch of rules that apply to us, which we have a voice in—sometimes we win the arguments and sometimes we lose them and most of the time there’s some sort of half-baked compromise—to a situation where we have no voice and just say, ‘Well, OK. That’s alright with us!’ It’s not clear what exactly we’ve gained. We haven’t become less regulated. We’ve just accepted that we don’t have a say in the regulations that apply to us. And AstraZeneca and other pharmaceutical companies want regulatory approval. They might not like what the regulators do but they need regulators. They’ll tell you that. It was clearly an appalling outcome and reflects very badly on VW and very badly on European regulators. But it’s not clear, to me, how it would necessarily have been different if the UK had been doing the regulation. Certainly, it was the UK political process that was responsible for the tax privileges that diesel has had in the UK. That’s the main reason we have an air pollution crisis in London now that is killing thousands of people a year. For the last 25 years, we’ve got tax policy on diesel wrong and it’s had very, very damaging consequences. But those decisions were taken in the UK Treasury—they weren’t taken in Brussels. Will we do better if we do this sort of thing in the UK? Maybe, maybe not. We just don’t know. “Daniel Hannan’s book illustrates the naïve and fact-free approach, of some people on the Brexit side, to our future outside the EU.” What is certain, though, is that just as with pharmaceuticals, the thing that will change is that decisions will be made without our input. We’ll still have emission standards made in Brussels but without our voice or vote. Alternatively, we could have emissions standards made in the UK. In that case, are we going to stop exporting cars to the rest of Europe? That’s not a particularly attractive outcome for the UK car industry. It clearly is the case that there is a much larger political constituency in this country against deep political integration and for detachment than there is in any other member state in the EU. That’s absolutely right and we wouldn’t be here if there wasn’t. I’m not an expert on the history, but the UK’s very conflicted relationship with European integration has indeed been obvious since the start, since we decided not to participate in the original Treaty of Rome. “It was clearly an appalling outcome and reflects very badly on VW and on European regulators.” And there clearly is a good argument for saying that both we and the rest of Europe would have been much better off if we had been able to come to some sort of arrangement that had a large degree of economic integration without the degree of political integration. It is interesting and, to be fair to Dan Hannan and some of the people on his side of the Brexit camp, that was what they were arguing for before the vote. Things have changed rather now. Currently, the government is pursuing a type of Brexit which does not envisage that degree of economic integration and people like Mr Hannan have largely gone along with that. There does not seem to be much of a contingent calling, for example, for us to remain in the European Economic Area ."