Pascal Lamy: Brexit – What’s Next?

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EVENT TRANSCRIPT: PASCAL LAMY: BREXIT – WHAT’S NEXT?

DATE: 29TH APRIL 2019

VENUE: COMMITTEE ROOM 9, HOUSE OF COMMONS, WESTMINSTER, SW1A 0AA

SPEAKER: PASCAL LAMY

CHAIR: SUELLA BRAVERMANN MP

 

SUELLA BRAVERMANN MP: “Good evening, ladies and gentleman. We are four minutes past six so I’m going to open our meeting this evening. Thank you very much for filling this room, quite rightly, I think, given the title of our discussion ‘Brexit – What’s Next?’ and, of course, our esteemed speaker Pascal Lamy. (Inaudible). Sorry, I wanted to show off.

I am Suella Bravermann, I’m Member of Parliament for Fareham and more importantly very happy to chair this evening’s discussion of where we are going with Brexit and what the future may look like, although it’s a brave man or woman who makes any predictions about what is going to happen next.

And we are here thanks, of course, to the Henry Jackson Society, founded and led by this gentleman on my right, Dr. Alan Mendoza, who has really established the Henry Jackson Society as the authority and leading think tank on research and strategy when it comes to foreign policy and I pay tribute to all your work, Alan, and your team for holding vibrant and interesting and relevant discussions like the one we are about to have, I am sure, and also for the work that you do on a wide range of foreign policy subjects, thank you.

I never thought, I don’t think, or many of us didn’t think at the beginning of this year that we would be approaching the May bank holiday still in the European Union and wondering what next? Pondering on the future of Brexit, this historic policy and mission that the UK government has embarked upon. And we are at a difficult time, there’s no doubt about it, in our political constitutional system. There is a huge amount of uncertainty amongst the public, amongst businesses, amongst our politicians as well and many events are happening and occurring in an unpredictable way. Groups have fractured, new political parties have emerged and the usual parameters of left and right politics have been thrown aside.

And it is a great honour for us to welcome our guest tonight to explore the issue today and provide some insight. We are looking to you, Monsieur Lamy, on how events may proceed over the coming months. Monsieur Lamy has an enormous breadth of experience when it comes to the art of negotiation, trade and the EU institutions. He has served two consecutive terms as General-Director of the World Trade Organisation between 2005 and 2013. He’s a member of the French Socialist Party and was previously Chief of Staff for the president of the European Commission, Jacques Delors, between 1985 and 1994. Monsieur Lamy has also been a CEO in the finance industry at Credit Lyonnais until 1999 before he returned to Brussels as the European Trade Commissioner until 2004. An impressive background and a name that is very familiar to all of us in this room.

Over the next hour, we will be hearing from Monsieur Lamy about his views on Britain’s departure from the EU, what the future politically, economically make look like, and then I would very much welcome a discussion and questions from you, the audience members, so that we can explore this issue in more depth. Please join me in welcoming our guest.

PASCAL LAMY: “Well, good evening ladies and gentleman. It’s always a pleasure for me to be back in this temple of democracy where I had (inaudible) time to time along the many years you nicely summarised. And let me thank the Henry Jackson Society for providing the occasion of this discussion which I will introduce as clearly as possible, which I know may ruffle a few feathers here and there but this is the tradition in this House and I have to stick to it.

I think the starting point is fairly uncontroversial, which is that Brexit is a bit of a mess. My own view for what it is worth is what it always was to be at least a bit of a mess, may not be as big of a mess as it is now. And answering this ‘what next?’ question which we all have, which is about how to get out of this mess, necessitates I think to understand why it is such a mess? And my answer to this question fairly simple; Brexit is a mess because of a fundamental misunderstanding in the UK and to some extent on the continent about the trade-offs which Brexit implies. That’s, I think, at the core of the matter and let me try and explain.

At first sight, this is what historians would say, Brexit is only one of the many episodes of a very complex relationship between Great Britain and the continent. I know that full well, I’m a Norman, so I’m the one that really united part of the continent and this island. But just look at the last 70 years of this very complex relationship which, of course, has much deeper and longer historical routes. At first sight is like the British are attracted by the continent for economic reasons but they have political repulsion to European Union and this gave rise to a, sort of, plug unplug narrative.

So we start remaining unplug and then after a bit of time we consider 1970s the British plugging and then in 2016 public opinion moves the other way around and then you deplug. As if the problem was for Great Britain to be as much in economically as possible and as little politically as possible. That’s the sort of implicit trade-off, which was the great game of British diplomacy and we have here some of the best British diplomats that navigate this complex relationship in obtaining as much as possible of economic integration because this is British culture, (inaudible), opening trade, that’s good. Very good. Probably better than average on the continent. But, of course, if it’s about joining politically that’s not good. So that’s the first sight and after all Brexit, according to the view, is a sort of deplugging exercise.

Now, this first sight is wrong. The reason why we are in this situation is that in the meantime the relationship between economic integration and political integration has enormously changed. Economic integration and political integration in the European Union is much more entangled today than it was 10 years ago. It was much more entangled 10 years ago than 20 years ago and so on. So what has dramatically changed is this deep connection between economic integration and political integration. And if I may use a simple formula, Brexit is not about deplugging, it’s about unscrambling, and deplugging and unscrambling are two very different processes. Deplugging has something of a mechanic flavour. Unscrambling has what the reality is about which is an organic flavour. And organics and mechanics work very differently. And nowhere is this understanding more obvious than in this extraordinary confusion between the Customs Union and the internal market. It’s a huge confusion on this side, and notably in this House if I may, and it’s somehow of a confusion on the EU side. I wouldn’t criticise Michel Barnier at all but I’m not sure the subtleties this distinction between the Customs Union and the internal market are always clear on the EU side.

What is the difference between the Customs Union and the Single Market? The answer to that is that we created the Common Market as a Customs Union in 1957. During 10 years we had a Customs Union and customs duties within the Customs Union. That lasted to 1968 where we removed customs duties within the Customs Union. We had a common market when we arrived with Jacques Delour in Brussels in early 3rd January 1985, we had a plan in mind which was moving this common market into a single market and the way we outlined the narrative of this endeavor was we have to get rid of borders. We had borders at the time, we only removed borders in 1992 after a long and complex process of regulatory convergence, harmonisation, mutual recognition, whatever technology you use in order to make sure regulations converge. This is what we did between 85 and 92 so that in 92 we were able to remove borders because there was enough stock and trust that regulatory standards in every part of economic, to some extent social, life were similar or at least similar enough to be able to remove these borders and recognising you didn’t have to harmonise the way you produce beer in detail as long as you recognise that if it’s good beer for the Scots, it is good beer for the Bavarians and if it’s good beer for the Bavarians then it is good for the Belgians and for the French.

So this is what we have to understand because exiting the European Union is not exiting a Customs Union. That’s not the real problem to be frank and I say this as an expert in trade and customs issues. Exiting the European Union is about exiting the Single Market. That’s the name of the game. Which is why symmetric to creating the Single Market was removing the borders, leaving the Single Market is recreating a border which had been removed. This is the name of the game. The problem being that this old obsolete equation that you have to take as much as possible of economic integration and as little as possible of political equation, moving to the internal market fundamentally changed this equation in such a way that there is now there has to be a trade-off between economic integration and political integration.  You cannot have both in the same way, a trade-off needs to be there and if I had to define the trade-off of Brexit in simple terms, the trade-off of Brexit for those who support Brexit and for those who will have to accept it if the decision of the referendum is not changed is how can we exit politically as much as possible and economically as little as possible. That’s the equation. And the reason why Brexit is a mess is that there is no answer to this question today in the United Kingdom.

I’m not saying there cannot be an answer to that, I’m not saying that at all. After all, we all have to take decision to it including, by the way, exiting members of the European Union sometimes have to take decisions on how much you want to integrate politically and economically. But the reason why we have integrated economically so deeply is because we’ve beyond pure economics. We’ve gone to what experts, intellectuals, call collective preferences. If we don’t like (inaudible), there’s a lot of politics there. I mean, I’m probably saying when I’m in the US, this is about science because I’m a European and I want to defend the European position. I’m not 100% sure this is right. So we’ve reached, if we have a single regulation on data privacy in the European Union and it is different from the US one, from the Chinese one, this is not science, this is politics, this is feelings, this is philosophy, this is culture. Some would say this is morals. Nothing to do with two plus two equals four which is the sort of initial approach to the internal market.

So that’s where we are and the reality is that the progressive integration of the European Union economically has made it more and more costly to exit politically and this translates into the (inaudible), there has be a border and the problem of this border is how thick will it be? A real exit, which means taking back control of sovereignty in regulating the country and using this sovereignty to dis-align UK from EU regulation, will be costly. So if there’s a little of that, it’s going to be not that costly, if there’s a lot of that it will be very costly and the European Union will, and I think everybody understands that, proportion, the thickness of the border to the degree of regulatory divergence on the UK side. And this is where there is a trade-off between exiting politically, becoming sovereign and paying the price of that which is the price of a thick border and we all know that a thick border is costly, and by the way this is the reason. And I remember the first meeting we had between Delours and Margaret Thatcher because I attended this meeting where they discussed whether it was a good idea to go in the direction or not and that was in the autumn of 84. Of course she thought it was a good idea to go in this direction because she deeply thought removing the borders was a good thing to do. Of course, trying to make the case re-putting it is the good thing to do is a hard case to be made when you remember that but that’s where we are.

So, the UK decision for the moment is we’ve decided to Brexit but we do not know what is the UK position on how much economically and how much politically. And this is in my view the basic reason why you have this impasse in Parliament, I’m not the best expert in UK politics and the Frenchman, I know, I have to be careful, plus the fact that I was European Trade Commissioner which has always technocratic flavour but I think the reason why there is such an impasse is that the absence of any notion of what this trade-off could be creates a lot of fear on the two extremes.

Assuming there is part of this Parliament which is ready to follow the agreement which is on the table, some Brexiteers fear that in the next stage, which is the real negotiation which will be framed by the compromise by how much economically and how much politically, a number of them feel they’ll be cheated because if the compromise is ‘we don’t want to exit economically that much’, they know full well it will mean that the political exit will be rather thin. You have exactly the symmetric position on the side of Remainers who hope that if Brexit happens, we will limit the damage in not using this regulatory divergence which has been recuperating famous BRINO which I have to explain in the US, in China, in Europe, in Africa, ‘Brexit In Name Only’, which for the moment is what looks as if could happen after some time.

And the reason why this is the case is that in my view and I’m reporting to nobody, I’m giving you my deep feeling, the reason is that the interpretation that was chosen by the British government of Article 50 is wrong. Article 50 says if a country wants to exit the European Union, it negotiates withdrawal agreement with the view of the next nature of the future relationship between this country and the continent. For reasons of political (inaudible), the British government decided withdrawal was one thing and the future relationship was another thing. Withdrawal was one thing because there was such a fear on the Brexiteer side that they would be cheated, that they put a lot of pressure exit would take place and rapidly and quickly. Trigger the thing, Article 50 says two years, this is limited time and then we’re out. There’s nothing more to be discussed. We will see what comes next. But of course this doesn’t work because the fundamental question of how much politically and how much economically will appear in the second phase in the future regime of relationship between European Union, which will determine the thickness of the border, how much you can use your regulatory sovereignty and how much you are ready to pay for a thick or a medium or a small border.

So this is the situation and this is why I’ll come to my conclusion, conclusion of this introductory remarks, which is trying to answer this question of ‘what’s next?’ given what frames the answer. I think first there is a possibility and I’m not going to say whether it’s a high possibility or a low possibility or a high probability or a low probability, I think there is still a possibility that the British Prime Minister gets her deal through Parliament before the EU Parliamentary elections i.e. within the next month. The elections are one month from now. And the reason for that is that if polls are right, it doesn’t look good for the Tories and I’m trying to be a diplomat which I never was and probably never really succeeded if I had ever wanted to be one. I see Charles Powell looking at me, laughing.

But I think there is still a chance because it may create a sort of solid discipline that we better avoid this carnage. And after all only 60 votes missing, which is much better than the first vote and the second one was better and so maybe with a bit of discipline and in order to avoid the situation, which by the way seen on the EU side is a bit strange, the notion that a country that wants to leave the European Union elects European parliamentarians that will decide the next governance of the European Union for the next 5 years is a bit strange and I think one of the leaders of the European parliament has a good formula saying ‘come on, these people the European parliament is a pigeon house’ and I think it’s a good image. And that probably solutions to that, not least in making sure the existing set up and notably the existing commission survives until there is a Brexit agreement approved.

So, that’s the first possibility. I think the second possibility, if that doesn’t happen, and this is where I come back to my unscrambling image, the second possibility is to reduce the level of uncertainty which still lies for the next phase. For the moment, we have a withdrawal agreement and we have a few good words of nice music about what we would all like to do in the future but frankly speaking this is Sunday night banquet wording. It’s not like what you have to really do on Monday. And what you really have to do on Monday, in this case, need to be framed in a more precise way so that the spectrum of possibilities for the next phase, which ran from total exit at a high cost or low cost and (inaudible) exit which is too wide for something to be decided in this country i.e. in this House is narrow.

And I participated in many of these negotiations that are 30 years and my experience in there, it usually works when you start with a stage where you narrow the options and we, in our vocabulary, we (inaudible) discussing, framing, if possible agreeing modalities, which is (inaudible) where you reduce the universe possible to something which starts making sense. And my advice is that if the deal doesn’t go through because I believe, right or wrong, the reason (inaudible) the spectrum of the next stage is too wide open and has to be closed and then you have to try and close it. Of course, it will entail a compromise. Not a compromise between EU and UK. This story has never been a negotiation between the EU and UK. Pretending it’s a negotiation between the continent and Great Britain is laughable, it’s a negotiation between the UK and UK. Of course there was a bit of negotiation on what should the rights be of Europeans on British soil and the other way around and what the bank note, who will pay for the rent and the petrol and that was not a serious negotiation. The serious negotiation is about how much politically and how much economically.

So that’s, I think, where it has to go. And only then will we have a proxy for what the final relationship would be and then it would be probably a bit more precise and people will be able to make a judgement on what Brexit is really about. Again, how much of political Brexit and how much of an economic Brexit do you accept this trade-off? Same with, I know I’m saying something which including this House is a bit strange, which is compromise. Compromise is a word which is totally unknown in British politics and that’s a big difference with the continent and I say this as a French man because the only other country where political compromise is loathed is France. Compromise in France looks like (inaudible) something. Whereas on the rest of the continent, people are extremely happy when they dare to compromise. In Britain and in France, if you go to the TV and say ‘we reached a compromise’, it looks very bad and I don’t think any British prime minister, except in very old times, ever became Prime Minister as a result of a compromise. In this country, a winner takes all and you become British Prime Minister while you have totally defeated your opponent, nothing of a compromise.

There’s probably something new that needs to come and by the way the fact that after many, many, many months the British prime minister decided to have a discussion with the opposition on this. I’m not saying it will work because this is all politics, what exactly the political interest of Labour in this discussion could lead to many, many speculations but for the moment, that would be my advice so what next is either do it within the next month or start understanding why it cannot be done within the next month and this is not just because this people are crazy. British people are not crazy, they have views on what’s good, bad and on what should be done. What they need is to be presented with something that allows this judgement to be made. It’s not the case for the moment. If it’s not done within the next month, it will have to be the case for the thing to happen. Of course there are other options than Brexit happening but I think within the realm of the Henry Jackson Society, I should stick to that option. Thanks for your attention.”

SUELLA BRAVERMANN MP: “OK, that was so wide ranging. Very enlightening and very thought provoking, I think. I’ve got many questions myself but I will hold myself back because I’m sure the hands are going to reaching for the skies. Who here would like a question, if you could stand up, say your name and if you’re representing anybody and I’ll take a couple of questions, two or three questions together so that you can deal with them together. So gentleman here.”

AUDIENCE MEMBER 1: “Andrew Ben-Nathan. Member of this society. Monsieur Lamy, you described the way over the years that the EU and its predecessors, economically and politically grew together. Where do you think it is heading politically?”

SUELLA BRAVERMANN MP: “OK, so the direction of the EU?”

AUDIENCE MEMBER 1: “Yes”

SUELLA BRAVERMANN MP: “OK”

AUDIENCE MEMBER 2: “(Inaudible), I had the great (inaudible) of working with Pascal for many years”

PASCAL LAMY: “And I loved it”

AUDIENCE MEMBER 2: “I’m slightly related (inaudible)”

PASCAL LAMY: “We know that. We know that. Nobody is perfect”

AUDIENCE MEMBER 2: “There was one proposal which did reach a majority in the House of Commons. I think it was 316 – 303 something like that, which was referred to as the Brady amendment, it is commonly referred to as the Brady amendment. And this is made apparent (inaudible) negotiators in Brussels though there’s no evidence that she did so with any enthusiasm.

Here’s my thought; in your perspective, I mean it seems to me that this Irish backstop has become almost symbolic of the two views of where we are going and people who believe that it’s very, very important to get a political break. Are people who believe we have to get rid of the Irish backstop in the withdrawal agreement, and my sense is that probably is still the majority position in the House of Commons, but here I ask myself do you think, and you worked with Mr. (inaudible) for so long, do you think it is conceivable, if I go back to the (inaudible) council meeting when in that (inaudible) it said ‘and we all agree 27th plus the British (inaudible) that the renegotiation of the withdrawal agreement is not possible. I just say to myself isn’t there some way which the European side in this, seeing that there is (inaudible), say ‘OK let’s park the Irish issue into the next phase?’ You see what I mean?”

SUELLA BRAVERMANN MP: “OK, so you’re saying the British are not famous for compromise, we had a Brady compromise that gathered the command of the majority in the Commons. What’s the EU’s position? Can they come halfway on that? Great question. And one more for this round. Gentleman over there.”

AUDIENCE MEMBER 3: “My name is Andrew (inaudible), I’m just representing myself. Not a member of the society but may well be after this. Just going on from the last question about the Irish backstop and your (inaudible) to compromise. Do you think it would be possible to replace the Irish backstop with the offer of the second referendum?

So that will be one way of unlocking the paralysis we have at the moment and if we can’t get any sort of a trade deal two years down the road then the option is to very much fall between hard Brexit and (inaudible). So what (inaudible) another referendum after the deal (inaudible) doesn’t cost anybody anything.”

SUELLA BRAVERMANN MP: “Great. Thank you very much.”

PASCAL LAMY: “Now on this issue on economic integration versus political integration, sort of dialectic synergy there is, I think this is what’s happening. And by the way I was DG of the World Trade Organisation during 8 years and one of my conclusions of this experience is that if the WTO is about obstacles to trade, which is what it is by levelling the playing field as nicely as possible, the real issue for the future is not about protecting producers from foreign competition, which is what you do with tariffs or subsidies, the real issue is how do you address regulatory discrepancies, the purpose of which is not to protect producers but to protect citizens or consumers from risks.

If I’m an average trader on this planet today, what I have to pay to export, let’s say, my goods is 5%. That’s the average trade weighted tariff worldwide. What I have to pay in order to match the different regulatory regimes of the countries I want to export with is roughly 20% because this is the problem. The problem is not so much these tariffs to protect producers, it is discrepancies and why are these discrepancies there? Why are they so different? Why do we have a different regime for marketing, medicines or food or animal welfare standards? Because this is not about 2+2=4, it’s not about playing right economics, it’s about emotions, it’s about what you believe is good or bad because this is about risk management and risk  scale is between good and bad, which frankly speaking the notion that we have small bumpers on EU cars and the Americans have big bumpers getting to the conclusion that it probably would make the cars a bit cheaper on those side if we have middle sized bumpers is something which is a no-brainer. If it’s about GMO food, if it’s about animal welfare, it is about data privacy, it’s very different.

Now, this is why the pursuit of globalisation, of this face of global market capitalism which is both expanding and deepening into collective preferences which people care a lot about. Look at what happened with the TTIP with the beginning of the negotiation between Europe and the Americans on the Trans-Atlantic trade deal, it never bumped into the problem of tariffs on cars or carrots or whatever, it bumped into chlorinated poultry, the ratification of the Paris Agreement. Things which are of a very emotional nature. And this is what political union is about. And the next stage of political union will be once we have harmonised our view, which we have roughly on what healthy food is about, the next stage will be about security and defence which is about not just agreeing on what good food is but merging our nightmares. What do we fear? Where are the threats on this planet? Are they in Africa? Are they in Russia? Are they in China? So this is what, and I’m absolutely convinced that this will go through little by little, it will take a very long time. Maybe one day if the planet gets it right, US and China will converge to something where the US is less violent and China more open, that’s probably 150 years from now.

I’m not saying when will the European Union be a full-fledged political union. What I know is that it is a process. It’s a process that goes and of course this process is about deepening the agreement on collective preferences and you cannot, in the world of the future, you cannot reap the benefits of economic integration, which are many in a global market capitalist system, while not taking the political consequences of that. And we have a good example with data which I already mentioned, forget the benefits of globalisation in the world of data, which is a big thing for the economy of tomorrow, which is about the (inaudible) because the reasons why US, EU and China regulations are so different are deeply political.

On the Irish backstop, let me be frank. This Irish backstop is an excellent example of this total confusion between a customs union and an internal market. If UK leaves the European Union, Ulster leaves Ireland, border-wise whether there is a single customs (inaudible) it doesn’t matter at all. It’s this customs union backstop is a proxy, is a thing, which by the way the reason why I think Labour loves it because it looks like a soft Brexit. Not as hard, as bad as it could be. But I’m sorry to say and I wrote this in an op-ed recently in a reasonably poor remain paper, I recognise, the others usually do not open their columns to my op-eds and I can understand why but this is the wrong approach.

The Irish problem is very simple. The Good Friday Agreement says no border, Brexit implies a border. And whatever customs union arrangement will not change that because Ulster will enter into a world where it can diverge from the Republic of Ireland in a number of consumer citizen whatever related issues and this is the moment you need an order because the moment you start diverging, you stop controlling what you get. And it’s relatively easy to understand about goods, it’s exactly the same for services except that you don’t have customs duties on services but in services a border is the limit of a regulatory system. You have a border when you change this regulatory system. You don’t see it because you don’t see services moving anywhere but that’s the reality.

So the solution to your problem is move into what the trade and economic and to some extent social, cultural, environmental, we discussed this afternoon, and I was there as a member of the European Climate Foundation, what next? With Brexit, with environment standards, which is a perfect example of the capacity to regulate environment differently but why should you do it differently? And what is going to be the situation and do we need trade agreement with environment provisions? Or an environment agreement with trade provisions? The only answer to your question is in the next step. Until then”

AUDIENCE MEMBER 2: “(Inaudible)”

PASCAL LAMY: “Yeah, you will not do that unless there is enough trust on both sides that nobody is going to be, and both sides are Brexit and remain, it’s nothing to do with EU and UK. The problem is you don’t trust yourself on both sides and you need to create a sense of trust that there is something you can live with on both sides whereas how much of this, of this, of this remains to be seen. But Brexiteers have a hard time voting the thing why they believe it won’t be a real Brexit and Remainers have a hard time voting the thing why they believe is going to be bad for the economy and for growth and for the people.

And in a way again this choice of this segregation, this very narrow interpretation of Article 50, which by the way was written by a very clever British civil servant at the time who now serves in the House of Lords and he very cleverly drafted what (inaudible), who had a sort of very mathematical mindset, (inaudible) said to him ‘look we said in Article 7 that if a country doesn’t behave properly, we can kick it out’. OK that’s good but we need the users notice so please for tomorrow draft me the users notice and then he drafted the users notice in case Article 7, which was about kicking countries of the EU for political reasons, the sort of thing we have with Poland and Hungary. Of course the users notice, had he known the users notice would have been used by Great Britain he would never have written it but (inaudible) was rather persuasive. But like anything written by a first class diplomat, it is susceptible to various interpretation. This is what diplomats are about and the art is about getting things done while remaining vague on this consequence.

So I’m not saying the interpretation of Article 50 is wrong because it’s a matter of interpretation. I’m saying you have chosen the one that creates the biggest problem on agreeing the withdrawal agreement. And until and unless this issue is more or less fixed, I think we will remain where we are.”

SUELLA BRAVERMANN MP: “And on the point about second referendum, briefly, and then more questions.”

PASCAL LAMY: “That’s a question for you, frankly speaking. I mean, who am I to enter into this intricacies of British politics and all that. I mean, what I know is that there are maybe other options than Brexiting. I’ve tried in my remarks to remain within the Brexiting tent. I mean, there are other possibilities, true. But, you know, I lost this referendum. So be it. That’s politics and I’m just trying to help understanding what the problem is about in order to, at least, to bring a bit of clarity which I think is not there for the moment.”

SUELLA BRAVERMANN MP: “OK, let’s take a few more questions.”

AUDIENCE MEMBER 4: “Hi, my name is Maria. I’m here just representing myself as well. I heard you mentioned hormone beef and I was just going to ask about the case of Switzerland because obviously hormone beef is actually eligible for export to Switzerland. So I was wondering if you could just tell us a bit more on that? How can that be? How does that work? And perhaps more pertinently, how difficult do you foresee in your opinion, a similar sort of carve out being negotiated by the UK in the future.”

SUELLA BRAVERMANN MP: “I’ll take two final questions. They have to be brief because we are running out of time I’m afraid. Gentleman at the back in the red tie.”

AUDIENCE MEMBER 5: “(Inaudible), (inaudible) Institute, University of Cambridge. Given that the proposed transition agreement is too short for any final deal to be put together, would you agree (inaudible) and the transition period will, as happened to Norway, effectively become a permanent position for the UK as an associate member.”

SUELLA BRAVERMANN MP: “Final question to this gentleman”

AUDIENCE MEMBER 6: “Thank you. Andrew (inaudible), representing myself. Going back to where you started and your scrambling analogy. This is organic. Is a compromise possible or are right in or right out?”

SUELLA BRAVERMANN MP: “OK, thank you. Monsieur Lamy, so Maria has asked about hormone beef and the Swiss model and is that feasible for the UK?”

PASCAL LAMY: “It depends on whether you want to eat hormone beef or not. The Swiss are a very specific country and I always have a little bit (inaudible) including with Barnier’s nice pictures about whether you want to choose Switzerland or Norway or Canada or Thailand or Botswana or Singapore. United Kingdom is the United Kingdom and there’s nothing like an assimilation to Switzerland or Norway or Botswana. So, the question is whether we accept to eat hormone beef or not.

I know full well that the reason in the first place why we banned hormone beef, and banning hormone beef is banning some hormones, a series of 5 different hormones including (inaudible) which we believe are bad for human health. This case was taken by the US to WTO. And the WTO said among the 5 hormones which you banned, there may be reasons why you believe 4 of them are carcinogen. We have to accept margin of certainty with (inaudible) because if it’s about health and science, it’s not yet there, precaution. But, (inaudible) no. And that was a problem because we at the time should have, we the European Union, should have accepted hormones with (inaudible) to be important.

The good news is that these hormones are injected in cocktails so that’s segregating (inaudible) from the others. Well, not really economically feasible. And then the US said you are in breach of your WTO obligations which was right and there we said OK, OK, please, if there’s anything referendum on hormone beef in the European Union we will lose it because they don’t like hormone beef. Let’s do a deal. We keep the ban and we give you a quota of Hilton beef, which is upstream, premium, high quality beef which they produce in the US, which we don’t produce in the EU and which is non-hormone. And then the question was how much will this quota be in order to be sure that there is a segregation between producing Hilton beef.

So that’s the way things happen in real life and that’s probably the way the Swiss did it, who are extremely pragmatic and who anyhow have such a huge tariff on beef, higher than ours which is rather high that I’m not sure any of that comes into Switzerland in reality and I’m quite convinced that if you ask Swiss consumer whether he or she has a choice between the two, they’d take the hormone version.

On the transition. Here again, let me be frank. What we Europeans, continentals, accepted to call a transition in the withdrawal agreement is not a transition, it’s a standstill. And we accepted to call it a transition because we were begged to call it a transition because it had to look like a transition. It’s not a transition, it’s a standstill during two years and whatever transition will have to take place once we have a deal in the next phase and once we have a deal, we will have to decide whether its implementation takes two years, five years, eight years, ten years. And if you look at the market of trade agreements, you can choose.

Usually, economic operators ask for something longish because it takes time to adjust, which by the way the reason nobody wants a no-deal except as an atomic deterrent to make your case, everybody knows leaving without any transition would cost a lot to many people. So can we negotiate a trade agreement within the two years of the existing standstill? No. It will take a longer time. Assuming Brexit happens, who will really care about the standstill being two years or three years or four years, which is what you need to negotiate a full farewell. And then you have the transition.

So let’s assume Brexit takes place, which I recognise is an assumption, plus two, three, maybe three or four years, plus average five year real transition, that’s the answer to your question. And we’ve just shown, which I was absolutely convinced we would and I said this at the Franco-British Colloque in January this year that we on the continent are extremely good at stopping the clocks. We’ve done that every year for fish quotas, which have to be decided by the 31st of December and each year there is such a big (inaudible) about agreeing on fish quotas that the chair of the meeting says ‘OK, we will go and have a nice rest and the clock will be stopped at midnight minus 5 minutes and we will (inaudible) next year’. And we can do that. Frankly speaking, time and money are the two ingredients that usually help solving impossible political problems.

And finally on scrambling. I recognise I have my doubts. If somebody can provide me with a reasonable theory of how you get an egg out of an omelette. Somebody that really deserves a sort of Nobel Prize in physics, I’ll be more reassured but so far nobody has come to me with how it would work, which is why I have my doubts.”

SUELLA BRAVERMANN MP: “Well, with that, on scrambled eggs on our mind. Monsieur Lamy, thank you very much. It’s been a very, very (inaudible). Great, thank you very much. That brings the meeting to a close.”

HJS



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