Brexit: bypassing the problems

Thursday 21 June 2018  



After the recent rendition of Getlink's presentation on the effects of Brexit, it is rather timely to have reports of a Freight Trade Association conference where warnings were heard that Brexit could bring serious problems to the port of Dover.

Pride of place goes to Leigh Pomlett, the organisation's President, who said:
The time for political negotiations on Brexit is fast running out, and those of us responsible for keeping Britain trading need urgent assistance and guidance from government. We are now in a crucial period where businesses (like mine) need to make spending decisions and commit to operating plans for the period when Brexit will be a reality, but we are currently operating “in the dark.

Without knowing who we will be employing, how we will be crossing borders, what certifications and permits goods and vehicles will require in order to travel, business as we know it will be unable to continue. The logistics industry will be the first part of the economy to encounter the realities of Brexit when vehicles drive off the first ferry to arrive in Calais on 30 March 2019 and we want things to go smoothly, but we need more information about the trading conditions we are to expect once the UK leaves the EU. The time for talking is over – it's now time to act.
Such issues have been the fare of this blog for many years but now we have the Guardian telling us: "Port of Dover warns of 'regular gridlock' in event of hard Brexit", with the sub-heading, "Port's head of policy says there will be serious congestion without a suitable trade deal".

The speaker the paper chose was Richard Christian, the Dover's head of policy. He is recorded as saying that there will be "regular gridlock" in Kent in the event of a hard Brexit. Disruption to freight traffic on ferries and Eurotunnel services would have a profound impact on Britain’s economy.

"Operation Stack", he says, "may be needed around once a week", a view supported by Jean-Paul Mulot, the permanent representative to the UK of Hauts-de-France, the administrative region covering Calais.

Mulot says that the migrant crisis "helped us to understand that it was really easy to have traffic jams on both sides of the Channel", adding: "We can talk and talk and write lots of papers, but in the end, I'm not sure we are going to get to a suitable solution unless the authorities on both sides of the border are allowed to exchange ideas and plan for [a] post-Brexit future".

Showing signs of desperation, he tells us: "The reality on the ground is very different to the big picture in Brussels. We keep saying endlessly we need help. Don't think too big, know more of the ground and let's try to engage".

In a very direct comment, Christian then told the conference: "If the cross-Channel system falls, our collective way of life falls", while customs agents dealing with non-EU freight said that preparations by government to make Dover ready for Brexit were "woefully inadequate".

John James, the chairman of the largest customs clearance agency in the UK, said the government was unprepared for the consequences of leaving the customs union and single market.

In the view of James, the big problem was not random customs checks, but the clearance documentation required for every consignment. A new system for third-country trade being introduced by HMRC in January required 84 data fields to be filled for customs purposes – 34 more than the current system. Each form takes 10-15 minutes to fill out and there was no sign of HMRC recruiting staff in Dover or training them, he added.

Sketching out the size of the problem, he noted that before the Single Market was established in 1993, there were 300 customs officers. Now there are 24 in east Kent. There were also previously 185 customs clearance agents doing the paperwork. "Today, there are only 17, and only five of them of any real size operating a 24-hours-a-day service", he said. "In 1993", he continued, "there were between 2-2.5 million entries; post-Brexit, there will be somewhere in excess of 25 million, this including Dover and Eurotunnel. It is obvious to everyone that customs clearance will be woefully inadequate".

James also reminds us that there would be queues at ports in the Netherlands, Belgium and France, and if congestion were severe, ferry companies and Eurotunnel would have to reduce the frequency of their services.

The tedious thing about this, though, is that it doesn't even begin to get close to the reality – which is far more troublesome than even the new requirement to fill in multiple forms. But even if that is the case, the all-knowing Iain Martin in The Times is so far from the real world that he puts the prospect of chaos down to the lack of "fair dealing" from the EU.

Alongside him, we have Robin Walker - the Brexit junior minister - trying to reassure us that none of the problems predicted will happen. "There will be no breakdown at the border" he says. Businesses on the continent need frictionless trade so solutions will be found. It was, he said, "in the bloc's interests to strike an agreement".

Both Martin and Walker are delusional, but it doesn't help either that the industry still isn't able, coherently, to sketch out the full nature of the problems we encounter. There is a certain sameness to their warnings, yet nowhere do I see a comprehensive report from the industry setting out in detail the issues which will have to be addressed.

Readers will recall that I have attempted to think through the likely (or sensible) response to the prospect of the roads being clogged with trucks attempting to deliver their wares to destinations in EU Member States. It seems to me that the one thing the police do with absolutely supreme efficiency is close roads on any excuse whatsoever, and either divert traffic or stop it from moving.

It would take relatively little to organise some form of permit system, whereby international shippers were not allowed to put their vehicles on the road unless they had permits or other forms of authorisation. These would have to indicate that their loads would most likely be cleared when presented at ports in EU Member State territories.

The bill, as I pointed out, comes later, when goods are not exported, in the loss of revenue and in the failed businesses and rising unemployment. But there are measures that governments can take – even if extreme – which can keep the roads clear and the supermarket shelves filled with basic necessities.

That is not to say that there won't be disruptions and local shortages, or even some commodities disappearing altogether – but people are unlikely to starve in the short-term (even if it would be unwise to trust government completely in this respects).

For many other issues, there are workarounds. The pharmaceutical sector is already transferring market approvals to operations established in EU Member States, and requiring the necessary qualified staff to move overseas. Similar, but not quite so straightforward measures are being taken with chemicals, but we can expect the Commission to intervene, to make it easier to transfer registrations to EU-based establishments. And we have already seen new proposals for vehicle type approvals, which will allow UK approvals to be transferred to other Member States.

There is even a convoluted work-around for aviation certification in some cases. Where Member States currently have competence, it is not always possible for UK holders to transfer their certificates to EASA but, under the mutual recognition provisions of the US-EU bilateral agreement, they can transfer them to FAA jurisdiction. From there, owing to a quirk in the way the system operates, they can then transfer FAA certificates to EASA – and thereby keep operating even after Brexit.

Other companies are stockpiling goods in the UK, or expecting their suppliers to increase their stockholdings, and those supplying enterprises overseas are sending out goods in advance, to pre-empt supply difficulties at the time we leave. Even some enterprising ports are offering services which will enable users to bypass congestion.

Meanwhile, Dover, for want of government action, has set up its own Brexit taskforce to study the impact of Brexit on the town, looking at measures it can implement to mitigate the worst effects of any crisis.

In particular, they are looking to improve working relations with local authorities in the Pas-de-Calais district – an essential measure if they are to be able to match traffic flows with the ability of the authorities to clear loads once they arrive in Calais. With 48 million tons of freight passing in both directions each year, they cannot afford to wait for Whitehall to make up its mind.

Other companies, of course, will need to up their games. There is no point, as we see with Siemens UK in having the CEO talking about Brexit when he clearly has little idea of the nature of the problems confronting him. It really is rather pathetic to see 54-year-old Juergen Maier bleating about the need to maintain a customs union, when the tariffs his company faces are the least of his problems.

Maier tells us, "We ship thousands of goods daily across the borders that help keep power stations running, that help keep trains running, that help keep British manufacturing running", asking "are those parts going to be able to pass pretty frictionlessly over the border?” – as if a customs union made the slightest bit of difference.

That aside, if the government fails to resolve the Irish border issue, and the EU decides to stick to its guns, refusing a transition period, no amount of contingency planning will be able to overcome all the problems. Doubtless, the line taken by the EU will depend on the degree to which its Member States and their businesses have put in place the necessary measures to keep their needs satisfied.

One can also be assured that the UK's needs will be well down the line and, in the event of a failure to agree, there will be no concessions unless they are to the overall advantage of EU Members.

Such activity is there currently is, though, is very much under the surface – entirely independent of the excitement in the House of Commons over the last week. MPs have yet to learn that they are entirely irrelevant to the Brexit process.

Arrangements will be proposed by the EU and the government will either accept them or opt for the chaos of a "no deal". As far as Parliament is concerned, it either accepts what is put to them or it too must face a "no deal" scenario. The idea of a "meaningful vote" is a chimera, a hothouse fantasy spawned from the ignorance and fevered imaginations of our elected representatives and their media handmaidens.

Businesses and industry need to look to their own salvation as far as they can – they will get little relief elsewhere, while the rest of us will just have to do what we can. But the idea that government can actually govern is fast evaporating. The central problem we're having to face is actually government. When we start bypassing that, life will really start getting interesting.



Richard North 21/06/2018 link

Brexit: the little picture

Wednesday 20 June 2018  



In a dank corner of the internet, where some rather unpleasant people reside, we have Euro Guido spinning a presentation from Getlink (formerly Eurotunnel), having the company declare: "Don't buy border scaremongering".

This is on the basis of a slide, addressed to shareholders on the prospects of the company, which presents a "before and after" scenario for Brexit. On the one hand, there is the "UK position on the border" which sought "a comprehensive free trade agreement and a new customs agreement which allows for trade which is as frictionless as possible".

On the other, there was the "likely outcome", anticipated as "an agreement with a time-limited transition period for implementation of customs and animal and plant health controls". In addition, the company asserts: "Technology will speed up border processing".

Thus, we see a position where this blog has been warning that, with Brexit, there will be SPS and customs checks on the borders – something which Getlink now concedes. That technology will speed them up is neither here or there. The fact is that there will be intrusive checks where, previously, there were none – with all the consequences that that will bring.

Amazingly then, this is projected as a statement that somehow "counters a rash of stories placed by remainers raising artificial fears about the border" – notwithstanding that this blog has been most prominent in warning of the problems. Guido, like so many others, can't deal with the idea of the "intelligent leaver", and feels impelled to present this as a binary issue.

Interestingly, Getlink sees the negotiations continuing until 30 November – past the October deadline when the Council is supposed to wrap up the talks and put the final text out for ratification. In order to present its "likely outcome", the company is assuming that there will be a formal Withdrawal Agreement and a transition period, before the shutters come down and customs and SPS checks are imposed – bringing untold chaos.

Despite that, the company remains confident. "Given Eurotunnel's unique position", it says, and its "key Government insights", together with its "track record in managing transition", it strongly believes that it will "strengthen its competitive position after the Brexit".

Actually, this is not entirely untoward. Compared with the Port of Calais, Eurotunnel is better positioned to deal with Brexit. Almost immediately, it can run trains on from the Calais terminal to the Port of Dunkirk where it owns land, and where there is only one of two Border Inspection Posts (BIPs) on the Channel coast of France – albeit of limited capacity.

In the longer term, it can exploit the development of the multi-modal hub at Lille, where it would be possible to position a BIP to service the rail traffic coming over from the UK. Thus, after the initial disruptions, the company might be expected to fare better than its competitor, although one might also expect an overall fall in the level of traffic.

As it stands, Getlink thinks the "likely outcome" is one of an agreement being concluded yet, by coincidence, we see the publication of another joint statement from the EU and the UK government negotiators on progress of the Brexit talks.

Crucially, neither side could bring itself to declare that no agreement had been reached on the Irish question, with the statement retreating into Delphic pronouncements that "scoping work has continued on the full range of provisions in the Protocol", while both parties "are committed to accelerating work on the outstanding areas".

Earlier, Michel Barnier had tweeted that "we have agreed a number of separation issues and the UK has engaged on others. But we are not there yet: serious divergences remain on the backstop for NI/IE. More work clearly needed".

Whether this impasse is because of, or despite David Davis's interventions cannot be told, although Hilary Benn has managed to smoke out an answer from the Department for Exiting the European Union that the Secretary of State has met Michel Barnier only three times since 1 January 2018.

Davis met him on 5 February in London, the pair had a joint press conference in March following the agreement reached on the transition period and then he met Barnier on Monday 11 June. One might suspect that the UK side isn't treating these negotiations terribly seriously.

That leaves us to gaze upon a leaked draft of the European Council conclusions for later this month. There, we see the Council expressing its "concern" that "no substantial progress has yet been achieved on agreeing a backstop solution for Ireland/Northern Ireland".

It also states bluntly that work must be accelerated "with a view to preparing a political declaration on the framework for the future relationship", noting that, "this requires clarity from the UK as regards its position".

Much earlier in the day, we had seen Barnier in Vienna at the European Union Agency for Fundamental Rights. Although his talk was focused on that subject, it had more general application. Pointedly, he noted that the UK has decided to leave the EU, its institutions, structures and safeguards. "It will be a third country outside Schengen and outside the EU's legal order", he said, "This is a fact" and "facts have consequences".

He reminded us that the EU relied on an "ecosystem" based on common rules and safeguards, shared decisions, joint supervision and implementation and a common Court of Justice". If you leave this "ecosystem", he said, you lose the benefits of this cooperation. You are a third country because you have decided to be so. And you need to build a new relationship".

"To negotiate an ambitious new relationship with the UK, which we all want", Barnier said, "we need more realism on what is possible and what is not when a country is outside of the EU's area of justice, freedom and security and outside of Schengen".

The UK, he went on to say, "will not be in a position to shape the strategic direction of EU agencies". UK representatives, he added, "will no longer take part in meetings of Europol and Eurojust management boards". And although he did not state this specifically, this applies equally to EASA, EMA, EFSA and the others. We are out on our own.

Perhaps this is the reason why the government is advertising for a "Head of Aviation EU Exit Negotiations", recognising at last that there is no status quo and we can't simply slot into our previous position on the management board of EASA.

The post-holder, who will be working for the Department of Transport rather than the CAA, will be charged with "overseeing negotiations with the EU on the future of our aviation safety and airspace relationships", which does suggest an element of realism creeping in, although it is being left perilously late to get ourselves organised.

All of that, though, is presaged on us dealing with the Irish question and, as we can see, there has been no progress – not that anyone is surprised. From the very beginning to the last, Ireland has been dominating these talks and there is, as yet, no clue as to a resolution.

The only thing sustaining the process is a blind faith that the parties will somehow come to an agreement – a strong possibility given what is at stake, but with no evidence to support that conclusions.

One thing that entertains me though – especially in relation to our potential "Head of Aviation" – is the concentration on the "big picture". But, turning to the "little picture" for the moment, back in February last year, I was writing a boring old piece that dealt with EORI numbers – without which, of course, UK traders will be unable to export to EU Member States.

I surmised that, on Brexit day, those currently held by traders would not be valid, and reapplications to Members States might have to be made. Now we see from the Joint Statement that access to the EORI system will be closed to us from December 2021 – the end of the planned transition period. And it is then that Getlink's border controls will slot in place.

Altogether, that "little picture" is altogether not a happy one. It is a world where detail matters and the posturing of MPs and their Lordships is of no relevance. It is where Brexit will be made or broken and, at the moment, "broken" looks to be the most likely outcome.



Richard North 20/06/2018 link

Brexit: ill-equipped to understand

Tuesday 19 June 2018  



It is not exactly unsurprising that the recent Telegraph report on the potential grounding of commercial aircraft didn't get much traction in the rest of the media. It was played low-key in the business section, while the Commons drama was rampant. As a result I can't recall it being copied by a single newspaper.

The same can't be said of The Times which yesterday did its own version of the story, reporting the background and the response to the letter from aerospace representatives to Michel Barnier alerting him to the gathering crisis and calling on the UK and the EU-27 "to allow technical planning conversations between EASA and the CAA".

This I have already covered in depth in two posts on this blog, here and here, both of which were ignored by the legacy media. We are, of course, invisible – except when they need to steal our stuff.

Unremarkably, though, when The Times managed to produce its own half-baked version - with considerably less detail than we were able to offer - it was enough to bring out rampant coprophagia in the rest of the media. Most national newspapers have rushed to copy The Times, none of them adding anything significant to the story by way of their own research or clarification.

Based as it was on an initiative by ADS and the General Aviation Manufacturers Association (GAMA), it was almost inevitable that The Times story should perpetuate the error of the aerospace manufacturers, in assuming that there was any possibility of meaningful talks between the EU regulator, EASA, and the UK body, the Civil Aviation Authority (CAA).

Thus, we had from The Times the claim that "Brussels bars aviation chiefs from preparing for no-deal", based on an unconfirmed assertion that the European Commission had intervened after the aerospace industry had contacted Barnier, specifically to prevent EASA and the CAA from holding talks.

However, had the paper take more note of what I had written in my second piece, they would perhaps have understood that – in the absence of a Withdrawal Agreement and the transition period - it is not possible for EASA to enter into talks with the CAA to secure the optimum outcome, a Bilateral Aviation Safety Agreement (BASA).

This, I observed, is a full-blown treaty and can only be negotiated by the EU and the UK government. And, to do that, they need to use the formal procedure set out in Article 218 of the consolidated treaties. Such negotiations are way above the pay scale of the agencies and, as with the broader post-Brexit relationship, the negotiation process can only be undertaken once the UK has left the EU and formally acquired the status of a "third country".

Failing the settlement of a BASA, there is provision within the Basic Regulation (Regulation (EC) No 216/2008) for inter-agency agreements between EASA and the "aeronautical authorities of third countries" (Article 27). But, once again, the qualifying requirement is for the UK to assume the status of a third country.

However, we are also aware that, without such agreements and in the absence of a transition period, UK parts fitted to EU-registered aircraft will no longer be validly certified, the aerospace industries and airline operations of the EU Member States will be as badly affected as UK enterprises.

This is something that The Times and partners in coprophagia have comprehensively missed, even though many online commenters seem very well aware of this.

Essentially, with this and other issues, the EU and its Member States cannot afford for the UK to break out of the EU without a deal any more than can the UK. And on that basis, there is good cause to assume that the EU will take active steps to avoid a "no deal" scenario taking effect at the end of March 2019.

How far it will go is anyone's guess, but it does change the entire political architecture, putting the UK in a better position than might be supposed. The danger is that the EU will engineers a "sudden death" for the UK at the end of the transition period, once it has bought enough time for its Member States and got what it needs.

Returning to The Times story, we see the story copied out more or less intact by The Mail, The Sun, the Guardian, Metro and the Express. Yet not one of the derivative writers questions the basic, flawed premises from The Times, that the European Commission is wilfully blocking talks between EASA and the CAA. They have their narrative – the big, bad Commission being "nasty" to the UK.

In fact, it is more that case that there is no value in entertaining discussions between the bodies as nothing can be achieved. There is no "plan B" that the industry regulators can draw up to keep the airline fleets flying. And it is unlikely that the EU is any happier about the situation than we are.

This, one might add, is where it is so necessary to understand how the EU operates and what makes it "tick". Here, we have a conjunction between the political and the technical and, when you are looking at the EU, you cannot neatly partition off the two and treat them separately - the two are intertwined and strongly influence each other.

Thus, unlike UK Westminster politics, where the "lobby" can entertain itself endlessly with court gossip, covering the EU requires a wider knowledge of issues and an appreciation of how the parts fit together.

Another point here is that, while The Times managed to take note of the relevant Notice to Stakeholders when it was stuck in front of them, the paper seems unable to take on board the scope of the problems. From their story, you would be forgiven for believing that this issues just affects aircraft – even if the Mail and the Metro manage to confuse this problem with the Open Skies Agreement. The Mail also manages to mix up EASA and Eurocontrol.

Aircraft apart, though, it is the case that a "no deal" scenario would mean that the operational certificates for Heathrow and all other UK airports would no longer be recognised. That would not only apply to EU Member States but also its other partners, such as the United States, which accept EU-mandated certification.

One can see the EU taking heroic measures to keep its Member State airline fleets flying but being less rigorous about keeping UK airports in operation. If there are adverse effects to come from a "no deal" scenario, therefore, it is more likely that we will see Heathrow, Gatwick and all the others restricted to flights by UK-registered aircraft.

The odd thing here is that, while the prospect of air fleets being grounded qualifies as news, Heathrow effectively being shut down apparently isn't. And nor is the media concerned with the fate of the air traffic management system, the fact that many pilots will no longer have valid licenses, that it will be impossible to get an aviation medical in the UK and even simulator instructors will be prevented from practicing.

As it stands, the story of a potential grounding of the aviation fleet is already yesterday's news, and being dismissed by many as "project fear" – and not without good cause. It is hard to see that the EU will stand idly by while Member States aerospace industries and airlines are shut down.

But that is not to say that the UK will be able completely to escape any fallout from the massive reorientation of aviation regulation that must follow Brexit. We will be lucky if we can escape the worst consequences, but a degree of damage is inevitable – the only real question is how much.

Here, we are on our own. The moving finger of the media has written, and moves on. The dogs bark, the tents are packed and caravan disappears into the night, the story never to be revisited until some new development – usually some trivial oddity – captures the imagination of an editor somewhere in the interstices of London hackery.

Thus, none of us go into the future fully equipped to understand the implications of a "no deal" scenario, while charlatans such as Minford can peddle their wares without fear of challenge from the zombie media. When journalists themselves don't understand the implications of what they are writing, and are unable to report fully on what passes, the debate will remain ill-served.



Richard North 19/06/2018 link

Brexit: misdirection

Monday 18 June 2018  



Quite what we are supposed to make of Mrs May's claims of financing additional spending on the NHS from the "Brexit dividend" I don't honestly know.

On the face of it, it is an expression of extraordinary political cynicism by a prime minister who has ceased to have any concern for the truth, but it could just as easily be the act of a deluded woman who has lost touch with any semblance of reality. Either way, this a worrying development – this is not a politician in whom we can have any faith.

My best guess is that we're on the receiving end of a "look squirrel" ploy. Faced with the intractable problems thrown up by Brexit and growing disillusionment with her handling of the process, Mrs May has decided to employ the classic magician's trick of misdirection, diverting attention to the NHS. She then goes further, seeking to create positive linkage between the issues.

That the figure on offer is better than the headline claim on the side of the infamous red bus is also no coincidence. The effect (or the intention) is to restore positive vibes to Brexit, trying to overcome the loss of confidence that has been building up over the months.

It took not more than a few minutes, however, for commentators to deny that there is a Brexit dividend. Even the most optimistic of forecasts suggest that leaving the EU will come at a net overall cost and, if we fail to get a deal from the EU, losses to the economy could run to hundreds of billions of pounds.

By 2023/4, therefore, when Mrs May reckons to be pumping over £20 billion extra a year in real terms to the NHS, the Treasury will be running on air, just trying to finance existing expenditure commitments. Any increased funding will have to come from taxation or borrowing.

If what we are seeing is Mrs May abandoning any attempt to keep her claims in line with anything approximating the truth, then her action would be entirely in keeping with the way the entire Brexit debate is going. Protagonists no longer seem to feel obliged to stick to the fact, and are indulging in crude propaganda in order to make their points.

Another example of this is my one-time friend and colleague Owen Paterson, known famously for declaring that "only a madman would leave the market". Now, in a complete volte face, he is asserting that: "Unless the EU changes its tune substantially any EU trade deal on offer looks as if it will be thoroughly inferior to the WTO Free Trade Option".

Declaring that "it is time that Parliament understood this", he calls in aid a tawdry article in Brexit Central written by none other than Patrick Minford, who in turn refers us to a staggeringly dishonest polemic published by his group, the Economists for Free Trade (EFT), under the heading: "Why a world trade deal exit from the EU will be best for the EU".

What is so difficult for us, though, is that the document relies so many half-truths, errors and outright lies that, properly to dissect it would take multiples of the 14 pages devoted to the original.

Focusing very tightly on one small part of the argument, we have EFT telling us that, when it comes to the UK and EU's trade relations after Brexit, "WTO law is very clear". There can be no discrimination in standards laid down by the EU or the UK. Thus, once a "domestic" standard has been imposed it must be generalised to all foreign countries’ exporters, without discrimination between them.

After Brexit, we are told, companies which want to export to the EU will have to match EU standards and, when they do match these EU standards, "they cannot be discriminated against" – all of which sounds eminently reasonable.

Some standards", the EFT continues, "concern 'behind the border' actions, like the testing of product quality". But this is airily dismissed with the comment that, "if a company wants to export its products to the EU and the EU insists on some such testing or other internal procedures, then the company must follow them in order to sell to the EU market".

What might not be obvious to some, though, is that there is a lie embedded in these statements. Given a "no deal" arrangement, much of this testing is not "behind the border" but at the border. And this is precisely why the WTO option is potentially so damaging. Thousands of consignments daily, which hitherto would have crossed unhindered into the territories of the EU Member States will, post-Brexit, have to be checked.

In some cases, this may only amount to documentation checks but even these alone are enough to cause substantial hold-ups. But, in other instances, detailed inspections and testing will have to be carried out, routinely taking hours and, in respect of some of the testing, days or even weeks.

To get the flavour of how the EFT seeks to deceive, though, we have to dart around the publication, where we happen upon the claim that, where it comes to border checks, "the median developed country lets 98 percent of border traffic go through unchecked … and the remaining two percent checked is cleared within a day".

This, we have already been led to believe, is a situation that pertains globally, on WTO terms, where the EFT relies on spin from a Telegraph journalist on the basis of a comment said to have come from Roberto Azevedo, Director General of the WTO.

The essence of this is that we are supposed to believe that "about half of the UK's trade is already on WTO terms with the US, China and several large emerging nations where the EU doesn't have trade agreements". This, it was asserted that, "it's not the end of the world if the UK trades under WTO rules with the EU".

What was quite deliberately excluded here (and subsequently conceded) is that countries such as the US and China (and many others) do have trade agreements with the EU. What they lack are formal Free Trade Agreements. But where the likes of the US (and China for that matter) have multiple sectorial agreements in areas of mutual concern, the cumulative effect is to serve the same function as FTAs.

In the instance where the UK seeks to trade with the rest of the world, where its relations are bound only by the provisions of WTO rules, we would lack all-important Mutual Recognition Agreements on conformity assessment. Which enables huge amounts of trade in manufactured goods to pass without checks at the borders.

Here, though, we find embedded the ultimate dishonesty. According to the EFF, "leaving without a trade deal does not imply 'walking away' from the Brussels negotiations". There will, they say, "be many other aspects of the new EU-UK relationship that will need to be agreed – eg, airline landing rights".

So, we have a situation here where "no deal" doesn't mean "no deal". Instead, the EU is supposed to allow us to cherry-pick sectorial deals, to cover all those areas where we need agreements in order to facilitate trade – such as MRAs on conformity assessment, cooperation on aviation safety, type approvals of vehicles, and much else.

In the meantime, the UK has resiled on its commitment on budgetary contributions, has abandoned any attempt to maintain regulatory alignment and is insisting on "maximum facilitation" to avoid a hard border with Ireland. there is "no need to negotiate a trade deal with the EU and, hence, the onerous 'backstop'’ requirement falls away".

An assertion that, under these conditions, the EU is going to roll over and agree anything with the UK, simply stretches credulity to breaking point. Yet, only a handful of people are going to penetrate the layers of the EFT arguments and expose them for what they are – specious nonsense.

That, sadly, will not be enough to stop the likes of Owen Paterson – who really should know better – from making absurd statements, and no amount of analysis will turn the tide and dissuade charlatans such as Minford making thoroughly dishonest arguments.

To that extent, the rot starts at the top. There is no credible case to be made that, over the next decade or more, there will be a Brexit dividend. This is not merely a matter of opinion. The overwhelming preponderance of evidence supports the argument that Brexit will impose substantial cost burdens.

For Mrs May then to make claims on the basis of this non-existent "dividend" is more than just an example of episodic dishonesty. By her action, she is legitimising overt political lying at the very highest level. And, if it is acceptable for the prime minister to lie in such fashion, political discourse has sunk to a level where anything goes.

In days gone by, politicians at least made the effort to pretend they believed their own lies. But when such blatant distortion becomes the norm, politics as we know them have ceased to function. The expediency that drives Mrs May to rely on misdirection becomes a wholly destructive force, from which there is no recovery.



Richard North 18/06/2018 link

Brexit: necessary but not sufficient

Sunday 17 June 2018  



It's not very often that I actually look at the metrics for EUReferendum.com, and I had settled on the daily reader rate peaking occasionally at around 30,000.

Looking at the statistics yesterday, therefore, I was somewhat surprised to see that visitors recently peaked at well over 100K (before the Financial Times intervention) and we're regularly getting 80-90K, with the average well above 50K. That effectively means that we are seeing in excess of 1.5 million visitors each month.

This, of course, is a testament to our readers and in particular to those who so generously contribute financially to the site, enabling us to keep going. And apart from some very welcome single contributions, our special thanks go to those we have signed up for regular donations. This steady trickle of funding gives me the confidence to continue without having to worry too much about where the next bailiffs are coming from.

The elevated visitor rate also gives us a voice, when otherwise the legacy media and the establishment would have buried us – having done all they could to exclude us from the debate. And I do enjoy the stern ticking-off from the pompous ideologues on Twitter who never miss an opportunity to finger-wag, telling us that, if only we were "nicer" and more conciliatory, people would start listen to us. As I said yesterday, "this isolation is killing us".

What is most ironic of all in this context is that the attention Pete gets on Twitter is usually proportionate to the number of insults he deploys. His serious, well-considered technical posts are studiously ignored by the legions of "mongs" until they feel sufficiently slighted to intervene, repeating that rather unconvincing mantra that they never listen to him because he is so "horrid" – whence his hit-rate soars.

The most interesting development here, though, is readers volunteering new and unusual insults, enabling Pete to keep up the volume without having to repeat himself too often.

Both of us certainly gets to a point when there seems little value in engaging with elements of the self-appointed commentariat, such as Sheila Lawlor, Director at Politeia, "where she directs the economic, education, constitutional, and social policy programmes".

This woman is part of what Pete calls the Brexit blob (pictured), seen recently writing for Conservative Home. There, she asserts that not only could UK-EU trade continue painlessly and with profit to both sides (either under current international trade law without an EU customs union, other arrangements, or association through the EEA) but a "no deal" could also bring the economy a much needed Brexit boost as it reboots after March 2019.

Already, she chirps, "the rules are in place for friction free UK trade with the EU", adding that, "the WTO prohibits members from any discriminatory barriers or action against countries with regulatory convergence" and then that, "most of the world's trade (around 96 per cent) happens under the WTO umbrella with rules that require trade partners to offer most favoured nation (MFN) terms, oblige members to facilitate trade and customs arrangements, and simplify those for land borders".

That she should be writing this sort of tosh, nearly two years after the referendum, allows the inference that the woman is so stupid that it's a wonder she is able to dress herself unaided each morning. Given the sort of stuff I've been writing on the aviation industry and other industrial sectors, this also suggests an alarming degree of insularity – and even arrogance. Of the 100K-plus visitors to this site, Dr Lawlor is quite obviously not one of them.

The sad thing, though, as Booker tells us in his column this week (no paywall), the likes of Lawlor are not alone in their blind complacency that "frictionless" trade is a possibility after Brexit without any special efforts.

Booker has picked this up personally for it was at his behest that I accompanied him to see the "captains of industry" last week, now leading him to write under the headline "Businesses still haven't woken up to the calamity of Theresa May's decision to leave the single market".

If you want a reinforced dose of stupidity, you can also visit the comments on the Telegraph website where there seems to be an inexhaustible supply of "mongs" only too willing to parade their ignorance.

Setting the scene for the less gifted of his readers, Booker notes that there are fewer than two weeks before the European Council at which we were supposed to agree the terms of our EU withdrawal agreement. Yet, he says, while our politicians squabble around in circles without any real clue as to what they are talking about, we still face total deadlock on the Irish border, that original issue on which everything else was meant to depend.

There is some small comfort in the knowledge that "cannier businesses such as Jaguar Land Rover, major pharmaceutical companies and foreign-owned banks have woken up to the implications of Theresa May's decision to exclude ourselves from the regulatory system that allows them to trade in the single market.

Some of those picked up the information early from this blog, getting information that others have spent thousands of pounds in consultancy fees to acquire – later and not in as much detail. But, whatever the source of their information, they are quietly making their dispositions, relocating key parts of their operations to the continent, along with personnel and funding.

But, as Booker and I confirmed last week (adding to indications gained elsewhere), the vast majority of businesses that rely on trade with our largest export market still have no idea of what could soon be hitting them. Booker tells his readers that when we tried to explain the problems to the senior executives of one major company that will be seriously affected, we were airily told, "Oh, this could never happen".

The root of the problem, of course, goes back to the decision by Mrs May, January year last, to extract us from the Single Market. If only she had properly understood what she was letting us in for, Booker says, she could long since instead have applied to join sovereign Norway in the European Free Trade Association and thus remain in the wider European Economic Area.

On the other hand, sectors such as the aerospace industry worth £74 billion a year (EU-wide), including Airbus, may at last be waking up to the devastating consequences of our decision to leave the Single Market.

But, as Booker observes, when the aviation manufacturers' associations, representing 1,000 firms, recently sent an appeal to Michel Barnier, all they could ask for was a special deal to allow them to continue trading with the EU, on terms which Barnier has already made clear the rules could not possibly allow.

What makes all this so terrifying, says Booker, is that 95 percent of this was wholly avoidable. As he has said before, and says again: if only Mrs May had properly understood what she was letting us in for, she could long since instead have applied to join sovereign Norway in the European Free Trade Association and thus remain in the wider European Economic Area (EEA).

Despite those fools who assert that the Efta/EEA option means we haven't properly left the EU, we would be completely outside the political EU and three quarters of its laws; free to make our own trade deals with the rest of the world; and even to exercise selective control over immigration from the EU.

Above all, Booker reminds us, we would have been free to continue trading within the single market much as we do now, and this prospect of an economic catastrophe need never have been bearing down on us.

At least a handful of Labour MPs dimly understood this. But the rest of our politicians, like the chairman of the company we lunched with last week, have remained lost in the wishful thinking that such a disaster "could never happen". As we shall see, it can, and we will have brought it on ourselves.

And that is as far as we get with Booker. As am I, he is acutely aware that the Efta/EEA option is only part of the solution. It is necessary for us to continue trade relations with the EU after Brexit, but it is not sufficient.

EEA participation alone does not solve the regulatory issues in aviation safety, or in a multiplicity of other industries. We will need bolt-on agreements to deal with the other issues, not least VAT cooperation, before we can even start thinking of frictionless trade.

The trouble is that, when people such as Lawlor haven't even mastered the basics, there is not room for discussing the more advanced issues that we are addressing on this blog. The media narrative is permanently locked in at Key Stage One level, a grotesque groundhog day of its own, where the commentariat constantly churn over the same set of factoids, unable to progress to the next stage.

This is where it gets really worrying. The Brexit debate cannot be summed up in a few woolly clichés. The aviation story tells us how complex things really are. If the debate never gets past the soundbites, there is no chance of getting to grips with these complex issues.

Nevertheless, the current level of readership of this blog does give us hope that there is a growing number of people unsatisfied with the fare they are getting from the legacy media and the blob. That legacy media circulation (and web visitors) is declining, while ours increases, tells its own story.



Richard North 17/06/2018 link

Brexit: no room for doctrine

Saturday 16 June 2018  



Following the piece I published yesterday on aviation safety regulation and Brexit, I spent the best part of the day reading up on various aspects of that regulation, with the general view of better understanding the nature of the beast and how it would be affected by our leaving the European Union.

In so doing, I found myself confronted with such vital issues as the difference between Commission Regulation (EU) No 1321/2014 and Commission Regulation (EC) No 2042/2003 as amended (the answer to which can be found here and such arcane questions as to whether I can import a rebuilt engine and associated components from the US.

The answer to that apparently simple question brought into rather fine focus the fact that I was out of my depth. How else could one describe one's own status when confronted with this:
Under the terms of the EU/US bilateral agreement (BASA), you can import an engine with a "rebuilt" status in block 11, only when it has been released by the original engine manufacturer on a Form 8130-3 using the blocks 13a. to 13e. (left side).
And if that wasn't enough, the response (provided by EASA) helpfully continued:
Please note that Form 8130-3 with "rebuilt" status are not acceptable for components other than engine (regardless whether it has been released on left or right side) therefore the components accompanying the rebuilt engine should either be released REPAIRED/OVERHAULED… (right side) or NEW (left side).
The EU/US bilateral agreement (BASA), by the way, is that document to which I have referred earlier in its 135-page iteration, but is available here as a 140-page consolidated version, taking into account revisions up to 3 May 2018.

This has grown from its original length of 42 pages agreed in 2011 and brought into force by Council Decision 2011/719/EU of 7 March 2011. This, incidentally, is one of only three of the EU's bilateral agreements. The others are with Brazil and Canada. An agreement with China has been concluded but not signed, and negotiations with Japan are under way.

It is these agreements which provide the template to which the UK might look for its own relationship with the EU post-Brexit, in the field of aviation safety. And here, it is important to note that they cover only the EU, not the whole of the EEA. In each case, the parties to the "bilaterals" have signed separate "working arrangements" with the four Efta States, such as this one between Canada and Iceland.

Going into the detail of the EU/US bilateral, one learns from EASA that this has spawned such things as "release documents" signed by the European Community, referred in AMC M.A.501(a)5(a)/ AMC 145.A.42(a)1a). It is such statements as these which further convince me that I am totally out of my depth.

As an aside, it is experiences such as these which also reinforce my disdain for that happy band of creatures who so easily claim to be "experts" in matters of EU law. Material produced by EASA (including the above) is part of the EU's acquis and that relating to the regulatory system would require a lifetime of study to deliver a semblance of expertise.

Such as I have learned, however – reinforced by my study from the last day – tells me we are dealing with something hideously complicated – and more so as competences are shared between the European Commission and its executive agency, the European Aviation Safety Agency (EASA), and the Member States and their own aviation safety agencies, such as the UK's CAA.

Certainly, the regulation of aviation safety is not the place for the fainthearted or the amateur, and thus the impact of Brexit was always going to be complicated. Perhaps this is the most complex of all the regulatory areas which will need to be tackled in order fully to detach us from the EU.

Unsurprisingly, Mrs May has expressed a preference for the status quo, with the UK retaining its membership of EASA. But that cannot happen. The EU's agencies are servants of the Union, established to service the Member States under the aegis of the European Commission. Concessions are made to Efta States, but even they with a form of associate membership of the EU, have no voting rights.

But what can be readily established is that, outside Efta and the EEA, our target must be a bilateral agreement with the EU. These are highly formal and comprehensive arrangements which not only set up the areas of cooperation but also establish joint bodies which enable the agreements to be monitored, interpreted and developed.

In the case of the United States, there is the "Bilateral Oversight Board" (no one seems to want to call it "Bob"); Canada has a less formal Joint Committee and Brazil has a Joint Committee of the Parties as well as Joint Sectorial Committees on Certification and Maintenance.

The big problem we have at the moment is the same problem we have in agreeing a post-Brexit trade agreement with the EU. The aviation safety "bilaterals" are full-blown treaties so we cannot even begin to negotiate with the EU until after 29 March 2019, when we formally become a third country. Equally, we cannot enter into the less formal "working arrangement" type of relationship with EASA until we are a third country.

This is where the ADS/GAMA letter to which I referred yesterday gets really interesting. These aviation bodies have become aware of the effects of Brexit and, in particular, the peril of withdrawing without a transition period. Ideally, they argue, the difficulties could be addressed by talks directly between EASA and the CAA, concluding a "separate aviation deal agreed prior to March 2019".

However, the very solution that the industry seeks cannot be achieved which means that, if there is a "no deal" Brexit, catastrophic disruption to the aviation industry is inevitable. In legal terms, there is simply no way round this.

What this effectively means is that – as I stated yesterday – "no deal" is not a serious option. The effect on the aviation sector alone is enough to rule it out. Factor in all the other problems, in other sectors, and no responsible government could allow it – and nor could MPs, individually or collectively, permit it.

This makes a complete nonsense of the endless dramas we have been seeing in Parliament. Given the prime minister's determination to leave the Single Market, in order to resolve the Irish border issue and move to a transition period, we have no option but to accept the text of the EU's proposed withdrawal agreement, including the "backstop". The idea that Parliament has the option of a "meaningful vote" is absurd. It can accept what government agrees, or drive the nation into chaos.

And that brings us back to aviation safety. No MP is in a position to understand the implications of their votes unless they also understand the outcome of a "no deal" on aviation and other industry sectors. This particularly goes to the "Ultras" who are actively campaigning for a no deal Brexit.

These people need to know that we cannot walk away from the EU without putting in place the structures and agreements which will enable vital functions to continue. We have to negotiate deals because the alternatives are unthinkable.

If our MPs get it wrong, the jobs of hundreds of thousands will be lost, many thousands of businesses will be destroyed and the economy will be irrevocably damaged. There is no room here for doctrine, or riding political hobby-horses. The fate of the nation is at stake.



Richard North 16/06/2018 link

Brexit: a shockwave of tsunami proportions

Friday 15 June 2018  



Following on from my discussions on Wednesday with that dismal example of British management, it was already evident that the whole of industry was not asleep to the potential adverse consequences of Brexit. The pharmaceutical industry (alongside banking) was ahead of the game, and some sections of the chemical industry are aware that trouble lies ahead.

Slow off the mark (publicly, at least) was aerospace manufacturing, which I flagged up as a high-risk element in November last year and again in December, with a further piece in April.

The attention paid by the legacy media has been minimal, although last April the Telegraph and a few others took brief notice as Rolls-Royce engines reported that it was to transfer the "signing off" of British-made airliner engines to Europe. This hardly got the measure of the story but, at least, the paper revisited the general story a few days ago (11 June), with a more realistic headline (online), declaring: "Warning aircraft could be grounded as aerospace industry calls for it to be separated from Brexit talks".

It says a lot for the febrile mood of the media, obsessed as it is with the empty posturing of parliament, that this was given a low-key slot in the business section and (as far as I can see) largely evaded the coprophagic tendencies of the rest of the legacy media.

Yet, the essence of the Telegraph story was that two aviation bodies, ADS and the General Aviation Manufacturers Association (GAMA), had joined together to write a letter directly to Michel Barnier, asking him to intervene directly to mitigate the potential damage which Brexit could cause.

It says something that these bodies are writing to Barnier rather than his UK counterpart, or even a departmental minister, but then the scenarios which they are addressing are not only potentially devastating, but could have consequences for the aerospace industry throughout the entire EU.

The issues addressed centre on the points I have raised in my posts – that, in the absence of a Withdrawal Agreement, approvals of aircraft and components made or maintained (or designed) in the UK will no longer be valid.

As a result, "any aircraft containing engines, parts and spares manufactured in the UK will not be able to fly under EASA's jurisdiction", and UK businesses "would not be able to deliver products such as engines and propellers to EU manufacturers, thereby stopping aircraft production in the EU".

One has to step back to take in the full implications of what is being said here, not only will thousands of aircraft be grounded but also no further aircraft in the entire EU area can be built or maintained using parts manufactured in the UK, closing down an industry turning over in excess of £70 billion a year.

Doubtless, the extravagant nature of the threat is the very thing which is preventing it being taken more seriously. The argument will be raised (as it was on Wednesday by the fine example of British management that I met) that the situation is so serious that neither the UK governments nor the EU could allow it to transpire.

In this, there has to be an element of truth. As we have seen with vehicle type approval legislation, picked up by one of our eagle-eyed commenters, the EU is preparing to make adjustments which will enable European manufacturers to keep operating.

This has been noted, incidentally, by the Financial Times with reference to this blog and its "veteran Eurosceptic author who rarely misses such things (or the chance to be grumpy about journalists)". The ability to keep on top of things, though, is why I value so much the interactive comments, where readers volunteer information that is then fed back into the blog.

However, should the Commission deem it necessary to make adjustments for the aviation sector (which undoubtedly it will), then it stands to reason that it will attend to the needs of EU enterprises first. The 207 CAA-certified British firms will be at the end of the queue, and what is settled will not necessarily be to their advantage.

Actually, dealing with the issues is complex. The ADS/GAMA letter talks of the need conclude bilateral aviation safety agreements, on the lines of the 136-page US-EU Agreement, and this sort of agreement does not come easily or quickly. Furthermore, the UK cannot negotiate with the EU until it is a third country, which means that talks will have to be pursued during any transitional period.

This is one of the reasons why seasoned commentators don't think the EU will cut the UK adrift yet – not in the coming June or even on Brexit day on 29 March next year – no matter how provocative the behaviour of the UK government. The EU and Member State governments are simply not ready: they need more time to get their ducks lined up.

However, the issues raised by aerospace manufacturers are by no means the full extent of the problems faced by the aviation industry in its broadest manifestations. If the Telegraph hacks had done the journalistically impossible, and read the relevant Notice to Stakeholders (or the EUReferendum.com blogposts), they might have got a fuller picture.

They would have found that the EASA jurisdiction, and the writ of EU law, does not just cover aircraft and their parts. It extends to such things as operating certificates for aerodromes, air traffic management and air navigation system providers.

In the event of the UK government failing to settle a transitional agreement, on the stroke of midnight (our time) on 29 March 2019, no EU-registered aircraft will be able to fly into UK airspace (as this would involve relying on uncertified air traffic management systems and navigation beacons). And even if they could, they would not be able to land at any UK airport. Heathrow and Gatwick will be closed to them for the duration.

I wrote about air traffic management back in February last year, but that issue has been hardly rehearsed in public. And again, it could be argued that the EU could never allow approvals of ATM services to lapse, as it would affect air services throughout Europe, as well as trans-Atlantic, trans-polar and other services.

That aside, there are numerous other functions, such as licences and medical certificates for air traffic controllers, certificates for air traffic controller training organisations, certificates for aero medical centres and aero medical examiners responsible for air traffic controllers, certificates for persons responsible for providing practical training or assessing the skills of air traffic controllers.

There are also pilot licences, pilot medical certificates, certificates for pilot training organisations, certificates for aero-medical centres, certificates for flight simulation training devices, certificates for persons responsible for providing flight training, flight simulation training or assessing pilots' skill, and certificates for aero medical examiners, and also certificates for air operators and attestations for the cabin crew.

Brexit is akin to dropping a huge rock into the aviation industry, causing a shockwave of tsunami proportions, the potential consequences of which have not yet come to be appreciated. And, because our international aviation agreements are wrapped up with the EU, it will have global impact.

Getting the attention though, at the moment, is the fate of Rolls-Royce and its announcement of 3,000 job losses. By the time Brexit is over, we could be looking at losses in the hundreds of thousands, and the wreckage of a once-vibrant industry.

If this alone makes a "no deal" scenario an unlikely proposition – no matter what the loons say - the way Mrs May is handling the negotiations means that the "accidental Brexit" cannot be ruled out altogether. It seems we're more reliant on the good sense of EU players than we are our own government to avoid a disaster. But, if that is the case, there will be a price to pay and it will not be to our liking.



Richard North 15/06/2018 link

Brexit: open thread

Thursday 14 June 2018  



I was out most of yesterday at the coal face, discussing with the chairman, chief executive and directors of a major, public company, the impact of Brexit on their operations – some of which were not entirely unrelated to the picture shown above.

Many points came across, one of which was the profound ignorance of any practical detail of impacts. The company has received nothing official from government, from trade associations or customers, with no warnings of any nature to prepare for Brexit day. In their absence, there was no great concern that there were any serious issues which might affect the company.

There was no awareness of the availability of EU material – such as the Notices to Stakeholders. On being advised of their existence, the view was taken that these simply set out a negotiating position. They were not taken as indicative of state of the art.

With the chairman enthusiastically pro-Brexit, he offered the view that the company would ride any impacts. He firmly believed nothing serious was likely to happen – it was not in the interests of the EU to allow it; the UK government would make sure it didn't happen and, in any case, the Germans would not allow it as they wanted to trade with us.

None of those present believed the EU would (in their terms) erect any new barriers against UK goods – for the reasons specified above. Neither the chairman nor the directors had any concept of the Single Market being an entity where the barriers already existed and the UK was moving outside them.

No systematic (or any) study had been carried out within the company on potential adverse effects of Brexit. I was the first to have addressed the board on the issue. My warnings of potential problems were not believed.

I am still processing the information and, having got back late after many hours driving, I'm not really in a position to write a coherent post. Nevertheless, despite being out of touch most of the day, I am aware that the Commons rejected the Lords' amendment on the EEA.

This hardly came as a surprise. There is no great enthusiasm within the ranks of the Tories and, after Corbyn decided that Labour should abstain, there was no momentum to see the measure carried. One can quite sympathise with the frustration of the Labour MPs who defied their whip and voted for the amendment.

What is also frustrating is the loathsome slackness in the way the media report the issue – after all this time. This is the best the BBC can do:
In return for market access, the latter are obliged to make a financial contribution and accept the majority of EU laws. The free movement of people also applies in the zone as it does in the EU.
The piece also allows "critics" to say it (EEA membership) would require the UK to adhere to EU rules without having a say in them - and would not be in keeping with the spirit of the 2016 referendum result.

There is no way of dealing with this low-grade reportage. This is a state broadcaster that has given up even trying for accuracy and objectivity, and the rest of the legacy media is no better. And, if the media can't even treat the Efta/EEA option seriously, it's hardly surprising that our lacklustre politicians find it so difficult to get a handle on it.

Nevertheless, from me, this will have to suffice for the moment. I'll leave this post as an open thread and add to it through the day.



Richard North 14/06/2018 link

Brexit: who cares wins?

Wednesday 13 June 2018  



If chaos and confusion attending the end of the debate on the Lords' Brexit amendments, with the word "shambolic" freely being used, one has to observe that this probably signifies nothing more than a House of Commons that has disappeared up its own fundamental and is now destined for the irrelevance that it has so assiduously earned.

In all the torrent of verbiage that been devoted to this extraordinary day that was yesterday, not a single commenter seems to have observed that the government is being asked to concede something that it is not within its gift to offer – namely a role for Parliament in the talks with Brussels, should Mrs May's designated team find it impossible to get agreement on the UK proposals.

That the prime minister, in the event of the UK failing to reach an agreement – which looks ever-more likely – should then be required to consult with (or take instructions from) Westminster as to what line she should then take, is a counsel of absurdity so manifestly improbable that even the scriptwriters of a political satire might have difficulty raising a laugh with it.

The underlying point here, of course, is that come the October European Council, the UK and EU negotiators will be expected to have agreed the text of a formal Withdrawal Agreement (including a protocol on the much-debated Irish border question), which will then formally be presented to the European Council signifying the end of the negotiations.

Theoretically, at this point, the text must then be approved by the European Council, by the European Parliament and then by the UK Government – the latter requiring the assent of both Houses of Parliament.

However, it is not only the Withdrawal Agreement that must be finalised. The parties must also conclude discussions on the framework for a future relationship, taking in trade, security and much else – with the production of a political declaration, the text of which has to be submitted for agreement by all parties.

Given that there has been no movement since December last on the Irish border question (with other issues also unresolved), and the UK government has yet to publish its proposals for a future partnership, its is quite conceivable – almost to the point of certainty – that the October deadline will not be met.

Aside from the Withdrawal Agreement, the certainly of failure is more or less assured from the cretinous statements published by the Department for Exiting the EU in an animated tweet, setting out its preferred options for trade (pictured).

The fact that we are now seeing Trumpesque "negotiation by tweet" is bad enough, but when we see the government declaring that it "wants seamless and frictionless trade of goods after we exit the EU", then proposing "a comprehensive system of mutual recognition", it is pretty obvious that, even if the lights are on, there is nobody at home.

Taken straight from the Legatum playbook, it will come as absolutely no surprise to learn that there is precisely zero chance of the EU accepting a trading relationship with a third country based on the mutual recognition of standards. This simply isn't going to happen.

Facing that near-certainty of failure to agree in October, one can see a possibility of the talks going into overdrive, and then being extended into the autumn to allow parties more time to resolve outstanding issues. In that the six months allowed for "ratification" is fairly generous, one could see the talks running into Christmas and even the early New Year.

In such situations, hope springs eternal. Talks are never written off until they are over – and the deadline even in January 2019 will not have expired. Even at this late stage, therefore, it will not be possible to state with conviction that the talks have failed and that there is "no deal". That status can only exist after midnight (our time) on 29 March 2019.

Between now and then, it is hard to see what useful (or any) contribution Parliament could make to the negotiations. It certainly could not veto a "no deal": that is completely outside its powers. In deciding whether there will or will not be a deal, the stance of the European Council and the European Parliament will be final. If they decide there will be no deal, there will be no deal, regardless of anything the UK government or Westminster says.

On the other hand, the negotiations – such as they are – are between the European Commission, represented by Michel Barnier as the chief negotiator, working to a mandate decided and set out in writing by the European Council, and the UK government. The Westminster parliament has no locus and cannot intervene directly in the talks. It can only work through the UK government.

With that, it is hard to see how Westminster – even if it was able to speak with a single voice – could credibly instruct the government on a "line to take", much less monitor delivery. It is even harder to see how, at a late stage in the talks, the UK government (independently or at the behest of parliament) could introduce a new or different line of approach. Any new direction would require the Commission to go back to the Council for a revised mandate and an extension of time (the latter also needing the assent of the UK government).

A new settlement then agreed (if, indeed it was agreed) would then have to be put to the Council and the European Parliament for ratification and, of course, the UK government and the Westminster Parliament - taking far more time than is available.

Inevitably, the chances of such a scenario materialising would seem to be rather slender. The most likely outcome is that M. Barnier will seek to continue talks with the UK government on the basis of his current mandate. He is unlikely to entertain any radical departures which would require him to seek a new mandate – with all the delays and complications that that would entail.

Whatever the ambitions of MPs (individually or collectively), therefore - and the febrile "deals" cooked up over the last days and hours with Mrs May - the die is already cast.

As currently constituted, there is no useful role that the Westminster parliament can play in these talks, other than to approve any settlement (should one be agreed). If it refuses approval, then the outcome will be "no deal". That makes the choice what it has always been: take it or leave it. The idea of a "meaningful" vote is delusional.

Bearing in mind that the outcome will most likely be a failure of the parties to agree, this actually renders parliament obsolete – an idle spectator with no more power to influence events than the rest of us. MPs, constrained by existing ties, will be able to make a lot of noise, but will not be able to do much else.

The only way this sorry affair can be brought to any different resolution is if parliament stopped playing procedural games and decided to exercise real power. It needs to bring the government to book by means of a vote of confidence – forcing a new leader to form a new government.

It is only this, presented to Brussels, which might have sufficient impact to change the direction of the talks, allowing the introduction of new ideas such as the adoption of the Efta/EEA option. But this would also require a recognition that more time is needed, with a formal application for an extension of the Article 50 period.

Yet nothing of the events of the last few days – or weeks – have brought us any closer to this state. The frenetic manoeuvring in the Commons to the accompaniment of the over-excited posturings of media commentators has achieved precisely nothing. And with nothing changed, the shambles of yesterday is the shambles of today.

The essential problem here – as we have observed so many times – is that both the legacy media and the politicians have lost the plot. Unable to come to terms that we are playing out a drama on an international stage, where our fate depends as much on foreign actors as it does our own, the politico-media nexus has retreated into its comfort zone and cultivated an infantile demeanour to armour itself against the real world.

Any solution lies in its own hands, but such is the degree of infantilisation that there can be no confidence in the this being understood and actioned. We seem doomed to watch the play being acted out, children trapped in personas they don't understand, unable to break free and play sensible roles.

Thus, as the media hyperventilates and the commentariat so comprehensively misses the point, all we can do is watch and record, with growing dismay. For, whatever the prizes that the gabbling children of our capital so value, the game they are playing is not worth a light. As they squabble to dominate the dunghill of Westminster, all we can say is: who cares wins? The real game is elsewhere.



Richard North 13/06/2018 link

Brexit: the bill comes later

Tuesday 12 June 2018  



I think it's fair to claim that, over the years, we've been at the forefront on this blog, struggling to define the consequences of what has become termed a "hard" Brexit. And pointing out the pitfalls is done for no other reason than to better enable us to avoid them – in the same way that a passenger in a car will point out the potholes to a driver.

From that point of view, we are not seeking out obstacles for the sake of it. If there are ways of mitigating the effects of a "hard" Brexit, these should be explored. It is not in the interest of any sane person to magnify its effects or to ignore measures that could reduce its impact.

To that effect, just over a week ago – in the wake of the Sunday Times piece that forecast Armageddon in the wake of a "hard" Brexit – I looked at some of the ways the potential logjam at the ports could be reduced, or even avoided altogether.

A particular problem for the UK is in dealing with food consignments from EU (and Efta/EEA) Member States. Currently covered by Single Market provisions, they enter the country without any border checks. But, once we leave the EU, the UK will be required under WTO rules to impose checks on those goods to match those applied to other "third countries".

In the absence of adequate inspection facilities – and in any event – the time taken to subject consignments to the full range of checks would undoubtedly lead to significant delays in the ports, sufficient to bring the whole system to a grinding halt, creating the spectre of rotting food at the docks, empty shelves in the supermarkets and people going hungry.

However, in my piece from just over a week ago, I discounted the idea that the UK would purposefully block the import of foods from the continent. For a period at least, I suggested, the UK would most likely waive those requirements in order to keep food supplies flowing.

On the ball as always, we now have the legacy media trailing in our wake, the intervention in this case triggered by Rees-Mogg's comments yesterday when he argued that there would be "no need for customs checks at Dover on EU imports in the event of a no-deal Brexit". His thesis, therefore, is that any delays for exports to Europe would be France's responsibility.

Mogg hasn't really got the measure of this, so it's more a matter of him being right for the wrong reasons. "There will be no need to have any delays on goods coming in from the continent in the event we leave with no deal", he says, "because goods that are safe on 29 March will be safe on 30 March and that means inbound traffic ought not to suffer any delays because it will be our choice".

The facts of the matter, however, are that the UK will be obliged under WTO "non-discrimination" rules to afford the same treatment to EU goods as it current does to goods from third countries. But, under Article IX:3 of the Marrakesh Agreement establishing the WTO, it is entitled to seek a waiver, a provision which allows it to set aside any obligation imposed under the WTO/GATT agreements.

I've written about this back in 2016, referring to a book on the subject by Isabel Feichtner called The Law and Politics of WTO Waivers: Stability and Flexibility in Public International Law. This positions the "waiver" rather neatly as a "safety valve" which allows in "exceptional circumstances" provisions of the agreements to be suspended.

In procedural terms, an application for a waiver must be processed in 90 days – ostensibly by the Conference of Ministers with the support of at least three fourths of the Members. In practice, decisions are usually made by consensus by the General Council, and they are rarely rejected. From 1995 to 2010, over 400 applications were approved.

Given that there would be no difficulty in describing the circumstances of Brexit as "exceptional", the UK should not find it hard to get approval and, even if it is caught out by the 90-day timing, in practice applicants can apply the terms of waivers unilaterally, pending approval. By the time any dispute procedure gets under way, the full waiver will be in place.

Ponderously, the chief executive of the British Ports Association, Richard Ballantyne, finds it "difficult to see a situation where food and other products could be legally imported from another customs territory without being subject to some kind of border check".

Nevertheless, his Association understands that "government may choose to waive these in event of no deal", but concedes: "we are not sure of the basis of that decision". If he read this blog, he might be better informed but, as it stands, he presumes that this "would be an emergency option". Rightly, he adds that "it is certainly not a comfortable fallback position in the medium or long term", but then we are only talking about measures to get us over a short-term crisis.

The award for pomposity, however, goes to Steve Peers, a University of Essex academic and self-described "expert" in all things to do with Brexit. This "legal expert", grandly questions Rees-Mogg's claims, declaring that it is "hard to see" how unilaterally waiving checks "would be compatible with WTO law".

"The basic idea", Peers opines, "that we will check non-EU goods but not check EU if there is no trade deal done with the EU or a customs union agreement will violate the basic rules of the WTO, because that would be deemed discriminatory".

For sure, on the face of it, unilateral action would be contrary to the provisions of the WTO, etc., agreements, but even then this is public international law. It doesn't behave the same way as statutory law. For there to be an actionable claim, aggrieved nations have to demonstrate what is known as "nullification or impairment" – i.e., real loss. There are no "offences" as such and mere breach of a provision is not enough to justify dispute proceedings.

In addition to the waiver process, though, there are also the security exceptions, where any contracting party may take "any action which it considers necessary for the protection of its essential security interests", arising iter alia from an "emergency in international relations".

The "emergency in international relations" is so widely drawn that one could easily imagine that a "no deal" scenario in Brexit would fall under this exemption. And, where applicable, measures may be taken unilaterally which are not even amenable to the examination by the dispute panel.

Nevertheless, if this potentially keeps incoming goods flowing, there is still the likelihood of outgoing ferries (and Eurostar trains) being unable to offload at their destinations, as vehicles awaiting clearance back-up at the ports, causing congestion.

An answer to that, as I have already pointed out, is to manage the loading process so that vehicles are not allowed onto their transports (trains or ferries) until an equivalent number have been cleared at the other end and released from the ports.

This could mean sending transports to the continent either empty, or laden only with empty vehicles returning after delivering goods to the UK. This would keep the goods flowing, although it would have a massive effect on our exports, substantially increasing our trade deficit.

Nor does this rule out more proactive measures. It will be known that certain loads presented to EU Member States border authorities simply will not get cleared. Until the UK is re-listed for the relevant products, no live animals or foods or other products of animal origin, will be admitted into the EU Member States territories.

With these and other products, carriers can be subject to screening by UK authorities and only allowed movement permits if it is believed that goods will be accepted by EU Member States. Without those permits, vehicles will not be permitted to travel to the ports. At the ports themselves, port owners or managers may prohibit entry to vehicles without movement permits.

Given a certain amount of planning and anticipation, therefore, there is no absolute reason why we should see a re-run of Operation Stack on or after Brexit day. The reality might be completely contrary to expectations, with the ports themselves and their approach roads uncannily clear as the trucks are forced to stay at home.

The damage will not necessarily be measurable in terms of visible congestion but in lost trade and reduced economic activity. One can expect the value of the pound to fall as a result, accompanied by a surge in inflation and then a build-up of unemployment.

Deprived of their headlines and pictures of congested motorways, the media will have to rely on archive material (pictured) and might be easily fooled into believing things are under control. But the bill will come – and be higher than anyone could begin to expect.



Richard North 12/06/2018 link
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