White Paper Whitewash

Dramatic events after the Chequers cabinet meeting. A government in chaos with 8 months before Brexit. What is going on?

The White Paper on the future UK-EU relationship has united Remainers and Leavers against it. There’s no point reviewing a work that’s already scrap.

However Britain and the EU only need to agree a non-binding declaration on this. The real battle is over the 80% ready Withdrawal Agreement (WA).

The BBC’s new Europe Editor, Katya Adler, has proved to be objective, fair and switched on over some key issues.

Adler predicts that much negotiation work will be needed after Brexit! We cannot agree a new free trade deal until we’ve left and become “a third country” (e.g.). The Lisbon Treaty has produced an uneven playing field that means that the trading relationship will have to be a continuation of the EEA Agreement (“Single Market”) or falling back onto WTO-only rules.

A trade minister confirmed intentions to stay in the EEA until 2021. However the EU (Withdrawal) Act (EUWA) will repeal the legislation for this on 29 Mar unless Brexit is stopped or a new EU Withdrawal and Implementation Act (EUWAIA) is agreed.in Parliament, reflecting whatever WA deal is made.

If Britain and the EU cannot both ratify a deal, the only alternative to WTO-rules only is for both sides to request a dispensation (WTO Waiver) to allow current trading terms to continue.

This would help keep trade flowing on Single Market lines, but require Britain and the EU then having a working agreement, including a clear plan for a Free Trade Agreement (FTA)

Monmouth MP David TC Davies rues that there seems no Parliamentary majority for any one kind of Brexit.

Labour’s “Six Tests” would mean opposing any deal that wasn’t a close match to EU membership. Jeremy Corbyn seeks to exploit any defeat on the government to bring about a General Election. Deputy leader Tom Watson won’t rule out a second referendum. The New Statesman adds that a petition needed only 1400 more names for Labour to debate making this party policy!

At the same time we must ask if a Withdrawal Agreement  deal was agreed to the EU’s liking, would pro-EU Labour really scupper it? With UKIP reviving, would Labour seek to fight an election as the party that ignored many of its voters and stopped Brexit (even temporarily)?

European leaders are having jitters. Austria’s Sebastian Kurz, leading the EU until December, is hot on avoiding hard Brexit. Adler notes that many in the EU don’t want Brexit. (This could in theory lead to delaying Brexit for continuing negotiations, which, if repeated indefinitely, would block it.)

However Adler senses an EU feeling “Brexit must be done in time”, but with a perception that our government tends to make a fuss then just cave in. EU negotiator Michel Barnier has been pushing Britain to remain in the Single Market and Customs Union.

Whereas Barnier’s assistant Stefaan de Rynck hinted that Britain would duly get a FTA, Berlin Foreign Policy journalist Dave Keating warned that “Transition is likely to be permanent”.

Even if a British government preferred to end “vassal status” in 2021, a FTA could take a good 5 or 6 years to agree, according to former WTO head Pascal Lamy. (This could be reduced if parts of the existing EEA Agreement were carried forward.)

The EU would also have to be willing to offer us a more flexible trading deal and could simply say “Take it or leave it – and lose trading rights”.

However, time can be a healer, and with the ghosts of Brexit exorcised, the EU might realise there’s an opportunity to deepen trade with its largest trading partner? The EU is supposed to back a WTO holy grail of multi-lateral free trade – a single global FTA covering substantially all goods and services. It won’t happen overnight, but a Deep and Comprehensive Free Trade Agreement (DCFTA) with Britain would provide a ready model towards freeing up trade for other partners?

Another option is an Association Agreement (AA). Guy Verhofstadt, a Belgian liberal MEP, has proposed one for Britain. The Lisbon Treaty already provides for an AA for countries with a “special relationship, with “the same treatment” (i.e. privileges) on trade? However, there is more flexibility – a proposed new AA for Chile wouldn’t involve payments to the EU, free movement or being under the ECJ, yet could cover most goods and services.

This article first appeared in Brian Mooney’s Resistance newsletter and is reproduced with permission

Brexit White Paper July 2018 fails to deliver frictionless trade

Unworkable, risky wishful thinking on frictionless Single Market trade

The Government’s recent White Paper entitled The Future Relationship between the United Kingdom and the European Union is unworkable, risky wishful thinking as far as frictionless trade with the Single Market (and wider European Economic Area, EEA) is concerned. The White Paper also fails to take cognisance of how the European Union (EU) and Single Market functions, and its direction of travel, which makes it unlikely that the EU can accept it. If the EU did accept these insubstantial, ‘cherry picking’ proposals, businesses and regulatory authorities, etc. would struggle to make them work.

This short examination does not consider Facilitated Customs Arrangements etc. It is difficult to work out exactly what is being proposed and how it will operate. However, it appears to be unproven and to increase the complexity and costs of importing and exporting goods and services.

Vague unreality without any practical solutions

A major shortcoming of the White Paper is the lack of detail.  It is unclear what the various terms used and their proposals actually mean in practice, what they cover and what they omit. There is also no recognition of any problems or limiting issues that need to be addressed, and no consideration of timescales or resources needed to turn the theory into reality.  Important terms not explained include: goods, services, Common Rulebook, Free Trade Area for goods, approvals and authorisations, ‘sit alongside’, ‘open and fair’ and ‘participation in EU agencies’.  These are critical to understanding and avoiding impracticalities, ambiguities, arguments (with the EU) and confusion.

Whilst goods and services are to be treated differently, there is no analysis about how they can be separated, which could often be very impractical.  The only example of a product, vaguely and briefly considered, is mutual recognition of type approval of motor vehicles, which is itself unlikely to be acceptable to the EU.

The EU’s legal basis for Frictionless Trade in Goods is ignored

The White Paper’s aspiration is for frictionless access for goods – a free trade area part in and part outside the Single Market. There would then be one set of approvals and authorisations for goods to be sold in both markets (UK and Single Market). How this will work is unclear given that EU Directives (the EU Acquis) relating to the Single Market governs how it functions.

The EU’s direction of travel (for the Single Market), is towards harmonised standards, regulations, and enforcement or surveillance through a top-down centralised legalistic and bureaucratic framework. This gives the European Commission and agencies ultimate control inside the Single Market.  This is the basis for frictionless trade. The European Free Trade Association (EFTA) incorporates relevant EU Directives into their own body of EFTA/EEA law in order for them to participate in the wider EEA.

Generally there are no deviations from the EU Directives except those permitted within the existing legal regulatory framework.  Any change must be incorporated into EU law first.  Countries outside the Single Market (and wider EEA) are ‘third’ countries effectively outside EU control or surveillance necessitating appropriate measures regarding imports.  The White Paper effectively ignores this and assumes the EU will agree to the changes and the UK exceptionalism being proposed.

The EU’s Directives for Products are ignored

The White Paper does not mention any actual EU/EEA legislation and how it will be affected, nor does it discuss practicalities. There is also no acknowledgement of the EU’s position on trade in goods with ‘third’ countries.  The EU’s legally mandated arrangements to control diseases and parasites etc. in imported livestock, products, plants, packaging etc. from ‘third’ countries are largely glossed over.

Note:    EU’s approach (to products) is outlined in principle in COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Enhancing the Implementation of the New Approach Directives , in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach and encapsulated in EU law in REGULATION (EC) No 765/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93. The EU has also recently spelt out its position, which is consistent with their New and Global Approach Directives, in Notice to stakeholders withdrawal of the United Kingdom and EU rules in the field of industrial products.   The adverse effect of Mrs May’s Brexit on a frequently essential part of this product jigsaw (the work of Notified Bodies for mandatory conformity assessment of products) is explained here.

According to EU law, products of animal origin (meat and meat products) imported into the EU must be inspected (sanitary checks) at Border Inspection Posts (BIPs). For products of plant origin (for plants and plant-derived foods) phytosanitary checks are required at Community Entry Points (CEPs, Designated Points of Entry, DPE).

The White Paper adds a new level of complexity to the Single Market and EEA

The White Paper’s advocacy of regulatory alignment and mutual recognition adds further complexity.  It would inevitably require considerable amendment to existing EU Directives covering a wide range of products and associated production, regulatory and conformity assessment and market surveillance. This is far from straightforward or quick given that requirements are effectively intertwined; change one here and there can be a knock-on effect elsewhere. Then there is the creation of new precedents that produce anomalies elsewhere and situations that can be exploited by others to gain an unfair or unreasonable advantage.

Also, more errors and anomalies are likely to occur when time is short to develop revised legislation, standards, conformity assessments, accreditations and market surveillance processes etc. Obviously it is far from certain that the EU will agree to this in any instances.  If it did, this would impose new uncertainties and risks where before matters were fairly settled and predictable.

No Go Chaos for Nobos and their Conformity Assessments of Products

Notified Bodies need accreditation for carrying out mandatory independent conformity assessment on a wide range of products to be placed on the market in the EEA. They need separate accreditation (Designated Body, Debo) when carrying out assessments relating to national specific or special cases covered by EU/EEA legislation.  The White Paper proposes a Common Rulebook (harmonisation with EU rules) applying to goods to be exported to the Single Market but not to services.  Clearly the work of Nobos and Debos are services falling outside any compliance with the EU Rulebook whatever that vague term is supposed to mean in this context; for example, EU Directives with or with European specifications, mandatory conformity assessment, market surveillance etc.

Under the White Paper’s proposals, a new product could be assessed by a Debo and then exported to the EEA where the Debo’s accreditation and product conformity assessment is currently not recognised. Obtaining this recognition raises a host of practical problems, such as who gives the Debo accreditation, how is the Debo assessed, who keeps the register of accredited Debos and test houses, and what should the Debo now include in its product conformity assessment and certification?  Where an existing product undergoes a material change requiring further or updated assessment, more difficulties will inevitably result in determining whether this is Debo or Nobo work or a combination and who does what.  This complexity and vagueness needs to be resolved or a wide range of UK goods would become non-compliant and could not be exported to the EEA.

The Practical Alternative

Mrs May’s Government is proposing an unworkable Brexit in name only. However, instead it could have opted for a workable real Brexit by remaining temporarily in the Single Market (or wider European Economic Area, EEA) under much more favourable and flexible conditions by re-joining the European Free Trade Association (EFTA). (Further information see The EFTA/EEA Solution to the Current Brexit Impasse, Brexit Reset, Eureferendum.com, various posts on Campaign for an Independent Britain and affiliates )

The Devil is in the Missing Detail

So far there is little indication that the UK’s negotiators actually understand much, if anything, about the minutiae of the EU Directives and how the EU/EEA functions.  Even if the EU agreed to this White Paper (and this is a very  big ‘If’), the resulting outcome is most likely to be more, largely avoidable confusion all round carrying on for years among customers, suppliers, regulators, conformity assessors (e.g. Notified Bodies) and organisations involved in market surveillance.  The frequent questions would be “Where do we find the requirements?”, “Must we comply with this requirement?”, “What does this requirement actually mean?”, and “How much is this going to cost us?”

In short, the whole document is seriously deficient and likely to be rejected by the EU.

The EU is right – our government is wrong!

Shock horror! Can a Brexit supporter honestly utter such a phrase as the above?

Sadly, yes, especially when the subjects include cooperation in security and criminal justice matters. These two issues powerfully illustrate the illusory nature of our government’s approach to Brexit. It still wants to have its cake and eat it. Reality is dawning that this isn’t possible on the trade front, but somehow that reality has not spread to other areas where some sort of future cooperation is needed. Be it trade, criminal justice or military cooperation, the EU is concerned at all costs to preserve its integrity. In voting to leave, we dealt it a massive blow. Obviously, it recognises that some form of cooperation will be necessary but it does not seek a warm and cosy “deep and special” relationship with us. Yes, we were once part of the club, but we won’t be after March 29th next year. We made the decision to leave and we must accept the consequences.

To any Brexit supporter, this is perfect common sense. We knew what we were doing when we voted Brexit.  Among the many issues which we highlighted as a reason to leave the EU were concerns about the flaws of the criminal justice system in some EU member states and the need to disentangle ourselves from the EU’s military and security aspirations.

So yes, if the EU says we cannot participate in its flawed European Arrest Warrant scheme after Brexit, great! That’s what we voted for. Likewise, the EU’s disdain for Mrs May’s “ambitious future security partnership” with the EU won’t cause many Brexit supporters much lost sleep.  As a Third Country, we would no longer participate in several EU security data bases which hold intelligence and help track criminals. However, there are other means of cooperation over these matters. We have Interpol as well as Europol. The procedure may be more complex but at least UK citizens will be one step further removed from the EU’s interference with our daily lives. We don’t want the EU to give us special treatment. What is more, is Europol reliable? One report suggest that its statistics distort the truth about terrorist threats in the EU, with more emphasis being placed on monitoring so-called “separatists” than those who pose the biggest threat to ordinary people.

On a different note, we heard recently that Olly Robbins, who has more or less pushed David Davis into the sidelines and has become the de facto chief negotiator, has been told by the EU that there is no chance of a bespoke trade deal with the EU.  It will either be a very loose trading arrangement or what has been described as a “Norway-type deal”. There are strong opponents of both these options and even among her cabinet, Mrs May will have her work cut out to square the circle.

She has not, however, signed a letter promising a second referendum, Two separate copies have been sent to me, one by a very concerned Brexit supporter who feared Mrs May was about to  cave in to the remainiacs. If anyone has come across this spoof letter, try to find an example of the PM’s real signature. You will then see that it does not match the signature on this letter.

Observant readers may have noticed that we have said little about the latest EU council meeting. This is not because we were unaware of it but rather because it has been a foregone conclusion that nothing was going to be said to indicate any progress with the Brexit talks. We did pass a milestone last week when the European Union (Withdrawal) Bill became law. It paves the way fro the 1972 Accession Treaty to be repealed when we leave the EU in March next year, but as far as what our future relationship with the EU is going ot look like,  we are still none the wiser.

Trade in food with the EU after Brexit

This article, a personal opinion, was written for the agricultural press.

It has been suggested that independence campaigners like me should keep quiet about the possible problems of Brexit so as not to be accused of “Project Fear” . But a realistic appreciation of the known consequences of leaving the EU under present government policy is essential for businesses.

The more prudent amongst them are already taking precautions against the possibility of things going wrong .  That is surely to the nation’s good. So far the government has neglected its duty of keeping businesses informed . So here is the fruit of some light research and of experience in the animal feed  industry.

At present the considerable volume of British food exports to the EU is not subject to inspection at the border because the UK authorities which enforce food standards are monitored by the EU.

Once we become a “third country” outside the EU and  EEA, that will no longer apply and food exports to the internal market will be subject to the same controls at the border as non EU goods, presently arriving in this country – which are described in this HM Revenue & Customs guidance notice.  There are presently no adequate facilities or preparations like staff training to deal with the work load on either side of the Channel.

The volume of EU food exports to the UK is considerably larger. In event of a no deal Brexit, It is very likely that HMRC would simply have to let everything through without controls or face the certainty of empty shelves in the supermarkets. That would open the possibility of considerable public health risks as unscrupulous traders would take the opportunity to offload sub standard goods. If continued as more than a short temporary expedient, it would also be in breach of the UK’s obligations under WTO rules .

When we become a third country, independent from the EU and outside the European Economic area, firms which were previously able to deliver trailer loads of perishable food products in both directions across the channel without inspections and controls will be subject to the regulations listed here and the delays which they will impose – unless that, as yet undisclosed  “deep and special” partnership, advocated  by Mrs May emerges from the realm of her secret imagination to the reality of common day in a workable form.

 https://www.gov.uk/guidance/port-health-authorities-monitoring-of-food-imports

THE STRANGE ACQUIESCENCE OF TRADE ASSOCIATIONS

At some point  reality will surely come crashing in from concerned businesses and must eventually have some effect on the parliamentary and public discourse. But it has been an awfully long time coming. The way in which trade associations work may have something to do with it.

Soon after Mrs May’s Lancaster House speech (Jan 2017) I started to approach various business groups to point out the likely effects of Third Country status and to see if we could create some publicity to alert people – principally business and government-  to the foreseeable consequences. The business areas I picked were food and animal feed products, aviation and pharmaceuticals. I did not get very far – even with my old trade association ( grain, seed, feed,food, etc) . They did not want to put their heads over the parapet and become ” political” . I had forgotten how the staff of such associations actually work. They have an interest and locus standi of their own which is not generally recognised. They do work hard to represent their members to government but that is only half of it. They need to be able to demonstrate their good connections with government to convince the members of their usefulness.

To do that they have to stay well-in with government, so not cause any political problems. Their usefulness to government is as a channel of communication to their members. In this, they are almost part of the para-state.

During all the food health scares – salmonella, listeria, BSE etc, my trade association became an advocate (almost an unofficial enforcer) of new regulations which were very onerous for smaller firms but welcomed by larger ones as raising the barriers to competition.

So whilst our then Director General (a former senior civil servant but a decent enough bloke) listened to me, I could get no change of policy. The standing of our trade association with government depended on helpful, demonstrable cooperation with government policy and that was more important than the smaller member firms.

I was not involved with poultry food but heard this after the event from people who were (circa 1988 onwards) . With the salmonella scare, so ably stoked up by Edwina Currie, the government introduced regulatory proposals which would have made egg production extremely difficult and expensive ( without being able to impose similar conditions on eggs imported from the EU). The National Farmers’ Union was so keen on cooperating with the government that it was prepared  to accept the lot. So the egg producers had to get together their own representative group and were able to bring sufficient scientific and technical evidence to bear to get the worst aspects of the proposals amended. As a consultant they had a public health expert whose PhD was in the epidemiology of salmonella – a certain Dr Richard North.

The interesting thing to me was that the apparatchiks of the NFU were quite prepared to sacrifice the interests of their egg producing members to stay well-in with officialdom.

A similar mindset, I think, probably prevailed with my old trade association in early 2017 – plus inertia. They would doubtless have had assurances from their highly placed contacts in DEFRA that everything was under control, ” nothing was settled until everything is settled” etc  and that “everything will be all right on the night”. A degree of secrecy was needed on the government’s negotiating position “so as not to tie our hands” etc etc. In any event, the whole thing was then two years away and there were more pressing matters to deal with… Now that great day is only ten months away and coming rapidly closer …..  Mrs May can put it off for a while with an “implementation period” but, as Rabbie Burns put it

 ” It’s coming yet for a’that “.

No deal is not an option

Could food, medicines and petrol run out in the event of a no deal scenario? The short answer is yes, absolutely. It only takes a small disruption to sophisticated supply chains for things to grind to a halt.

Leaving the EU without a deal means becoming a third country overnight. The status of having no formal trade relations. The UK would not exist as an entity anywhere inside the EU legal framework. We would be subject to third country customs controls without any of the single market product approvals or valid certification.

If you don’t have the valid paperwork for your goods to circulate freely in the market then you have to find a named importer and have your products re-certified inside the EU – at considerable cost. Some classes of foodstuffs must be diverted to border inspection posts.

So that means if we go from single market members to being a third country then overnight the ports back up, Operation Stack goes into effect and lorries are sat on the motorway for days. That takes trucks and drivers out of circulation. The normal flow of supply chains is interrupted.

Remember this works both ways for trucks coming in and out of the country. Meanwhile companies by law have to file declarations which our current system is not designed to cope with. For some suppliers there will be no point in trucks even leaving the depot.

With roads jammed with trucks, supply chains collapsing very rapidly we see rumours of shortages which leads to panic buying. It happens every time we get even a dusting of snow where Tesco runs out of bread and loo roll even if there is no actual shortage.

Those of you old enough to remember the fuel strikes will remember how perilously close the country came to grinding to a complete halt. This would be the same with fuel lorries trapped in traffic. The way the EU legal system works is that if there is no paperwork and there’s no tick in the box then there is no trade.

All the while keep in mind that we will have been ejected from the treaty system governing airways and flight-plans, and without legally valid flight-plans then aircraft are grounded. All rights in the EU airline market are rescinded.

There is nothing in WTO rules that compels the EU to breach its own rules even in an emergency. Driving licences wouldn’t be valid, nor would qualifications so there would be no mutual recognition of conformity assessment. Veterinary inspectors, drivers and pilots would be disqualified.

This is not “remoaner” speculation. Our own findings at The Leave Alliance paint a pretty grim picture of the WTO Option. This is a simple matter of law. If we have no formal relations with the EU then trade simply does not happen.

Longer term, as a third country, the costs of delays, inspections and re-registration make UK business uncompetitive in the EU. Costs go up, contracts are lost, deadlines are missed, tariffs kick in. This is what it means to be outside the European Economic Area.

All of this has been made clear in the EU’s Notices to Stakeholders. These are formal notifications based on the current law. This is no scaremongering or diplomatic threat. This is the business end of the EU.

We don’t know how long it would take to get the trucks rolling again. We’d have to revert to paper declarations because the current IT is not set to cope with the volumes of declarations nor is it mapped to a third country regime.

There are mid-term fixes in the form of bilateral agreements but these would take time and since the UK will have left without paying, the EU would not be in a rush to do us any favours. It will take years to rebuild a functioning customs and regulatory system.

In the meantime businesses cannot afford to wait. Suppliers to EU assembly lines will have no choice but to relocate. Delays will naturally mean production slowdowns and all the secondary suppliers will take the hit.

Trade is more than just movement of goods and there are far bigger worries than tariffs. By leaving without a deal all the otherwise manageable problems of exit happen overnight without the capacity to cope with them. We would be in very serious trouble.

Frictionless trade does not happen by accident. It is the product of thirty years of technical and regulatory collaboration and the result of several strands of agreements on everything from fishing to aviation. Without formal status in the system then UK trade collapses.

Additionally, it’s not just the immediate effects we must consider. It’s the ripple effect that passes through every supply chain, every regulatory system and anything that depends on licencing, certification and approvals. Nearly all of it has an EU dimension.

Without alternative arrangements a lot of our insurances become invalid, contracts voided and work will grind to a halt an major infrastructure programmes. It will simply be illegal to operate without valid insurances.

So deep and comprehensive is EU integration that there is no escaping the regulatory gravity of the EU without serious and lasting harm. It is therefore not remotely realistic to suggest that things can function without a formal framework for trade. Leaving without a deal simply is not an option.

The Customs Union – stupidity or sabotage?

Regular readers of this blog will know without a shadow of doubt that there is nothing to be gained by remaining in the EU’s Customs Union. Well, dear readers, you can pat yourselves on the back for you are clearly much wiser than 348 members of the Upper Chamber of our Parliament.

Lord Kerr of Kinlochard, speaking in the debate preceding the vote, said “I do not recall at the time of the referendum any debate about a customs union.” He was perfectly correct in saying this. Staying in the customs union is such a daft idea that no one felt the need to bring the subject up.  As Dr Richard North points out,  “A customs union does not in any way eliminate a border, as we see with the borders between Turkey and EU Member States.” it is therefore no help in solving the Irish border question. 

He also makes the point that, as usual, the Press are all over the place in their reporting of yesterday’s vote. It was not a “big defeat” for the government as the amendment supported by 348 peers only forced “the government to explain what it has done to pursue remaining in a customs union”. In other words, suppose that some degree of light finally dawned and the government realised that there was no point in remaining in a customs union, all this “big defeat” would require them to do would be to say to their Lordships “not much”. Hardly the sabotaging of Brexit which the headlines seem to suggest.

For people looking for a way to keep the flow of trade moving in the immediate post-Brexit period, both across the Irish border and through the Channel Tunnel, it makes for more sense to visit the invisible border between Sweden and Norway rather than Turkey’s version of “Operation Stack” at Kapikule on its border with EU member state Bulgaria. Norway is not in the customs union; Turkey is.  Need one say any more?

The Government should finally lay to rest all this nonsense about a customs union. It should also abandon the current plans for a transitional deal. Further evidence of its inadequacies emerged yesterday  when Cecilia Malmström, the EU’s trade commissioner, said that the UK would no longer be part of trade agreements negotiated by the EU with third countries  once we leave. Re-joining EFTA  as an interim arrangement would not only solve the Irish border issue but would address the issue of our trade with countries like South Korea and Mexico as EFTA has negotiated free trade agreements with virtually all the countries with which the EU has FTAs.

It remains a mystery to many observers why this sensible option isn’t being pursued. For all its well-known faults as a long-term relationship, as a stopgap arrangement it is far better than the arrangement currently being discussed with the EU. Adopting it would put to bed a number of issues which should have been dealt with well before now and thus enable the Brexit debate to move on after being stuck in the same groove for far too long