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 All rights in the EU airline market are rescinded.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.

Technical information on NOBO issues

Those who read Nigel Moore’s article on the threats to the NOBO (Notified Bodies) industry may be interested in this further study of NOBO issues by Roger Wright-Morris, the driving force behind the ConcordanceOUT.eu, a useful resource for Brexit issues. It is rather a technical piece, but nonetheless a helpful resource for anyone either involved in NOBOs themselves or who knows someone else who is.

BSI and BSI ACCREDITATION and NOTIFIED BODIES

SOME QUESTIONS HAVE BEEN RAISED BY CONCORDANCEOUT.EU and the answers: How will BSI certification be recognized?  [Either, by EU and/or by non EU?]

We should separate and be very clear on the issues of (i) Standards and Certification and (ii) EU Certification by NOBO’s. Standards, with BSI as the UK’s national standards body, are the businesses that are relevant here. There are other parts of the BSI Group that provide certification services, including those of being a Notified Body*. [NOBO]

This is part comprises an answer on standards, but it will give the reader some very unofficial thoughts on certification/NOBO’s too.

 Standards are good practice set down by experts (industry, consumers, govt, testing people, unions etc etc) through processes run by independent and very often private standards bodies, like BSI, and used voluntarily.

Certification is the process of a third party organization stating that a product, service or process meets a standard.

On Standards, this is the relevant EU Brexit question about continued membership for BSI of CEN and CENELEC , the EU’s standards bodies. It is to be understood that the directors of BSI remain very positive about achieving this, in good time, through a change of the CEN and CENELEC statutes. The BSI is speaking again to the CEN and CENELEC Board meetings in June 2018 (BSI is a member of the Boards of the two organizations).

BSI discussions with UK government have also been positive (helped in terms of the education mission to government that the BSI has been undertaking by the secondments made). UK government understands the issues about standards and does not want to stand in the way of a BSI-designed solution, unless there is a significant political reason for so doing. It is to be hoped that there will be more, and specific, policy statements in the forthcoming UK government white paper.

On Certification generally and very unofficially, ConcordnaceOUT.eu understands that this is a voluntary activity performed by BSI when businesses so request it.

BSI Assurance* certifies to a huge range of standards, as do other certifiers in this commercial market. These certifiers will most commonly be accredited to perform their certification function, through UKAS, the United Kingdom Accreditation Service**.

BSI Assurance also has accreditation through other accreditation bodies around the world, reflecting the global nature of BSI Assurance’s work. One example of this certification is the BSI Kitemark, which is well known.

POST-BREXIT BSI CERTIFICATION

Certification work by BSI Assurance can continue post-Brexit: these are business services used when businesses need them, not EU regulatory requirements. BSI’s certificates for whatever products or services will continue to be recognized post-Brexit as that accreditation will still be valid.

This BSI Assurance work is significantly different from NOBOs as Nigel Moore has mentioned, except as referred to below.***.

NOBOs undertake EU Regulatory Certification for EU conformity assessment

 When a product is to be placed on the EU market, it has to meet certain regulatory laws (especially relating to safety), and if those laws are met, the product has free circulation in the EU and EEA market. To meet the EU law, the manufacturer has to go through a process of conformity assessment, to prove that the product will comply with relevant EU legislation. This may involve an element of mandatory testing by a third party organization, a Notified Body.

Notified Bodies are certification (and similar) bodies designated by Member States for this purpose. There are some 200 UK NOBOs, and BSI Assurance*** for example is a NOBO for some 15 EU directives/regulations. Remember that only an EU Member States that can designate NOBOs.                                                                 Accordingly lease note carefully that: –

FROM day 1 post-Brexit all UK NOBOs will no longer be legitimate and official NOBOs; there will be – or could be challenges  – to the validity of their certificates. [Accordingly, UK goods and planes so certified will not pass EU borders or fly!]

Walking out of the EU and relying on “WTO Rules” would not therefore be a solution to the government’s current BREXIT chaos. The route can only be through the EEA and EFTA. There may be a stopgap – and less satisfactory solution – in the arrangements for the proposed transition period but we do not have any details. Furthermore, what happens in December 2020 when the transitional arrangements come ot an end?

Some countries have MRAs [Memoranda of Agreements] permitting them to have legitimate NOBOs, including in the EEA and also agreements with Canada, US and possibly Japan. This is something that UK could/should/must push for. The continued role of UK NOBOs is certainly a vital issue for the BREXIT negotiations.

**It is worth noting that UKAS has its own statute issue with its European body, EA

Is the Customs Union (or Partnership) option about to be shunted into the siding?

The government has been going round in circles with its Brexit proposals and getting nowhere. We have been saying so on this website for well over a year, but a growing chorus of voices is saying the same thing. Lord Kerslake, the former head of the Civil Service, has called the Government’s plans “undeliverable” while Michel Barnier has poured scorn on Mrs May’s hopes of breaking the Deadlock in her cabinet, which has been divided into two in order to consider two equally unworkable options – the  customs partnership or the alternative “maximum facilitation” model, which relies on as yet untried computer technology. He pointed out that neither would be acceptable to Brussels.

Is it too much to hope that the idea of a customs union or customs partnership is slowly being abandoned? In this article for Cap X,  William Davison could not be clearer:- “A new customs union will not resolve the Irish border issue.” He quotes Richard North, who has provided ample evidence ot show that it does not create frictionless trade. The customs union, he correctly states, is a key building block of European integration. There really is no point in pursuing any sort of customs union or partnership if we want to leave the EU. A recent ICM poll, discussed in the Guardian, shows that the general public is more on the ball than Mrs May’s government. Leaving the customs union is the most popular Brexit option. It is encouraging that, in the current climate where most people are utterly fed up with Brexit, that there remains at least some appreciation of what Brexit must mean among the general public.

So this leaves us with two options – leaving with no deal or the EEA/EFTA route. The Davison article mentioned above does say that the Single Market is also a “building block of European Integration”, but this doesn’t mean that re-joining EFTA would be a covert back door returning us into the EU.  It is a shame that the Davison article, after debunking the Customs Union option so thoroughly, fails to to justice to the freedom which we would enjoy as an EFTA member – accessing the single market but free from the EU’s programme of ever-closer union. Dr Richard North explains very clearly in this piece that accessing the single market via the EEA Agreement is a much better option than is widely believed. He debunks an article in Brexit Central by Hjörtur J. Guðmundsson which claims that “this arrangement was originally designed by Brussels to prepare countries for becoming part of the EU”.

Not so, says Dr North. “What became the EEA originated from an initiative taken by the EFTA member states.” He then gives the reader a thorough history lesson, which is well worth reading through, as is his previous post on “EEA Myths”, where he explains that if we used the EFTA route, we wold not end up replicating Norway, Iceland or Liechtenstein but would use the flexibility within the EEA agreement to carve out our own relationship with the EU.

Whether or not this sounds appealing, few could disagree that it is vastly better than the current transitional arrangements. What is more, it looks like being the only Brexit solution which will be acceptable to Parliament. On the one side, the Lords continue to behave mischievously while on the other, a number of MPs including cabinet colleagues have lined up against any sort of customs partnership.

The only other alternative is to walk away and rely on so-called “WTO rules”. Although advocated by a number of leave-supporting MPs it would be fraught with problems. This piece offers a lengthy but readable analysis of what life would be like without any agreement:- disruption for goods crossing borders, major issues with air traffic, no nuclear safeguarding framework, mutual recognition issues and so on. Especially given the ticking clock – less than ten months remain before Brexit Day, there is no time to address these issues and make bilateral deals to avoid utter chaos.

We have been saying for some time that it will need a crisis to provoke a change of direction from Mrs May. It has yet to break, as latest reports still talk of Mrs May not only pursuing a customs union or partnership for the transitional period, but even extending if for several years. Even so, this unworkable customs union/partnership option is now being openly assailed on all fronts, so there is some hope that, amidst all the muddle, the tectonic plates are slowly shifting.