Friday 21 December 2018

Brexit means Brexit

By Roy Price

Here is how the head of Britain’s hauliers’ trade association sees the effect of a no-deal Brexit.

  • Each haulier entering Britain will be required to submit a 40-field declaration form per consignment before travel. The form takes 10 minutes to fill out.
  • The average trailer has 400 consignments per delivery.
  • 11,000 trucks a day use Dover.
If his figures are correct, this means:

By coincidence, as of 1 April 2018 the total strength of the full-time trained and untrained UK Regular Forces (army, navy + RAF) was around 146,560.

And the figure above only counts Dover. The DoT’s official (and excellent!) publications do not give the breakdown needed to compute a comparable figure for all the other UK ports but I should be surprised if Dover represents more than 50% of consignments. It could well be less.

The UK will also need a smaller but nonetheless sizeable army of Customs clerks needed to process all the new paperwork and spot-check the consignments. And average days are one thing, but what about peak days? Few lorry drivers have clerical skills. Many have little or no knowledge of English. And even competent clerks make mistakes every day.

How to recruit this army of clerks at a time when immigration is supposed to drop dramatically, with knock-on effects for the job market throughout the UK? Not to speak of all the new housing and infrastructure needed at the ports. It simply cannot be managed.

Of course all this can be computerised. It will have to be if Brexit occurs and be ready when the transition period ends. Such system will take years to develop, test and fully deploy. It will cost billions to the tax payers and tens of billions to industry. There is no way that it can be even started until the outlines of the future UK/EU trading relations have been agreed.

Who thinks a UK/EU trade agreement can be agreed in 2-3 years? The EU’s agreements with Canada and Switzerland took much longer although the stakes were much lower.

Everything will have to be thrashed out, product by product, service by service and agreed unanimously by all EU members and Britain. Every company in the EU with a strong British competitor will be putting pressure on the respective governments. An agricultural agreement will probably be impossible with serious consequences for British farmers (or huge subsidies to replace the ones they will lose).

Developing the software before all the details of an ultimate trade agreement are known will greatly add to the cost and the amount of debugging. New software never works perfectly from Day 1. The physical “cloud” infrastructure to support a system that doesn’t fail more often than, say, airline reservations, will cost further billions. And when the inevitable breakdowns do occur, a lot of produce will spoil or many half-assembled cars will stop assembly lines for hours.

Once such a system is implemented, every company in the EU exporting to Britain, and every British company exporting to the EU, will have use the new system for each consignment. Companies in the EU will have to charge their British customers more for the extra admin costs. And vice versa, which will mean loss of customers for many (probably most) British manufacturers. If standards start to diverge – very likely if the past is a guide to the future – there will be more costs. Everyone will be poorer but Britain will suffer much more than the rest of the EU.

How many Brexiteer politicians have the slightest understanding of these “practical” problems? They appear to expect business simply to get on with it.

One way to avoid this mess
Crashing out of the EU has the merit of simplicity. The systems for imports from non-EU countries exist already (although they are far from being fully computerised, in Britain or anywhere else). But the billions needed to implement a new UK/EU system would be almost trivial compared to the disruptions that would follow if third-country tariffs were applied to UK/EU trade.

EU/UK trade today is a far cry from what it was in 1974. It is more comparable to trade between the north and south of England or France or Germany Just think of what putting a border across the middle of any big country and you can see what Brexit really means in reality.

Taking back control
Mrs May’s deal would avoid almost all of these problems but it would also strip Brexit of any practical meaning… except that Britain would no longer have a voice in making the applicable rules. Parliament will not accept that and quite rightly so. Either Parliament votes to cancel Brexit (unlikely) or it acquiesces in a crash-out or it calls for a second referendum.

A second referendum becomes all the more probable if the implications of a crash-out become clearer in the weeks ahead. The 27 EU countries will gladly accept a postponement of Brexit to allow that, knowing that the result is almost certain to be different this time.

It's unseasonably warm in the Rabbit Hole
And it promises to get warmer by the day despite the approaching winter outdoors. What would happen if Mr Corbyn came out for a second referendum and urged Labour voters to opt for remain?

Mrs May says:
1.   “What we have agreed unashamedly puts our future economic success, and the livelihoods of working families up and down this country, first.”
2.   “It is important in delivering for the British people that we are out of the implementation period before the next general election.”

No 1 would be true if the transition period were to last indefinitely because, for almost all practical purposes, the UK stays in the EU although it no longer has any voice in Brussels. But No 2 is logically incompatible with No 1. The EU has said, effectively, that “Brexit means Brexit”. Does she not remember who said that first?

Mr Corbyn says:
1.   “Our votes in parliament will be to attempt to stop this deal…”
2.   … and to say to the government, ‘You’ve got to go back and negotiate something else’.
3.   There is time to do it. By the way, when the EU says there isn’t time, the EU has a long history of 11th hour negotiations. Even the Lisbon Treaty was renegotiated several times.”

No 1 is obvious. Everyone knows that most, probably almost all, Labour MPs will vote against the deal. No 2 follows logically because the Government will almost certainly pretend to try again before calling for a 2nd referendum or a general election.

However the EU will not budge to help the Tories. Or Labour for that matter. So No 3 is disingenuous and Mr Corbyn surely knows it.

The EU will gladly postpone the deadline for leaving. But that does not mean they will seriously change any of their positions. A Labour government, if one should emerge, must either accept the current deal, or hold another referendum which the Remainers are likely to win, or crash out which they know will have consequences for which they will not want to be held responsible.

Nothing suggests that Mrs May and Mr Corbyn are mating underground but both are hiding from reality or pretending to do so. As of today it seems that Mr Corbyn is the more clever animal. When the deal is voted down in Parliament, and if he cannot get the general election he wants, he will have to acquiesce in a 2nd referendum. Mrs May will have a hard time doing that.

And if there is a 2nd referendum, how will the two denizens of the rabbit hole urge their respective followers to vote? Either way both will be exposed as dissemblers.