Saturday 13 June 2020

Another milestone passed

I have been writing this blog since March 2017, more than 2160 posts ago. When I began I had no idea where Brexit would take us. It has been an horrendous journey, full of unexpected twists and turns of which perhaps, coronavirus has been the latest and most incredible. All sorts of milestones have come and gone. Yesterday was another big one. Gove confirmed that we will not ask for or accept an extension to the transition period and the EU said they in turn accepted it as our definitive position.

In effect Gove ruled out an extension at the same time that he granted himself one.  But, let me say here and now there will be an extension whatever happens.

Why?

Because of several things. First of all, we have rarely met any of the 'deadlines' we set ourselves. In fact despite all the deadline-setting we have never actually controlled the timeframe and virtually every one has been missed. So deadlines in themselves are meaningless.

Secondly, we are not actually ready, which is why the government has had to announce the U turn and explain they will not be applying border checks on goods imported into the UK via Dover for months and months. And this will apply not just to EU goods but to goods from anywhere in the world.  The no deal planning announced by Penny Mordaunt seems to amount to a no planning deal.

The government's plans to 'control' our borders by throwing them wide open is set out officially HERE.

If we are not ready to conduct checks on goods coming in we are almost certainly not ready to have all the paperwork systems ready for goods being exported. The problem is that France and Holland, the two main entry points into the EU, had the foresight to prepare themselves and they are ready. They will not reciprocate as confirmed this morning by the FT.

What's the significance? There will either be queues on the M20 if trucks arrive without the proper declarations or the flow of trucks will be significantly reduced because they will not be authorised to begin a journey. Probably the latter. Certainly products of animal origin will not go via Dover or Folkestone because there is no Border Inspection Post there.

Customs declarations are being migrated from the old CHIEF system to the new CDS system and is supposed to be running seamlessly by September. With big projects (and it is very big) slippage of months and even years is not unknown, in fact it is the norm. So, expect serious problems with that anyway.

Assuming it is ready in time, will all the 150,000 EU exporters be ready? Almost certainly not. This will seriously restrict exports and therefore HGV return journeys carrying imported goods. The quantity of goods flowing between the UK and the EU would be seriously restricted whatever happens and at a time when we are importing a huge amount of food - perhaps up to 30% or more. This will never be allowed to happen.

Note I have not assumed we do not get a deal because it's irrelevant. This will happen whether we get one or not.

The damage from a no deal Brexit would be serious on an economy struggling to shake off the devastation from coronavirus and the lockdown. The closure of Nissan's Sunderland plant would be a mortal blow to Tory hopes of winning in 2024. So I discount a no deal Brexit completely.

And once you rule out a no-deal outcome the ONLY other possibility is an EU shaped deal with all the LPF provisions and a fisheries agreement. Johnson and the government will trumpet it as a stunning success brought about by their resolute stance and the Express and Mail will echo it to give it an initial gloss of success. But it will soon become clear, as it did in Ireland, that things are going to be very different, But it will be phased in slowly over a period of years.

I discount any possibility the EU will make any serious compromises.  This tweet from a former Treasury mandarin sums it all up:
And we have never even got the ducks, let alone put them in a row. 

The EU parliament will have a vote and they seem to be working towards agreeing a resolution which would see them rejecting any deal that does not include robust level playing field conditions. Nobody sees that actually happening but it probably won't matter since some heads of state, notably Macron, but others too, will never be able to agree a deal without LPF or a fishing deal that gives access to our waters. Their own electorates would never stand for it.

Johnson has effectively put the future of this nation into the hands of members of legislatures across Europe, any one of which could block a deal and send us spinning out of the single market.  Most European legislatures are carefully balanced coalitions without big government majorities so there is no guarantee a deal will pass quickly or without some objections - another reason to believe there will be an extension.

What is the EU's game?  They will play along with us. Their main objective is not to be seen as the side which is being difficult. They will accept the speeded up timetable and will talk about compromise - but it will not be Brussels making them.

David Davis suggested recently that the EU always take things to the wire. He is mistaken as David Henig points out. The EU often do take things down to the wire - but only in internal negotiations among the members. It has never taken a trade deal down to the wire.
Interestingly, with refeence to trade deals done in a hurry, Henig says the USA and Australia once negotiated one (AUSFTA) in eleven months but this actually resulted in trade between them falling. 

In any case all the talk about signing a good trade deal quickly with the USA is laughable, as Dmitry Grozoubinski points out;
They actually believe the Americans will give us a good deal. Trump is desperately trying to close the massive US trade deficit and you can bet they will not be taking any prisoners and certainly not in an election year.

Among other things, we should not, on what was an important day, forget that Gove's extension does not apply to the Irish sea border. There cannot be a delay here because it's written into the WA. And in a press release after the second meeting of the Joint Committee, the EU said there was a need to get on with it "fast". This will also need an extension because we are nowhere near ready.

The devolved Welsh and Scottish governments both condemned the move to block any chance of an extension and wrote a joint letter condeming it as "extraordinarily reckless". This comes within days of polls showing  that 63% of Scots want another referendum on independence, 34% within the next two years, 19% in two to five years, and 10% after the next five years. It is a gift to the SNP.

The break-up of the UK took another step closer.

Another person to whom all this is a gift is the Labour leader, Kier Starmer. He has made a cracking start anyway with a poll by IPSOS Mori suggesting he is the most popular opposition leader since Tony Blair in the 1990s. The government's mishandling of the coronavirus pandemic has given him a boost and now the government is offering another free gift to him by mishandling Brexit.

Finally, on this point Johnson would do well not to forget that we will not have Tory governments forever. Sooner or later a pro-EU prime minister will come to power and we will begin to negotiate a closer relationship with Europe and start to take the first tentative steps to return as full members. We will all be a lot wiser then.
Posted by at