Wednesday 30 December 2020

When two crises collide

Today will live in infamy - to use FDR's immortal phrase.  In parliament we are to get a travesty of democracy and 'taking back control' as MPs are given five hours to debate and vote on a highly technical and complex 80 page bill to implement a near 1300 page trade treaty. The bill was published yesterday and the treaty, jam packed with virtually unreadable legalistic language, was published six days ago. Whatever you might call it, this cannot be scrutiny.  I for one won't be watching it.

Sir Bill Cash and the rest of the ERG endorsed the Trade and Cooperation Agreement (TCA) yesterday in a two page legal opinion which declared that the treaty negotiated by Lord Frost protected our sovereignty. Damage to the UK and its economy was not mentioned. The summary should be preserved so we can check it against reality over the next few years.

I say this because Professor Damian Chalmers, Co-Director for the ASEAN (Association of SE Asian Nations) Law and Policy Programme at the Centre for International Law at the National University of Singapore. disagrees with Cash. In a piece entitled: British Sovereignty run by Europe, he demolishes the idea we have 'protected' our sovereignty. He writes:

For the EU, it was all about ensuring that the terms of competition favoured EU business over British business. Its rules already determine the rules of trade in EU markets and in many non-EU markets.

However, it also had to foreclose other routes that the UK might use to secure competitive advantages for its industry. And on this, the EU secured its objectives in spades.

He concludes we are entering a world in which our sovereignty "will be policed on its own territory by a foreign administration in the form of the Commission with wide-ranging powers and few legal constraints and where its industry will have to accept the rules of the game set by Europe."

We shall see who is right.

Also released yesterday was 'guidance' on Rules of Origin for the TCA. I knew these rules can be complicated but I confess to being shocked at just how complicated they are.

Faisal Islam tweeted: 

For example, if you imported nuts from the EU, shell and pack them and export back to the EU, they will not go tariff free because shelling, even if you use a machine, does not count as 'sufficient' processing to be considered UK produce. 

He gives other examples of grated cheese, table legs and the eyes of dolls (I'm not kidding) showing just how tricky it all is and the minute level of detail exporters will now be submerged in.

The Food and Drink sector say almost half of their priorities have not been delivered on Rules of Origin:

And if you think that looks difficult, the automotive sector seems even worse. 

Allesandro Marongiu, Trade policy adviser for UK Automotive, has a very long Twitter thread attempting to explain what RoOs mean for UK car manufacturing. There are 40 tweets so you might want to put the kettle on:

He describes the difference between the single market and any FTA as "massive" but thinks the sector is resilient enough to cope with the changes.  It is incredibly convoluted with Rules of Origin changing over time to add another level of complexity. Again, we shall see if he's right.

And remember, some of these changes, most as far as I know, will come into effect in two days time. Is business and industry prepared? How could they be? The rules were only settled a week ago and guidance published on 29 December.

Nobody knows what will happen at the borders next week. Nobody knows if the new IT systems will be ready and working, if exporters and haulers will be ready with all the new paperwork. It could be smooth and quiet - provided the level of exports falls substantially. But it could be chaotic. 

All this comes on top of a massive rise in coronavirus cases (53,000) a new daily record yesterday as many hospitals are already at peak capacity. 

It looks to me like two crises are about to collide with Johnson caught in the middle.

Finally, I noticed this report in The Guardian about the Brixham fishing industry. One fishermen is particularly angry that they have been betrayed again and says "The Europeans always get what they want."

This strikes me as going to the heart of the illusion of sovereignty. The EU get what they want because they are a single bloc and Brussels is the gatekeeper to the highly lucrative single market as well as the policeman for its rules.  By coming together and sticking together they "get what they want" or are more likely to in any negotiations.

The EU has a population 50 per cent bigger than the USA and a GDP bigger then China. It has a single set of rules - ever expanding - to govern trade, something even the US does not have and I'm not sure China has any rules at all, certainly not on intellectual property and not enforceable in any court.

It is simply by being the EU that gives the bloc power. Does that fishermen think France or Denmark acting independently could have won access to British waters?  Of course they couldn't do it alone, but as a bloc they can and did. 

This is what the UK has voluntarily given up.

Boris Johnson says the TCA marks a resolution of UK-EU relations. Dream on.

Posted by at