Thursday 30 January 2020

Brexit Johnson: no alignment, no consultation

Ursula Von der Leyen was again explicit about the level playing field when she addressed the European parliament yesterday as UK MEPs said their last tearful goodbyes. The European Commission President  said "solid guarantees of free competition were a precondition to a new trade agreement with the EU after Brexit".  There, it could not be clearer.  No free trade deal with zero tariffs and zero quotas without zero dumping.

But later in the day, in the pages of The Telegraph, we are told defiantly that the PM "will never cave in to demands for alignment on regulations, despite knowing 'the consequences that flow from that'."

Brexit Johnson wants a zero/zero free trade deal but not at the price of regulatory alignment, thus setting the scene for the first (and possibly the last) big argument with the EU after Brexit has been 'done'.  We shall see how far the bravado carries him, not very far I suspect.

In a forthcoming major speech he will apparently tell a stunned business community that "they might [sic] face extra paperwork and physical checks on goods crossing the border."  This is the understatement of the year. I think HMRC are talking about export declarations rising five-fold after Brexit to nearly 300 million annually.  Downing Street are demonstrating their ignorance of trade.  It isn't the 'extra paperwork and physical checks' that matter, it's the extra cost of filling in the paperwork and doing the physical checks and the actual or potential delays involved.

It is these extra costs that will determine where a business can or will be located and indeed whether it can survive at all.

They seem to think the opposition will just come from leaders of the companies that trade heavily with Europe and they forget that those extra costs will sooner or later involve business closure and relocation, job losses, reduced tax revenue and public spending cuts. This is when reality will intrude.

What is coming across is just how little weight is given to industry.  Peter Foster tweeted about the cursory level of consultation that is just beginning to take place between trade groups, businesses and industries that are likely to be affected by Brexit:
Foster says, "BUT...just as biz world can't 'quite' believe Boris Johnson is really going to inflict disruption on a grand scale; so Government doesn't really believe business is really grasping/embracing what government is planning to do." 

He's puzzled by it all and quotes a former Australian trade negotiator, Namali Mackay, saying this lack of consultation is NOT (his capitals) normal.  Ordinarily business would expect to be consulted every step of the way.

Perhaps I can enlighten them both. The reason is that the forthcoming 'trade' talks are not about trade at all. They are about sovereignty or rather the illusion of sovereignty.

The two sides are talking past each other. Business is concerned about trade but the government is concerned with divergence and a macho display of our newly found 'sovereignty'.

If I am right, and I think I am, it's a worrying position. Brexit Johnson has no experience of industry and Cummings even less. If they genuinely think British industry is 'match fit' ready to bestride the world stage like a giant about to rise from a 40-year, EU induced torpor, a very big shock is waiting for them. After a lifetime in and out of every kind of factory, mill, assembly plant and distribution warehouse across western Europe, I can tell them the Europeans are light years ahead in embracing and understanding technology, making it work and extracting the maximum in terms of real economic gains.

This will be brutally exposed after Brexit. Remember, this is not something that is quickly reversible.

Incidentally, Foster cites a report from the Food and Drink Federation on how they hope to be involved in the 'trade' talks. Page 5 says this:

Business involvement in real time
The consultation mechanism must include a process for looking at the detail of potential decisions and trade-offs to fully understand potential long-term implications. This cannot be done without careful discussion with industry to understand potential ramifications of decisions. This would, for example, be particularly important in relation to the detail of the Northern Ireland protocol in the Withdrawal Agreement. In live negotiations, Government should look to build on Mexico’s model from NAFTA talks, where they placed business representatives ‘in the room next door’.

 A national trade strategy
Government should look to build on examples such as New Zealand’s ‘Trade For All Agenda’ in setting out a national trade strategy, taking account of devolved interests, that delivers in terms of jobs and growth in all regions and communities to preserve the UK’s single market, underpinned by suitably robust mechanisms of trade defence. For agri-food and drink this should include the overall objectives and priorities set out in this note.

Bear in mind trade talks start in a month's time!  I wouldn't hold my breath if I was them.

I also noted a tweet from Mujtaba Rahman:
This is also ominous. A UK-EU trade deal seems not quite as high up the EU agenda as our government might think and the price of a bare-bones deal could be much more expensive.  Fishermen in particular should check out alternative employment in their local areas - just in case.

This all sounds right to me. The EU will want to maximise their advantage from the very start. Setting out their conditions and waiting for British industry to pressurise Brexit Johnson into accepting all the LPF and regulatory alignment stuff that they have been calling for. I think the government will soon look quite isolated.

Finally, a tweet from Carole Cadwalladr, the journalist who uncovered the Cambridge Analytica scandal, about the EU parliament singing Auld Lang Syne yesterday:
Nice.
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