Thursday 10 September 2020

Problems mount for Johnson

Problems are mounting for Johnson with covid-19 figures rising again and the back-to-work drive not having the desired impact, which means the economy may be heading for a bigger crash than we thought later this year.  These are problems that would stretch a half competent administration but Johnson is adding to them with a Brexit that seems deliberately designed to create the worst possible atmosphere in which to negotiate a new partnership with the EU.  


The talks have been going badly and the new proposal to break an international treaty that Johnson re-negotiated, signed, rushed through parliament with barely any scrutiny and used to win an election on the basis of it being "over-ready" looks to be the last straw.

The UK Internal Market bill (UKIM) was published yesterday and confirmed Peter Foster's story from Sunday. If anything it's even worse that predicted with specific clauses directing courts to disregard sections of the NI protocol and in fact any EU law of any kind.

Maros Sefcovic, the EU Commissioner responsible for seeing the NI protocol implemented is flying to London today for urgent talks with Gove and the outcome will decide whether the trade talks will proceed. It will be a moment of truth.

Politically, the government is facing a barrage of criticism from all sides, especially their own, with the move being condemned by former PM John Major and senior figures in the party including Sir Roger Gale and Charles Walker, chair of the 1922 committee, who said he would not vote for the bill as it stands.

But in a sign of how divided the party is, many hard Brexiteers welcomed it all. Sir Bernard Jenkin was on Newsnight fully supporting the idea of reneging on an international treaty while Sir Bob O'Neil urged the PM to think again.  The Lords will never pass it and, in my opinion, neither will the Commons. It is all bluff.

What it will do is cause the EU to demand stronger assurances on all the other contentious points of  state aid and the LPF. The governance issue becomes even more important to give the EU the right to impose sanctions if we do not meet our obligations - as we appear to want to wriggle out of the WA after just a few months. It does not build trust.

While the press waited for the UKIM to be published I watched Hilary Benn's Exiting the EU Committee take evidence from Richard Burnett of the RHA, Robert Hardy of the Customs Clearance Consortium and trade expert Anna Jerzewska. I am not an expert in customs and border formalities but I have read enough over the last four years to see it as very complex, costly and time consuming.

But yesterday's session took it a stage further with several additional layers of complexity being introduced. The concept of Incoterms which I know about in export trade as defining the terms of trade. The acronym DDP, meaning delivered, duty paid, puts the onus on the exporter to handle the sale right up to the customers door - including paying VAT in the foreign country. Which means the exporter needs to be registered with (in the example given) the French VAT authorities - and presumably with every other EU country with which you do business.  Wow.

And imports from the EU will need a safety and security declaration for each 'consignment' not each load, which must be completed by the haulier. About 85 per cent of the trucks coming in are EU trucks with foreign drivers and the witnesses were sceptical that a Hungarian haulier, as an example would be able to do this correctly and consistently if at all.

The lack of customs agents came up a lot with only about 5,000 of the 50,000 needed on our side already recruited but not yet trained. However, we were told this isn't just a UK problem, the EU hasn't needed customs agents for UK exports for years and there aren't enough in Europe either!  A shortage of vets to complete export health certificates was also highlighted.

The biggest shock came right at the start, with Richard Burnett telling Benn that with 81 working days to go, road hauliers still did not know what the lorry park in Kent was for!  They had not been told if it was for processing imports or stacking trucks which lacked proper paperwork for exports or both. They didn't know who was responsible for it or how to register to use it. Nothing. They were sceptical the Kent Access Permit scheme could ever work.

They all seemed to hope there would be a deal - not because of avoiding tariffs, important though it is - but to provide an implementation period they could use to get ready.

Listening to the evidence one can see precisely why the single market was created and what it means for trade. Of course, sooner or later, everybody will get used to it but the added costs will be there permanently and sooner or later, all the arguments that Lord Cockfield used thirty years ago to create the SM will be rehearsed and we will then have come full circle. 

A new government will then make the case for rejoining.  That is a certainty.