The latest iteration of the Border Operating Model (BOM?) was published yesterday, 138 pages packed with complicated block diagrams and jargon (CTC, ATA, CITES, etc) explaining how the UK government intends to strangle exporters with bureaucracy and red tape from 1 January. If this is ready and working in three months time I will eat my hat. I know this is about the third version, with added detail, and exporters will already have had some time to go through it, but many of them have been hit with coronavirus and will I am sure be absolutely exasperated with it all.
The model is immensely complicated as you will see, with 10 sites identified for new infrastructure - see page 24 - all of which have the words 'potential' or 'intended' next to their locations.
A report from The Halle Institute from February 2019 looked at potential job losses coming from Brexit and the starting point is an estimate of by how much trade would be depressed. It assumed a hard Brexit with WTO Tariffs and I don't think that will happen but there is no doubt the deal being negotiated is not much better, with the non-tariff barriers now spelled out in some detail in the BOM published yesterday. The Halle report in 2019 said:
"Higher import prices will lead to less import demand. The magnitude of this effect is uncertain. Hantzsche et al. (2018) estimate that a no-deal Brexit would reduce bilateral trade between the UK and the EU by 56% in the long-run and that about half of this effect would occur immediately after March 29, 2019. Accordingly, we assume that UK final imports form the EU decline by 25% after Brexit "
Since there is no impact assessment (not a published one anyway) for a 'thin' trade deal we don't know by how much trade would be depressed but it will be very significant. And exports will be affected the most in my opinion because of three reasons. These are (a) because EU customers will have plenty of options inside the SM, (b) many British exporters will be unable to find customs agents and will give up and (c) imports will be effectively waived through for 3 months and the full model won't be operational until July.
Products of animal origin (POAO) – for example meat, honey, milk or egg products won't be checked until April and even then not actually at the border until July. Between dates they will be checked randomly at the point of delivery - if at all.
So, expect exports to take a gigantic hit in the first and second quarters next year. Remember no government in history has ever tried to do this at any time, let alone during a pandemic, against a self-imposed deadline and with a cabinet of incompetents led by a chaotic and manically disorganised prime minister. It promises to be an utter disasterfest with shortages, queues, complaints and rows from one end of the country to the other.
Bear in mind that the BOM for NI has yet to be published. Essentially what the NI protocol does is to create the EU's external border in the Irish sea and it should operate pretty much as the BOM published yesterday for Dover and other EU facing ports including Hull and Holyhead.
However, the government are being remarkably coy about it and with three months to go we do not have the first version of the Irish border operating model. This will be an even bigger BOMshell when it finally appears.
As for the talks, these are obviously getting close to the end and Katya Adler from the BBC has a nice thread on Twitter:
While UK side keeps *banging on* about fish fish fish .. the Brussels end of post #Brexit trade negotiations now *harps on* (AND ON) about governance ie need for a robust dispute mechanism with teeth allowing for swift legal action (including suspending chunks of whole deal) /1
— Katya Adler (@BBCkatyaadler) October 8, 2020
Adler says while we bang-on about fish, Brussels does the same for governance with calls for a "robust dispute mechanism with teeth allowing for swift legal action (including suspending chunks of whole deal)" if we transgress.
She says unsurprisingly that the EU are "keener on this than ever in a deal with UK following the government threat to override parts of the Withdrawal Agreement with its internal market bill" - who knew? It's another example of the government shooting itself in the foot.
There is the suggestion that the LPF issue could be softened with a robust governance system with the EU able to retaliate quickly if UK businesses suddenly get an unfair competitive advantage because of spending less on environmental or employment regulations or receiving more in state aid. This sounds OK but the ERG will surely not be happy with British business held in an invisible strait jacket, not knowing from one year to the next what sectors of the economy are likely to be hit with blocks or tariffs or quotas.
For foreign investors who wanted to export to the EU it would make the UK a much less attractive place to build, they would never be certain of future trading conditions.
I am not sure it would be acceptable but as the clock ticks down, who knows?
