Richard North, 12/03/2017  
 


Ever longer grows the list of potential disasters that lie ahead for Britain, writes Booker in today's column.

This, he writes, is thanks to Theresa May's decision that, on leaving the EU, we should also leave its Single Market. But rumbling away now in the background is one that dwarfs them all, because it will affect every one of the 170,000 UK businesses that trade with the rest of the EU, and much else besides.

We are, of course, wearily familiar with the argument that, because the rest of the EU sells more to us than we do to them, they will happily concede us that "one-off deal" Mrs May wants, allowing us to continue trading much as we do now. But this relies on a complete failure to grasp the real nature of the regulatory system that is the essence of the single market, and what would be facing us if we leave it to become what it calls a "third country".

We would be excluded from that fully computerised system which for 25 years has allowed us to trade with the rest of the EU without having to go through customs controls. Only our trade with the outside world has been governed by a system called CHIEF (Customs Handling of Import and Export Freight), designed to handle 50 million customs declarations a year.

As long ago as 2010, HMRC realised that this system would soon be hopelessly overstretched. By 2014, when they had already been working for four years on upgrading their software, it became clear that they would now need a new system to be compliant with the proposed new EU-wide Union Customs Code, covering 1,300 pages.

This, in fact, is a suite of legislation. It covers the 101-page Union Customs Code itself (Regulation (EU) No 952/2013); the 557-page UCC Delegated Act (Regulation (EU) 2015/2446); the 336-page UCC Implementing Act (Commission Implementing Regulation (EU) 2015/2447; the 320-page UCC Transitional Delegated Act (Commission Delegated Regulation (EU) 2016/341); and the 15-page UCC Work Programme (Commission Implementing Decision (EU) 2016/578).

At the tip of the spear, so to speak, is the Customs Declaration Service (CDS), an £87 million project to create a new computer system capable of handling the 90 million declarations a year, a capacity needed to ensure future system stability. Just dealing with the CDS, though, has proved so tricky that it is unlikely to be in place before 2020.

But even that has been totally changed by Mrs May's decision that we are no longer to remain "within" the internal market as she earlier promised, and as we could have done, on leaving the EU, by remaining within the wider EEA.

As a "third country", Britain will now have to create its own unique customs code from scratch – the equivalent of the 1,300 pages which currently define procedures for customs authorities within the EU.

Not only must this cover trade with the outside world but the EU as well, dealing with procedures, legal requirements and with mutual recognition of systems which will enable the UK to work seamlessly with other systems around the world. Obviously, work on this new code cannot seriously get under way until the details of Mrs May's trade deal are finally agreed.

Booker asked HMRC how long producing the code might take, since they have already spent three years in dealing with a very much smaller problem. Their reply notably failed to answer the question of how they are planning to face this colossal new challenge.

Indeed, it is inconceivable that, on day one after leaving the EU, we could have in place our own wholly new system, which it is estimated would now have to handle 350 million or more customs declarations a year.

An absence of a working system, Booker writes, would result in chaos on an unimaginable scale. And yet there are those who would reject even the idea that there might be problems, expecting us to rely on current systems and rules – without the first idea of how they would operate in a post-Brexit environment.

In theory, the "colleagues" could relent, allowing UK goods free access to their markets without any of the controls normally applied to "third countries", but that would be an extraordinary concession to make. Why should they do this after the UK had already rejected continued membership of the EU?

When it comes to the overworked mantra about their selling more to us then we do them, Booker points out that 30 percent of all our food is import from the EU. Do we stop supermarket shelves being restocked just so that we can retaliate against the EU? And what do we tell people when they go hungry?

The crucial point on this issue, however, is that the EU will be applying existing "third country" rules and controls to UK exports. Contrary to the assertions of Brexit zealots, it will not be erecting barriers against us. They already exist.

The UK, on the other hand, would effectively be starting from scratch but, is constrained by WTO rules. In the first instance, under the no discrimination rule, it must apply the same rules to all its trading partners, including the EU. Secondly, it cannot arbitrarily impose barriers to trade. Any controls must be necessary and proportionate.

Breaching those rules would turn the UK into a pariah state, the consequences of which would be profound. Having destroyed its reputation for respecting the rule of law, it would find it very difficult to build new trading relationships.

Much of what would face us, of course, could have been avoided if Mrs May had not been talked into leaving the EEA by her fluffy-headed colleagues. And this is the crucial point.

Within the EEA but outside the EU, the UK would still need its own specific customs code. But, with the decision settled early, that would give more time for development and writing. The predictable outcome would also allow parallel development of the necessary computer systems.

Without that, the disruption to our trade would not just be a car crash or a train wreck, it would be a whole fleet of jumbo jets crashing down on our entire economy.

When the Prime Minister shortly confronts her 27 EU colleagues to trigger Article 50, they will be gazing at her in disbelief that she could be asking for anything so silly: that would be a catastrophe not just for Britain but for the rest of the EU as well.

So does Booker concludes that when 2003 Margaret Thatcher famously looked back on our decision to join "Europe", she described it as having been "a political error of the first magnitude". But entirely through our own ignorance and stupidity, it looks as though the way we are choosing to leave it could be even worse.






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