Richard North, 16/03/2017  
 


We only have the legacy media copy to go with at the moment, but the report in the Guardian is as good as any, retailing David Davis's admission that the Government has not since the referendum carried out a full economic assessment of the "no deal" option.

This was under detailed questioning from Hilary Benn, chair of the Brexit select committee, who also elicited from Davis the assertion that the precise cost would depend on the degree of mitigation which the Government could undertake. "It is rather otiose to do the forecast before you have concluded what mitigation is possible", he said.

Davis then went on to admit that border delays were potentially "as big an issue as tariffs", but then asserted that these could possibly be avoided through the extension of electronic, light-touch customs checks after Brexit. Under the "authorised economic operator" system, he said, "more than 90 percent of cross-border traffic can be cleared in five seconds".

The thing is, if this is the extent of Mr Davis's understanding of the effects of the "no deal" scenario then we really are doomed. Should we end up with no deal, working solely to WTO rules, then that means we have no mutual recognition agreements with the EU on customs. Mr Davis cannot have it both ways. No deal means no deal. 

Under such circumstances, it matters not at all that UK customs can clear more than 90 percent of cross-border traffic in five seconds. That applies only to the UK end. The traffic still has to be cleared by the customs authorities in the Member States, and that is where the delays will occur, completely out of the control of the UK authorities. 

The point is that, in the event of there being no deal, there can – by definition – be no mitigation. Apart from anything else, the overwhelming likelihood is that the computer links between the UK and EU Member States would be ended. It would be impossible to communicate rapidly customs data between UK and Member State authorities, and the UK would lose its rights of access to European Commission databases. 

The only way links can be maintained is by a carefully negotiated deal, which would have to include agreements on data security and confidentiality. That really cannot happen in the "no deal" scenario. Instead, the system would have to revert to paper documents, and physical inspection by customs officials. Since there would be no means of verifying their authenticity, there would also have to be a high level of cargo inspection.  

To add to the misery, Davis was also forced to admit that not reaching a Brexit deal would leave carmakers facing 10 percent tariffs, while dairy and meat producers would be hit with tariffs of between 30 and 40 percent on exports to the EU. Financial services companies would lose their "passports", Britain would exit the EU/US open skies aviation deal and customs checks would take place at the Northern Ireland border.

A small dose of reality then comes with Donald Tusk, who took to Twitter to say that "A no deal scenario would be bad for everyone, but above all for the UK because it would leave a number of issues unresolved". Against this, most recently, all we have is the likes of Matt Ridley and Douglas Carswell reassuring us, on the basis of no good evidence, that the WTO option is tenable – hardly sufficient under any circumstances.

However, within the space of 24 hours, The Times has rejected my complaint against Matt Ridley, even going to far as to cite Wikipedia as the authority for claiming that the EU has no deals with China, India and the United States. As a result, I spent much of yesterday preparing a formal complaint to the Independent Press Standards Organisation (IPSO) and will not be ready to submit it until later today.

One of the interesting details I've been able to tease out is that, while the EU-South Korea free trade agreement runs to 1,432 pages, the Australia-China agreement totals 1,427 pages. This is in the context of The Times arguing that Australia's free trade agreements are considerably simpler than those the EU has been trying to agree, "which is why they were faster and easier to negotiate".

With the Australia-China agreement having taken ten years to conclude, The Times can't even claim that this agreement was either fast, or easy to negotiate, and it sets a poor precedent for the UK's chances of concluding a rapid trade agreement with the EU.

Davis, on the other hand, is still asserting that he can bring home a "good deal" from Brussels, yet only through manipulating the evidence and rank dishonesty can anyone show that we could reach an agreement on trade within two years.

He still rests on his claim that we already have regulatory convergence, so we will be able to take short-cuts in the negotiations. But, once again, he was not able to convince anyone that there would be systems in place to ensure continued convergence, or that these would be acceptable to the EU.

Nor is Davis addressing such issues as mutual agreement on conformity assessment, on market surveillance, complaints procedures and dispute settlement – all essential parts of an FTA which are often politically contentious and time consuming to agree.

There is also the issue of mutual recognition of standards, where some twenty percent of traded goods are no subject to any harmonised standards. In a "no deal" scenario, and even where there is an FTA agreed, there is no provision for cross-border trade. Regulatory convergence is the least of the problems.

As we get closer to the Article 50 negotiations, therefore, we see the Government wedged between the rock of a free trade agreement that is impossible to agree in the time and the hard place of a "no deal" that would be catastrophic for the economy. The only comfort we can draw from this the ability to say, "I told you so", which we've been saying for the best part of three years.

Looking at the Parliament TV footage of the select committee evidence yesterday, I thought that, at times, Davis looked tired and rattled – and well he might. Chickens really are coming home to roost.






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