Richard North, 08/09/2017  

Yesterday - in terms of maintaining coherent coverage of events - represented something of a crisis. Information flow, covering a wide range of events, effectively reached saturation point – more than could be properly reported in any one post, and way beyond the capacity of the average reader to absorb it.

What grabbed my attention and what in normal times might have made the substance of a single post is this report which features David Dingle, the chairman of Maritime UK, the organisation which represents marine and shipping industries.

In a press briefing, he said he was "very nervous" about the future and concerned the government was putting £16 billion-worth of business in jeopardy with threats of no Brexit deal, his concerns stemming from the reality of developing new customs declarations systems in time to prevent gridlock at ports and their approach roads.

Dingle, who is to lead a delegation to see Theresa May and Liam Fox on Monday – the first such meeting since the referendum - said it had taken HM Revenue and Customs "eight to ten years" to put its latest customs declaration system in place. It is due to go live in October, suggesting a Brexit system will take many years to put in place.

He warned that there would be an "awful shutdown" in trade if the government ended up with no deal, branding such a scenario as "daft". As to HMRC delivering a new system that could do electronic matching of trucks and their cargo to enable continued speed in roll-on-roll-off ports such as Dover and Holyhead, Dingle said: "It has taken an extremely long time to build the new system planned before Brexit – eight to ten years – and then suddenly it [HMRC] is supposed to have another step change in just two years?"

"That", he continued, "makes me nervous. It's why we need to have… a lengthy transition period so that work is completed. We need to land this. We need to land this in a really sensible and pragmatic way".

Supporting him was the chairman of Carnival UK, which operates cruises for P&O. He said: "Having looked at the time it takes, even in my own company, to build complex new systems, I would be sceptical we will be where we need to be in two years". Dingle thus concluded that the transition period must be extended "until frictionless trade could be guaranteed".

What is worrying here is that Monday's meeting will be the first with government since the referendum – yet Dingle is conveying crucial information which should be playing an important part in exit plans. Somebody in his position talking of an "awful shutdown" in trade is someone who needs to be listened to, and should have been talking to government for some time.

Clearly, though, there is little connection between the real world and the foetid bubble of Westminster politics, although we are to see a select committee look at the customs situation. Nevertheless, May and her ministerial team are more likely to listen to the European Research Group than they are real people with experience of cutting-edge operations.

This secretive group, supported by 60-plus "Ultra" MPs with very suspicious funding arrangements – and dubious arrangements with Brexit minister Steve Baker - is about to launch a "major drive" in an attempt to keep Mrs May on track for a "hard" Brexit, eschewing continued participation in the Single Market even as part of a transitional arrangement.

To an extent, though, they are knocking at an open door, with David Davis at yesterday's Brexit questions responding to John Whittingdale who rehearsed the tired canard that continued membership of the Single Market "would negate many of the advantages of leaving the European Union, while requiring us still to accept decisions that we could no longer influence".

To the charge that "it would actually be worse than continued membership as a full member", Davis agreed that, "In many ways, it is the worst of all outcomes". "We did consider it", he said: "I gave it some considerable thought, maybe as an interim measure - but it seemed to me to be more complicated, more difficult and less beneficial than other options".

This is a shorter re-run of the answer he gave in Washington but how Mr Davis can assert that adopting an off-the-shelf option is "more complicated" and "more difficult" has yet to be explained – by him or anybody else.

But then, it is very far from clear that Mr Davis actually understands the purpose of transition arrangements. It is my understanding that, in the absence of a full-blown trade agreement with the EU, we will need such arrangements to enable us to continue trading with EU Member States, giving our companies access to their markets without, as Dingle puts it, an "awful shutdown" in trade.

This, however, does not even feature in Davis's explanation to Keir Starmer. The Secretary of State believes they will meet three different requirements: "to provide time for the British Government, if need be, to create new regulatory agencies and so on; time for companies to make their arrangements to deal with new regulation; and time for other countries to make arrangements on, for example, new customs proposals".

That, says Davis, "is what will be required. That is why we need to be as close as we are to our current arrangements. It does not mean that, in the long run, we are in either the customs union or the single market".

What then does the man propose to do about REACH, and the fact that UK registered chemicals will no longer be afforded access to EU Member State markets? What are his plans for marketing in the EU the British medicines which no longer carry valid authorisations? What happens to food export when there are no facilities to inspect them in EU Member States?

We could fill this whole post with details of unresolved issues, which must – in the absence of a final trade agreement – be addressed in a transition agreement, and which do not fall within the scope of Davis's idea of such an agreement. And once we become a third country, our "current arrangements" will no longer suffice – which is why Mr Dingle is so concerned.

Personally, when we get little more than vague generalities from the person supposedly masterminding our Brexit effort, I think we are entirely justified in feeling more than a little concerned – especially in the context of what we know of David Davis's behaviour and the general conduct of the negotiations.

We can recognise, therefore, the sentiments behind Barnier's observations, expressed to the Commission after the first round of negotiations. The EU's chief negotiator noted that the UK "had not yet really engaged in the negotiations or spelled out its positions" and that Davis "did not regard his direct involvement in these negotiations as his priority".

This we saw for ourselves last week, when Davis spent only an hour in Brussels at the beginning of the session, then only returning for the final session and press conference, then to jet off to Washington to address a private seminar on business unrelated to his duties as chief UK negotiator. This is not a man demonstrating full engagement in or even direct involvement with the talks.

Barnier himself emphasised the importance of being able to negotiate with a "stable, accountable and authorised interlocutor who was available for the negotiations", and regarded these as "a fundamental condition" for the smooth conduct of the negotiations.

In this context, we see Commission President Juncker express his own concern about the question of the stability and accountability of the UK negotiator and his apparent lack of involvement. This, he though, "risked jeopardising the success of the negotiations".

Specifically, Juncker wanted Barnier to avoid discussions "at the purely technical level with negotiators who had no political mandate, while fundamental political questions still remained". In other words, he wanted each of the chief negotiators to be negotiating directly with each other – something which is scarcely happening.

Nor more so was this evident than in the Irish question, the "extreme sensitivity and the complexity" of which Barnier has acknowledged. Interestingly, he noted "the particular problem of the trade in animals and animal products owing to the sanitary issues raised and the difficulty of ensuring controls without reintroducing a physical border with Northern Ireland".

We've heard very little indeed of this "absolute nightmare scenario" from Mr Davis, and in the government's position paper we had the suggestion that border controls could be avoided through what amounted to mutual recognition of standards, based on "regulatory equivalence.

This is something to which the EU could never agree. Where food and animals have not been subject to control by officials under the jurisdiction of the Commission, working to EU standards, the Union has always insisted on imposing its own official controls at its external border. It cannot afford to concede on that point without weakening its entire animal health system.

With no agreement on the border question, therefore, we have got to the stage where yesterday the Commission published its Guiding Principles for the dialogue on Ireland/Northern Ireland. It states:
Issues unique to Ireland include the protection of the gains of the peace process and of the Good Friday Agreement ('Belfast Agreement') in all its parts, the maintenance of existing bilateral agreements and arrangements between the United Kingdom and Ireland including the Common Travel Area, and specific issues arising from Ireland’s unique geographic situation, including the aim of avoiding a hard border between Ireland and Northern Ireland. The invisible border on the island of Ireland is one of the major achievements and societal benefits of the Peace Process. Border issues are broader than economic questions. The physical border itself was a symbol of division and conflict.
Making absolutely no concessions to the desire of the UK to have the border question rolled into the broader trade deal, the Commission is stating that: "The onus to propose solutions which overcome the challenges created on the island of Ireland by the United Kingdom's withdrawal from the European Union and its decision to leave the customs union and the internal market remains on the United Kingdom".

And, in what amounts to a clear a rejection of the UK's position paper as we'll get, it tells us that, "a thorough understanding of the other issues beyond customs arrangements which are relevant to the border is also required in order to move forward to discussing solutions in the context of the dialogue with the United Kingdom".

"It is the responsibility of the United Kingdom", the Commission says, "to ensure that its approach to the challenges of the Irish border in the context of its withdrawal from the European Union takes into account and protects the very specific and interwoven political, economic, security, societal and agricultural context and frameworks on the island of Ireland".

"These challenges", it adds, "will require a unique solution which cannot serve to preconfigure solutions in the context of the wider discussions on the future relationship between the European Union and the United Kingdom". And any solutions "must respect the proper functioning of the internal market and of the Customs Union as well the integrity and effectiveness of the Union legal order".

For all the noise generated by the Second Reading debate in the Commons today, that was the least important event of the day. Ireland has become the make-or-break. The UK is expected to come up with a solution that can be integrated into the Article 50 withdrawal agreement and now with an additional proviso that it "must be achieved in a way which ensures that Ireland's place within the Internal Market and Customs Union is unaffected".

So important is this issue that Barnier held a press conference in Brussels to mark the publication of the Guiding Principles. "The UK wants to use Ireland as a kind of test case for the future EU-UK customs relations", he observed, telling his audience: "This will not happen".

In unequivocal terms, he went on to declare: "Creativity and flexibility cannot be at the expense of the integrity of the Single Market and the Customs Union. It would not be fair for the European Union".

Pete rehearses the best options for Ireland in one of his Twitter threads, the bottom line of which is that the entire island of Ireland becomes a single administrative area for the purpose of managing external trade. The CTA also becomes the Common Trade Area.

This is spelt out by the Irish Times which writes of the North retaining "a special status", which "would mean border checks on goods leaving and entering the North for Britain". This, the paper notes, would be "unacceptable for the DUP and for the North's businesses, who trade more with Britain than the Republic".

But Barnier had a bombshell in his press conference which he left until last. "The sooner we see sufficient progress, real progress", he said, "the sooner we start discussing at the same time a possible transition period, if requested by the United Kingdom, and our future relationship which will require a second treaty. He thus continued:
Through this second treaty, he said, we want an ambitious agreement with the United Kingdom, not only for trade but also for our necessary cooperation in security, counter-terrorism and defence.

This second treaty must be founded and built on a balance of rights and obligations, as is the case with each of the agreements we have already concluded with third countries.

I am thinking, for example, of Norway, Iceland and Liechtenstein, which have chosen to be part of the single market, to accept its rules and to contribute financially to European cohesion.

I am also thinking of Canada, with whom we have just negotiated a very ambitious free trade agreement, AACC. Canada is not part of the domestic market. It does not have the opportunities or the obligations.

It is well understood that it is not possible and will not be possible for a third State to have at the same time the benefits of the Norwegian model and the weak constraints of the Canadian model.

And it is in the light of these principles that the United Kingdom knows well since it has been applying them for 44 years, which we look forward to and that we will study with objectivity and I promise you constructively the next proposals of the British government that we need to make progress.
Had Mrs May decided to keep us in the Single Market, the Irish problem would largely have gone away. And now we are getting the clearest of hints from Barnier as to the best direction to take. It is thus so ironic that the Walter Mitty-like David Davis regards this as being "more complicated, more difficult and less beneficial than other options", when it is the one thing that could resolve a problem that he isn't even beginning to address.

For my part, I see the irony of an issue which is largely being ignored by the mainstream, and widely misunderstood, but which could collapse the entire Brexit negotiations, dropping us out of the EU without an agreement.

Then, at least, the "Ultras" will get an education in what the WTO option really means, as we queue outside nearly empty supermarkets for supplies that are no longer reaching the shelves. But what an expensive education that will prove to be.

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