Richard North, 06/10/2017  
 


Speculation about the survival of the Prime Minister is dominating the political discourse, giving the political hacks plenty of harmless entertainment. Generally, the emphasis is on when, rather than whether, Mrs May will go. Few are prepared to bet she lasts beyond Christmas.

As to the fate of Brexit, when I wrote yesterday's piece I was of the view that the October European Council was unlikely to allow the UK to move to phase two of the negotiations, thereby massively increasing the chances of the UK leaving the EU without a deal.

That pessimism, it seems, is shared by Lord Kerr who reckons that there is only a 50-50 percent chance of the UK pulling off a deal.

By my reckoning, Kerr is an optimist, although we'll have to wait for the outcome of the European Council before we know whether the talks are set to fail. One thing Kerr is dead right about, though, is in deriding Mrs May’s talk of a two-year implementation period.

This is not a transition, he says, but a "deferral". "It is the prisoner who is not going to be executed next week but two years later", he observed. And if this man can see it – as indeed can we – one truly wonders how the media and all these "brilliant" political pundits have missed such an obvious point.

In the meantime, it takes no special insight to know that the UK delegation, when it resumes work next week, is not going to offer anything calculated to break the logjam. Any decisive move would have a political impact on one or other wing of the Conservative Party, and bring Mrs May's tenure closer to termination. She is basically frozen into inactivity.

You almost pity those in the negotiation teams next week – on both sides of the divide – having to go through the charade in the almost certain expectation that that the UK is not prepared to add anything to Mrs May's "generous" offer.

On that basis alone, we know that next week's talks are almost certain to convince M. Barnier that there has been "insufficient progress" and recommend accordingly to the European Council. If Mr Davis was determined to head this off at the pass, he would doubtless have been "love bombing" the Commission with detailed position papers to maximise the impact of his work.

The silence from our Government, therefore, tells its own story. If we needed any reinforcement, we would only have to look to Germany. There, the German Federation of German Industries (BDI) has warned German companies in the UK to adapt to a "very hard brexit".

The UK government, says BDI chief executive Joachim Lang, "talks a lot", but has no "clear concept" of what it wants. German companies would have to start now with precautions. Anything else "would be naïve".

That might also apply to UK companies, and especially port enterprises, which will be among the first to suffer from the rigours of a hard Brexit. But food exporters, chemical producers, pharmaceutical companies, and a whole range of manufacturers – including those in aviation and the automotive industries – need to be taking measures to protect their businesses.

It was rather appropriate in fact for Lang to use the word "naïve". That is certainly a description we could apply to the many advocates of the WTO option – assuming that more sinister motives are not at play.

But, as the politicians drift further and further from reality, we get news that the Anglo-Swedish pharmaceutical giant AstraZeneca has started preliminary preparations for the possibility of a hard Brexit.

This will mean moving some of its operations away from the UK, the company's chairman, Leif Johansson, has told a Swedish newspaper. The firm's board has taken the "first step" in planning for a scenario in which there is a "no deal" Brexit. "Moving manufacturing takes several years", Johansson adds, "but the likelihood of us moving in to the EU in the case of a hard Brexit is high".

AstraZeneca, of course, are not the first or the only ones to start contingency planning for the worst case scenario. And while Lord Kerr thinks that eventually, the "penny will drop", the bulk of the public are being left out of the loop, while too many businesses still labour under the impression that Government knows what it is doing.

But even the Telegraph belatedly seems to be coming to the conclusion that nothing is going to be resolved next week. Whitehall officials, it says, are privately conceding that which we've been predicting for some time.

And although officials believe that some progress will be made in some areas, Barnier is not going to be satisfied by a piecemeal approach. He will expect "sufficient progress" on all three areas - the financial settlement, citizens' rights and the Irish question – before recommending to the Council that we can move on.

Furthermore, it is being suggested that there will be no attempt next week to push Barnier to discuss the mythical "transition" period. It is being said that decision to drop this came after Johnson's public interventions on Brexit had "undermined EU confidence" that Mrs May had the authority to make good on her own promises.

More to the point, Barnier cannot step outside his own mandate so there was no chance of his being able to make any decisions on this issue, until after the October Council.

In many respects, this meeting is turning out to be a watershed. And perhaps, once it has been effectively confirmed that the talks are going nowhere, the politicians and media will start focusing on the consequences of leaving without a deal.

It strikes me though that neither media nor the politicians have any more idea of what the WTO option involves than they have of the nature and functioning of a customs union. Already, they are getting dreadfully confused over the carry-over of the WTO schedules, leading the Guardian to conclude, for quite the wrong reasons, that WTO rules are "not a Brexit safety net".

The newspaper is right, but for the wrong reasons. Not mentioned is the huge burden of non-tariff barriers which will affect trade with the EU and with other third countries, all of which are perfectly legitimate under WTO rules.

Taking, for instance the food safety rules for fresh meat and meat products – within the Single Market, checks are carried out at point of production and then right through the food chain, under the direct supervision of the Commission's Food and Veterinary Office (FVO). Thus, for intra-community trade, border checks are not necessary.

However, when produce comes from third countries, its conformity with EU rules cannot be verified by these internal checks, so checks are carried out at the border instead. These provisions have been challenged many times, and are entirely WTO compliant. Relying on the WTO is not going to give products entry into the markets of EU Member States.

Once people realise that food exports will virtually grind to a halt after Brexit, they might start waking up. But there is also the question of imports. There will be no question of dismantling border controls for third country products but, once we leave the EU, WTO rules prohibiting discrimination will require that we apply those same checks to EU products.

In this case, WTO rules – far from giving us a free pass – will create a problem that, at the moment, hasn't even been acknowledged. But with no BIP at Dover – and no space for one – imports through that ports will also be badly affected.

Even now, there is insufficient time to resolve such issues – assuming that the necessary funding can be found for developing the necessary infrastructure. By the time we have finished, billions will have to be spent and thousands more officials will have to be appointed.

Understanding this should take us a little further down the road but, once all the implications of the WTO option sink in, I could well imagine a sense of panic setting in. And with that we will see increasing "business flight" as firms relocate their operations on the mainland – and the jobs that go with them.

But then, there is also the problem of Theresa May. For as long as she remains, she will be a distraction, taking attention away from the crucial issues on which we should be focusing. For that reason alone, she needs to go – although such is the nature of contemporary UK politics, there can be no expectation that her replacement will be any better.

Nevertheless, a nation stricken by panic will set its own political agenda and, if that's what it takes to get people to engage with the impending crisis, then the sooner it comes the better.






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