Richard North, 08/10/2017  
 


In the Observer today (although still under the Guardian brand online) is a piece about the impact on the continental port of Zeebrugge.

As we drift towards a "no deal" Brexit, such pieces will become more and more important and, one hopes, more frequent, as journalists and their editors break out of the claustrophobic confines of the Westminster bubble and do what this blog has been doing for years – looking at the wider impact of our withdrawal from the EU.

The theme of this piece is that, in the Belgian port of Zeebrugge, which does 45 percent of its trade with the UK, there is growing concern about the impact of the worst-case scenario – no deal, and the resumption of WTO tariffs.

As such, it is useful to have a journalist, in this case Jennifer Rankin, look at a European port but there is still this narrow obsession with tariffs which, even in a no deal scenario, balance out to roughly 2.5 percent of traded value, compared with costs of non-tariff barriers estimated at 20 percent in established trading relationships.

Trapped in the obsessions and lacking the basic understanding of the complexities of the non-tariff barriers (NTBs) and their potential effects, there is also the failure to understand that, in the early stages until the necessary adjustments have been made, the immediate impact of NTBs may well be to bring trade to a complete halt.

This piece does at least recognise the prospect, starting off with the narrative: "Gridlock at the border, vast motorway car parks and jobs lost: British ports have been vocal about the risks of a hard Brexit".

Rankin then observes that, in case Conservative MPs missed the message, the Port of Dover advertised at the party conference, warning that an extra two minutes on lorry inspections could lead to queues of 17 miles at Dover and similar "chaos in Calais and Dunkerque".

It's the point about the similar chaos in Calais and Dunkerque that is so often missed when trade with the EU is discussed. But here we have Rankin writing that "continental ports are worried about the great unknowns of Brexit".

One of the most exposed, we are told, is the Belgian port of Zeebrugge, which does 45 percent of its trade with the UK. The trouble is that Rankin, in accordance with most modern journalistic practice, then goes to a prestigious source to tell the story, ending up (as is so common) with someone who quite obviously doesn't know what he's talking about.

The unfortunate victim here is port chief executive Joachim Coens, who tells Rankin, "We are vulnerable if something happens to the trade from the UK to the continent. So what I mainly hope is that we could continue having a good trade relationship with the UK … as we have been doing for centuries".

Crucially, he fails to mention (and perhaps does not realise) that, come what may, once we leave the EU and with it the Single Market, we move outside the protection of the EU's external border and all sorts of barriers automatically take effect. The UK's newly acquired status of "third country" will make sure of that and Mrs May's "deep and crisp and even" trade deal isn't going to make a lot of difference.

What is interesting about Zeebrugge is that it is a major European transport hub and has invested heavily in rapid distribution. Thus, says Rankin, this sprawling port complex "is a hidden link in Britain's everything-on-demand economy". If a British supermarket in Glasgow orders a pallet of washing-up liquid from Zeebrugge's distribution hub before lunchtime, she writes, "it will be at the shop door the next day".

Every bottle of Evian and Volvic water on British shop shelves travels from France, via Zeebrugge, she says. Tens of millions of litres of Tropicana orange juice are bottled for British breakfast tables at the port, after the juice has been shipped in from Brazil.

But here we get the obsessive focus on tariffs. In the worst-case scenario – of no deal – the port, we are told, "would be hit by the resumption of WTO tariffs – 10 percent on cars to 25-30 percent on orange juice". In actuality, it is so very easy for the UK to strike a standstill on customs duties, wrapping it up in a formal agreement that would make it WTO complaint, that relations would have to deteriorate to an enormous extent before we were troubled by such matters.

The real problem is partly expressed by Isabelle Ryckbost, the secretary general of the European Sea Ports Organisation – but then only partly so. She tells us: "Nobody knows what Brexit will be, what will come after it", then adding: "What we know is that you will have to reorganise your port to do the border checks".

Ryckbost then goes on to say: "It is not very clear how important these additional checks will be. Will there be an agreement between a UK port and an EU port to facilitate these checks? Then you have phytosanitary checks (on plants and plant products) – will the legislation be different?".

Actually, she should know the answer to this. Zeebrugge is one of those ports which does have a Border Inspection Post (BIP) on the complex, so she should know something of how the system will work. And she must know that when the UK becomes a third country, any foods of animal origin imported from there will have to go through the BIP, with anything up to 50 percent of consignments having to be physically inspected.

She should also know that the food products which are shipped out to the UK will have to go through a similar process once they reach their destination, to ensure that our systems are WTO compliant. And, on both sides of the divide, there can be no doubt that there is insufficient capacity to deal with the additional inspection load.

As to what will happen when the UK leaves, Ryckbost is asking the wrong questions. The EU legislation is already in place. It is not going to change once the UK leaves the EU, so the full system will be applied. Any concessions to the UK would also have to be made to all other trading partners, and the EU is not going to dismantle its entire food import control system just to suit the UK.

However, not only is she asking the wrong questions, she is struggling under the same misunderstanding that afflicts the likes of Owen Paterson. "If the British remained aligned to European standards", says Ryckbost. "then the checks are 'not so burdensome'", although she did have the sense to add: "but for now this remains 'very unclear'".

Yet, this is not true, As we know, regulatory conformity is only the starter for ten, and logic tells you this must be the case. If one takes fresh meat production, for instance, having EU equivalent legislation on the statute book - dictating standards for slaughterhouses and the handling and distribution of meat – can never be sufficient.

A slaughterhouse might comply with statutory requirements when it is approved, but buildings deteriorate and require maintenance. They get dirty and require cleaning, waste must be disposed of, drainage systems must work efficiently, and the basic operational procedures must be kept up to scratch.

Such matters will require ongoing supervision and enforcement, with active intervention by the authorities. Left unchecked, standards can very quickly deteriorate, no matter what is written into law.

Within the Single Market areas, the members earn their freedom from checks at the border by agreeing to a range of draconian checks at the point of production, during processing and right through the distribution chain. And within the internal market, the Commission has direct control over enforcement. It can reach out and instruct a member state to close down an offending establishment, or enforce the necessary remedial action.

Outside the EU, we are released from the "tyranny" of Commission intervention and are free to enforce our own rules in our own way. But, since the Commission no longer has direct control, there is a price to pay. That price is checks at the EU's external border.

It really is quite surprising how difficult people are finding it to understand the basic tenets of the Single Market. There is a direct trade-off which comes with EU Single Market membership. We not only obey common rules, we give the Commission (backed by the ECJ) the power to enforce those rules and to take action in the event of non-compliance.

We wanted to be free of that jurisdiction – which is fine. But we cannot go on pretending that there is no price to pay, that everything is going to carry on as normal after Brexit.

And here, our really big problem, in a way not appreciated by many, is that the nature of our trading with the EU relies on the Single Market freedoms. Take those away and the market cannot perform as currently configured. Massive changes will be required to restore equilibrium.

Meanwhile, the writing is on the wall. Port chief executive Joachim Coens, says Rankin, is optimistic about the future, citing Zeebrugge's increasing traffic with Ireland and other countries, including Turkey and Iran. In July, the first cargo train from China - loaded with Daqing-made Volvo cars - chugged into Zeebrugge, making this windswept corner of Belgium a final stop on the silk road.

Those are the sort of changes will see, as trading patterns adapt to the new reality – and they won't be in the UK's favour. And, in the short-term, disruption is inevitable, more so if people continue to fail to understand what is at stake and what is needed to mitigate the consequences of our departure.






comments powered by Disqus













Brexit - the first year - New e-book by Richard North
Brexit - the first year - New e-book by Richard North
Buy Now





Log in


Sign THA
Think Defence





The Many, Not the Few