Brexit: losing patience

06/06/2018

I listened in to yesterday's oral evidence sessions in the Treasury select committee, with its galaxy of witnesses.

In the first session, we had Benoit Rochet, Deputy CEO of the Port of Calais, Joachim Coens, CEO of the Port of Zeebrugge and John Keefe, Director of Public Affairs, Getlink (formerly Groupe Eurotunnel). They were followed by Jon Thompson, Chief Executive and Permanent Secretary, and Jim Harra, Deputy Chief Executive and Second Permanent Secretary, and Karen Wheeler, Director General Cross Government Border Delivery Group, all three from HM Revenue and Customs.

Some useful points came out but, as always, the MPs failed to develop their lines of questioning and, to judge from some of their responses (and lack of them), not all of them understood the significance of the answers they were being given.

However, from the post trio, it is firmly lodged that "sanitary" inspection are an issue and that Border Inspection Posts will be needed. Nevertheless, the impact of the deficiencies in the system was not fully explored.

Had the MPs read the blog, of course, their line of questioning might have been different. The could actually have read any one of three possible sources – this blog, last week's Booker column, or the European Commission's notices to stakeholders.

But they're far too grand to come prepared to these taxpayer-funded sessions and therefore are quite content to waste everybody's time and money on questions of no relevance directed at witnesses who couldn't give them the answers they needed even if they were asked the right questions.

The point, of course, is that there aren't going to be any queues of trucks going into the inspection facilities on the EU side – where all foods of animal origin must be presented to non-existent (at Calais) Border Inspection Posts (BIPs). Until the UK has been able to get itself re-listed on the EU database as a permitted exporter – across the whole range of products handled – consignments will be rejected and either destroyed or sent back to their ports of origin.

I don't know what it is going to take to drive this point home but, clearly, addressing a gaggle of MPs intent on sharing their own ignorance, is not proving very successful.

And nor has this same gaggle cottoned on to the fact that all the manufactured goods which require third party approval and have relied on UK certification are going to have similar problems. Vehicle and their components, aircraft and their components, medicines, medical devices, and the vast range of goods which require third party testing for their CE marks, are all going to be turned away at the border – or in some cases held for expensive and time-consuming re-testing.

In short, although the select committee is beginning to address some points of concern – years after they had been raised on this blog (I first wrote about BIPs in January 2013and have referred to them since in over 50 blogposts) – the MPs are so far behind the curve that B-day will have come and gone before they begin to realise what's in store for us.

It's also beginning to look likely that we won't see Mrs May's White Paper on future relationships with the EU until after B-day (if at all). Originally promised in good time for the European Council on June 28-29, we are now told that Mrs May has abandoned her self-imposed timetable – without offering a new date.

David Davis is said to be "disappointed", as are other politicians. But they are by no means alone in expressing frustration. According to the Financial Times - which has a line into the court gossip on such things – business executives are also losing faith.

Last Monday, Mrs May held one of her regular meetings with leaders of thirteen large British concerns, whence one of the number conveyed that the mood of the collective had "decayed considerably", largely in parallel with the way decision-making in Whitehall has stalled over the last few months.

This source – joining the ever-growing ranks of the anonymous – spoke of the group having repeatedly raised the same issues - such as the need for frictionless trade once we leave the EU. This one in particular, the source complains, "is now a Gordian knot that we can't help untie". When sources come, though, they come not single spies, but in battalions. Another "leading business figure" said executives were "starting to disengage" after months of regularly making the same case to the government.

A vast cloud of pessimism seems to be descending on the group as the leaders question what impact they could have on negotiations. "It's not only 'What's the point?', it is 'What can you actually do?'", says one. "When you keep circling round and it keeps coming back to Ireland, and you know the solutions being proposed are not acceptable to the EU, you get in this desperate spiral of: 'What the hell can we do?'"

One company that is answering that question is the US pharmaceutical giant Merck & Co. We are told that it is planning for the possibility of a temporary supply blackout after Brexit and is looking to stockpile as much as six months-worth of goods in the UK.

The contingency plans include factoring in as much as two extra days of travel on routes between UK and EU destinations to allow for delays caused by document checks. The company is also planning to add about 30 employees at its Haarlem, Netherlands, facility to cope with regulatory demands.

Less able to respond is the UK's leading logistics trade body - the Freight Transport Association (FTA). With three weeks to go until the June Council, James Hookham, the organisation's Deputy Chief Executive, says that its confidence in Government's ability to deliver a "frictionless" Brexit is fast collapsing.

"Of the eight demands made in FTA's list of essentials to 'Keep Britain Trading' issued at the beginning of the year, not a single one has been progressed," Hookham says. "Details of whether or not the country will have a Transition/Implementation Period are still unclear, there is still no decision on what Customs arrangements we will have from March 2019 onwards" he adds.

Expanding on his litany of complaint, he goes on to say: "We keep getting told that all food and agricultural exports to the Continent and Ireland will be checked at EU ports - but there is nowhere to check them, and the system to check them does not exist".

Then, he says: "We still don't know if we will be able to employ the 43,000 truck drivers in the UK that are nationals from another member state – that's 13 percent of our driver workforce!". And, "there is no clarification on whether UK drivers' qualifications are to be recognised, so they could well be barred from driving their own vehicles on the Continent".

For the rest, Hookham seems to be getting a little confused. He refers to the "real show stopper", stating that, "under European law, unless an agreement is reached, there will only be 103 international haulage Permits to cover the 300,000 journeys made by British trucks to Europe each year".

"The logistics industry", he says, "is being asked to decide who would get a Permit to Drive if there are not enough to go around – in effect, being asked to destroy the businesses of its international haulage members".

But I'm not sure he's right here. According to the relevant Notice to Stakeholders, outside the EU we drop into the multilateral quota system managed by the International Transport Forum (ITF). Currently, we have no general allocation of annual licenses (as opposed to Turkey with 6,100) and 105 country-specific licenses – all of which run out at the end of 2018.

What he's picked up though is that the UK transport industry, in its Europe-wide operations, will be subject to quota limitations, which will have to be negotiated on a year by year basis. And, outside the 43-member ITF countries, bilateral permits will have to be negotiated.

Details aside, the transport industry is in for a torrid time, come Brexit. currently, with less than 300 days to the UK's scheduled departure from the European Union, and no progress made on trade talks, the lack of clarity over key issues is eroding the country's invaluable trading relationships with businesses overseas, and foreign businesses based in Britain.

"All these potential barriers were thrown up by the Government's decision to leave the Customs Union and the Single Market", says Hookham. "In return we were promised that 'frictionless' trade would continue through special agreements reached with the EU". But, he complains, "Trade talks haven't even started".

In the event of a No Deal Brexit it will be the logistics industry, which operates 24/7 365 days a year, that will have to pick up the pieces of the failure of politicians to agree. No doubt we will face the unwarranted ire of consumers and businesses if goods cannot be delivered on time.

"The industry’s frustration with the lack of progress is building daily. Logistics businesses simply cannot answer their customers’ questions about how they will move goods after Brexit. Manufacturers and retailers are losing faith and fear that post-Brexit Britain is at real risk of becoming nothing more than a series of road blocks at our ports and airports". Thus, Hookham avers, the logistics industry is being "hung out to dry".

And yet, the message isn't getting through to the "Ultras". Says one member of the Treasury committee, Charlie Elphicke has responded to the "Armageddon" concerns, declaring, "Usual suspects again saying we can't really leave the EU".

His "considered view is that, if we make the investment that's needed to ensure we are ready on day one, "we can continue to trade seamlessly whatever happens". This, he says, is because "It's just as much in the EU's interest as ours that we do so".

As for the pic – I'm getting bored with queues of lorries, so here's a picture of a cuddly kitten instead.