EU Referendum

Brexit: drawing conclusions


I am not sure of the value of the Prime Minister going to the Mansion House in the City to give a policy speech on Brexit, as she did last Friday, only then to turn up at the House of Commons yesterday, essentially to repeat the same speech.

There was a time when I might have complained that constitutional proprietaries demand that a prime minister should address the House of Commons first, and hold herself accountable to the MPs. But, for all that those assembled MPs had to offer, she might as well not have bothered.

The only marginal entertainment came when Emma Reynolds (Lab, Wolverhampton North East) asked Mrs May to name an international border between two countries that were not in a customs union and had different external tariffs where there are no checks on lorries carrying goods at the border.

Mrs May, in her usual way, resorted to waffle, stating that there were "many examples of different arrangements for customs around the rest of the world". Indeed, she said, "we are looking at those - including, for example, the border between the United States and Canada".

That didn't really answer the question but it was good enough for the legacy media. The Guardian managed a headline out of it, declaring: "Post-Brexit Irish border could be like US-Canada, says May", retailing a "challenge" by shadow Brexit minister Jenny Chapman, who pointed to the presence of armed customs guards on that border.

In fact, just looking at one of the customs posts (pictured above), at the Ambassador Bridge, one can immediately see that there is not the remotest possibility that the US-Canada border arrangements could provide a model for the Irish border. One struggles to imagine what Mrs May must have been thinking of, even mentioning this border.

The Irish Times had even more fun of it, having Taoiseach Leo Varadkar dissing Mrs May's apparent suggestion. Varadkar actually visited the US-Canada border last year, when he said such a system would not solve the potential issues that could arise between the Republic and North after Brexit.

Perhaps the best (although not the last) laugh went to a tweet from Sam Ashworth-Hayes who posted pictures of a US border post – including dense traffic queues – remarking that, if Theresa May says that the Irish border could look like the one between US and Canada, she is "completely right".

But while so many were having fun at the prime minister's expense, no one seems to have noticed what was embedded in the last paragraph of her statement to the Commons. "My message to our friends in Europe is clear", she said, then adding: "You asked us to set out what we want in more detail. We have done that".

Readers will recall from my report of yesterday Irish foreign minister Simon Coveney saying that Mrs May hadn't "really gone into any more detail than we've already heard in terms of how she's going to solve the problem of maintaining a largely invisible border on the island of Ireland".

But here we have Mrs May expressing her view that she had provided more detail. And indeed she had, introducing the concept of mutual recognition of standards as a core element of the UK's trade relationship with the EU. But, in the 16 thousand-words plus of the statement and the accompanying "debate", the prime minister was the only one to mention it – three times. Not a single MPs in the chamber brought up the issue.

However, later that evening, there was someone who did. This was Stefaan de Rynck, senior advisor of Michel Barnier, speaking at a seminar hosted by the European Institute and the Institute of Public Affairs at the London School of Economics.

Helpfully recorded and posted on Facebook, we thus were able to hear his comments. There is, he observed, a lack of understanding in the public debate about what the Single Market is. As to mutual recognition, this could exist between member states but the joint rule-making system could kick in at any time and take over from it.

In financial services, as a result of the financial crisis, he noted, we have moved away from mutual recognition of national standards to a centralised approach, adopting a single European rulebook with common enforcement structures strengthening single enforcement and supervisory structures.

In this case, mutual recognition was abandoned to avoid the problem of regulatory arbitrage between different systems – with service providers essentially shopping for the most relaxed system.

This sort of issue, the emergence of regulatory agencies and the strengthening of EU policies, has led to a reduced reliance on mutual recognition. The essence of this is that mutual recognition is a diminishing feature of the European system.

It was thought at one time, de Rynck averred, that it could have led to market efficiency but it had failed. There was now a "single rule book" and greater use of harmonised standards, alongside central surveillance and supervision.

Even when it applied, mutual recognition could work only within the framework of the Single Market. This necessarily meant a "pretty firm rejection" of Mrs May's idea for extending it to form the basis of a post-Brexit relationship. Her detailed offering was doomed before it has even got off the ground.

Outside the cloistered domain of the theologians, however, the real world is intruding, with Airbus now warning that, in the lack of clarity from the centre, it was having to reconsider its post-Brexit position.

It would, the company said, would soon have to decide whether to start stockpiling parts to avoid border delays, adding costs that could make its British operations uncompetitive.

Katherine Bennett, senior vice-president for Airbus in the UK, said that despite some welcome assurances from government over Brexit, there was concern that customs and paperwork could delay its manufacturing process. She said: "It's critical for our business to ensure that the wings that we build in Broughton and in Filton can get to France and Germany for the final assembly line".

The company spent about £5 billion each year on the UK supply chain, she said. "It's really important that the parts don't get held up in warehouses. We have a very just-in-time delivery system". And, on that basis, a three-hour wait on a lorry at Dover "would be a critically bad issue for Airbus", as would be delaying cargo flights carrying completed wings to Europe.

There we have the great divide. While Mrs May is accused of "trying to dance on the head of a pin that simply doesn't exist", the practical issues that determine how businesses can function in a post-Brexit world are not being addressed.

The MPs can play their dire little games and dance around the head of Mrs May's pin, but international businesses are wondering whether they still have a future in the UK. If they are not given answers, they will draw their own conclusions.