EU Referendum

Brexit: bypassing the UK


In October last year we picked up the news that the ferry company CLdN SA was preparing to deploy its newly-built ro-ro ferry, named the Celine, to the port of Dublin. This 234m giant, with the capacity of 8,000 lane metres (equivalent to nearly 500 articulated trucks), had originally been intended to serve the UK-Belgian route but has now been pressed into service on the Dublin-Zeebrugge route, by-passing the UK route to the continent via Holyhead.

At the time, I remarked that, with additional ferries also planned to exploit the major expansion of Dublin port, we were seeing practical steps being taken to reduce the Irish dependence on the UK and to forge increased direct links with EU Member States. And now, Celine has a brand new sister in the Delphine, which has just made a maiden call to Dublin Port. It will also serve the Rotterdam-Zeebrugge-Dublin route.

In many ways, this was inevitable, although there is something of a "bidding war" going on. A new "super cruise" ferry will carry passengers from Holyhead to Dublin from 2020 after Irish Ferries ordered a new ship. This €165.2 million vessel will take up to 1,500 cars or 330 trucks across the Irish Sea. It will be the largest cruise ferry in the world in terms of vehicle capacity, and will be one of two super-cruise ships serving the route.

Irish Ferries had previously warned of a potential "significant displacement of traffic" from Holyhead to ports in northern England and Scotland if Brexit brings stringent checks at Welsh ports, while more relaxed arrangements remain on the land border. But Eamonn Rothwell, Chief Executive Officer for Irish Continental Group, the owners of Irish Ferries, said the new ship "underpins the confidence" they have in their markets.

On the other hand, Brittany Ferries has announced what it says is the first ever direct ferry link between Ireland and Spain. The company will operate two direct return sailings weekly from Cork to Santander in Northern Spain, from the end of April to November of this year. A new ship will be chartered to serve the route.

But it is on the political front that we're seeing an even more interesting development. Budget commissioner Günther Oettinger has been Dublin to tell the Irish parliament that there's EU money in that there Brexit. He was there to discuss the multiannual financial framework budget for 2021 to 2027, telling the parliament's Joint Committee on Finance, Public Expenditure and Reform that the new EU budget would have provision to fund "shocks" arising from Brexit.

The European Union, Oettinger said, could fund new ways of connecting Irish and continental European ports if a "super-hard Brexit" cut off access to the UK. EU financial reforms meant money could be redirected to ensure the transport of products from Irish ports (Dublin pictured) to Rotterdam, Antwerp and other EU ports, bypassing the UK.

There is, of course, the small matter of the annual €12-14 billion hole left in the budget as a result of the UK leaving, but it does seem a measure of the EU's determination to maintain business as usual that money is potentially being made available, despite expected cuts in the cohesion fund and CAP payouts.

The one thing one can't fault is Oettinger's timing. His pep talk comes just at the moment when the EU seems to be calling time of Theresa May's latest journey in the Tory fantasy Brexitland.

In a stinging analysis of her Mansion House speech, obtained by the Guardian, the General Secretariat to the EU Council has dismissed her ideas as "more a domestic communication battle than proposing real substance and ways forward". She used the language of finding a balance between rights and obligations, says the analysis, but essentially argued that the UK would decide on that balance by itself for each sector of the single market.

Thus, while Mrs May had promised "clarity" on the UK's future trading relationship, her speech did not address the question of the unresolved tension in the UK position.

And, although she called for a "new and better model", it was one that does not yet exist, with the Secretariat describing it as "unworkable" and "double cherry-picking". Furthermore. there had been "zero progress" when it came to ideas for customs cooperation.

This EU analysis is very much on the ball and, following Stefaan de Rynck's lecture yesterday, even elements of the British media are beginning to realise that the game is up. Late on Monday night, we had the Guardian reporting that de Rynck had dealt a "deals blow to Theresa May's free-trade proposal", referring specifically to his comments on mutual recognition of standards.

With the subject thus broached, other newspapers piled in, mostly lifting from the Guardian story. By yesterday afternoon, the story had even penetrated to the fog of Robert Peston's mind, enough for him to realise that mutual recognition was an issue, even if he didn't really understand why.

Reuters then followed up with a report of how French economy minister Bruno le Maire had ruled out the idea of a free trade deal for financial services and said that UK companies might have to rely on "equivalence".

This cuts right across Mrs May's ideas of mutual recognition, which would amount to a blanket permission for UK firms to trade in the EU on the basis on their conformity with UK law. Applicable to third countries, equivalence is based on a case-by-case assessment of regulatory conformity, specific to each enterprise, sometimes taking years before approval is given.

Despite all that, Chancellor Philip Hammond is to insist that the UK can overcome EU opposition and include financial services in a post-Brexit free trade deal. He is dreaming.

In her speech, Mrs May also raised the prospect of the UK's continued participation in some of the EU's regulatory agencies – which from the outset seemed over-optimistic. Now, in a select committee appearance yesterday, David Davis admitted to MP Stephen Kinnock that some agencies, such as the European Medicine Agency, had no provision for third-country membership. EU laws would have to be re-written to allow continued UK participation.

Davis could not offer any assurances that the EU would even be prepared to negotiate on such issues. The EU's Notice to market authorisation holders in respect of medicines is not at all promising.

Further, if any concessions are given to the UK, similar deals may have to be given to other trading partners, damaging the entire structure of the EU system. For that reason alone, it is most unlikely that there will be any special favours coming the UK's way.

More of the EU's attitude may come clear when, delayed for one day, the EU publishes its negotiating guidelines today on the UK's trade relationship. In the meantime, we're getting unhappy messages from Vauxhall, with Carlos Tavares, chief executive of PSA, saying that the lack of clarity over the terms of the UK's departure were "a big concern".

The way it's going, though, the uncertainty is to be welcomed if the effect of clear statements is simply to confirm the parlous position of the UK. Basically, in less than five days, Mrs May's Mansion House initiative is unravelling, leaving the cupboard bare.

The situation gets even worse with the news that the UK's trade with more than 70 countries could "fall off a cliff" after Brexit, while ex-ambassador Sir Peter Westmacott says that the prospect of easy UK-US trade deal is an illusion.

For all that, it is hardly to the EU's advantage to pull the plug - just yet. If, as with Ireland, it is to promote the reorientation of trade away from the UK, looking for alternative routes and import substitution, it is going to need time to make the arrangements. On top of that, there are the border checks to organise and the infrastructure to provide.

On that basis alone, a prolonged transition period would suit the EU as much as it would the UK – perhaps more so if the UK is then bound to make substantial, ongoing contributions to the EU budget. It could be that the longer Mrs May prevaricates, the better off the "colleagues" will be. And if they appreciate this, they will not be too severe on the UK in the guidelines due out today. They may be couched in terms of keeping the discussion going and the options open.

Whatever the outcome, things do not look good for Mrs May. She has invested heavily in her pack of six, "road to Brexit" speeches and she is no further forward than when she started. She can hardly pull another speech out of the bag and, in any event, there would be no guarantee that it would produce any better results than the last.

Mostly, then, we need to be watching the Irish ports and the growth of sea traffic to the continent. And with every ton shipped direct to Europe, Mrs May's aspiration will take another hit.