Richard North, 25/06/2018  
 


Time is running out to save thousands of jobs. That is the message on the Brexit negotiations sent to Teresa May, Donald Tusk and Jean-Claude Juncker, by five of the UK's main trade groups: the CBI, the Institute of Directors, the British Chambers of Commerce, the manufacturing organisation the EEF, and the Federation of Small Business.

Via the Sunday Times, we learn that this is a sign that "bosses are fast losing patience with the slow pace of negotiations". And now, they are demanding a greater input over the Brexit deal.

How seriously we are supposed to take this is not specified, but a clinical appraisal of these groups' inputs suggest that they have very little to offer. The latest EEF report, for instance, is incoherent, acknowledging that we are to leave the Single Market yet calling for (amongst other things), the ability to participate in developing harmonised product standards and continued adoption of European standards and technical requirements.

This is industry's own version of "cakeism" but, despite Airbus's recent entry into the fray, it is dwarfed by the ineptitude of the CBI which, on aviation regulation calls merely for the UK to continue to play a leadership role in EASA. There is not a whisper of the need to ensure continuity of certification.

In general terms (and all it can propose is generalities), it tells us it wants "a barrier-free relationship with our largest, closest and most important trading partner" and "a clear plan for regulation that gives certainty in the short-term, and in the long-term balances influence, access and opportunity".

Both the CBI and the EEF have called for Britain to remain in the EU customs union, while the Institute of Directors recently launched off into an excursion of its own, with "a hybrid option for a UK-EU trade framework". This went one better, in calling for a "partial" customs union, an idea so mad it has effectively taken this organisation out of the game as a serious player.

By contrast, however, the British Chambers of Commerce contribution to the well of human knowledge could best be described as slender. Its idea of reducing non-tariff barriers is that "Government must work with businesses to identify the most obstructive barriers, and collaborate with other countries to alleviate them".

That leaves the Federation of Small Businesses which, in its usual muddled way, also wants large helpings of cake to have and to eat.

In the immediate to short term, it wants the government to "secure the easiest and least costly access to the EU single market". This means, it says, a comprehensive trade agreement "securing barrier-free access, covering both goods and services, across all sectors". Its medium to long term objective is a free trade area of an unspecified nature.

Given the vacuity of the industry response to date – as expressed by trade representatives - one has to take with a pinch of salt their complaints that "their expertise is being ignored in favour of ideology". None of the five have yet to demonstrate an expertise, other than in the ability to craft endless clichés. "Frictionless trade with Europe is a top priority for their members", they say.

To that extent, it is quite understandable that Health Secretary Jeremy Hunt and another minister have been less than sympathetic to the pleas of business. Interviewed on the Marr show about the Airbus intervention, Hunt thought it "completely inappropriate" for businesses to be making these threats of the kind that Airbus had made.

Here, the focus is in the activities of individual companies rather than their trade representatives. And Hunt argues that "we are in an absolutely critical moment in the Brexit discussions", which means "we need to get behind Theresa May to deliver the best possible Brexit, a clean Brexit and what businesses want".

More dangerously, the Health Secretary seems to regard multinational companies as "siren voices", asserting that the European Commission "has got absolutely no interest at all in saying that these Brexit negotiations are going swimmingly".

They were, he says, "always going to be saying that this is going to be very, very tricky", to which effect the interventions of Airbus, BMW and Siemens are seen as "part of their negotiating tactics", against which "we have to stand firm".

In some ways, therefore, Airbus has played a relatively good hand quite badly. Although it may have a point about future investment decision, its more immediate concern is continuity of certification for its suppliers, so that it can ensure that its manufacturing is not interrupted.

Tactically, it might have been more appropriate to have concentrated on this issue. And while staying within the Single Market is one option that would keep the company in business. Under current law, there is also the possibility of the bilateral recognition agreement, which opened the way for Airbus to ask for a commitment to this, in the event that we do not stay in the Single Market.

In fact, the basic regulation on aviation safety has just been substantially amended, the new versions gaining approval in the European Parliament on 12 June. This new law offers a further option, empowering the Commission to adopt delegated acts which enable it to accept certificates from third countries, based on establishing "conditions and procedures for achieving and maintaining the necessary confidence in [the] regulatory systems of [those] third countries".

This is not much of a short cut, as it requires the third country to establish a formal working arrangement with EASA, a commitment to adopt the EU's aviation safety law in full, and the acceptance of EASA supervision and inspections – for which substantial charges are levied.

Nevertheless, outside the framework of the Single Market, there are now two potential options open to Airbus by which it can ensure the continuity of supplies, and it would have been perfectly legitimate for the company to ask the government for a commitment to explore either or both.

The issue then, would not have been about Airbus moving out of the UK (which solves nothing), but one of protecting UK jobs – the alternative being to source supplies from suppliers established in EU Member States. Rightly, the company could also have asked for detail for the UK government's plans to avoid congestion at the ports and delays in securing customs clearance – more legitimate area of concern.

Thus, we actually see a lack of tactical acuity on the part of the company, leaving it open to charges of political game-playing. That three international companies have done likewise, less than a week before the crucial European Council, lays them wide open to charges of "Project Fear 2", despite the legitimacy of their concerns.

That has opened the way for Economists for Free Trade and other idiots to write a letter to the prime minister, asserting that the European Commission is "deliberately deferring discussions on the UK's future trading relationship with the EU27 post-Brexit".

In the event that it continues at the European Council, the signatories, which include Lord Lawson, Peter Lilley, John Redwood, Owen Paterson and Kate Hoey, demand that the UK "formally declare that we are assuming that we will be subject to WTO rules from 30th March 2019".

This, they say, "would provide businesses with absolute certainty about the future and enable immediate steps to be taken to implement our independent trade policy". If, early next year, they add, "the EU then decides to come back to discuss free trade, this will be a bonus – but it is not and should not be treated as essential".

As always, we get the "stupid schtick", as the group asserts that countries "including the United States and India" do not pay to sell to the EU but successfully trade from outside. "The UK too", they say, "can do this without being a member of the EU through WTO rules".

Never mind the 38 EU-US listed trade deals on the EU treaty database, including the US-EU Bilateral Agreement of the Safety of Aviation which facilitates the trade in aircraft and their parts, and the smooth running of transatlantic air services.

The one thing we actually cannot afford to have with the EU, therefore, is just a free trade agreement. As Pete points out - in an excellent exposition - "free trade" is just a slogan. We need full regulatory alignment, or the kits representing aircraft with British parts will look like the one in the picture above – the only thing left for British industry to make (although they are currently made in India).

Yet still, there is more nonsense than sense talked, much of it coming from industry and much of the rest coming from the "Ultras" in their various guises. The lack of sense from government is only part of our problem.






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