Richard North, 01/07/2019  
 


Even if I believed either Johnson or Hunt, presenting their pitches just before Conservative Party members get their ballot papers, it wouldn't make any difference. So much of what might happen is out of their control that they can't possibly deliver on their promises.

But, from an unlikely source, we get the impression that things are going to be worse than they make out. This is the Telegraph which is running a catch-up piece on what might happen on the Dover-Calais run after a no-deal Brexit.

For some years now, I have been writing about the potential impact of delays to the Channel crossing, coming to the conclusion that the most pressing problem was not Dover but Calais. Overloading the systems there would cause blockage in the port which would hamper and then prevent ferries unloading, thus preventing them returning to Dover. Eventually, this would bring operations to a complete halt.

The answer, I surmised was to adopt a system where the loading of vehicles at UK ports matched the rate at which consignments were cleared at their destination ports.

This eventually morphed into a permit system whereby international shippers would not be allowed to put their vehicles on the road unless they had permits or other forms of authorisation. These would have to indicate that their loads would most likely be cleared when presented at ports in EU Member State territories.

Halfway there, the Telegraph is now reporting on a deal made between the Port of Calais and Channel shipping lines. In the event of a no-deal Brexit, British trucks will be prevented from boarding ferries at Dover if they don't have the correct paperwork.

In this scenario, Dover would be used as a "filter" for traffic headed for the mainland, with the obvious possibility of massive tailbacks and disruption this side of the Channel. Vehicles without the necessary paperwork would be intercepted and stacked at Manston airfield as part of Operation Brock.

This, however, is very far from a problem-free solution. As a result of the "will-we, won't we?" attitude of politicians to a no-deal, UK exporters have been reluctant to invest in the systems and staff needed to cope. Thus, when it comes to matters like the all-important EORI numbers, only about 40 percent of businesses which need them have actually applied.

A lack of customs and forwarding agents is also causing major concerns, which means there is a chronic lack of expertise in the private sector. Thus, even if businesses all rushed to register, a lot of them just don't understand the processes and what they need to do to get ready, while sources of reliable information and assistance remain in short supply.

Part of the overall problem is the constant dismissal as "project fear" the warnings about the practical difficulties shippers will face, and exaggerated claims about the ease with which known problems can be circumvented.

Thus, while the EU is clear that it will need to charge tariffs and conduct checks on goods from the UK, there are still those who assert otherwise. Not least, there has been the widespread promotion of the GATT Article XXIV meme, while others have claimed that since UK goods currently conform with EU regulations, it would be "illegal" for the customs services of Member States to conduct checks.

This disinformation has fuelled complacency in some businesses, as Booker and I found when we talked to the senior management of a major UK port. This, combined with an extraordinary ignorance of how EU border controls in relation to third countries actually work, has contributed to the general lack of preparedness.

There is also the impact of what might be called the "but we're British" syndrome – a belief that the UK will be given special treatment, and that the rules for third countries will not be applied. There are those who even have difficulty accepting that we become a third country, the indignant denials suggesting a confusion with "third world country".

In the Telegraph report, there is emerging a suggestion that I raised last year that the effects on the ports from a no-deal Brexit might be something of a slow burn – thereby intensifying claims that warnings were part of "project fear".

The first day of Brexit, for instance – the 1 November – is a Friday so people will simply avoid trading. Then it is the weekend, when there are bans in France on heavy lorries using the road network, so commercial traffic will be light.

According to a Telegraph source, the worry is day seven when the queues have built up and the system is creaking. "And then", the source says, "you worry about day 21 when the automotive and aerospace firms that have been working through their stockpile run out of parts and start trading again".

What is not fully, or at all, explored in the report is the overall effect of measures in continental ports to keep traffic flowing. While there may be queues this side of the Channel, goods from EU Member States (and beyond) will get a relatively uninterrupted passage, especially as the UK government is committed to waiving checks in the immediate aftermath of Brexit.

This will not only ensure that many of the forecasts of shortages of food and other goods – made before contingency plans were in place – will not materialise. It will also mean that the effects on trade will be asymmetric, with UK producers hit harder than their Continental counterparts.

What I don't think has fully registered with many people in the UK – and especially the politicians – is how the legal relationships change once we leave the Single Market.

Currently, the example is often cited that it is as easy for a UK manufacturer to send goods to Milan as it is to send them to Birmingham. All the seller needs is a willing buyer, and a means of transport.

This changes with Brexit, where the exporter loses control of their goods once they enter the customs territory of any EU Member State. Such goods immediately come under customs control and the responsibility for releasing them from that control rests not with the exporter, but with the importer – which as a natural person or a company, must be established in an EU Member State.

It is then up to the importers to convince the authorities that the goods meet EU standards, for which they take legal responsibility, and it is the importers who must pay any fees, tariffs and other dues, before they can be released for free circulation within the Single Market. 

This change in status works very much to the disadvantage of third country exporters, as the importer is placed in the invidious position of having to guarantee the conformity of goods with EU standards, over which they do not necessarily have complete control. Obviously, it is a much safer bet to acquire goods from EU-based manufacturers, who retain the legal responsibility for conformity with EU standards.

All of this and more goes to the point I was making last year, where the biggest impact of Brexit will not necessarily be measurable in terms of visible congestion but in lost trade and reduced economic activity, with UK firms hit hardest. As a result one can expect the value of the pound to fall, accompanied by a surge in inflation and then a build-up of unemployment.

Yet, evidently without fully understanding the implications of what he proposed, Jeremy Hunt is prepared "with a heavy heart " to let businesses go to the wall. He argues that, if in order to respect the outcome of the referendum, we have to leave without a deal, he would do that.

As for Johnson. We have already had the "f**k business" response from him, which leaves both leadership contenders willing to sacrifice businesses on the altar of Conservative Party incompetence.

Any fool can take us out of the EU on a no-deal basis. It takes skill and determination to minimise the short-term economic damage which would inevitably accompany any Brexit strategy. Add the uncertainly for business of not knowing until the last minute what that strategy is, and you have the "perfect storm", geared to maximising the damage caused – a scenario where uncertainty wins.






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