Richard North, 01/10/2020  
 


There actually comes a point when one is tempted to sit back and let them get on with it – not that one can do anything else. I refer, in this case, to our highly-paid (and probably overpaid) captains of industry who, after all these years, still don't seem to have got to grips with the implications of Brexit.

Specifically, we have the example of three industry representatives who yesterday addressed Hilary Benn's Brexit committee, retailing a litany of woes, forecasting that trade will be a "day-to day struggle" after Brexit is completed.

Of the three representatives, it was Paul Everitt, chief executive of the ADS Group, the aerospace trade organisation, who came up with the phrase "day-to day struggle", saying that this would be the case "whatever happens now".

To that extent, at least we're getting a little realism from industry, where there has sometimes tended to be excessive resort to rose-tinted glasses – a naïve optimism which hardly seems to fit with the image of hard-headed business executives.

But, in Paul Everitt, we certainly seem to have a man imbued with somewhat unrealistic expectations, having criticised the UK's decision "to pull out" of what he calls the European Union Aviation Safety Agency - EASA. The man actually argues that continued membership had been "negotiable".

This, as I've pointed out before, is the same mistake made by Mrs May, in her speech on our future economic partnership with the European Union, delivered on 2 March 2018.

Then, she wanted to explore with the EU, the terms on which the UK could remain part of EU agencies, such as EASA, arguing that "associate membership" was the only way to meet our objective of ensuring that UK products "only need to undergo one series of approvals, in one country".

This was also a line taken by the dismal CBI which suggested that the UK "could still exert influence over important regulatory decisions through continued membership of the many EU agencies - such as the ones governing aerospace and chemicals - in which other non-EU nations like Turkey currently participate".

Here, you really do wonder what these people do for brains. The Turkish "participation" is documented, and I explored the relationship very thoroughly in April 2018, when it transpired that Turkey is not a member, in any shape of form, of EASA.

All Turkey has is a Working Arrangement, which ties in with Regulation (EC) 216/2008, which sets up EASA and establishes its operating rules. Here, Article 66 refers, where third country "participation" requires adoption and application of Community law, under the supervision of the agency – for which payment has to be made.

In Mrs May's speech, she rejected the idea of the "Norway model", where we would stay in the single market. One of her objections was that it would mean "having to implement new EU legislation automatically and in its entirety". Yet, in pushing to "remain part of EU agencies", the only option open to her was the same automatic implementation of EU legislation, with no say in the making of the rules.

By contrast, Norway – in common with other Efta/EEA members - is by virtue of an amendment to the EEA Agreement, entitled to participate fully in the Management Board and "have the same rights and obligations as EU Member States, except for the right to vote".

That relationship is exclusive to Efta/EEA members, along with similar rights in 17 other agencies. But, under no circumstances, are these rights accessible to other third countries. Everitt really should know by now that such a relationship is not negotiable.

As we see though, Everitt isn't the only one whingeing about the miserable fate awaiting industry. Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, is on the case, warning of the "cost and delay" – of up to 6 weeks – of re-testing when a medicine is exported to the EU.

Yet he's another one of these "captains of industry" who clearly lives in an alternate universe. The pharmaceuticals industry, he says, is pushing for the fallback of a "mutual recognition agreement" in order to facilitate the flow of medicines to the EU. At his level, Torbett really should know that "mutual recognition" is a facility afforded only within the Single Market.

The third of the triumvirate was Neil Hollis, of the chemical giant BASF. He told MPs that the chemical industry could suffer losses of £1 billion, through new registration costs, a loss of innovation and some chemicals no longer being available. "There's no positive spin on this".

This is a direct result of the UK pulling out of REACH, in favour of its own regulation. "To put it bluntly, chemicals available now", says Hollis, "will remain on the EU market, but will disappear from the UK market".

Elsewhere, the car industry is being reminded that the UK's departure from the Single Market is going to extract a significant financial penalty, with the BBC reporting that the EU is refusing to consider relaxing rules of origin on the manufacture of UK automobiles.

The UK had been looking for a deal with the EU where components from Japan and Turkey could be counted as British – under what are known as "cumulation", in order that finished vehicles can be exported to the EU without attracting penal tariffs because of the proportion of non-UK components – even if a "zero tariff" deal is agreed with the EU.

This has come to light in a letter from David Frost to the car industry, revealing that EU negotiators have neither been willing to discuss these nor share any proposed text [on reduced tariffs] with us. Discussions, it seems, have been stalled by the impasse over fishing rights and state aid.

I should imagine that it will be no consolation at all to learn that full cumulation is only operated between the European Economic Area (EEA) partners (and on the basis of some of the protocols with Tunisia, Morocco and Algeria).

Sadly, at this eleventh hour, there is very little relief for industry. We've had the foxes but now we're seeing the chickens coming home to roost. But it's a bit late for industry to start bitching now when there is so little that can be done.

It might have helped if there had been some serious support for the Efta/EEA option at the time when it mattered, with industry pointing out how this would have avoided most of the problems they are now confronting. But they sat on their hands, and now it is too late. Opportunities have been lost and there is no going back.

Also published on Turbulent Times.






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