Brexit: a certain lack of preparation

Brexit: a certain lack of preparation Richard North, 14/01/2021 Follow @eureferendum Largely, on fishing, I held my own counsel during the "future relationship" negotiations, but my general stance matched my view on remaining in the Single Market at the end of the transition period: sudden change was undesirable and there was nothing to be gained from immediate withdrawal from the Common Fisheries Policy. That is not to say that I had suddenly fallen in love with the CFP, any more than I had come to revere the Single Market. The point cannot be emphasised enough: whatever the demerits of continuing to participate in EU policies for a period, the penalties of sudden change were greater. And so it has turned out to be, no more so than with the fishing industry. Such is the crisis that has developed that the Guardian is now reporting that fresh seafood exports from Scotland to the EU are to be halted until 18 January - now extended a further five days. Yet, it is unlikely that such a short hiatus – even when extended - will have much effect. Export firms point to delays regarding health certificates, issues with the IT system interface between exporters and local authorities, and incorrect or missing customs documentation from customers. So fundamental are these problems that a break of a few days won't do much to help and there are fears that, unless the issues are resolved, the trade – which is said to be worth more than £1 billion to Scottish businesses – will collapse. All this has been brought about by the hard line adopted by the UK government in the trade negotiations, with the doctrinaire insistence on taking over fishing quota that the industry was not capable of exploiting, while failing to broker a deal which would safeguard the interests of businesses reliant on exporting. The British government stance has been driven by a notional attachment to the concept of "sovereignty" – equating this with control of our fishing grounds. There is thus a failure to recognise that to negotiate a transitional period, where the status quo holds, in return for concessions on access to the Single Market, is in itself a sovereign act. Without preferential access to the EU market, it should not have come as any surprise to the industry that the standard conditions applied to the export of fisheries products into the EU would apply. Furthermore, since the UK government had long-signalled that it had no intention of seeking concessions, the industry had plenty of time to prepare for the inevitable. Fishing for Leave, however, argues that what is happening to Scots seafood shipments is "nothing to do with Brexit". It blames the "Remain establishment" which, it avers, has had four years to prepare, but has not bothered, spending its energies instead on "thwarting Brexit". And yet, having tracked the progression of the Brexit process since the day of the referendum, I cannot recall the fishing industry cogently – or at all – calling for post-Brexit preparations to deal with non-preferential access. This is despite that, until almost the last moment, the emphasis was on a "no deal" Transend, which would have entailed precisely that situation. Nevertheless, it cannot be said that the fishing industry is alone in its lack of preparation – or foresight. We see, for instance, complaints from the supermarkets – addressed to the House of Commons Brexit Committee – that the TCA is "pretty much unworkable" for their businesses. We are told that Andrew Opie, director of the British Retail Consortium (BRC), was scathing of the government's last-minute delivery of the deal, which he said had resulted on shortages on supermarket shelves in Northern Ireland. The lack of notice, he claims, has left supermarkets scrambling to deal with mountains of "impenetrable" administration. Yet, once again, we have a situation which was all too predictable. The government has made no secret of its intention to secure a no-tariff, no-quota deal and has specifically excluded any deal on preferential access to the Single Market which removes the layers of non-tariff barriers. As for the Northern Ireland position, that was effectively settled with the conclusion of the Withdrawal Agreement, which was signed the day before we left the EU at the end of January 2020. The post-transition situation, therefore, in respect of both Northern Ireland and the rest of the UK, has been entirely predictable - so much so that we have had little difficulty spelling out on this blog the various difficulties which would be encountered, deal or no deal. On the other hand, when it comes to the supermarket chains, we are not talking about hole-in-the corner operations with limited resources. These are wealthy, powerful businesses, with easy access to government, and bestowed with enormous resources and influence. Despite all these advantages though, we see their representatives whingeing to MPs about their woes, with Ian Wright, director of the Food & Drink Federation, saying that suppliers remained "clueless" about some of the practical implications of the trade deal. Wright, like many of his colleagues, asserts that: "The biggest problem was that the deal was agreed very, very late". But the substance of the industry complaints cover ground unaffected by the deal, which were going to arise, irrespective of the nature of the deal actually agreed. Illustrating the difficulties faced, Wright cites one multinational company that found customs checks and certifications on a mixed consignment of goods to the EU, "would previously have taken three hours to complete now takes five days". This is, of course, the "groupage" problem, which I wrote about in March 2017 - nearly four years ago – again in April 2018, and many times subsequently. Behind the scenes, I have been talking privately to captains of industry, sometimes with Booker before he died, attempting to warn them of the difficulties they faced. Some might also remember that in 2016, I also gave evidence to the Treasury Select Committee warning of the perils of dropping out of the Single Market. When it comes currently to the Road Haulage Association, we see it being "shocked at the impact the new customs arrangements are having on the supply chain between GB and NI". Yet I recall briefing a senior official on the impact of the SPS provisions, shortly after the referendum. Since, with the settlement of the Withdrawal Agreement, these were to apply to NI traffic, the RHA has absolutely no business being "shocked". One can, of course, blame government (or successive governments) for the botch they have made of the Brexit process, and Johnson for his exaggerated (and untruthful) claims made about his deal, but it is not unreasonable to say that industry representatives have, in the main, been naïve and complacent. The media also plays a part in this. Their reluctance (or inability) to spell out in detail the problems we would encounter have contributed to the lack of awareness and the complacency that goes with it. Sadly, though, business complacency is not a unique phenomenon. Having worked in trade associations for part of my professional life, my job was to warn members of upcoming regulation and the problems they might present. This I did diligently, only to find in many instances when the regulations came into force, we were inundated with complaints by members that they hadn't been warned. With the late Peter Troy, who was a keen activist in the Federation of Small Businesses, I addressed many federation meetings, only to meet that same wall of indifference and complacency. Businesses, in many respects, are their own worst enemies. Sadly, many of the problems they face are now insurmountable, or without economically viable solutions. While Gove blathers about "mitigation", Barnier is telling us how it is. Many of the new regulatory frictions hampering cross-Channel trade will be impossible to smooth over, he says. They are the inevitable consequences of Johnson's Brexit. The way to deal with them was to head them off at the pass. Business should have been active in ensuring that government, the media and the public were made aware of the consequences of the actions being proposed. For now, though, their complacency is going to cost them dear. More to the point, it is going to cost us dear, for the idle and the naïve are not going to eat into their generous "compensation" and pension packages just because they have failed to see what was coming. Consequences are for "little people", and there are going to be plenty of those in the near future. Also published on Turbulent Times.

Richard North, 14/01/2021
Follow @eureferendum

Largely, on fishing, I held my own counsel during the "future relationship" negotiations, but my general stance matched my view on remaining in the Single Market at the end of the transition period: sudden change was undesirable and there was nothing to be gained from immediate withdrawal from the Common Fisheries Policy.

That is not to say that I had suddenly fallen in love with the CFP, any more than I had come to revere the Single Market. The point cannot be emphasised enough: whatever the demerits of continuing to participate in EU policies for a period, the penalties of sudden change were greater.

And so it has turned out to be, no more so than with the fishing industry. Such is the crisis that has developed that the Guardian is now reporting that fresh seafood exports from Scotland to the EU are to be halted until 18 January - now extended a further five days.

Yet, it is unlikely that such a short hiatus – even when extended - will have much effect. Export firms point to delays regarding health certificates, issues with the IT system interface between exporters and local authorities, and incorrect or missing customs documentation from customers.

So fundamental are these problems that a break of a few days won't do much to help and there are fears that, unless the issues are resolved, the trade – which is said to be worth more than £1 billion to Scottish businesses – will collapse.

All this has been brought about by the hard line adopted by the UK government in the trade negotiations, with the doctrinaire insistence on taking over fishing quota that the industry was not capable of exploiting, while failing to broker a deal which would safeguard the interests of businesses reliant on exporting.

The British government stance has been driven by a notional attachment to the concept of "sovereignty" – equating this with control of our fishing grounds. There is thus a failure to recognise that to negotiate a transitional period, where the status quo holds, in return for concessions on access to the Single Market, is in itself a sovereign act.

Without preferential access to the EU market, it should not have come as any surprise to the industry that the standard conditions applied to the export of fisheries products into the EU would apply. Furthermore, since the UK government had long-signalled that it had no intention of seeking concessions, the industry had plenty of time to prepare for the inevitable.

Fishing for Leave, however, argues that what is happening to Scots seafood shipments is "nothing to do with Brexit". It blames the "Remain establishment" which, it avers, has had four years to prepare, but has not bothered, spending its energies instead on "thwarting Brexit".

And yet, having tracked the progression of the Brexit process since the day of the referendum, I cannot recall the fishing industry cogently – or at all – calling for post-Brexit preparations to deal with non-preferential access. This is despite that, until almost the last moment, the emphasis was on a "no deal" Transend, which would have entailed precisely that situation.

Nevertheless, it cannot be said that the fishing industry is alone in its lack of preparation – or foresight. We see, for instance, complaints from the supermarkets – addressed to the House of Commons Brexit Committee – that the TCA is "pretty much unworkable" for their businesses.

We are told that Andrew Opie, director of the British Retail Consortium (BRC), was scathing of the government's last-minute delivery of the deal, which he said had resulted on shortages on supermarket shelves in Northern Ireland. The lack of notice, he claims, has left supermarkets scrambling to deal with mountains of "impenetrable" administration.

Yet, once again, we have a situation which was all too predictable. The government has made no secret of its intention to secure a no-tariff, no-quota deal and has specifically excluded any deal on preferential access to the Single Market which removes the layers of non-tariff barriers.

As for the Northern Ireland position, that was effectively settled with the conclusion of the Withdrawal Agreement, which was signed the day before we left the EU at the end of January 2020.

The post-transition situation, therefore, in respect of both Northern Ireland and the rest of the UK, has been entirely predictable - so much so that we have had little difficulty spelling out on this blog the various difficulties which would be encountered, deal or no deal.

On the other hand, when it comes to the supermarket chains, we are not talking about hole-in-the corner operations with limited resources. These are wealthy, powerful businesses, with easy access to government, and bestowed with enormous resources and influence.

Despite all these advantages though, we see their representatives whingeing to MPs about their woes, with Ian Wright, director of the Food & Drink Federation, saying that suppliers remained "clueless" about some of the practical implications of the trade deal.

Wright, like many of his colleagues, asserts that: "The biggest problem was that the deal was agreed very, very late". But the substance of the industry complaints cover ground unaffected by the deal, which were going to arise, irrespective of the nature of the deal actually agreed.

Illustrating the difficulties faced, Wright cites one multinational company that found customs checks and certifications on a mixed consignment of goods to the EU, "would previously have taken three hours to complete now takes five days".

This is, of course, the "groupage" problem, which I wrote about in March 2017 - nearly four years ago – again in April 2018, and many times subsequently. Behind the scenes, I have been talking privately to captains of industry, sometimes with Booker before he died, attempting to warn them of the difficulties they faced.

Some might also remember that in 2016, I also gave evidence to the Treasury Select Committee warning of the perils of dropping out of the Single Market.

When it comes currently to the Road Haulage Association, we see it being "shocked at the impact the new customs arrangements are having on the supply chain between GB and NI". Yet I recall briefing a senior official on the impact of the SPS provisions, shortly after the referendum. Since, with the settlement of the Withdrawal Agreement, these were to apply to NI traffic, the RHA has absolutely no business being "shocked".

One can, of course, blame government (or successive governments) for the botch they have made of the Brexit process, and Johnson for his exaggerated (and untruthful) claims made about his deal, but it is not unreasonable to say that industry representatives have, in the main, been naïve and complacent.

The media also plays a part in this. Their reluctance (or inability) to spell out in detail the problems we would encounter have contributed to the lack of awareness and the complacency that goes with it.

Sadly, though, business complacency is not a unique phenomenon. Having worked in trade associations for part of my professional life, my job was to warn members of upcoming regulation and the problems they might present. This I did diligently, only to find in many instances when the regulations came into force, we were inundated with complaints by members that they hadn't been warned.

With the late Peter Troy, who was a keen activist in the Federation of Small Businesses, I addressed many federation meetings, only to meet that same wall of indifference and complacency. Businesses, in many respects, are their own worst enemies.

Sadly, many of the problems they face are now insurmountable, or without economically viable solutions. While Gove blathers about "mitigation", Barnier is telling us how it is. Many of the new regulatory frictions hampering cross-Channel trade will be impossible to smooth over, he says. They are the inevitable consequences of Johnson's Brexit.

The way to deal with them was to head them off at the pass. Business should have been active in ensuring that government, the media and the public were made aware of the consequences of the actions being proposed.

For now, though, their complacency is going to cost them dear. More to the point, it is going to cost us dear, for the idle and the naïve are not going to eat into their generous "compensation" and pension packages just because they have failed to see what was coming. Consequences are for "little people", and there are going to be plenty of those in the near future.

Also published on Turbulent Times.


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