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Brexit: a council of ignorance

2017-07-20 04:30:23

Two weeks ago, on 6 July, Michel Barnier gave a speech in Brussels, addressing the issue of Brexit. We reported it the following day, but it was largely ignored by the media.

"For a third country", Barnier said, "one hundred percent of imports of live animals and products of animal origin … are and would remain subject to EU border controls". To this, he then added: "Moreover, before these products can be exported from a third country to the European Union, the sanitary and phytosanitary conditions for these exports to take place would have to be established".

On 29 March 2019, the UK in relation to the EU becomes a third country and, says Barnier: "One sees clearly, to speak frankly, the constraints that this entails for the agri-food industry". And one does indeed see "clearly" the constraints this entails. Specifically, these constraints are set out in Regulation (EU) 2017/625 and, in respect of animals and products of animal origin, Regulation (EU) 2016/429, carried over from previous legislation already in force.

According to Article 229 of Regulation (EU) 2016/429, no animals and products of animal origin may be admitted into the Union from a third county unless that country is officially listed as one permitted to export to the EU. Similar provisions apply to foods of plant origin although we do not yet know what rules will apply as they are under revision.

Country listing, though, is not automatic. Those who want to be vastly entertained can find the criteria set out in Article 230 of 2016/429. This cross-refers to Article 266 and, if I have understood this correctly, six months must elapse between the Commission approving a listing and it taking effect.

Clearly, the UK is not currently on the third country list. It cannot be, because it is a member of the European Union. Nor will it be when we leave the EU, or for some months thereafter.

Because of this (and the restrictions on other foods), I was confidently able to assert on 18 July that: "As near as can be certain, on exit day – 29 March 2019 – UK exports of food to EU member states are going to stop". I added: "This is not a matter for negotiation and nor can it be avoided. It is an inevitable consequence of the UK leaving the Single Market and becoming a 'third country'".

What I was actually doing was putting clothes on Barnier's statement. The effect of what he was saying is exactly that which I assert openly – that from exit day and some time thereafter, there are going to be no food exports to the EU. And for the foreseeable future, exports are going to be heavily restricted.

Now, if you don't accept that, then we're no longer talking rational politics. It can only be that you do not believe M. Barnier, in which event we're dealing with belief systems. You must believe that the EU's chief negotiator is bluffing and that the EU will not apply its own law to the UK when it becomes a third country.

But, if this is really the case, as one commenter asks: "why are we not hearing from the likes of Asda or Tesco?". Possibly though, because these supermarket companies are mainly importers, they are not the ones we should expect to hear from. However, we should certainly have heard from the likes of the NFU, the Food and Drink Federation and the trade bodies representing the meat industry.

Yet, in a strange vacuum of information, organisations such as the NFU have made no mention of crucial issues such as the need for inspections at the point of entry. The best I can find is a powerpoint presentation from Alan Matthews, Professor Emeritus of European Agricultural Policy, Trinity College Dublin.

Headed: "Implications of Brexit for the UK and EU meat sectors", this was delivered to the Agriculture and Horticulture Development Board Meat Export Conference, on 29 June 2017. And if it truly represents meat industry (and farming) thinking on Brexit, they are in very serious trouble.

On one of his slides, Matthews asserts that "we want to avoid or minimise … inspection and sampling at Border Inspection Posts", whence on another he states that it is: "Highly desirable to have a series of Mutual Recognition Agreements attached to [a Free Trade Agreement] to allow for equivalence and mutual recognition of inspection procedures".

It is certainly possible to reduce inspection and sampling but, on the basis of EU law, it cannot be avoided altogether. And even if inspection is minimised, the goods must be presented to a Border Control Post (to use the updated terminology) for document checks and the issue of a Common Veterinary Entry Document (CVED) – see also Commission Regulation (EC) No 136/2004.

As regards mutual recognition of inspection procedures, as the Canadians are finding, there is no such thing. The exporting country either has to adopt EU procedures in full, or the goods will not be admitted. And, while there is provision in EU law for pre-export controls to be carried out by third countries, these are normally confined to specific checks, such as the determination of aflatoxin levels in groundnuts.

In actuality, seeking approval from the Commission for pre-export controls might be a way out – although widescale application would be an unprecedented concession. But, again, approval cannot be given automatically. Formal applications must be made for all the categories of product for which approval is sought, and the Commission must carry out extensive investigations to ensure that the condition set out in EU law are satisfied.

Should this be an option, then one would expect the relevant trade bodies to be pushing for precisely this sort of thing to be included in the Article 50 settlement. But, on this, there has been total silence, with no indication that the industry is even aware of this possibility.

Looking at this in the broader context, this very much gels with the observation of Karen Briggs at KPMG that businesses are "in denial" over Brexit, with some refusing to acknowledge the "significant risks" that will accompany the UK's departure from the EU.

These organisations tend to argue that there is too much uncertainty and complexity or, post general election, they have unrealistic views on the Brexit outcome. As a result, they have yet to take measures to protect themselves from the imminent Brexit fallout, in what is becoming "an increasingly risky and untenable strategy". Ducking major decisions, Briggs added, was no longer an option and firms must make contingency plans immediately.

Analysis of the food industry, though, would suggest that this is not just a question of denial. There also prevails an extraordinary level of ignorance and complacency, the latter bolstering a firm conviction that everything will be alright on the night.

What price then Theresa May's new plan to chair a new advisory group, a so-called "business council", comprising the representatives of major businesses and trade bodies, in the expectation that they will keep her appraised of business sentiment.

Rather, it seems, she will be exposed to that lethal combination of ignorance and complacency, fortified by a strange naivety exhibited by many business figures who become involved in political issues. The hard business sense that drives them in their own enterprises seems to desert them, and they become as gullible as any ing้nue when exposed to the blandishments of politicians.

Certainly, we are not getting the alarm signals from business that we should be getting. One of the few trade bodies on the ball being is that representing the pharmaceutical industry but, that apart, all Mrs May will be getting is council of ignorance.

As to the smug, self-satisfied academics on the Brexit trail, these are scarcely making an impact. Briefly, though, we saw in the Independent yesterday (before it was pulled) an article inspired by a report from "UK in a Changing Europe" which asserts that a "no deal" Brexit would be "a political mess, a legal morass and an economic disaster".

Covering only a fraction of the territory we've already covered, and six months after we started to address the issues, it tells of chaos at UK customs due to new checks, tariffs on exports, UK nuclear plants unable to operate, British airlines unable to fly to Europe, UK developed drugs denied approval for sale in Europe. legal limbo for British citizens abroad and EU citizens in the UK and Economic crisis in Northern Ireland.

These and many more such issues should be the stuff or urgent debate and be dominating the media. The cliff-edge looms and all we get is unguided prattle, with talks potentially stalled over the so-called divorce bill.

Nothing it seems, is capable of penetrating the unreal world of the politicians, while the businesses which depend for their survival on an effective Brexit have largely gone AWOL. Their silence will be their undoing.