Friday 24 February 2017
In Stoke, it would be hard to imagine a better set of circumstances for Ukip to fight a by-election, says The Times: a neglected Labour safe seat, so disillusioned barely half of people even bothered to vote in 2015; a seat which voted overwhelmingly for Leave, up against a pro-Remain Labour candidate who called Brexit a massive pile of s***”; a seat abandoned by a metropolitan TV historian who had been parachuted into the area but now wants to run a London museum.
Yet somehow Nuttall and his team managed to contrive a situation where Ukip's self-styled salt-of-the-earth Scouse bloke had a grip on the truth looser than Nigel Farage holding his 10th pint.
In the event, Nuttall gained two thousand less votes than his party did at the general election, squeaking in at second place with less than a hundred votes more than the Tories. The unfashionable view of his performance is that he managed to get only 9.4 percent of the electorate to turn out and vote for him. This may be that "glass ceiling" of ten percent which prevents small parties from prospering.
However, it was not a good result for Labour. They lost just over four thousand votes, resulting in a new MP being elected on a 38 percent turnout. That means we have an MP sent to Westminster by 14 percent of the electorate. A democratic mandate this is not.
But if democracy is against the ropes, The Times allows their Matt Chorley to argue that the stage is set for Ukip to disappear from view. We can only hope that is true. A party that appointed Gerard Batten as their lead Brexit spokesman has nothing to offer and nowhere to go.
A win for Nuttall would have given this silly, vain little man an undeserved platform in an institution that is already badly tarnished. Adding his voice to the collective ignorance would not have been an improvement. In fact, it could only have done harm.
Under different leadership, there is a theoretical possibility that Ukip could make an intelligent contribution to the Brexit debate. But, since there is no prospect of testing that theory, perhaps the best thing that Ukip could do is follow the path signposted for it by The Times and disappear from view.
If it cannot make a sensible contribution to the debate, it is better that it makes none at all. There is too much noise already.
Friday 24 February 2017
I actually saw a website recently which suggested that the UK could adopt "third-country" status on leaving the EU. Although written in the context of financial services, it nevertheless betrays the mindset – one of staggering proportions – of those people who are completely failing to understand the implications of Brexit and Mrs May's retreat from the Single Market.
A major part of the problem, I rather feel, is the inability to see the situation through the eyes of the EU. Thereby, people simply fail to understand that, when we leave the EU – and also the EEA – we automatically assume the status of "third country". It cannot be emphasised enough. The EU does not do this to us – we do it to ourselves.
Our exporters then have to look at the EU through new eyes. No longer are they part of the vast Single Market, where goods shipped from the UK to mainland Europe did not come under customs control. Instead, like any other "third country", we come under the full panoply of customs controls.
To get a taste of what that involved is easy. Simply go to the export website of another third country and follow the instructions – the United States is as good as any.
Before they even start., putative exporters are advised to consult the TARIC (Tarif Intégré de la Communauté), website to help determine if a licence is needed.
Not only are there EU restrictions, many EU member states maintain their own list of goods subject to import licensing. For example , we are told, Germany's "Import List" (Einfuhrliste) includes goods for which licenses are required, their code numbers, any applicable restrictions, and the agency that will issue the relevant license.
Once that hurdle is overcome, the exporters must prepare their written declarations to customs, in the form of the Single Administrative Document (SAD), an eight-part document running to a minimum of twelve pages.
The SAD describes goods and their movement around the world and, effectively the passport for the goods, needed to secure their entry into the EU customs territory.
Even without going any further, there is a significant cost element here. Mistakes in completing the SAD can lead to expensive hold-ups at the posts, so many firms hire customs or shipping agents, paying anything up to £60 for each form submitted.
In order to fill in the form, exporters will normally be required to enter their Economic Operator Registration and Identification (EORI) number. This has to be formally requested from the customs of the specific member state to which the company exports.
Thus, for a UK exporter planning to ship their goods to or via France, they will have to go to the French website for the details and to make an application.
Member state custom authorities may request additional documents to be submitted alongside a formal request, and it can take anything up to two or three days to be issued. Of course, currently, almost every UK exporter will already have an EORI number but, on Brexit day and thereafter, these will probably no longer be valid., as they can only be issued by EU Member States.
There is a possibility that we could negotiate an agreement with the EU for continued recognition of the numbers issued by the UK Government but, in the event of talks breaking down, we would have to start from scratch. That could create significant problems as UK exporters would no longer exist on the EU's centralised customs database.
Then there is a matter of the mutual recognition of Authorized Economic Operator (AEOs). We deal with this in Monongraph 11.
Since 1997, the US and the EU have had an agreement on customs cooperation and mutual assistance in customs matters. This is the country that doesn't have any trade agreements with the EU, of course – except that it does, with details of the customs agreement here.
In 2012 the United States and the EU signed a new Mutual Recognition Arrangement (MRA) aimed at matching procedures to associate one another’s customs identification numbers. The EU customs code introduced the Authorised Economic Operator (AEO) programme (known as the "security amendment").
This is similar to the United States' voluntary Customs-Trade Partnership Against Terrorism (C-TPAT) program in which participants receive certification as a "trusted" trader. AEO certification issued by a national customs authority and is recognized by all member state’s customs agencies.
As of 17 April 2017 an AEO can consist of two different types of authorisation: "customs simplification" or "security and safety". The former allows for an AEO to benefit from simplification related to customs legislation, while the latter allows for facilitation through security and safety procedures.
Shipping to a trader with AEO status could facilitate an exporter's trade as its benefits include expedited processing of shipments, reduced theft/losses, reduced data requirements, lower inspection costs, and enhanced loyalty and recognition. Under the revised Union Customs Code, in order for an operator to make use of certain customs simplifications, the authorisation of AEO becomes mandatory.
The United States and the EU recognize each other's security certified operators and will take the respective membership status of certified trusted traders favourably into account to the extent possible. The favourable treatment provided by mutual recognition will result in lower costs, simplified procedures and greater predictability for transatlantic business activities.
The newly signed arrangement officially recognises the compatibility of AEO and C-TPAT programs, thereby facilitating faster and more secure trade between US and EU operators. The agreement is being implemented in two phases. The first commenced in July 2012 with the US customs authorities placing shipments coming from EU AEO members into a lower risk category.
The second phase took place in early 2013, with the EU re-classifying shipments coming from C-TPAT members into a lower risk category. The US customs identification numbers (MID) are therefore recognised by customs authorities in the EU, as per Implementing Regulation 58/2013. which amends EU Regulation 2454/93.
If the UK is to have a similar facility, then there would need to be some detailed negotiations within the Article 50 framework, to ensure arrangements are in place by the time we leave.
This notwithstanding, exporters will have to get used to preparing other form in addition to their SAD documents. They will also need Entry Summary Declarations (ENS), which have to be lodged at the customs office of first entry, once the items have been presented to customs officials. They have to be lodged by the people who bring the goods, or those who assume responsibility for the carriage of the goods into the customs territory.
In return, they will receive the MRN – Movement Reference Number –a unique number automatically generated, upon validation, by the customs office that receives the ENS. The MRN must be issued immediately to the person lodging the ENS and, where different, also to the carrier. The MRN contains 18 alpha-numeric characters. I have no doubt that this is not a collector's item and actually has a use.
US exporters are also warned that they will need to make special arrangements for selling batteries within the EU, for chemicals within the REACH system, the Waste Electrical and Electronic Equipment (WEEE) Directive, the Restriction on Hazardous Substances (RoHS) Directive, and the Cosmetics Directive.
Then there are the provisions for Agricultural Documentation, including meat and meat products, about which we have written previously, but exporters are warned of the need to acquire the appropriate export certificates before the goods are shipped.
The thing is, these rules are not exactly secret – you just need to know where to look for them, and have the incentive to do so. And those who would simply poke their heads in the sand would do well to heed the words of Robert Edminson, an ex Customs Officer who made a comment on the Booker column last weekend.
Having dealt with imports and exports for many years he was "delighted" that Mr Booker had started explaining the actual detail of international trade, much of which is unknown to the general public, as it is highly technical and has been built up over the years.
Then, on Pete's blog, we had Sicinius. He was an exporter whose experience extended, back beyond the Maastricht Treaty. If we complete Hard Brexit, he said, we will be back to the Dark Ages of detailed inspections, 82A carnets and days spent in Customs. We used, he said:
to allow three days to do all the documentation and get a vehicle out to the CE-BIT electronics show in Hannover having signed personal guarantees that every item, separately listed, (please list fittings that have detachable pieces in their exploded form) would be returned to the UK. On pain of forfeiting the personal guarantee. Post Masstricht, no documentation, no queues, no PG's and we sold the goods we took out there off the stand on the last day.
Should we have a Hard Brexit., he says he'd rather just move the company to Lille or Rotterdam than go back to that. "I can't imagine how Dover will work if we try and put the clock that far back", he added. "Tweak security up one level and this whole corner of South East Kent gums up. Reinstitute the border controls of 1992 now and this part of the world will stop functioning".
Then, in a separate comment, Sicinius recorded:
In 1991, the last time I did the CE-BIT run pre-Maastricht, I was behind the Sony artic [truck] bound for the same destination. A Customs Officer, who looked about 14 years old, said to the driver "We only want to see these six items". The driver opened the back of his truck, revealing about 20,000 cardboard boxes, almost all of which were plain and unlabelled. "I'll have to unload the whole truck" he complained "Well you'd better get started" said the CO. He ended up calling Sony HQ who helicoptered a crew to Dover to help him.
Similar sentiments came from Derek Howard, who noted that the NI/Irish border had been affected by protesters the other day causing delays. The French-Belgian border was affected for a couple of days in November 2015, after terrorism in Paris, and led to 40km queues taking 4-5 hours to navigate even though the checks did not require actual stops, just traffic being taken off the motorways round a roundabout at walking pace and back on again. Operation Stack in Kent, he said,
On the same trip, at Ghyveloe, going into Belgium from France, there was only one officer on duty (carnets have to be stamped at every border you cross, of course, in and out) and the queue was five hours. Nothing by today's standards when even the smallest things go wrong.
If you go and stand on the ridge at Arpinge above Folkestone or East Langdon Cliffs at Dover, you can watch the whole system creaking desperately at the seams. After Hard Brexit, you'll be able to watch it sink.
…closes swathes of motorway whenever there is an incident on the ferries or tunnel. All Kent ports as well as the Cheriton access to the tunnel are at risk. I challenge any Brexit voter to sit on the lovely hills above Folkestone or Dover and watch the sheer volume of lorry traffic passing between the world's 5th and 6th largest economies to realise the foolishness of reverting to detailed inspections of every vehicle. The cost would be vast. Utter madness to contemplate or threaten.
These are not fantasies by swivel-eyed loonies, but sober appreciations based on what went before. Dover as a port works, but only just. The slightest perturbation brings delays and the introduction of "third country" customs controls to Calais will have a knock-on effect in Dover that will be impossible to manage.
My guess is that, after a period of chaos, this could bring permanent change. The roll-on, roll-off traffic will be drastically cut and many of the goods will be containerised and diverted to inland ports such as Doncaster. They will then either be transported through the tunnel on freight trains, or by ship through a container port.
Customs checks on unaccompanied loads, although still onerous, are less troublesome than on lorry-borne freight. You can stack containers if there are delays, while Operation Stack for trucks means massive queues.
Either way, this problem is not going to go away. Mrs May intends to take us out of the Single Market. Dover may look the same, outwardly, but that turns us into a "third country", with inevitable and unavoidable consequences.
Thursday 23 February 2017
One of the more irritating mantras of the "hard" Brexiteers, defending their stupidity on the "WTO option", is their false claim that countries such as the United States, Australia and China all trade with the EU on WTO terms – on which basis, they aver, such an arrangement should be perfectly adequate for the UK.
This, though, is a mix of ignorance fortified by arrogance – ignorance of the fact that all of these countries have multiple agreements on trade with the EU, and arrogance of the people pushing their canard, in refusing to check their facts.
We saw this in April of last year when the self-important Charles Moore decided to misinform his readers with the deluded claim that: "The EU has never yet, in its history, had a trade deal with America".
It's very much Moore's style to waft around the high and mighty, sharing gossip and prejudice, looking down his patrician nose at informed sources from the lower orders. Thus, although I had sent him Flexcit in June 2015, whence he wrote to me saying, "I look forward to studying this", he obviously never did. He preferred his own ignorance.
A more cautious person, I wrote at the time, might have consulted the Europa website to check the veracity of the "no deals" claim. Because there, on the Treaties Office Database, are lists of trade agreements between the US and the EU, 38 in all, of which at least 20 are bilateral.
Now, ten months after an unrepentant Moore ignored my attempts to correct him, we have Ivan Rogers telling the Brexit committee something they should already have known – and is their duty to know, insofar as we pay them to keep themselves properly informed.
Said Rogers to these ignoramuses, "although the EU and the US do not have a free trade agreements, they do have agreements covering trade". There are 20-plus agreements, he said, adding that no major economy traded with the EU solely on World Trade Organisation terms. The Guardian recorded him saying:
No other major player trades with the EU on pure WTO-only terms. It is not true that the Americans do, or the Australians or the Canadians or the Israelis or the Swiss. They strike preferential trade deals where they can. But they also strike more minor equivalence agreements, financial services equivalence agreements, veterinary equivalence agreements, mutual conformity of assessment agreements. The EU has mutual conformity of assessment agreements with the US, with Canada, with Israel, with Switzerland, with Australia, with New Zealand, and more I think.
The determination of the Brexit zombies to buy into the "WTO option", though, is all part of their justification for rejecting the Efta/EEA solution. They reason – if it can be called reason – that if other countries can survive and prosper under a WTO regime, then there is no need to go any further. But Rogers wasn't letting them off that hook either. He told the MPs:
If you had an abrupt cliff edge with real world consequences, you've seen what Mark Carney [governor of the Bank of England] has said about the financial stability risks to the eurozone of an abrupt cliff edge. There are other consequences in other sectors which would make it an insane thing to do.
This is something I was writing four years ago, when I said:
All I was pointing out was that this is a very legalistic body that we are dealing with and they will say you have transformed yourselves overnight from having been a member of this body to a third country outside the body and in the absence of a new legal agreement everything falls away.
We all know that that's nuts in the real world, because why would you want to stop UK planes flying into European airports on day [one]. We know that this is insanity, but that doesn't mean - we know that stopping carcasses and consignments and saying "your slaughterhouses are no longer approved", we may know that that is a nonsense in the real world. Sadly, that does not stop it necessarily happening.
As the law stands, the UK is part of the Single Market. Outwith the EU and the EEA, however, the UK becomes, as far as EU law is concerned, a "third country". And imports from third countries must to subject to a raft of inspections, documentation and physical checks at member state ports (including airports) before they are allowed entry.
That, we need to emphasise, was four years ago. More recently, we pointed out that this was not something the EU did to us, but a status the UK assumed by choosing to withdraw from the EU and the Single Market.
You must imagine, I wrote, a medieval walled city, inside which the traders happily do business – with the public and between themselves – secure within the fortifications. When a trader (unhappy with the rules and regulations) decides to move his stall outside the walls, he cannot then complain that he is no longer able to trade freely with the people still inside.
Yet such is the total lack of comprehension of the Daily Mail that it reports Ivan Rogers as saying: "the EU leaders would be 'insane' to push Britain out of the EU without a deal but they might do it anyway".
Rogers, of course, was referring to the "walk away" option, where even the intellectually challenged Financial Times managed to understand that it was our own government that saw World Trade Organisation rules "as an obvious alternative to negotiating a free-trade agreement with the EU" – and was wrong to do so.
But what we're getting is a taste of how the zombies are going to rationalise their own failure – blaming their inability to craft a workable settlement on the supposed intransigence of the EU negotiators.
The Mail, though, was not alone in being out of its depth. John Crace of the Guardian observed that most of the stuff Ivan Rogers offered to MPs on the Brexit committee "went completely over their heads".
These are people who are four years behind the curve, and only because they've been lapped so many times do they look, briefly, as if they are in the lead. Thus, when John Whittingdale, a decent enough cove, tried to argue the point about regulatory convergence making a deal easier, Rogers shot him down in flames.
If anything, convergence makes things harder. "It's not about what happens on Brexit Day plus one", Rogers said. "It's about what happens further down the line. Because if we were intending to leave everything exactly the same there would have been no point in leaving".
This is the point we've been making, where the EU will want assurances – and some evidence to back it up – that we intend to maintain convergence, and will ensure that there is a system of market surveillance and enforcement in place to ensure a high level compliance. Additionally, the EU will want a bankable promise that we intend in implement new regulation.
That much detail, though, is down the line. Rogers had opened his commentary by telling MPs that the "Brussels beltway" view was that it could be the early- mid 2020s before we have a ratified deep and comprehensive free trade agreement.
To me, it seems that what happens in between us leaving and the agreement coming into force is the million dollar question. Moreover, by its very nature, it seems impossible to determine a "bespoke" transitional agreement until we know what the end game is.
However, Rogers was "on the stand" for nearly two-and-a-half hours and, while I've watched the TV session, I need to read the transcript before I can do full justice to the evidence.
But what we can already gain from it, as an overall theme, is that we're all flying blind. Anyone who tries to predict how the talks will be structured, said Rogers, is being "foolish". It may be past summer before we even know what it is we will be arguing about.
For the moment, I'll leave it with the Independent which has Rogers saying that the consequences of the UK securing no deal and relying on WTO rules would be "nuts" and like falling off the "cliff edge" into a "legal void".
It then cites Liberal Democrat MP Alistair Carmichael, who sits on the Brexit Committee, having him say: "It's clear no free trade deal with the EU could ever be better than remaining in the single market". But, as for no deal, well, that's just "nuts".
Wednesday 22 February 2017
To assert that the UK is a maritime nation is something of a cliché, but since our nation is an island and depends on seaborne goods for our survival, it can also be said to be true.
Amongst other things, that would imply that the UK needs a maritime policy, or a series of policies covering matters maritime which collectively add up to a maritime policy. Putting all those policies together, one might even call it an Integrated Maritime Policy (IMP), except for the fact that the EU has got there first.
Its fingerprints on this issue can be seen as early as September 1991, which brought the first formal intervention of the Commission into the domain, with COM (91) 335 entitled "New Challenges for Maritime Industries".
In this document, the Commission defined the framework in which a coherent approach to the maritime industries should be implemented, those industries including shipping, shipbuilding, the service sector, marine equipment and the "resources .of the sea" industry, including fishing.
The following year, 1992, saw a milestone in the development of EU policy, in Council Regulation (EEC) No 3577/92, applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage).
As from 1 January 1993, freedom to provide maritime transport services within a Member State (maritime cabotage) applied to all Community shipowners who had their ships registered in, and flying the flag of a Member State. This was regarded as an important element in completing the Single Market, ensuring the freedom to provide services.
Demonstrating continued activity, the Commission 1993 published COM 93/66 on proposals for a "Common Policy on Safe Seas". In an 81-page document, it set out an a "proposed action programme for enhancing safety in maritime transport".
The year 1995 then saw a major piece of legislation in the policy domain in the form of Council Directive 95/21/EC, the so-called Port-State directive, obediently transposed by the UK Government into domestic law the Merchant Shipping (Port State Control) Regulations 1995.
The next year, in March 1996, the Commission then published COM (96) 81 final, betraying much grander ambitions with the heading: "Towards a new maritime strategy", addressing "the problems of the competitiveness of EC shipping".
Alongside this came COM (96) 84 final on "Shaping Europe's Maritime Future", in which the commission investigated the structure and situation of "the European maritime industries" and outlined "which policy elements and initiatives it considered suitable to contribute to their industrial competitiveness".
These communications invoked a response in the form of a Council Resolution on 24 March 1997, endorsing the new strategy. The Commission had been given a green light by the Member States.
In addition to these high level policy issues, though, we also saw the drumbeat of routine legislation, implementing provisions agreed at global level through the International Maritime Organisation (IMO) and other bodies. An example of this came in 2001, with the passing of Directive 2001/96/EC, "establishing harmonised requirements and procedures for the safe loading and unloading of bulk carriers". This put into effect the recently agreed IMO Code of Practice known as "the BLUCode". Such measures would have been adopted by the UK, irrespective of EU involvement.
What then gave EU policy development a considerable boost was the sinking of the oil tanker Erika in December 1999, releasing thousands of tons of oil, polluting miles of the Brittany coast. It took just twelve months for the Commission to respond with COM(2000)802 final with a series of measures which included the establishment of a European Maritime Safety Agency (EMSA).
This got the go-ahead in 2002, with Regulation (EC) No 1406/2002, together with Directive 2002/59/EC establishing a Community vessel traffic monitoring and information system. Its purpose was to enhance the safety of efficiency of maritime traffic, "improving the response of authorities to incidents, accidents or potentially dangerous situations at sea, including search and rescue operations, and contributing to a better prevention and detection of pollution by ships".
When EMSA became operational in 2003, it was decided that it take responsibility for setting-up and operating the new vessel traffic and monitoring system, which would be called SafeSeaNet. Setting-up commenced in October 2004 and the system became fully operational in 2009.
Before even EMSA had ordered the office furniture, though, EU maritime policy ambitions got a further boost when, on 19 November 2002, the Liberian tanker MV Prestige sunk off the coast of northwestern Spain, releasing over 20 million US gallons of oil into the sea, polluting stretches of the Spanish, Portuguese and French coastlines.
By now, though, the EU was planning its strategic objectives to the end of the decade, which the commission published in COM(2005) 12 final, declaring that there was "a particular need for an all-embracing maritime policy aimed at developing a thriving maritime economy and the full potential of sea-based activity in an environmentally sustainable manner".
This spawned in 2006, COM(2006) 275 final (with Annex), a Green Paper entitled: "Towards a future Maritime Policy for the Union. This was: "A European vision for the oceans and seas". With "sustainable development" high up on the agenda, the aim was "to launch a debate about a future Maritime Policy for the EU that treats the oceans and seas in a holistic way".
The year 2007 them saw the publication of COM(2007) 575 final offering: "An Integrated Maritime Policy for the European Union". This, said the Commission, "lays the foundation for the governance framework and cross-sectoral tools necessary for an EU Integrated Maritime Policy and sets out the main actions that the Commission will pursue during the course of this mandate".
Since then, the Commission has been actively pursuing the development of maritime policy. Building on what was then 16 years of policy activism, it has since initiated a number of schemes, growing the institutional and legislative framework, a process which continue up to the point that the UK leaves the EU and beyond.
Immediately post-Brexit, a newly independent UK will have been removed from the policy-making sphere in maritime matters for nearly thirty years and, although it has been an active member of the IMO, will be struggling to make up for lost time.
On the face of it therefore, as a short-cut to a working policy, maritime regulation would be an obvious candidate for repatriation via the Great Repeal Bill (after its Royal Assent). This, if the Government's theory stands up, means that "the same rules and laws will apply on the day after we leave the EU as they did before".
However, as we pointed out yesterday (and many times before) simply adopting EU regulations concerning maritime policy isn't going to work. The EU instruments are devoted to setting up EU structures and systems which are not easily (or at all) transportable to a UK legislative environment. We need to be building up our own policies, and then devising the legislation and other instruments to put them into effect.
We cannot use EU law, designed to put into effect European policies throughout the EEA, to implement policies applicable specifically and exclusively to the UK. To try to do so is like using spanners to carve wood.
To illustrate this, we can look at just one of the EU's initiatives, the "Common Information Sharing Environment" (CISE), the practical embodiment of one aspect of the 2007 policy proposal. This was to:
take steps towards a more interoperable surveillance system to bring together existing monitoring and tracking systems used for maritime safety and security, protection of the marine environment, fisheries control, control of external borders and other law enforcement activities.
The parameters were set out in more detail in late 2009, via COM(2009)538 final. Headed, "Towards the integration of maritime surveillance: A common information sharing environment for the EU maritime domain", its aim was to develop a surveillance programme that would generate situational awareness of activities at sea "impacting on maritime safety and security, border control, the marine environment, fisheries control, trade and economic interests of the European Union as well as general law enforcement and defence so as to facilitate sound decision making".
There was, the Commission asserted, a clear need to share maritime surveillance information. Different sectoral authorities dealing with monitoring and surveillance of actions at sea gathered data and operational information so as to establish the best possible maritime awareness picture for their own use.
But, for many user communities, this picture did not include complementary information gathered by other sectoral users due to the lack of mutual exchange.
With undeniable logic, therefore, the Commission argued that developing the necessary means to allow for such data and information exchange "should enhance the different users' awareness picture". Such enhanced pictures, it said, "will increase the efficiency of Member States' authorities and improve cost effectiveness".
The objective of the programme, therefore, was to set out guiding principles for the development of a common information sharing environment and to launch a process towards its establishment. The accompanying staff working document then set out a complex of measures to be taken at European level, to make the system work.
Already that year, though, there had been published Directive 2009/17/EC, amending Directive 2002/59/EC establishing a Community vessel monitoring and information system. This highly technical measure was to re-emerge two years later, when the Commission complained that the UK had not fully implemented the Directive (along with eight other States which had not implemented it at all).
Then, in 2010, the Commission published a "roadmap" setting out the functional requirements for what it was now calling the "Common Information Sharing Environment" (CISE) for the surveillance of the "EU maritime domain". It stressed the passive nature of the project, declaring that "Integrated Maritime Surveillance" was about "providing authorities interested or active in maritime surveillance with ways to exchange information and data".
In June 2014, however, the surveillance programme became part of the EU's Maritime Security Strategy (EUMSS), thus acquiring an identifiable military dimension. The primary objective was to provide a common framework for relevant authorities at national and European levels to ensure coherent development of their specific policies and a European response to maritime threats and risks.
A secondary aim was "to protect EU's strategic maritime interests and identify options to do so". It thus significantly strengthened the link between internal and external security aspects of the maritime policy of the EU and civil and military cooperation.
In a joint communication from the European Commission and the High Representative for external affairs, the tasks of the EUMSS were set out. It was required to ensure an optimal response to threats, support the relevant authorities and agencies at all levels in their efforts to enhance the efficiency of maritime security and to facilitate cross-sectoral and cross-border cooperation among maritime security stakeholders.
The strategy was thus intended to position the EU as a credible, reliable and effective partner in the global maritime domain, ready and able to take on its international responsibilities.
As with the surveillance programme, great stress was placed on a cost-efficient approach to maritime security. The EU's maritime security is largely organised around national systems and sector-specific approaches that potentially render operations more expensive and less efficient.
Maritime operations should be made more efficient by improving cross-sectoral cooperation, enabling better communication between national and EU-systems, creating effective civil-military interfaces and by translating results from research and technological development into policy.
By July 2014, a month after the announcement on the Maritime Security Strategy, the Commission was in a position to set out further views on the surveillance programme, having Maria Damanaki, Commissioner for Maritime Affairs and Fisheries, argue that savings of €400 million per year could be made through increased cooperation and sharing of data.
Sharing such information was vital to avoiding duplication of effort. About 40 percent of information was collected several times and 40-80 percent of information was not shared amongst the interested users.
In pursuit of its plans, the Commission set out eight further steps required to give shape to the CISE, and to bring systems to fruition, culminating by 2018 in the launch of a review process to assess the feasibility of implementation and the need for further action.
Even then, the Commission was at pains to emphasise that ensuring the effective surveillance of waters under their sovereignty and jurisdiction, and on the high seas if relevant, remained the responsibility of Member States. The
operational exchange of maritime surveillance information between national authorities also remained with Member States. The role of EU agencies was to "facilitate and support this process". We are told:
Maritime CISE is a voluntary collaborative process in the European Union seeking to further enhance and promote relevant information sharing between authorities involved in maritime surveillance. It is not replacing or duplicating but building on existing information exchange and sharing systems and platforms. Its ultimate aim is to increase the efficiency, quality, responsiveness and coordination of surveillance operations in the European maritime domain and to promote innovation, for the prosperity and security of the EU and its citizens.
Untypically, therefore, the Commission averred that "the operational aspects of such information exchange" needed to be "decentralised to a large extent to national authorities in line with the principle of subsidiarity". On this basis, CISE as a project seems largely benign, and the timescale is such that it could be coming into effect around the same time that Brexit takes effect.
On paper, (as expressed in 2014), the UK Government supports the initiative, aiming to play "a leading role" in developing it. As part of the Brexit negotiations, therefore – and the internal policy discussions which will inform them – the UK will have to decide whether it wants to continue with this programme. In the context, the Great Repeal Bill is an irrelevance. This is a policy rather than a legislative issue.
The generality of the maritime policy is, of course, another matter, but much will depend on the UK attitude to the surveillance programme and related matters before Mrs May goes to Brussels. So far, the silence is deafening, but this is more than just a loose end. Before the Brexit negotiations are finished, we must know the UK position, and how it will relate to EU plans.
Tuesday 21 February 2017
In Flexcit, we readily acknowledge that repatriation of EU laws must be part of the Brexit package.
We point to post-independence experience in Ireland and India for precedents, where each administration simply adopted laws made while their countries were under British control, and carried on with them unchanged, until they had time and resources to bring out new laws.
Even then, the process can be somewhat protracted, with a report in 2014 that India was still going through its statute book, weeding out archaic laws stemming from the Raj.
However, our enthusiasm for the process was conditional on the adoption of the Efta/EEA option, where the EEA has an institutional and legal framework which enables the Single Market acquis to function in a coherent manner.
That would account for over 20 percent of the acquis communautaire, with much of the rest being discarded as unwanted. The most significant tranches of law that would have to be dealt with outside the EEA framework would be the CFP and CAP acquis but even these could be brought into the EEA via country-specific protocols and annexes, buying us time to develop unique policies applicable to the UK.
As the Government seems to have turned its face against this option, it is instead relying on the Great Repeal Bill to facilitate legislative continuity and to avoid huge gaps appearing in the statute book.
However, as is becoming increasingly apparent, simply re-enacting Brussels laws – in the way that British colonial law was treated - is not proving as easy as was imagined. The problem lies in the way the different sets of laws have been conceived and applied.
When the UK produced laws for India and the other colonies, they were most often produced by the Viceroy/governor general in India, and by governors in other territories. At state or subordinate level, you would also have law-making powers, by lieutenant-governors or some such. Even though they were made under British rule, they were still local laws, specific to the territories to which they applied.
There is an Indian example here, in the notorious Criminal Tribes Act 1871. As can be seen, it was made by the Governor General (Viceroy) in Council and, rather than Royal Assent, was given the assent of the Governor General. And that's the interesting thing: most of the laws were made in India specifically for Indians.
Here is another example, this one from New Zealand, the Land Registration Act 1841. There is a difference in style, as this is enacted by "His Excellency the Governor of New Zealand, with the advice and consent of the Legislative Council thereof". But it is a New Zealand Act, dealing with New Zealand issues.
Even when laws were produced by Westminster, they largely dealt with specific issues in the territories to which they were addressed. The classic was the Government of India Act 1935 which, at 341 pages, was said to be the longest Act (British) of Parliament ever enacted by that time. It had 321 sections and 10 schedules. But it was a decentralised system, even when the law was made in London. And then it was done on a much smaller scale.
In India, for instance, the Crown took over rule only in 1858 and between then and 1947, when independence was granted, Westminster only passed 196 Acts concerning the sub-continent. The 1935 Act granted a large measure of autonomy to the country and ended the system of diarchy introduced by the Government of India Act, 1919.
With the EU, though, not only is the scale of legislation different with about 20,000 laws currently in force, it is also a rigidly centralised legislature intent on creating EU systems.
Unlike the British Empire, law-making is centralised, with the right of proposal reserved for the European Commission in Brussels. The completed law is then administered by the European Commission in Brussels, backed up by a single court in Luxembourg.
Even India had considerable judicial independence, with its own High Courts, created by the Indian High Courts Act of 1861, with its own chief justice. Latterly, by authority of the Foreign Judgments (Reciprocal Enforcement) Act, 1933, we were to recognise and enforce (where relevant) its judgements in the UK.
In the centralised EU system, though, EU law imposes a common system on all Member States which have to work together as part of a whole. When a Regulation is "done in Brussels" and enters into force, it applies immediately to all 28 Member States, having direct effect without any intervention from national legislatures.
The law that applies in one Member State simultaneously applies in all others. It is system-wide law aimed with the aim of integrating the Member States into a single administrative body.
That was never the case in Commonwealth and Empire. Law was made for each of the territories. Thus, law made for Australia would not apply to India, nor to South Africa - there was no Empire law, as such, a single body of law made in London which would apply to the UK and then equally and simultaneously to the rest of Empire.
Thus, when it comes to the Great Repeal Bill, the Government is gong to have great difficulty in separating out the functional aspects of the law and those dealing with the establishment of the EU systems, which are worked into the law. It will need to keep the one and remove the other. And that's not as easy as it looks.
We've seen this with fishing
, where the core regulation
does not just regulate fishermen but also sets up the Common Fisheries Policy, empowering the European Commission to perform certain functions, and imposing the duty of co-operation on (multiple) Member States.
Had the fisheries policy been written on the lines of Indian colonial legislation, it would have been framed by a "governor" based in London but appointed by Brussels, yet would have applied solely to UK waters. That we could have adopted, pro-temp, until we had something better. But Regulation 1380/2013, as it stands, is unusable without very substantial amendment.
More recently, we've seen exactly the same type of problem with the Lift Directive
. This is also dual-purpose regulation Not only does it legislate for lift safety, it is one of the "New Legislative Framework" package which sets up a Brussels-based system of control over a wide range of products. As such, once again, it empowers the Commission and places cooperative duties on Member States.
We've been though many other examples, from chemical regulation
to Air Traffic Management
, and there are many more to come. But even now, it is evident that Government has vastly under-estimated the complexities of repatriation, and is not at all geared up to dealing with the problem.
The original proposal to adopt the Efta/EEA option as an interim solution to a staged process was intended to avoid problems such as these, but we have seen Davis, May and the others, blunder into a "plane crash Brexit", eyes wide shut.
They've committed themselves to something that is virtually impossible to achieve in the time, and don't even understand the scale of the mess they've landed themselves in.
Monday 20 February 2017
If the remainers have to put up with being undermined by Tony Blair, they at least have the consolation that leavers have to suffer the crass behaviour of the "Leave Means Leave" and their attempts to bring about a "plane crash" Brexit.
Clearly not having caught up with the idea that we have won the referendum though, they are still fighting the battle. And their latest stunt is to have The Sun announce: "Brexit to chop food bills", while having Owen Paterson claiming in the Sunday Telegraph that: "Brexit will cut shopping bills by £300 a year".
The real detail comes in The Sun, though, where the graphic (above) illustrates a number of foods and beverages, each with the current "EU price" and the supposed lower "new price" that we will be paying after Brexit.
For a start, the prices are meaningless. The figure "EU price" for 250gm of butter, for instance, is cited at £1.50, while the "new price" is £1.10. Yet, go to the Morrisons website and the price is £1.08 – without having to wait to leave. The "EU price" of 300gm of bacon is £2.00, against a "new price" of £1.86, but Morrisons offers £1.84 a pack, or two for £3.00.
Fresh prawns are also on the list. The "EU price" for 165gm is £3.00, with the "new price" at £2.64. This time, Tesco comes to the rescue, with £2.25 for 250gm, equivalent to £1.49 for 165gm. In all three of these cases, shopping around delivers more benefits than Brexit.
That is not the case, though, with bananas. For a bunch of five (notionally one kilo), the "EU price" is 65p. The "new price" is 55p, giving a differential of ten pence. Yet, such is price volatility of this commodity, that Tesco wants 80p.
The reason for the 10p discrepancy, we are told, is that after Brexit a tariff on non-EU goods will no longer apply. Cumulatively, removing tariffs could save us "up to £300" on the annual shopping for a family.
But saving ten pence on a bunch of bananas it not something we want to do – not when you understand the story which goes back to the "banana wars" and the decision in 2009 when the EU agreed to cut tariffs to €114/tonne by 2017. That works out (at current exchange rates) at 9.8p per kilo.
The point is that the tariff only applies to MFN bananas (mostly Latin American) – about two-thirds of our imports. Bananas from African, Caribbean and Pacific (ACP) countries come into the EU tariff-free. Yet, on the supermarket shelves, there is rarely any price differential.
The reason for that is, as Joanna Blythman explains, that Latin American bananas are cheaper to produce. But this is not for any good reason. They are typically grown on huge plantations owned by transnational fruit exporting companies, or their satellites. Writes Blythman:
the natural landscape will have been flattened to allow for intensive banana cultivation stretching as far as the eye can see. These vast acreages are heavily treated with pesticides, usually by aerial spraying. This is why, in Latin America, the banana is often referred to as "the chemical fruit".
ACP bananas, on the other hand, tend to be grown by artisan farmers. The communities which depend on them – mainly in the Caribbean – are fragile, and lack resilience. The tariffs offset the worst effects of a historical dependence that needs more time to remedy.
The workers generally live either in lamentable shanty accommodation on site or are bussed in great distances to work a long and punishing day. Paid piece rates, they have to work themselves into the ground to make a living wage.
In this context, even those opposed to tariffs would agree that their precipitate removal would do incalculable harm. It would not be in the UK interest to remove them for the time being – and nor would it be wise to settle on a defined end point.
That said, as Blythman also wrote, the current price of bananas is scandalously low. Retail prices bear little relation to the cost of production, and are more a reflection on supermarket purchasing power.
In 2014, you could buy a kilo of bananas for about 68p. Back in 2002 that same bunch would have cost £1.08, 59 percent more. If banana price inflation had kept up with the pace of Mars bars, the fruit would have cost £2.60 a kilo in 2014. Two years later, The Sun has the price at 65p.
It yesterday's price of 80p holds, it will represents an overdue price adjustment which needs to go much further before sustainable prices are being paid. To argue that, because of Brexit, we will see – or want to see - cheaper bananas is beyond absurd.
Never let it be said, though, that the Leave Means Leave can't outdo its own stupidity. For this, it picks up on the featured product: lamb chops. These it will have us buy for an "EU price" of £5.00, while the "new price" is £3.35.
In my survey, the Asda price was £6.00. Tesco came in at £5.50. But the post-Brexit price will be nowhere near £3.35. To get this fictional price, we can see what Leave Means Leave has done. They've applied the third country tariff rate which currently stands at 12.8 percent plus €311.80 per 100 kilos. That is roughly equivalent to a 50 percent tariff. Deduct that from £5.00 and you get your £3.35 (rounded down).
The thing is, nobody pays this. The countries which export to the EU all have tariff-free quotas. This includes New Zealand, with the largest, at 228,254 tonnes annually – which goes mainly to the UK. Supply exceeds demand, so the quota is unfilled unfilled each year, with New Zealand only taking up 76 percent of its allowance in 2015. Non-quota lamb is so uncompetitive that virtually all sheep meat is sold through the quota.
What that amounts to is that almost all the lamb sold on the UK market, which is over 90 percent self-sufficient, is quota-free. Post Brexit, prices would only drop if exports to the EU were blocked, diverting export product to the home market and triggering a collapse.
Clearly, this would only be temporary, but the effect on UK farming - and the countryside, which relies on its "living lawnmowers" to keep vegetation in check – would be drastic and long-lasting. A short-term consumer gain is hardly a welcome benefit, and not one to attribute to Brexit.
Moving on from lamb, we next find that the "EU price" for lettuce is £1.25, while the post-Brexit price would be £1.12. The question here is why would there be any saving? And the answer is: there isn't. Leave Means Leave have played the same trick that they used with lamb.
They have taken a 10.4 percent tariff and applied it to total sales. But roughly 55 percent of fresh vegetable consumption is home produced and tariff-free. Of the imports, over 80 percent come from EU Member States, mainly Spain and the Netherlands. They are also tariff-free.
What is more, most supplies from the rest of the world are currently tariff-free. Thus, the vast majority of fresh vegetables (over 95 percent) attract no tariff at all. The difference, pre- and post-Brexit is hardly measurable – there are no savings to be had.
If post-Brexit, we impose tariffs on EU produce, prices might actually go up 4-5 percent. But that notwithstanding, after the recent shortage of lettuces when prices soared, levels have now stabilised. A head lettuce can be bought from Tesco for 40p.
Incidentally, we see a similar tariff dynamic with bacon. We are 55 percent self-sufficient in pig meat (which includes bacon and cured products). The balance is imported mainly from Denmark and Holland. Additional supplies come from Germany, Ireland, France, Spain, Belgium and Poland – all of it tariff-free. Since we pay virtually nothing now, there is virtually nothing to save, post-Brexit.
It would now be tedious to go though the whole list, just to illustrate how untenable the claim is. But it's intriguing to see the "EU price" for 200gm of carrots reported at 90p, and the "new price" at 78p, when you can have 1Kg from Aldi for 43p, the equivalent 200gm price being 9p. Leaving the EU suddenly doesn't look so terribly exciting, if you're only doing it for the money.
Some of the entries in any case look rather silly. We are told to consider that the "EU price" of a 75cl bottle of white wine is £5.75, which will drop, post-Brexit to £5.54. But since we pay no tariffs on wines from EU Member States, there will be no difference (one assumes) if we keep buying wines from that source.
Tariffs on wines, when levied, are charged as a rate per hectolitre. The standard plonk is charged at £117.72 per hl – roughly equivalent to 16p a bottle. The strongest wines can go up to 28p. Theoretically, for many non-EU brands, tariffs will be dropped post-Brexit. Amongst other things, it is reported, that means Brexit will bring flood of cheap Aussie wine to the UK.
However, one can already acquire a tolerable Australian Chardonnay from Asda for £1.75 a bottle. Even if 16p was shaved of the import price, we would probably see no difference on the supermarket shelves. The cost saving would be absorbed.
Nevertheless, we're told that a 75cl Prosecco bottle has an "EU price" of £7.00. Post-Brexit, it is supposed to drop to £6.80. But once again, a notional tariff is being deducted, despite the fact that we're not paying anything on an Italian sparkling wine with GI status.
This, of course, is the product that the foreign secretary picked on when he said that Italy would sell less to the UK if the EU did not allow Britain to remain in the Single Market. But if we don't want to stay in the Single Market, one presumes there will certainly be no drop in price, post Brexit.
That notwithstanding, while Leave Means Leave might want us to pay £7.00 a bottle, Sainsbury's are selling it at the equivalent of £6.00.
Summing up, the saving from Brexit are being over-stated, and what little can be saved is only a fraction of what most households could save by shopping around. Leave Means Leave's strawberries, with an "EU price" for 400gm of £2.75 and £2.44 "new price", can be bought from Sainsbury's at £2.00. Morrisons sell for the same price, or two packs for £3.00. And the list goes on.
If you can't afford the luxury of branded products, you can go own-label. A 500gm pack of ketchup costs £1.75. The "new price" is £1.57. But 550gm of Tesco brand ketchup will set you back 63p. Alternatively, you can bulk up. A 2.5Kg bag of washed Maris Piper potatoes costs £2.00. Unwashed, the unit price halves, when bought in quantities of 12.5Kg.
That apart, shoppers will tell you that prices are going up across the board. Furthermore, pack sizes are shrinking, concealing the scale of the increases. Tiny savings from tariffs are dwarfed by the loss in the value of sterling. It really is not sensible to make such claims about minuscule tariff savings when the overall price trend is upwards and everyone knows it. More to the point, we did not vote for Brexit because we wanted to save a few pence on the food bill.
In the real world, the survival of the farming industry is much more important. And there is something Leave Means Leave needs to get stuck into. It has been learned that the government has commissioned no research in the past six months to inform agricultural policy once the UK leaves the EU. It hasn't a clue where it is going, or what it needs to achieve.
Messing about with stories about non-existent savings, therefore, is an unwelcome distraction, a waste of everybody's time when the main issues are being missed.
Sunday 19 February 2017
"I don't normally respond to hostile points made about this column on our letters page", writes Booker
in this week's column. "But one example last week repeated a fundamental misconception so widely shared – not least by our politicians – that it merits an answer".
"Booker must stop saying", its author sternly enjoined, "that when we leave the EU we may not have access to its market. Everyone can sell or buy into Europe at any time... the market is open to all and always will be. Markets are not made by governments, they are made by buyers and sellers".
This view is so comprehensively wrong on every count, says Booker, that this week he is this week focusing on just one further important example, so far not mentioned, of what we are risking with Theresa May's decision that, on leaving the EU, we should leave not only its single market but also the wider European Economic Area (EEA), which would allow us to continue trading with the EU as we do now.
The whole point about the EU market is precisely that it is a market "made by government". It is like a fortress against the outside world, made up of a vast thicket of laws, regulations and procedures, all of which must be followed.
Picking up on the point I made on 6 February, Booker tells us that, if we choose to leave that fortress, we will find its drawbridge has been raised against us, making it very much more complicated to enter.
The particular example he gives is what will happen to all those thousands of British businesses that share in our £9 billion-a-year food exports to the EU. Once we leave, Britain becomes what it calls a "third country"; and all our animal-related products, deemed because of potential diseases to be "high risk", will then have to face the new set of rules that apply to any other "third country".
Apart from many other requirements, such as the need for Britain to be officially recognised as an "approved country", and for every food-related business to be subject to new EU inspections, the live animals, dairy products, eggs, fish and processed foods now carried smoothly to the Continent in trucks through Calais will have to be diverted to a "Border Inspection Post" (BIP), for a mass of new checks and inspections that could take days.
An additional problem is that the nearest BIP at Dunkirk is so small (despite a recent upgrade) that a much larger one will have to be built. To handle UK traffic, it would require facilities for hundreds of new officials and a vast waiting area for those queuing for inspection; all at a cost of tens of millions of euros, which the French would understandably expect Britain to pay.
For all those Welsh farmers who depend on selling lambs to the EU – where we currently export 385,000 sheep and 34,000 live cattle a year – or those cheesemakers and other businesses that export perishable goods requiring refrigeration.
This, says Booker, will pose immense practical problems; as will also be faced on the border between the north and south of Ireland, where some foods involved in processing can end up criss-crossing the border five times before they are ready to be sold.
Politicians may wave all this aside as just something else to be "sorted out in the negotiations". But the rules are the rules. They have no more idea of how tricky it may be to resolve this problem than they have so far shown any sign of recognising that it exists at all.
At the moment the movement of all this trade into the EU is, as Mrs May describes it, "frictionless". But if we leave the fortress on the terms she seems to be proposing, she has no idea how far this may involve not just the lifting of its drawbridge, but lowering a mighty portcullis as well.
Of course, if she had the sense to keep us in the EEA, none of these problems would arise. But, by relying on her "Brexiteer" advisers, she may be facing rather stonier faces across that negotiating table than she has yet begun to imagine.
As we see, though, the Irish are waking up to the implications of a hard border, but not so commenters on the Booker columns. In and amongst the ritual jibes that Booker has become a "remoaner", there is no evidence of even a scintilla of understanding of the position in which we will find ourselves, making the comments a no-go area for sentient beings.
This itself is not a unique phenomenon – the comments on the Telegraph are generally a vile place to be – but it does indicate how a self-selecting minority of "brexiteers" have simply stopped thinking (if they ever actually started).
Generally speaking, though, it is not even worth trying to engage – no amount of argument, or resort to evidence – will penetrate the bovine stupidity of this claque. The worry is, though, that so many of the sentiments expressed seem to be shared by the Government, and even endorsed by Mrs May.
In the end, though, reality will take its toll. From being a fully paid-up member of the European Union, the UK will in due course revert to the status of a "third country". If we are fortunate, and against all the odds, the Government will negotiate a tolerable exit settlement, but things are not going to be the same as before (and neither would we want them to be).
However, since Mrs May, in rejecting the Efta-EEA option, appears to have turned her face against the most effective means of managing our transition from EU member to independent state, the road is going to be far bumpier and more difficult than it needs to be.
All we can do, and will continue to do, is point out the pitfalls. This is not done out of any intent to suggest that we should not leave the EU – merely, it is common sense on a difficult road to mark out the hazards, better to enable us to deal with them.
For those, however, who regard roadsigns as a form of betrayal, theirs is the precipitous path over the cliff edge. The outrageous thing out it is that these idiots seem intent on taking us over with them.
Saturday 18 February 2017
With at least 20,000 laws to be changed in Britain, says European Commission President Jean-Claude Juncker
, he believes it will take longer than two years to agree on all the arrangements for Britain to leave the European Union.
That is roughly the number of legal instruments in the acquis communautaire but I'm sure that the official response would be (if there was one), that the Great Repeal Bill would sort all this out. With a single Act of Parliament, the intention is, to quote the White Paper, to convert the acquis into domestic law.
We need constantly to remind ourselves of this, and the Government's belied that "wherever practical and appropriate", the same rules and laws will apply on the day after we leave the EU as they did before.
What is very far from clear, though, is how this will work in detail, not only in respect of EU Regulations, which have direct effect, but also in terms of Directives. Although transposed into UK law, increasingly the resultant domestic law is interlinked with EU law, to which it refers directly, relying on the originating directives for their legal authority, plus multiple regulations which are quoted in the directives.
This has been mentioned briefly in a recent briefing note from the Westminster Parliament, which underlines just how difficult it is going to be to cover all eventualities in a single legislative act. An extremely good example of the difficulties involved comes with Directive 2014/33/EU on the harmonisation of the laws of the Member States relating to lifts and safety components for lifts.
This is an important directive as it regulates a major industry which, globally was estimated to be worth €48 billion in 2015, of which the UK accounted for at least £1 billion, making it yet another sector that is significantly bigger than the fishing industry.
The big players in the UK market are Fujitec UK, Kone GB, Otis UK and Ireland, Schindler UK and ThyssenKrupp Elevator UK. For the steel giant ThyssenKrupp, its elevator business is currently one of its most profitable ventures, regarded as the gem of its operations, in which it is the world leader.
This is a business that directly impacts on billions of people, with Otis alone estimating that the equivalent of the entire world's population travel on their lifts, escalators and moving walkways every nine days. The structure is interesting, as only 36 percent of its value comes from new installations and 16 percent from modernisation projects. The largest single contributor (48 percent) is routine maintenance.
The value of the business can be seen from the European Commission intervention in 2007, when it fined the Otis, Kone, Schindler and ThyssenKrupp groups €992 million for operating cartels for the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands. These were the largest ever fines imposed by the Commission for cartel violations.
Obviously, the product (both at the construction phase and during operations and maintenance) is safety critical, so one would expect it to be heavily regulated, which indeed it is.
Rather than using a detailed, prescriptive regulation, though, the EU has chosen to adopt the mechanism of a directive, implementing the "goods package" adopted in 2008. This is part of a package of proposals aligning ten product directives to Decision No 768/2008/EC establishing a common framework for the marketing of products.
The essence of this "New Legislative Framework" directive is that it relies on a matrix of standards produced by the European standardisation bodies, conformity with which is deemed to satisfy the legal requirements. Hence, we have a list comprising multiple standards, which effectively comprise part of the regulatory system.
And also, as is typical of this type of legislation, we have extensive reliance on notified bodies, and cross-references to EU Regulations, which form part of what amounts to a legislative package.
Now, these are the areas (or some of them) where we start to get into trouble as the directive is transposed into UK law by the 56-page The Lifts Regulations 2016 which then applies to relevant enterprises in the UK.
In the normal course of things, that should be the end of the directive. It has become part of UK law, so we can file away the original and forget all about it. But, with this, and the rest of the "New Legislative Framework" package, this is no longer the case. Whole tranches of the Directive still apply, and must be read with the UK regulations.
A key example here is in the conformity assessment of a lift, where reference is made to a "model lift" that has undergone an "EU-type examination", the details of which are set out in Part B of Annex IV to the Directive. Since the Annex is not reproduced in the Regulations, yet form part of them, for the UK law to be implemented post-Brexit, the Directive (or its relevant parts) must remain in force.
Possibly, in producing the Great Repeal Bill, the Parliamentary draftsmen can come up with a clever form of words that will cover any gaps. There is already something of that in the header block to the Regulations, where its states:
These Regulations make provision for a purpose mentioned in section 2(2) of the European Communities Act 1972 and it appears to the Secretary of State that it is expedient for certain references to provisions of EU instruments to be construed as references to those provisions as amended from time to time.
Since the ECA will be repealed, this text will no longer take effect. Instead, there might, for instance, be a phrase which says (to the effect of), "where in any UK Act or Regulations, reference is made to EU legislation, upon which the Act or Regulations rely for their effect, the relevant parts of that legislation shall apply as if it was part of the UK law which refers to them".
Doubtless, the clever lawyers employed by the Government will come up with something neater than that, and also something which cross-references to the Great Repeal Bill. But at least my attempt illustrates that short-cuts might be available, saving the trouble of writing every single EU reference into UK law.
Of course, this will only apply for as long as the EU legislation is in force. If it is modified or repealed, there could be some gaps opening up, which could only increase with time.
Such a device might also cover the references to the "harmonised standards", on which the EU law applied. In the UK regulations, these are defined by reference to point 1(c) of Article 2 of Regulation (EU) 1025/2012 on European standardisation. Since the Great Repeal Bill is expected to re-enact precisely this sort of Regulation into UK law, there should not be any difficulty with this.
However, where there will be difficulty is in the "safety components" for lifts, which are listed in Annex III of the Directive but also Schedule 3 of the Regulations. These are manufactured separately and have to be tested separately by notified bodies.
Because of the wording of the Regulation, and its definition of a notified body, the regime applying to these components will suffice for lifts installed in the UK. But the UK notified bodies will not be recognised in the post-Brexit EU/EEA, so it will not be possible to export British-approved component to EEA members. Nor will it be possible to apply CE marking.
A core part of the regulatory process, though, are the procedures for issuing "EU declarations of conformity", to which there are 36 references, and to which Schedule 5 is devoted. Self-evidently, UK notified bodies are no longer authorised to make such declarations, as they are not recognised by the EU. Therefore, all references to the EU in the context will have to be removed.
Once you start looking in that direction, though, all sorts of anomalies creep in. For instance, we see the definition of an "importer" as a person who is "established in the EU" and "places a safety component for lifts from a third country on the EU market". By that definition, someone importing a safety component into the UK would not be an importer. Clearly, this definition will have to be re-written.
Similarly, the term "make available on the market", currently defined as "the supply of a safety component for lifts for distribution, consumption or use on the EU market", will have to be changed.
In other areas, it is not so simple. Regulation 66 refers to an "EU safeguard procedure", which is triggered by another Member State, initiating the procedure set out under Article 38 of the Directive.
This, obviously, can no longer apply, once the UK has left the EU. Neither can the Regulation impose duties on the Secretary of State to inform the European Commission and other Member States of any measures taken. Nor will the Commission be particularly interested in any objections that the Secretary of State may have to the measure taken by a Member State initiating the procedure. There is no point, therefore, in leaving such a requirement standing.
A far more major problem arises, however, with "RAMS", a reference to Regulation (EC) 765/2008 "setting out the requirements for accreditation and market surveillance relating to the marketing of products".
The Directive, and thus the regulations require market surveillance to be carried out in accordance with this regulation, which in turn imposes multiple duties on Members States to cooperate with other Member States, and to provide assistance and information to the European Commission.
This is part of the EEA-wide system of market surveillance, in which the UK can no longer partake (unless there is mutual agreement to that effect, negotiated in the Article 50/FTA talks). Unless there was such an agreement (and in any event), the references to RAMs would have to be removed. But with that, there would be no functional enforcement, so such provisions will have to be written into the Regulations, de novo.
And all of this is an incomplete record of the changes that will need to be made – beyond, I rather feel, the scope of any Great Repeal Act.
The odd thing about this is that, although there are presented some problems for the lift industry, the trade body, the Lift and Escalator Industry Association, has been silent on the issue of Brexit. I can find no statement from it, before or after the referendum.
United Technologies, the owners of Otis Lifts, warned prior to the referendum that leaving the EU "would create years of uncertainty, jeopardising investment and jobs". But, since then, the company has stated that it does not believe that Brexit "will impact businesses in the near term".
In the longer term, it will most certainly impact, but mostly those companies which manufacture components for export to the EU. The Government has a substantial problem in sorting out the regulatory code, and it may need to devote some time in the negotiations to mutual recognition of conformity assessment, and recognition of notified bodies, specifically with relation to applying CE marking.
A potentially bigger problem presents in setting up a new market surveillance system, once we have drawn away from the EU system. But, since that problem spans multiple sectors, we'll leave that for another post.
Friday 17 February 2017
I am beginning to wonder whether Mr Davis's approach of looking at different sectors in order to structure the Brexit negotiations is the right way to go about things. It certainly cannot define the full extent of his considerations.
The obvious example comes with the post on the "standards industry". There are two ways of looking at this. Either the BSI and other "notified bodies" may be treated as an industrial/commercial sector in its own right (thus addressing the producer interest), or the focus can be on the bigger picture, looking at the UK approach to the harmonisation of standards across a wide range of activities.
In making that distinction, one can immediately see the potential for conflict: what the BSI would regard as the preferred outcome would not necessarily be in the national interest. For the greater good, it may be necessary to sacrifice a sector that has a higher economic yield than the fishing industry.
Another example which comes leaping into the consciousness is the issue of "geographical indications" (GIs), after press coverage of a European Parliament report expressing fears that British companies could "violate protections" given to the names of thousands of European products – such as parma ham and champagne – while still retaining protection for products such as West Country farmhouse Cheddar.
This general issue was something that was raised by Mr Cameron during the referendum campaign – then in the context that the UK would be the loser. How times change.
Nevertheless, GIs are most certainly an issue – they are big business, covering 2,768 products. Independent studies valued total sales at €54.3 billion in 2010 (wholesale value), with extra-EU exports at €11.5 billion. UK production was valued at €5.5 billion. The total value premium of EU27 GIs was estimated at €29.8 billion (the premium that a GI can expect from the market, compared to similar non-GI products).
Furthermore, according to the World Intellectual Property Organisation, protection makes economic sense. Given the global competitive environment characterised by declining agricultural commodity prices, traditional and/or quality products with a strong cultural link add value and give producers the opportunity to move away from commodity markets into more lucrative niche markets.
Thus, the protection of GIs will need to be included in any Article 50/free trade negotiations, although they can be dealt with in any one of several different was – or simultaneously under multiple heads.
In that most GIs cover food and agricultural products, an agreement could be thrashed out within a framework of talks on the food industry. However, there is talk of expanding the GI concept to cover other areas. Internationally, protection has been applied to Montecristi hats (Ecuador), Swiss watches, Pochampally Ikat tie-and-dye sari (India) and Longquan Porcelain (China).
If for the purpose of the talks GIs are to be divorced from the food industry, they can be slotted into the much wider category of "intellectual property". As we have seen, this forms a major part of any modern comprehensive free trade agreement. In the Ukraine DCFTA, for instance, there are nearly 50 references. A whole chapter is devoted to the issue (Chapter 9), which runs to many pages.
But what the text of the Ukraine agreement shows is that the concept depends on much more than the EU treaties for its base. We see immediately a reference to the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (the "TRIPS Agreement"), which demonstrates that there is a major international element involved.
In fact, such are the global dimensions that the EU scheme is only the tip of an iceberg, with the World Intellectual Property Organization (WIPO) administering GIs at a global level.
At a national level, protection has been an issue for several centuries: the delimitation and regulation of the "Port" wine started in 1756. But the global scheme relies on an expanding network of treaties and agreements that started with the 1883 Paris Convention on the Protection of Industrial Property.
The list includes the 1891 Madrid Agreement and the Protocol on the International Registration of Trademarks; and the Lisbon Agreement for Protection of Appellations of Origin and their International Registration of 1958.
It is these agreements which laid the foundation for the 1995 WTO TRIPS Agreement. Part of the Doha round, the WTO intervention opened the way for other trading nations to protect their own traditional products and brands, to the same level enjoyed by European enterprises.
Formal EU intervention started fairly late, with Council Regulation (EEC) 2081/92 "on the protection of geographical indications and designations of origin for agricultural products and foodstuffs". This has now been replaced by Council Regulation (EC) No 510/2006.
There is specific legislation for wine, currently Council Regulation (EC) No 479/2008 "on the common organisation of the market in wine". Spirit drinks are covered by Regulation (EC) 110/2008.
Enforcement and related matters are dealt with by Commission Regulation (EC) 607/2009, "laying down certain detailed rules for the implementation of Council Regulation (EC) No 479/2008 as regards protected designations of origin and geographical indications, traditional terms, labelling and presentation of certain wine sector products".
As we reported earlier, though, when we discussed Mr Cameron's contribution to the debate, the EU scheme is not confined to produce from EU Member States. It also applies to third countries.
Applicants from outside the EU can register their products with their national authorities, which then pass on the details to the EU, where they are then – after due process – recognised as protected. In May 2011, four Chinese agricultural products received protected status in the EU, bringing the total to five, with another five going through the system.
In a reciprocal move, the Chinese authorities set in motion the recognition process for "ten celebrated European products". These were: Grana Padano; Prosciutto di Parma; Roquefort; Pruneaux d'Agen/Pruneaux d'Agen mi-cuits; Priego de Cordóba; Sierra Mágina; Comté; White Stilton Cheese/Blue Stilton Cheese; Scottish Farmed Salmon and West Country Farmhouse Cheddar.
More recently, an agreement has been reached with Iceland, an Efta/EEA member, which means that the full list of the EU's protected agricultural products and foodstuffs "will enjoy in Iceland the same level of protection as in the EU market".
However, the concern of the European Parliament, according to the Guardian is not the making of agreements but the possibility that the UK could break them.
Within Regulation 510/2006, there does not seem to be any provision for reciprocity so that – it is asserted - even if the UK failed to recognise GIs from EU Member States, its GIs would remain valid in EU Member State territory. Even worse, it is suggested, the UK "could, for example, rename some English sparking wine as English champagne, or ham as English parma ham".
Yet, this highly restrictive view is hardly realistic. The UK is leaving the EU but it will still be party to the mix of international treaties, including the Paris Convention and the Madrid Agreement, plus protocol, as well as the WTO TRIPS Agreement, which would require enforcement.
As regards EU legislation, it is not the case, as claimed that EU law takes effect in the UK without any national implementation. It also requires an enforcement framework.
In UK terms, geographical indications, and their related "protected designation of origin" (PDO) and "traditional speciality guaranteed" (TSG) are protected names. False use of a protected name is an offence under the The Food Labelling Regulations 1996, which are progressively being replaced by the The Food Information Regulations 2014.
These Regulations implement Regulation (EU) No 1169/2011 which in turn implements Council Regulation (EC) No 510/2006, thereby providing a convoluted but nevertheless intact chain of enforcement. On this basis, neither EU Member States nor the EU have much to fear that their GIs will be misused, post-Brexit provided, of course, Mrs May doesn't exercise her "walk-away" option, and allow the EU Regulations to lapse.
As regards the Great Repeal Bill, the complexity of these EU Regulations, their multiple cross-referrals and the sheer number of the references make covering all the bases a draftsman's nightmare. If there are no legal loopholes in the end result, it will be a minor miracle.
Nonetheless, there are the international treaty provisions to fall back on, and even then there are some gaps and differences in interpretation, especially as between the EU and the United States. These differences tend to magnify the gaps (and are preventing further progress on TRIPS). Whatever can be applied, though, does – as indicated previously – require enforcement. And there do not appear to be any domestic law implementing treaty provisions, although certain trademark provisions may apply.
To avoid any misunderstandings or ambiguities, though, the EU and UK might be best advised to conclude a mutual agreement on GIs, perhaps embedded in any free trade agreement concluded. The Ukraine DCFTA would provide an adequate model. This will then require its own enforcement framework in domestic law.
Arguably, when negotiating the specific GI provisions, the balance of advantage might lie with the UK, in that it is in a position to exclude EU products by amending UK law. In terms of the bigger picture, the EU might easily craft retaliatory actions which would serve neither party.
And, whatever is agreed, there are other battles to be fought. Between the EU and the United States, the major differences of view as to the application of GIs will require the UK to take a position in deciding which side to support. This is a matter for the future but such considerations may also cast a long shadow over the Brexit negotiations.
This issue, ostensibly simple, is extraordinarily complex, with billions at stake. It may well run and run.
Thursday 16 February 2017
As an observation, and most decidedly not a complaint, we note once again that as the blog delves deeper in the detail of Brexit, comments decrease – as do the number of visitors. This is not surprising. Apart from the nerds, people simply don't concern themselves in the details of governance and associated matters that do not directly affect their lives or interests.
But in there lies a warning. Seeking to extricate ourselves from the European Union is like draining the catchment reservoir in flooded valley, prior to removing a dam that is no longer needed. As the waters recede, the shells of long-discarded buildings are revealed, along with the rotting stumps of forgotten forests, all to become a permanent feature of the landscape once more.
So it is that issues which have long been hidden below the surface of the Brussels regulatory machine, ignored by UK regulators and businesses alike, are now becoming visible again and have to be dealt with. One of those issues – and a major one at that – is the formulation of technical standards for a wide range of goods and services, used to underpin legislation and as a marketing tool to reassure customers as to the quality of the products they are buying.
In post-war UK, the dominant standard was the British Standards Institute (BSI), its "kitemark" a familiar adornment on the labels of high street goods. This built on the work of the world's very first standards institute which, as the Engineering Standards Committee founded in London in 1901, took upon itself the task of standardising steel tramways as its first endeavour.
With the accession of the UK to the (then) EEC and the later advent of the Single Market, however, the British Standard was to give way to the European CE marking, a development about which the BSI is remarkably coy in its official hagiography.
In fact, despite losing revenue formerly gained from the development of standards, the BSI did rather well out of our membership, becoming "our man in Europe", representing the UK interest on European standards bodies (CEN and CENELEC, now combined as CENELEC) as the official National Standards Body.
Formalising the relationship with a Memorandum of Understanding with the Government, the BSI gets a generous subsidy from the taxpayer, currently £4 million in 2015-16, down from £7 million in 2006-7. Additionally, it gets handsome annual payments from the EU (nearly €7 million in 2014), for "services rendered".
The government subsidies have given the BSI space to reinvent itself as a testing house and an EU-approved "notified body" for 13 separate regulations. And now, with the fees flowing in and the revenue from overseas acquisitions, in 2016 it reported record profits of £35.4 million on a turnover of £331 million.
For a modern, services orientated Britain, the BSI and other such "notified bodies" are precisely the sort of businesses the Government wants. Operating out of its headquarters in Chiswick, the BSI has 3,500 employees and maintains 76 offices worldwide, reaching 80,000 clients across 182 countries.
In purely value terms, the "standards industry" is worth far more than the half-billion or so delivered by the fishing industry, creating high-value white-collar jobs, dominating a growing sector with high export potential.
However, with Brexit on the horizon, two substantial clouds are looming, with more than enough potential to rain on BSI's parade. The first is specific to the BSI as the UK representative on CENELEC, from which it profits so handsomely – and from which participation it gains both intelligence and prestige. At the moment, the organisation is maintaining a stiff upper lip, declaring after the referendum that it is "business as usual".
Over the coming months and during the transition period that will follow the triggering of Article 50, it says, we will be working with UK government and other parties as appropriate, such as the European institutions, and CENELEC, regarding our role in the development of European standards. It is BSI's ambition, it adds - "on behalf of UK stakeholders for the UK", of course - to continue to participate in the European standards system as a full member of CEN and CENELEC post-Brexit.
At first sight, it looks as if the BSI's ambition is not at all unreasonable. Although CEN and CENELEC are European institutions, closely related to the EU, EU membership is not a requirement for full membership. Currently, the 34 members include Turkey, Serbia and Macedonia, as well as three Efta states.
However, the current guidance on membership criteria sets six main points with which a candidate organisation must comply. Then, crucially, a candidate must have the "capability of becoming a member of EU or EFTA".
This leads to three additional criteria, the first one of which states that there must be a "Europe Agreement" (or equivalent) between EU/EFTA and the candidate country, specifying a transitional period for accession to EU/EFTA. Normally, it states, "an application for full membership can be considered only if target dates for accession to the EU/EFTA have been established".
What we then have are the Internal Regulations which state that CEN/ELEC is a European Standardization Organization, operating within the framework of EU Regulation 1025/2012 "whose members are joint-producers and disseminators of market-driven European Standards".
Within Regulation 1025/2012 is defined the role of the National Standardisation Body – the role taken by the BSI – making the collective bodies responsible to the European Commission, and imposing duties on Member States in relation to these bodies. It is hard therefore, to see how the BSI could operate effectively (or at all) within CENELEC without the UK also being an EU Member State (or at least an Efta/EEA member).
What the BSI can't avoid is that, post-Brexit, there will have been a change in its legal status - and not, as far as it is concerned - for the better. This is dealt with in the CEN Statute (Article 10) which states that any national Member "will be regarded as having resigned" if, inter alia, they "lose their qualification as a separate legal entity" or "no longer fulfil the conditions required in order to be a national member".
In all cases, a ruling is made by the General Assembly, against which there is no appeal. Nor, indeed, can CENELEC turn a blind eye. Responding to a request in 2008 from the European Council, CENELEC set up a Working Group on Membership Criteria to keep conformity with membership criteria under review, which means that the BSI's new status will come under formal review and trigger action.
Nevertheless, this did not stop Scott Steedman, Director of Standards at the BSI, writing to committee members after the Referendum, stating that, "for the foreseeable future we see no change to BSI's status and obligations as a full member of CEN and CENELEC".
Posted by a member
, the letter asserts the BSI's "ambition" that the UK should continue to participate in the European Standardization System as a full member of CEN and CENELEC. But Steedman then goes on to say: "We consider that this is a likely outcome of the forthcoming negotiations between the UK and the EU".
It is hard, though, to see how Steedman can be right, although the issue is discussed more widely here
. At the very least, he is being wildly optimistic. All that BSI might actually aspire to is a partnership agreement
, which confers no voting rights. Our experts would be afforded only "observer" status on technical committees.
For a UK perspective, though, full CENELEC membership it is hardly in accordance with the spirit of Brexit. The issue here is that CENELEC, when instructed by the European Commission via a set procedure
, is required to produce harmonising standards and, once adopted, all the nation bodies must withdraw
their own. Retaining full membership would keep open a back door, by which the EU could continue to impose its standards on the UK.
Whether or not BSI continues as a full member of CENELEC, therefore, needs to be a political decision – in the first instance by the UK Government. Then, it would require CENELEC to change its own rules, which would have to be negotiated. Doubtless, the European Commission would have the last word.
This, then, presents another series of policy decisions to be made by Mr Davis and his department, and ultimately by Mrs May. But there is then the issue of "notified bodies", which must also be addressed at a policy level.
Essentially, for existing UK bodies to continue certifying EU standards, the UK Government will have to negotiate a comprehensive Mutual Recognition Agreement (MRA) on conformity assessment, along the lines agreed with Switzerland. EU attitudes would probably be influence by our commitment (or otherwise) to CENELEC.
Alternatively, as we saw yesterday
, the UK could decide to abandon the European system altogether, and throw its weight behind global standard-setting organisations, in particular ISO and IEC, seeking to work on the basis of equivalence.
In the short-term, that approach would cause major disruption in the "standards industry", with a significant cost element and even job losses. Refusal of the Commission to play ball would leave some sectors with considerable extra costs in seeking approval from EU standards bodies. Divergence would add to costs, as manufacturers have to gear up to a dual standard environment.
Either way, significant input from Government is going to be needed, adding to the realisation articulated by one commentator
that breaking up is hard to do.