Monday, 23 January 2017

Brexit: It's the systems, stupid.

Today has once again picks up on customs systems which are about to filter their way into the mainstream debate. "Slowly, laboriously, the legacy media is beginning to pick up on some of the technical issues involved in withdrawing from the EU, with The Times reporting on fears that, post-Brexit, the customs computers will not be able to cope with the workload".

This is why a transition will be very necessary. Since we are leaving the customs union and the single market we will have to develop our own systems. More importantly they will have to seamlessly interact with EU systems and must also be recognised in law. That is why we won't be fully leaving the single market any time soon.

There will need to be a provision for delayed implementation - and since our government will screw it up as a matter of course, we can expect this to linger for a very long time. I expect this to remain in force for seven years at the bare minimum. It will be something of a miracle if a new system can be developed in time, especially not yet knowing what the final agreement looks like.

Any Article 50 agreement will state something along the lines of "Until the dates of deployment or upgrading of the relevant IT systems, the European Union Customs Code shall be used where the relevant electronic systems are not yet operational. The formats and codes required for declarations, notifications and proof of customs status shall be subject to the data requirements set out in existing regulation establishing transitional rules for certain provisions EU where the relevant electronic systems are not yet operational".

This is why I have trouble believing that trade talks can happen separately from the divorce proceedings. The issues seem indivisible to me. The danger in all this is that we drop out of the EU without an agreement where all access rights to these systems are nullified and the customs code ceases to apply. That then send the whole system into chaos. The only good news is that the department for exiting the EU is becoming aware of this.

A report from the joint consultative committee, the government-industry body that oversees border issues, warned: “The possible reintroduction of customs declaration requirements and frontier controls could potentially cause major disruption at the border, particularly at ferry ports and for trade using the Channel tunnel.”

Ministers are also being warned that a large amount of legislation will be needed to replace regulations. “We believe there are some 700 items of legislation that would need to be written as the basis of customs law going forward,” the report from the committee said.

This is where Theresa May's great repeal bill comes in. A lot of people think that the respective regulatory conformity issues disappear by porting EU law into UK law. This is not so easily achieved. Turning it into UK law cannot give it legal effect in the EU itself.

These laws mainly impose duties on Member States towards each other. None of the Member States will recognise the UK as a Member State, as we will no longer be one, and the Commission cannot require them to. The point, therefore, is that we can conform with EU law, but we cannot legislate for the EU Member States to recognise that. In terms of EU law, we no longer exist.

As much as it will all need extensive re-writes the EU must also do the same. That is a hefty legal process that will only happen through a process of co-determination. That, I suspect, can only be agreed after the basic Article 50 terms are set and there will need to be another transition period for both sides to get their ducks in a row before setting the clock running on implementation.

This is why I get irritated with the legal profession opining on the repeal bill because they have no affinity for regulation or the systems that make up the single market. Fellow Brexiteers too are equally frustrating.

It's all very well warbling about making our own laws and taking back control in line with the sovereign demands of the people but the fact is that we do not live in an isolated pocket. Our systems must at the very least respect their systems. There will need to be major compromises. The USA is big enough and diverse enough not to have to bend to the will of its neighbours, but we as a nation dependent on food imports necessarily need to be part of a wider network of interdependent customs systems, not least with our closest neighbours. That, like it or not, means we do not have absolute control over the form our laws will take. Unilateralism has grave and self harming consequences.

To participate in any such systems means spending on the surveillance systems and the databases that make it all work and this is why we cannot reasonably expect to end payments to the EU any time soon. Customs cooperation costs money. Making petulant demands will be met with confusion and ridicule.

To start with Brexiteers must acknowledge that there are some irreconcilable compromises between sovereignty and free movement of goods and services. Pretending that there isn't is deeply dishonest. Saying we can have it all our own way with no reference to the EU ducks the question of whether we want free movement of goods and free trade. It seems our government wants it both ways. It is the equivalent of saying "we'll build a wall and the Mexicans are going to pay for it". Unless you are prepared to acknowledge these details then you are simply not capable of debating the matter honestly.

The same can be said of those who believe Brexit is straightforward. To suddenly introduce all of this paperwork where previously none existed will take a while and business will need time to adapt. Even worthwhile change has expensive externalities and even with the most competent government ever this is going to be a herculean effort. It will add to the costs of exports and it will increase bureaucracy. But then you wanted to take back control of our borders. Well kids, this is what it looks like.

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