Monday, 12 November 2018

No deal: switching off the machines

If no deal turns out to be the only option the UK is in uncharted waters. Nothing quite like this has happened before. All plans go out of the window and how it unfolds is impossible to predict. We can extrapolate what would happen in theory from the EU's Notices to Stakeholders but the reality will pan out differently.

The first flashpoint is obviously the EU frontier in Ireland. Neither side wants to put up barriers of any kind and it is likely that neither will. There is then something of a legal limbo to be resolved. Whichever way you look at it, no deal cannot remain no deal. There will have to be formal agreements hammered out between the UK and EU.

Here we can expect a degree of flex from the EU simply because it will look after it sown immediate interests. The UK is a major exporter of medicines and it does not bode well for the EU if it causes medicines shortages in EU member states. It will, therefore, look to ensure that medicines previously cleared for sale will keep their authorisations. I have in passing seen some allusion to this.

Some things are going to be sorted out with relative ease within weeks. In other cases it will be some weeks or even months before there is any change to the system simply because it will be unclear what the exact legal position is and will need clarification from the EU.

In other regards I am reminded of the scene from Ghostbusters where the lowly city engineer is instructed by the environment official to switch off the Ecto Containment Unit. He knows it's probably not a good idea, there isn't a good reason for doing it, but the law is the law and he must do as instructed. A bureaucrat's gotta bureaucrat.

At this point much will come down to politics. Being that the EU frontier in Ireland has direct consequences for a member state the EU will act in support of whatever Ireland decides. That will have certain mitigating effects for the UK.

As to the tales of long queues at the ports, a lot will depend on planning, where it will be possible to keep imports flowing just so long as we keep the roads clear of exports which won't be cleared for sale anyway. Here it should be noted that not all exporters will experience much more than temporary interruptions and re-obtaining product authorisations for every day products isn't that much of a big deal. For some it will be worse than predicted and others will be wondering what the fuss is about. A lot will depend on what can be sorted out politically in the immediate aftermath.

This, though, is all speculation. Within the confines of Article 50 we are told that much is not possible but both parties free of the Article 50 constraints will be at greater liberty to forge remedial fixes and a transition of a sort may well be on the table. If the UK wants anything more than what is in the EUs immediate enlightened self-interest it will come back to matters of financial settlements and backstops. One thing is clear. Negotiations will continue in one or other form.

For a while now I have been less concerned the immediate headline effects than I ma the longer term outlook. Tory Brexiters seem convinced that a series of mini deals after the fact will keep aircraft flying and trucks rolling but they underestimate the complexity and the speed at which the EU can operate. A limbo will exist for months and in some areas years. The speed of the system patches will be prioritised according to the EU's needs, not ours.

Here we have to keep in mind that the politics will be markedly different. No doubt Theresa May will have resigned and the ERG Tories who told us everything would be fine will get nowhere near the leadership. I do not anticipate a general election because no Tory will be in a rush to hand the keys to Number Ten to Jeremy Corbyn. If the Tories are going to be kicked out, parliament will have to do it.

It will take some time for UK politics to resolve itself and it may be bogged down in useless bickering before we see any coherent narrative emerging. By that point minds will focus as to the urgency of forging a new relationship with the EU. How the EU responds then, and what it is amenable to is anyone's guess.

Being that our politicians will still be none the wiser they will be calling for an emergency customs union agreement, still failing to understand how little it would fix. If, though, that was the direction of travel, something could be ready to sign within a year or two. By then most of the JIT exporters will have already relocated or gone under.

Meanwhile parliament will be busy trying to make repatriated EU law function without being part of EU/EEA systems. Fisheries and other complex regulatory sectors will be in a state of dysfunction for years. Being that EU fishing interests will want to resume fishing in UK waters, the UK can make certain offers to incentivise EU cooperation.  The smart thing to do will be to make exploratory moves toward Efta. Whether or not that flies again depends on the politics. The ERG Brexiter complaints will cease to be relevant.

My disclaimer for this post is that your guess is as good as mine. I have no crystal ball. I'm just working on the assumption that politics will kick in and we will see a good deal more pragmatism after the fact when both sides realise it is not in their interests to allow the situation to worsen. But then by the same token I could be completely wrong and the obstinacy and petulance of both sides could set in for some years to come - and then we really are stuffed.

In a lot of respects there is no real plan of action simply because we do not know the full extent of the impact and you cannot plan for chaos. You can only prepare for it and react to it. At that point it will come down to the ingenuity and dedication of public servants from the customs officials through to the environment agency. We are better in their hands than our politicians.

Over the longer term we will normalise trade relations and within five years we will at the very least have an FTA and like Switzerland we will spend at least a decade rebuilding trade links, adopting rules in much the same way, until our relationship is a similar spider's web and though Brexiters may wail, they won't be in a position to complain. The public will not be sympathetic.

My preference is that we pick up the threads to join Efta and take up a role inside the EEA, and that will be easier when the delusions of Tories in respect of a US trade deal lie in tatters and their lies in respect of the WTO option are exposed. I will continue to make the case for Efta come what may. It is our best insurance against rejoining the EU. The only thing I can predict for sure is that it won't be boring.

No comments:

Post a Comment