Friday, 13 January 2017

Brexit: the price of failure

A lot of people think we're exaggerating when we say walking away from the table would the absolutely catastrophic. It would mean all EU treaties would cease to apply with no transitional mechanism in place. Presently most shipments of goods can be dispatched to other member states of the EU without special customs documentation. That would cease overnight.

The reason we are able to export without paperwork is because it is assumed that we conform to the standards as set out by EU regulation. Though we would continue to comply with standards UK manufacturers exporting to the EU would need an 'importer' to place the product on the Community market.

Within the EU, where for intra-community trade there is a general presumption of conformity. With imports from "third countries" - those with which the EU has no trade agreements, there is no general presumption and, in the case of harmonised standards, no recognition of conformity procedures - whether or not they involve testing.

When the goods are presented to EU Member State customs, it is entirely for them to decide whether to accept any certification or carry out their own inspections and tests. This is decided on the basis of risk assessment. In the absence of any information (which is no longer accessible because the UK has broken off relations), the customs authorities must assume the worst (high risk) and impose the most intensive regimes.

This would most likely amount to a 100 percent documentation check, and anything up to 50 percent consignment inspection. You open you the container and look inside, or it may require formal sampling where the container emptied out to get a full statistical sample, with products sent to a testing facility.

Depending on the nature and duration of the inspection, the costs could be anywhere between £52 and £1,540 per consignment. Ports would need to accommodate the increased demands for inspection facilities. This would be at the expense of losing valuable space for commercial activities. And this just applies to general goods.

Any goods which are of animal origin (including foodstuffs) are subject to a separate inspection regime by the veterinary authorities. Calais is presently not equipped for this. This can only be done at Border Inspection Posts. Goods would have to be redirected to a port registered at a BIP. In this case, Dunkirk.

Instantly you have an abnormal workload imposed on a port so lorries could be redirected to Brest or Rotterdam, increasing the journey times and delays. On a good day it only takes small interruption to cause several hours delay. What unilateral Brexit would do is to throw the entire system into chaos with none of the customs officials having any real idea which laws still apply. This would naturally cause French port workers and customs officials to go on strike because they are French.

There is also a debate presently running over my head which has it that the instant invalidation of procedure codes would likely mean that we cannot export at all. Our documentation would have no official standing in the EU.

This is what would happen if we were to walk away from the table or if we run out of time. Put simply, we would be very severely screwed. This is not to say that we couldn't sort something out. To solve problems coming the other way we could unilaterally grant access to goods on the same basis as before but the EU does not have the authority to reciprocate and would have to forge an agreement between member states, some of which would be all too happy to restrict UK exports.

Very quickly the economics of road haulage would collapse as trucks would only be filled with goods on one leg of the trip. We'd have more lorries sat in queues than actually distributing goods and could within a few days see empty shelves in supermarkets. When we are a net importer of food and heavily dependent on Calais this is not good news.

The short of it is that there is absolutely no basis on which we would unilaterally withdraw from the EU without creating a national emergency. From there all the leverage would be in the hands of the EU and we would be out with the begging bowl. It would be national humiliation and could even see the army deployed to help manage the ports. Confidence in the UK would collapse and the markets would go into a tailspin.

So when you see some idiotic Toryboy saying "we should be prepared to walk away from the table" they are assuming quite a lot. Unless by preparation they mean an emergency diversion plan and a standing order to prevent lorries taking to motorways unless heading for a UK destination then you are in fact dealing with a textbook Brexit moron.

As it happens I don't think anybody serious thinks we can walk away from the table and that would be reassuring were the May administration not forcing serious people to resign. There is also the risk that negotiations stall or run out of time thanks to a bone headed insistence on a "British Option". In short, I wouldn't rule it out. Never underestimate the destructive potential of Tories with only half a clue.

While the intricacies of what would happen are still hotly disputed, there is no way we can assume normal operations would continue - and without officials on both sides of the Channel being properly trained for such an eventuality we would rapidly find ourselves in a real mess. It doesn't take much to foul up the system as it is. A chaotic Brexit would have lasting repercussions and would raise serious questions as to whether Britain is a serious place to do business.

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