Thursday, 21 January 2021

Brexit: time to get on with it

I rather thought I was going to enjoy pulling the wings off ultra-Brexiteer types as their delusions were skewered by the encroachment of reality but it's turning out to be meagre pickings since many of them are too stupid to even realise there is a problem and the rest are unwilling to believe it has anything at all to do with that thing they campaigned so intensively for. 

The other problem is with me. I just can't be bothered. There's no real sport in it if it's easy prey. And of course, it scarcely matters now. What's done is done. The fishing industry is mostly getting what it deserves and I don't have that much sympathy for British manufacturers either. Rules of Origin should not have caught them off guard.  

Moreover, Just In Time supply chains are not necessarily about rapid transit, rather it is a matter of planning to ensure goods get to their destination precisely when they are needed while spending as little time in warehouses as possible. 

Though the precise trade regime was not known until the last minute, the writing has been on the wall for some time that we would assume third country status and though government communications have been poor, there was nothing at all preventing them from doing their own groundwork - yet a great many of them sat on their hands. 

Of course, nobody can say that the government has upheld its own part of the bargain. Customs software isn't up to scratch, the support isn't there and the trade deal itself is barely worth having for all the use it is. Brexit is done and we've made a pig's ear of it. 

The energy, therefore, is better invested in thinking how we make the best of it. I do not believe that re-joining is likely, possible or even desirable, and if Efta EEA was a losing bet before then it is now for much the same reasons. The argument for remaining inside the EEA regulatory sphere was to maintain EU trade but by the time we re-joined it, our trade would already be a distant memory and would likely never be the same again. Our current value chains are the product of thirty years of evolution. 

I will never stop beating remain MPs over the head with the fact they voted against EEA Efta, but for better or for worse the TCA is the foundation we must build on. It is now a fact of life that, for the time being, things are going to cost a bit more, we're going to export substantially less to the EU, and business will have to adapt or die. I don't like it but there it is.

Of course the remainers are going to whine for an eternity, particulary about any regulatory divergence. In their minds any divergence is bad, and any way that isn't the EU way is inferior. But that never has been true. Regulation has always been used by the EU as a tool of integration where it never particularly mattered if it was bad regulation just so long as it was uniform throughout. Though it gets improved over time, improvement is always a suboptimal compromise - and still more concerned with finding an acceptable average than tackling the problems regulation is notionally designed to solve.

There are aspects of environmental law and waste policy, only tangentially related to trade, that could now be reformed without that process of negotiation. Energy, water and waste policy is now up for grabs. Moreover, the UK is now, to a point, free to make its own decisions on product regulation. We have long been a dumping ground for substandard Chinese counterfeit output, which the EU system failed to prevent.

The EU's system has, in fact, encouraged corporate irresponsibility, instilling a culture of "plausible deniability", where retailers and their suppliers can plead that the "paperwork and procedures" were in order, thus dumping the blame for any failures on anonymous producers, largely keeping their own reputations intact.

While people were complaining about the opening of our borders to the inrush of immigrants from other EU member states, another revolution was taking place. Our borders were forcibly opened to a torrent of cheap, often substandard imports. And, as long as they carried the "magic talisman" of the CE mark and had the correct paperwork, local port inspectors were effectively prohibited from examining the goods.

What were termed "technical inspections" were condemned as "barriers to trade", on the basis of which the commission rigorously pursued their agenda of dismantling port controls. Furthermore, once in the shops, the official presumption is that goods bearing the CE mark are "safe", so that officials such as trading standards officers are actively dissuaded from carrying out spot sampling. And no longer do local authorities make budget allocations for routine tests. 

That is a large part of the problem in UK governance. Across the board, adoption of EU regulation has weakened enforcement and lessons from enforcement are not fed back into the system - and where they are there is little reflection of it.

Among national politicians there is a presumption that technical governance of this nature does not require them to be familiar with it, being that it's an EU competence and the sharp end of it is handled by local authorities. Enforcement is then a matter of mere budget allocation rather than governing philosphy. This we have seen with the sweatshops in Leicester where there is no shortage of regulation on treatment of workers and health and safety, but what good is Rolls Royce regulation if enforcement is still British Leyland?

As much as there is an overreliance on the EU and international organisations to provide the regulation, there is a presumption that the system is self-maintaining without the direct involvement of our politicians. To a point that's true, but that's how we get to critical decision points like 2019 and the average MPs has no concept of what they're even debating.

Under the terms of the TCA it is unlikely we shall see that "bonfire of regulation" and suppliers to global corporates will still elect to follow international standards. Britain will still have to make its own representations to the global bodies where the rules are made, but over time the EU will lose interest in monitoring what the UK is doing internally, particularly as its attentions turn elsewhere, by which time there should be policy space to rethink how we do things.

Since we have already damaged our trade beyond repair we now have little to lose by experimentation and regulatory innovation. In terms of animal welfare and disease control there are obvious advantages to having a distinct system to the EU, and though we should still look to liberalise our trade, there is no reason why we should continue to allow China to abuse the certification process in order to keep dumping fraudulent goods on our market.

Though trade metrics report of volumes and values, they don't give us an idea of the economic, health and social costs of a profligate society living for conveniences, always sacrificing quality for price. The mentality of the last forty years has been geared toward the maximisation of trade volumes but with scant regard for the wider implications. With Covid and geopolitical trends interrupting globalisation, we could certainly use a "great reset" in the way we think about trade and regulation. 

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