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Brexit: HURRY UP PLEASE ITS TIME

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Brexit: HURRY UP PLEASE ITS TIME

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There seems to be little to report on Brexit, which is not at all good given how little negotiating runway remains. The Independent and the Financial Times said that Michel Barnier wouldn’t come to London for the Friday session unless the UK showed some movement in its positions. Per the pink paper:

An EU official said Mr Barnier had told his UK counterpart David Frost this week that there was little point in the EU side making the trip to the UK capital if there was no sign of movement in the talks.

Tony Connelly of RTE reported that Barnier had a video conference set for Friday with the eight fishing countries, which at a minimum means even if he went to London, he’d need to break for this confab.

Nevertheless, the EU has always made a point of being willing to talk, so having Barnier remain in Brussels but dispatching the rest of his team would send a message…..as if one needed to be sent. The EU has been broadcasting the same message from the very morning after the Brexit vote, that if the UK wanted access to the Single Market, it would have to subscribe to the Four Freedoms, which the UK rejected. The UK has repeatedly demonstrated appalling ignorance of trade deals, such as saying it wanted a Canada-style deal and acting as if it was tariff-free and contained no “level playing field” provisions. In fact, it contains both. Similarly, the agreement the UK just sealed with Japan contains provisions restricting state aid…yet the UK has taking the position that those are a no go in an EU deal.

Oh, and while we are on the topic of that Japan deal:

The Financial Times reported that the UK offered a four-year review clause. It’s hard to see what this would accomplish, since the only adequate remedy would be to force what amounted to a crash-out, which would be more disruptive to the EU then than now, when it is already preparing for Brexit changes:

This week there was a flutter over whether a four-year “review clause” might provide a mechanism by which the two sides could create the space for a deal, but the differing interpretations of how that might work speak to the divide between the two sides.

What started with a conversation about kicking the can on the fishing issue (which the EU has always said must be traded against access to the EU’s single market) opened the door to some thinking on a possible fix for the overall deal.

Under some UK thinking, a four-year review clause on the free trade agreement would enable Brussels to assess if the UK had behaved in a way that undermined non-binding promises on free and fair competition — with Brussels imposing tariffs on UK trade in retaliation if necessary.

Such a proposal was never going to fly for the EU. The imposition of tariffs after the fact is far too small a price to pay for competitive divergence — particularly if the UK should retain all the other market-access elements of the proposed FTA, from aviation freedoms to border trade facilitations.

More realistic, from an EU perspective, might be to agree a review clause where the penalty for the UK walking away from its level playing field obligations was a much more “nuclear” option, with both sides reverting to a full no-deal scenario if the deal wasn’t working.

Financial Times readers weren’t impressed either:

Fooltomyself

What’s the plan? Is it possible Johnson/Frost don’t actually have a clear outcome they are working towards, and are waiting for public opinion to nudge them to ‘agree to something’? (cf the first lockdown, which was implemented by the public and confirmed by a reluctant Johnson.)

In what way is the UK offering to have a different partnership with the EU, than other neighbours eg Serbia, Turkey, Russia, Morrocco? Is one of them our future model?

Scarlet Pimpernel

This thing is dead. No way Boris can concede. And why should the EU. BJ’s vision is that of a (hopefully more properous) Cuba sitting close to but independent from Europe and causing havoc. Good luck with that. Who would trade with people like that. A new PM will settle. But this one needs to go first. No deal is the way to get him booted out.

The press has more and more accounts of Santa delivering coal to the UK’s stocking. The Express is warning that Northern Ireland shoppers won’t be able to get 15% of Marks & Spenser’s food items come the new year.

And remember…back in Theresa May’s tenure, one of her ministers tried suggesting that food stores could stockpile, only to have industry incumbents clear their throats and say, no, they operated on a just-in-time delivery basis and could inventory only a few days of supplies? Broader food worries are back, with Covid another stresser. From Bloomberg:

A scarcity of warehouse space because of Christmas demand and the pandemic is putting the U.K. at risk of shortages of some food products as it prepares to leave the European Union’s single market.

With five weeks to go before the end of the Brexit transition period, large manufacturers and industry groups are warning that the capacity of the food supply chain is at its peak and can’t withstand any further shocks.

Unilever, the maker of Ben & Jerry’s ice cream and Hellmann’s Mayonnaise, said it is building up stock of key lines but “warehouses are absolutely full.” Like rival Nestle, the maker of Kit Kats and Nescafe coffee, maintaining supply of finished products and ingredients is now the priority as talks between Britain and the EU on a trade deal remain deadlocked. Yet that’s “with stock building more difficult at this busy time of year,” Nestle said….

There have been numerous warnings about potential Brexit disruption from companies and even U.K. ministers, such as lines of trucks on the highway regardless of whether there’s a trade deal or not. The trouble is that the latest contingency planning couldn’t come at a worse time as Christmas goods take up storage space.

Mind you, the notion that a year-end departure was the worst possible time isn’t news. Nor is the idea that the UK has a highly optimized retail food system, which makes it vulnerable to breakdown. From Ian Dunt in 2018:

We’ve grown so used to frictionless EU trade that our food system is based on something called Just In Time. The idea behind this is that products are constantly cycling from producers to consumers, without being stored in big cargo holds. It’s more efficient and also more pleasant. This is why you eat fresh tomatoes from countries miles away without ever really having to think about how extraordinary it is. Under your feet, a miraculous logistical engine is constantly pumping ham and cheese and fruit and veg and bread around the continent. It’s a circulatory system of yummy wonderfulness.

The UK is particularly reliant on Just in Time because it doesn’t feed itself. Domestic food production has been steadily declining from the early 1980s and is now at just 60%. Most of our imports come from the EU because it is closest to us. With food more than arguably any other good, distance is important – because it’ll go off. About 10,000 containers of food come into the UK from the EU daily. (This is an excellent recent report on Britain’s food security and its vulnerabilities.)

But the efficiency makes it fragile. The impact of no-deal Brexit on this system would be an implosion in the trade network. Suddenly, the full certification system would need to be checked at the border. Frictionless trade would be replaced by standard-issue bureaucracy.

Sky describes the UK’s efforts to brief haulers….when the app won’t be released till December 23:

After four years of politics and prevarication, Brexit is about to become a test of competence rather than conviction.

And the heart of the government’s effort to meet it is a cabin in a lorry park in Ashford, Kent.

It’s one of 45 sites around the country where agents patiently attempt to brief hauliers on impending changes to border arrangements that have applied for a generation….

n total, this new pile of red tape will run to 270 million customs declarations a year, and, in practice, responsibility will fall to hauliers and drivers, 3.5 million of whom cross the short Channel straits into Kent, largely through Dover, every year.

At Ashford, on a grey Thursday with 35 days to go, four agents tried to stop drivers as they made their way for a shower or a meal.

Most stopped to hear them out but very few speak English. The vast majority of drivers are from eastern Europe and often more interested in a hot drink than an iPad demonstration.

Using Google Translate, the agents did their best to walk the drivers through the new system.

But there is another problem. The app they’re demonstrating is not available yet.

Despite having years to prepare, the government will only release it on or around 23 December, just eight days before it needs to work.

Without it, or if the paperwork it tracks and coordinates is not completed correctly, lorries will not be able to board boats or trains.

Reuters chronicled how delivery prices are already up as companies are frantically moving goods before the January 1 state change:

Logistics companies told Reuters they have seen a surge in demand to bring goods into the country before any potential disruption in January, and customs agents report being overwhelmed by pleas for help from traders grappling with the rules for the first time.

“We have told our customers that the best thing you can do now is stock up, stockpile, and they’re bringing in as much as they can,” Jon Swallow, director of Jordon Freight, told Reuters…

Swallow said the demand had pushed prices up by around 20% in recent weeks and further rises were likely in December.

Fellow freight specialist Tony Shally said his Espace Europe had seen the cost of journeys between Poland and England, and Northern France and England, rise by more than 10%….

Sam Harris, operations manager at provider Freight UK, said it had become a full-time job just to answer the phone to new customers. “Most know nothing about customs,” he said. “Everyone is panicking.”

“We had a farmer on the phone and he had no idea whatsoever about what needed to be done.”

The Reuters account also described how Covid had made matters worse: companies had put off stockpiling, unlike before other Brexit deadlines, because they were low on cash. Financial stresses also meant many have held off on hiring and training new customs staff.

Twitter confirms the Reuters tidbits:

Boris Johnson is the only one who can change his negotiators’ mandate. But he is allegedly indecisive. Even though Johnson no longer has Cummings to push him around, the inertial path is a crashout. Carrie Symonds may have won the battle against the Brexit Boys, but her intervention looks to have come far too late to change the course of the war.

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