Don’t worry it may never happen

As an ex-pat Scot, I regularly visit the pages of The Scotsman newspaper.  the Scotsman is a broadsheet based in Edinburgh and it covers all the big national stories as well as those affecting Scotland.

Over the weekend, I chanced upon two stories in the paper.  the first was an opinion piece on the future of Scottish agriculture outside of the EU.  It highlighted some of the UK government’s recent press releases relating to the trade in agricultural produce once the UK has left the EU.

In recent weeks, press releases have highlighted the prospect of selling pigs trotters to the Philippines and deer antlers to China (they are used in Chinese traditional medicine).  The article equated these press releases to applying lipstick to a pig.  Firstly, the trade deals mention were in the low millions of pounds not the billions needed to replace the drop in trade likely after we leave the EU.  Secondly, UK agricultural and food suppliers already carried out a lot of this form of trade from within the EU.

As a trading standards professional, I regularly had to inspect two large poultry processing factories.  Both of these factories exported chicken heads and feet to China.  In total these factories processed around 2 million chickens a year.  The value of their existing chicken by-products was larger than some of the trade benefits quoted in the UK government press releases.

The second article I spotted was a survey of UK and EU CEO’s by Thompson Reuters.  This survey stated that 69% of CEO’s had yet to include the potential effects of Brexit in their corporate strategic plans.  The survey also stated that 21% of those surveyed had paused or stopped investing in the UK as a result of Brexit.  The International Trade minister Liam Fox was given a score of three out of ten for his performance so far.

The spin applied to the survey in the article was that company CEO’s were not worried about Brexit.  I would suggest that many have yet to become worried; that they are in denial at the potential chaos of the UK’s exit from the EU.  I suspect many company directors still believe that Brexit isn’t going to happen.

The problem is that there is not a lot of time left before the Brexit deadline for CEO’s to plan and get their act together for a political and economic whirlwind.

To illustrate the lack of thought that is being applied to the process of Brexit, I refer you to two of the position papers recently published by David Davis, the cabinet minister for exiting the European Union.

The first of these relates to the land border between Northern Ireland and the Republic of Ireland.  The second is the position paper relating to the continuity of the availability of goods for the UK and the EU.  Both of these documents are the thinnest of gruel.  They consistently lack the appropriate detail to give business an idea of how life outside the EU will look.

The paper on the Irish border is particularly awful.  It talks of the border remaining identical to now.  Goods will be able to cross the border freely, as will people.  But such an assertion stands directly against the facts of the Republic being inside the EU and the UK outside.

The proposals in relation to customs are particularly baffling.  Two options are given.  The first is the ‘have your cake and eat it Brexit’.

The paper argues that the UK could leave the current European Customs Union and set up an identical but different UK/EU customs union.  This would allow the movement of goods to go on unhindered.  At the same time, the UK would be able to go out and make new free trade agreements with other states.

There is no way that the EU will agree to such a situation.  It would allow third-party nations which have agreed a free trade agreement to siphon goods through the UK into the EU avoiding existing tariffs and customs controls.

The second option is that a class of ‘trusted traders’ either side of the border are exempted from customs and tariff law.  In particular, the UK government wants to exempt small firms from such measures.

This is a bonkers suggestion.  You cannot have one law for some and a different law for others.

In summary the UK government proposals for the Irish land border are a recipe for smuggling, people trafficking, tariff evasion and carousel fraud.  The position paper resembles a first year undergraduate politics essay.

The paper on the continuity of the availability of goods is equally terrible.

It only talks about goods up to the point that the UK exits the EU.  It states that goods placed on the market prior to the UK exit should be treated as they are currently and not under the new arrangement between the EU and UK.

What this means is that goods made or ordered at five to midnight o March 31st 2019 will be EU goods and treated as such.  Nothing is said about the status of goods made or ordered six minutes later on the first of April.

The paucity of detail in these position papers should have businesses of all sizes extremely worried about the potential effects of Brexit.  They clearly show that the UK government has no strong policy on Brexit and little idea how life will look outside the EU.

Beware, get contingency business plans and strategies ready now because it looks like the UK out of the EU will be a particularly unstable place to do business.