BC BREXIT
Saved by @CodyyyGardner

How to make sense of the increasing number of UK-EU trade disruption stories?

In short - outside of a single market product checks and people working restrictions are inevitable. And outside a customs union you will have tariffs and / or rules of origin.

Detail ---> 1/

 The UK decided to leave a Customs Union. Within that Customs Union, no tariffs, just a common external tariff or preferential rates for bilateral deals or developing countries. Hence, distribution hubs in one country for all make a lot of sense. 2/
Outside a Customs Union our choice was tariffs under WTO rules or remove them subject to rules of origin with a deal. We chose the latter, but it means we can't just import from China, rebadge, and get zero tariffs from the EU. As we could until December 31. 3/
Net result of being outside of the Customs Union - it no longer makes sense for the UK to be a distribution hub for the whole of Europe. Particularly when so many neighbouring countries remain in it. No trade deal changes that. 4/
Now, product checks, of the sort causing problems for food exporters (see Scottish seafood). In the single market, we shared regulations, so a safe product in the UK was safe in France. No inspections. We chose to leave that system, as we want to change some regulations. 5/
All developed countries have extensive safety regulations, particularly on food and drink products. They have stringent entry checks. Outside of a single market, you face the full weight of those checks. They take time. 6/ https://t.co/3NY7zgXRet
Countries outside a single market can negotiate with each other to reduce the number of product checks. Agreements usually involve commitments on both sides to build trust, such as not changing regulatory standards. The UK chose not to pursue this on food. 7/
You could be forgiven for wondering why if I knew all of this, the UK government, MPs, and businesses did not. But you recall there was a campaign for the purest possible Brexit. You may recall Brexit central. Not everything written there was true... 8/ https://t.co/PuppVdIHWZ
Individuals who said leaving the single market and customs union meant product checks and rules of origin were told we were biased. We weren't invited to advise government. Business was not encouraged to say this. EU-shills. Code for inconvenient. Anyway, enough Trumpism... 9/
There is a whole category of restrictions we are hardly seeing yet, on services. We aren't travelling to the EU for work right now, because of covid. After covid it will be because of work permit restrictions. Financial services changes are coming. 10/ https://t.co/ankZwPqeUp
For services like goods, it no longer makes sense for London to be the hub serving the EU, when there will be barriers in terms of trade, people, perhaps data. The UK's European HQs are threatened. Hard to know how exactly this might unfold, but there will be change to come/ 11/
But the UK government is not powerless to prevent the erection or maintenance of EU trade barriers. It was a choice not to prioritise easing of regulatory checks. We chose a quick deal, with little regulatory alignment. We could choose differently. 12/
The UK government can choose to prioritise easing checks on food exports to the EU. But it will probably mean less regulatory divergence. We can choose to prioritise a data equivalence agreement, but that might require certain commitments. 13/
The government could argue that global Britain means pursuing deals and regulatory freedom elsewhere. Thus for example a US trade deal to change our food standards. That again is a choice. Can Scottish seafood be sold to the US? Such are the choices. 14/
But this is where we are now. A government supposed committed to free trade has chosen high barriers to £670 billion (approx 50%) of our trade. It can try to reduce them, or accept the consequences. It can try to replace EU trade with further away countries. Tricky. 15/
All of this was known last year and before. What is happening now the inevitable consequence of the decisions taken. But we also need to talk about the future choices. Alignment and reduced checks, divergence and higher barriers. No getting out of it, whatever partisans say. 16/
Goods regulatory checks and to a lesser extent rules of origin also apply to Northern Ireland - Great Britain trade. As widely stated when the Withdrawal Agreement was signed in 2019 but denied by the Prime Minister. 17/
Finally, element of "told you so"? Sure, not denying it. It isn't always easy being told that facts = bias, doors in government being closed because easier to listen to those who are factually wrong but politically right. But more a hope we start dealing in reality. 18/ end
PS a telling little detail. A modern trading relationship is made up of numerous such decisions, and on them will trade and investment depend. https://t.co/1Mt8xjslnf

More from David Henig

David Henig
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Plenty of talk this morning about how UK sovereignty is what is stopping an EU deal, that the EU want to impinge on this.

Sorry, the argument is totally bogus. It is a combination of EU hatred and cakeism dressed up in respectable clothing. 1/ n

How do we define sovereignty in trade deals? Complex question, so let's just look at this government. It believes in trade deals and membership of the WTO. These contain binding rules. Therefore for this government sovereignty and binding rules are compatible. 2/

Therefore sovereignty in terms of trade rules for this government is a relative concept either in content or partner terms. So when they say the EU proposals go too far is that because of what is proposed, or who it is proposed with? 3/

We haven't been told the detail. But with regard to the level playing field it is suggested that no country could sign up to a situation where not following the rules leads to tariffs being imposed. However we agree to this in the WTO and FTAs. So that is untrue. 4/

Fish is a slightly different matter, and it is being said that the EU proposal would deny the UK control of our waters. But definitionally that can't be true. We're showing our control through the discussion. We don't have to do a deal. 5/
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David Henig
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@DavidHenigUK
Brexit. UK-EU talks. Let's try to explain why we're in such a state, of increased risk of no deal, moving away from the fish and playing fields which are the detail but not the answer, to differing philosophies and divorce parallels that might just help... 1/

First, with apologies to those concerned, we need to go beyond those saying this is the inevitable path to deal / no-deal. Half of them will be right and I'll definitely be wrong (don't worry, I'm hedged in wine bets), but it wasn't inevitable, typical, or necessary. 2/

I'll also ignore the content of any deal, which has been clear for months, the UK compromises on level playing field, the EU on fish. Something so obvious really isn't the fundamental issue. Could, as some not noted for their perspicacity have said, be done in an afternoon. 3/

Some truth in the idea that flounces and playing the tough cop are a part of trade negotiations. But equally as we're in about the 5th pass of these, I think it has ceased to be helpful. Either side could already have cut the deal having shown their toughness. 4/

Some fundamentals then, that we've forgotten. First, the trade deal that will lead to much less free trade than before. The incentive structures, the ability to create a win-win, are inevitably going to be different to a normal deal. 5/
BREXIT
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David Henig
David Henig
@DavidHenigUK
As is traditional for this time of year, and more in hope than expectation, my top ten trade / Brexit hopes for 2021...

1 - The UK Government ditches the unnecessary secrecy and engages much more openly with business, NGOs etc about their priorities, and reflects them

2 - Parliament steps up its game on government scrutiny beyond select committee reports and starts expecting answers on why priorities have been chosen, why trade agreements with which countries, what the content should be etc

3 - UK business do their best to keep on exporting and importing, innovating and partnering, to overcome the new barriers in their way, and also to keep shouting for government to remove barriers as they arise

4 - Brexiteers show even the vaguest hint of interest in the views of those who continue to want strong ties with the EU, rather then repeating over and over again, to even the vaguest hint of criticism, "you lost suckers, get over it"

5 - Remainers, rejoiners and the like stop talking quite so much about how the 2016 referendum was stolen from them, which is becoming both history and suggests that 17 odd million people were conned

(NB not confident on the last two)
BREXIT
David Henig
David Henig
@DavidHenigUK
There is a sense of disbelief about the new trade problems between Great Britain and the EU / Northern Ireland. Which we need to lose. This is the new normal. And we face a difficult period of adjustment - immediate paperwork needs, and to longer term uncompetitiveness.

As we trade folk might have mentioned before, outside of the single market and the customs union of the EU, problems at borders are normal. Delays common. Great job of the Brexit supporters to find supposed experts claiming otherwise, but now back to reality...

Such delays at borders were in fact part of the origin of the single market, in the days when the Conservatives didn't see a contradiction between free markets and sovereignty. Such delays weren't really compatible with a supposed common market. So, the single market...

The delays and individual issues will ebb and flow. There will be new regulatory requirements in EU and UK affecting different products. But for UK and EU business as a whole it will mean UK-EU trade is more costly and less predictable, and there will be economic adjustment.

To put it bluntly, some UK firms will go out of business due to new border barriers. Some EU firms will stop supplying the UK, at a cost increase to UK consumers but a possible new opportunity for firms. This adjustment will take some time though.
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David Henig
David Henig
@DavidHenigUK
The first working day of the new UK-EU relationship. We're going to hear a lot this year from all sides (remain and Brexit in UK, EU, etc) using any possible scrap of evidence. But what we need to look for is trends, over time, so a few to think about in this thread... 1/

Obvious disruption or reduction to UK-EU trade flow. Here we may be thinking e.g. of a permanent 10% fall in traffic, or regular queues, or indeed no change. And apart from goods, the same with individual travel, for work, residence etc... 2/

As a reminder we're not expecting permanent scenes like those of the week before Christmas when borders were closed. But 5-10% reductions in UK-EU traffic would not seem to be out of line with economic forecasts of a hit to the UK economy. 3/

Then we'll need to look at whether UK-EU trade is being substituted by UK-non EU trade. This probably should happen to a degree, and in theory efficiencies could come this way. But its also possible that all UK trade falls, with the UK no longer an EU entry point. 4/

Inward investment is another key post-Brexit indicator. There isn't a single obvious data set here, but the impression of the last four years has been a fall off in manufacturing, but not in services, particularly tech. Continuation would suggest economy tilting to services. 5/
BREXIT

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As the transition period ends, the #BrexitDeal applies from tomorrow. But there's also a parallel significant legal change - most of the rest of the withdrawal agreement starts to apply. A thread on the legal issues in the rest of that agreement.


The citizens' rights provisions of the withdrawal agreement (on EU citizens who moved to the UK, and UK citizens who moved to the EU, before the end of the transition period) start to apply.

Annotation and detailed analysis of those provisions here:

After today, UK citizens newly moving to the EU, or EU citizens newly moving to the UK, are in principle governed by national law (partly harmonised by the EU, on the EU side).

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EU views PMs letter accompanying his formal #Brexit extension request - saying that he doesn’t actually want an extension- as a gimmick aimed at a domestic audience. As far as EU law is concerned: a formal request from the UK prime minister, is a formal request full stop /1

EU leaders not rushing to make decisions. Instead they watch events in Westminster carefully. If their newly negotiated #Brexit deal is approved by the majority of MPs - as the PM promised them it would be - then possibly no extension will be needed OR /2

Only a short one maybe to allow for necessary legislation to be completed. If this is the case, EU leaders won’t think twice about granting this short extension. They may even approve it by writing rather than on person at an emergency #Brexit summit. Spoiler alert../3

EU leaders - who surprise, surprise already have a thing or two planned in their diaries over next couple of weeks - have zero appetite to return to Brussels again especially for #Brexit They have no desire to be involved in the drama playing out right now in the UK BUT /4

If MPs reject the deal, if there are plans for a general election or a referendum on the deal then a longer extension will be necessary. Here it is harder for EU leaders to come to immediate consensus so an emergency summit becomes likely /5
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While we await white smoke signalling a #Brexit deal, let us consider what the end of the transition period on 31 Dec (deal or no deal) will mean for the future of UK politics. Will the end of the Brexit process lead to the end of British #populism? I am very sceptical.
Thread 1/

This thread serves as an English summary and translation of a long essay I published in the Swiss @RepublikMagazin last week. Contrary to its title, it is not just about @BorisJohnson

British populism is a political method, not an ideology. It is not identical with Trumpism, even if it shares some of its traits. The populist method in the UK does not become redundant with #Brexit, because its use hasn't been limited to the UK's relationship with the EU.
3/

The populist method in the UK consists of two key elements:
1) the emotionalization and over-simplification of highly complex issues (such as Brexit, the pandemic, migration, culture or history)
2) the reliance on bogeymen ('enemies') both abroad and at home

4/

Populists depend on enemies, real or imagined, to legitimize their actions and deflect from their own shortcomings. There has been an obvious candidate for the enemy abroad since 2016: the EU. But once transition is over, this may, in the long term, become more difficult.
5/
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Peter Foster
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@pmdfoster
🚨🚨🚨🇪🇺🇬🇧🚛🚒🇪🇺🇬🇧🚨🚨🚨 serious #brexit story alert - companies now starting to see penny drop on what rules of origin does to supply chains (food for example) but Brussels seems deaf to both EU & U.K. pleading. A bellwether? 😬 Stay with me. 1/


So first the problem: its a tad complicated but basically goods that are imported into UK and then 'hubbed' onwards into Ireland or other parts of the EU are facing full EU tariffs - this is particularly bad for food stuffs, which attract high tariffs. Why is this? /2

It's a function of the Rules of Origin clauses that mean that goods have to sufficiently "originate" in the UK to qualify for zero-tariff entry to EU (and vice versa).

But to qualify, you have to do something to the goods - process them or add value - not just punt them on /3

The brilliant @AnnaJerzewska does a better job than me of explaining, but the important thing is that this is a nightmare for companies that 'hub' /distribute products through the UK - and that's both EU and UK companies /4


So both the @Foodanddrinkfed and EU groups like @CAOBISCO_EU (chocs etc) say they want the EU Commission to fix this with a derogation/waiver that takes into account proximity and interdependence of EU/UK supply chains. /5
BREXIT
Peter Foster
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@pmdfoster
So. The hunt is on in Whitehall for #brexit dividends...to show some clear value in the freedoms given by Brexit.

As we report today one area being looked at is workers' rights...but it is politically difficult territory.

No cabinet decisions have been taken, but per sources, three potential areas been identified in Business Dept...

- the 48 Hour Week
- holiday pay/overtime calculations
- new EU rules on reporting hours worked...

All potentially possible post #brexit /2

The government says it has no intention of “lowering” workers’ rights....and notes that UK has actually gold-plated many EU regulations...BUT (think of government saying it won't "lower" animal welfare standards)...the devil will all be in the detail, if and when it comes /3

So the government likes to talk about ensuring workers’ rights are protected but ALSO making sure businesses has freedoms and flexibility to grow...so one man's reduction in rights is another freedom to get richer/work harder/be more prosperous. It depends how you sell it. /4

So take this 2017 story from The Sun on the cash bonanza that will be rained down on hardworking families by Brexiteers' (long standing) desire to scrap the 48-hour week. Overtime booooom..../5

https://t.co/QLqQ7rCzkv
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