For anyone who thought Brexit was done in 2020, the early signs are that it will, once virus woes settle, become Boris Johnson’s biggest headache. Again.
It’s not a great sign when a formerly pro-Brexit lobby is suddenly furious about a part of the deal that was billed as a triumph. “The key is we’ve got our fish back and they’re now British fish and they are better and happier for it,” arch-Brexiter Jacob Rees-Mogg told a near-empty Parliament last week. Whether or not the fish are happier is unproven, but fishers, as the largely family-owned businesses that catch them are called, surely are not.
Scottish and some English fishing businesses staged a dramatic show of anger earlier this week over the increased costs of doing business. The problem isn’t so much the complex terms of the new quota sharing arrangements, but the red tape that threatens to ruin businesses that have been in operation for generations. Exporters of animals and animal products must submit Export Health Certificates (EHCs) and also Catch Certificates, which are issued by vets and environmental health officials. Demand for EHCs has outstripped supply and many businesses are struggling with confusing paperwork or IT problems.
Launching a new blame game or seeking to unwind
treaty commitments would undermine efforts to rebuild
the post-Covid, post-Brexit economy. It would also
poison a trading relationship that geography says will
remain hugely important to Britain.
Some fishermen have lost tens of thousands of pounds as live catch perished before reaching its destination across the Channel. Larger fishing vessels have begun landing their catches in Denmark to avoid the delays, but that means less work for Scottish processors. Some will have to sell frozen fish instead, at lower prices.
Fishing businesses have been the most visibly unhappy, but they aren’t alone. A London-based meat exporter complained of containers of fresh pork rotting at a Rotterdam port. “We can no longer sell it, but we can’t even bring it back into this country because we don’t have the right forms to do so,” the managing director of DH Foods told the Times.
Owners of hair salons said they were having difficulty securing supplies of hair dyes (largely French) needed when hairdressers reopen. Welsh wine merchant Daniel Lambert detailed how new paperwork, supply-chain surcharges and other frictions will add to the cost of a bottle of wine and estimated that 20% to 30% of some product ranges will no longer be carried by retailers. Shoppers in Northern Ireland found some supermarket shelves empty.
Meanwhile, businesses’ aversion to the Irish Sea border was so great that ferry operator Stena Line diverted a large ship that was intended to route passengers from Belfast and Liverpool to an Ireland-France route.
Johnson’s government has two words for those who are complaining: “teething problems.” Or rather, be patient. The issue isn’t Brexit per se, the argument goes, but the inevitable and temporary costs of a major adjustment. The flaws in implementation will be fixed. The fishing industry has been promised compensation.
Of course, some of the problems will resolve themselves in time. The trade deal was cut at the last minute and many businesses weren’t fully prepared because they couldn’t be. The pork stuck in Rotterdam was reportedly the result of a veterinary certificate not filled in correctly. IT systems will improve and paperwork will get more routine.
That still leaves a more complicated situation than the government wants to admit. As trade experts had warned all along, non-tariff barriers will become permanent features of the post-Brexit landscape, even once the form-filling and customs declarations become more routine.
These hurdles include so-called rules of origin, which require businesses to prove in which country their goods were produced. They include the plant and animal health regulations that saw apologetic Dutch border guards relieve truck drivers of their ham sandwiches in the new year. Value added tax requirements also become much more complicated. The trade agreement didn’t include the mutual recognition of conformity assessment, which would have allowed U.K.-based testing labs to certify that British products meet EU requirement.
Consumers are increasingly finding these things out too. I was asked to pay duties on an item I ordered online that shipped from France; I declined. Buying products from other EU countries was once as common as Americans in California ordering something made in Pennsylvania or Ohio. It’s about to get more expensive. HM Revenue & Customs have estimated these new requirements will add 7 billion pounds ($9.6 billion) of bureaucratic costs to EU trade.
Brexit is now irreversible — at least for a generation. But the relationship with the EU will never be static; it is one of perpetual negotiation. Johnson could look to mitigate some of these frictions in the trade agreement by working within one of the 19 specialized committees covering the various areas to reduce some of the hassles.
But just as there’s a way to have a little less of the Brexit pain, there is also plenty of scope for old tensions to be reopened and escalate. Given the past few decades of British politics, it would be foolish to bet against that happening. Either the U.K. or EU could terminate the agreement after a 12-month notice period.
It’s not hard to see how a return to scapegoating may become an attractive option for some in Johnson’s ruling Conservative party. While Nigel Farage’s new Reform UK party poses no serious threat, it could influence the debate, as the populist politician has in the past, even without winning a seat in Parliament. Some have already called for triggering a provision of the Northern Ireland Protocol to take unilateral measures.
Launching a new blame game or seeking to unwind treaty commitments would undermine efforts to rebuild the post-Covid, post-Brexit economy. It would also poison a trading relationship that geography says will remain hugely important to Britain. Johnson should resist that route at all costs.
Therese Raphael is a columnist for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.
Source: Bloomberg
