LibLink: Nick Clegg – British cross-border supply chains will be strangled by hard Brexit red tape

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Writing in the i newspaper, Nick Clegg says that any chance of Soft Brexit has been killed off by Theresa May. Instead, MPs will be faced with the choice of a hard Brexit or no Brexit.

Nick Clegg hits the nail on the head when he describes how modern cross-border supply chains will be destroyed by a hard Brexit:

It cannot be said enough: the Brexit this Government is determined to impose on this country cannot under any circumstances avoid the introduction of extensive new barriers, costs and frictions to trade with our largest trading partners.

There is something morbidly fascinating about the spectacle of Conservatives spouting the language of free-trade whilst overseeing the greatest retreat from open markets embarked upon by any party in the post-war period.

And, boy, it will come as a shattering shock to UK businesses when they realise what this means in practice: new lorry parks near the Kent ports; new checks to work out which tariffs should apply to each product; phytosanitary and veterinary checks on livestock and agricultural products; according to the Institute for Government, every single trader exporting to the EU could end up having “to complete a Single Administrative Document (SAD) and an Entry Summary (ES). The SAD consists of eight parts with 54 boxes which must be completed and submitted for every declaration.” And this excludes insurance certificates and other product-specific documentation. With each declaration costing between £20 and £45, the IFG reckons the additional annual cost could amount to £9bn per year.

Integrated supply chains will be destroyed. The fuel injectors assembled by the US automobile component manufacturer, Delphi, at its UK plant in Stonehouse, Gloucestershire, illustrate the point perfectly. The injectors are made from steel from Europe which is machined in the UK before going to Germany for special heat treatment before returning to the UK for assembly. They will have crossed the channel five times before they are inserted into a lorry and sold to a customer. This seamless, cross border assembly line will be slowed and eventually suffocated by the multiple bureaucratic incursions courtesy of the Brexiteer’s new “customs arrangements”.

You can read the full article here.

* Paul Walter is a Liberal Democrat activist. He is one of the Liberal Democrat Voice team. He blogs at Liberal Burblings.

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19 Comments

  • John Marriott 10th Feb '18 - 10:04am

    And so? The problem is that, deep down, nobody really knows for certain what is going to happen. Better to keep quiet, keep your powder dry and see what the latest ‘negotiations’ produce. Remember the advice that Attlee gave to Laski.

  • It’s amazing to think that a car traveling into the London region can somehow pass an invisible line (without stopping), have its reg. plate logged and a Congestion Charge allocated to the owner of the vehicle.

    Yet Nick Clegg seems oblivious that the same tech could be used to scan a lorry (without stopping it), with the ability to electronically, cross reference the lorry reg. plate, with a specific UK company sending product (Taric code) 0406 9021 (cheddar cheese), from a UK company to a Spanish supermarket chain, who both have a matching electronic copy of a certificate of origin of the aforementioned cheddar cheese.? [or even origin certified as non-chlorine-washed chicken?]

    I also think that for items such as car parts ‘shuttling’ several times between UK and the EU for different processing, that the newer ‘blockchain authentication log’, which allow validated crypto-currencies to shuttle around the globe, could easily be adapted and used to ‘keep track’ of fuel injectors and any other ‘stuff’ moving around different European companies.?

    Surely, in an electronically certified world, there are only 2 reasons a lorry needs to stop and park up at Dover:
    1. Because a belligerent politician is wilfully intent on complicating a simple electronic tracking process for the sole reason of creating maximum political mischief.

    2. The driver needs to stop for a pee, and a full English breakfast.

    So post Brexit, I suppose trading across borders, can be as simple and traceable, as current technology allows, or as complicated as a cantankerous politician is determined to make it?

  • Peter Chambers 10th Feb '18 - 7:42pm

    @Sheila Gee

    You seem to have great confidence in a potential new government IT system that would track and tariff the items the flow across the local parts of the EU. Do you have an estimate of the cost, schedule and risks for this proposed system? When would it be up and running, and what would the annual running costs be? Looking at coverage of the work of the Public Accounts Committee leads me to believe that much simpler government IT projects fail all the time and need expensive re-work.

    As far as blockchain is concerned, we may dismiss this as an useful solution to keeping track of trade items. For instance the blockchain for Bitcoin uses as much electricity as Ireland to track an almost negligible transaction volume of BTC each day. To suggest such a thing indicates that you do not know how blockchain works. Allowing a shipping manifest to be “eventually” accepted as the winning transaction of a proof-of-work contest is simply silly. The result should be deterministic, and the simplest mechanism is a transaction against a register, as in the first part of your comment. Sorry, magical thinking.

    Nick is correct to point out the costs and risks of a hard brexit. He is simply stating facts.

  • Andrew Melmoth 10th Feb '18 - 7:54pm

    – Shelia Gee
    There is a very obvious reason why no border in the world works the way you describe.

  • The issue of leaving the EU is simple. There was a referendum. The majority said leave. So we leave. There is no such thing as a hard leave, or a soft leave. We leave. The rest of Europe understands that. We will need an agreement on trade with the EU. This will take some time. All the research has been done. Everyone is waiting for the Conservative Party to sort out their differences and come up with a policy. I only hope that we get to the stage where the majority in Parliament demand that the government get on with the job of governing and stop playing childish games with the future of the country.

  • Peter Chambers
    “For instance the blockchain for Bitcoin uses as much electricity as Ireland to track an almost negligible transaction volume of BTC each day. To suggest such a thing indicates that you do not know how blockchain works.”

    I’m sorry but it is you who doesn’t know how blockchain works. Blockchain is a totally separate technology from Bitcoin. It is the Bitcoin ‘mining’ and the Bitcoin ‘transactions’ which use massive amounts of electricity. There are many companies who are already researching blockchain ( NOT bitcoin), as a valid ledgering system for secure transactions.

    Paul Walter
    “Have the French given any indication that they would be happy to wave through trucks without checks?”

    Border controls should (and will) always exist. But lest we forget, that under the watchful eye of our present EU regulations, border guards checking trucks, didn’t identify the horsemeat coming into the supermarket food-chain as beef? It was misuse of certificates of origin which breached the rules.

    It’s perfectly possible to have a near frictionless routine trade across borders, handled by technology, but like I said, the real obstruction is political.

  • Of course it is possible to have frictionless trade across borders. Rejoin the EU. But a majority of those who voted oppose that. So now it is up to our government to say what they want. They haven’t done so because of the internal fights in the Conservative Party. This is a serious issue. The future of our country is at stake, and all we get is silliness from the government.

  • Denis Loretto 11th Feb '18 - 2:34pm

    I very largely “agree with Nick” but I feel that he goes too far towards giving up on the feasibility of finding a way of leaving the EU without utter disaster. No one could be more convinced than I that the referendum result is an appalling historical error. Nothing would please me more than reversing it. But that might not be achievable – even if there is a new referendum between the hardest of cliff-leap brexits and staying in the EU we could lose it. So we must still try to secure some sort of soft brexit as an option. If it were possible to get an extension of the 2 year Article 50 period instead of a transition period (as suggested recently by Jacob Rees Mogg and applauded by Nick Clegg) maybe we could start to get somewhere BEFORE the exit occurred. I have little doubt that the 27 could be persuaded to agree that.

  • Arnold Kiel 11th Feb '18 - 3:57pm

    Even if it could be proven that upon Brexit the channel would silt (and the tunnel flood), brave Brexiteers would spot a continental conspiracy easily overcome by some political goodwill.

    For various historical reasons I do not dare to speculate about, Britain’s inclination and skill to “make” things had been largely lost around 1960. SIngle-market membership, a liberal labour market, residual brand values, and the English language has brought foreign capital and management, and with it some rebirth of manufacturing. But upon closer inspection, it is rather assembling than making. Consequently, these islands’ manufacturing activities are particularly dependent on the four freedoms of the single market, a much despised fact by many islanders.

    It is now quite irrelevant whether frictionless borders could be replicated with technology (they can’t). The countries accross the channel, who would have to mirror these solutions (at whose expense, btw?), and who are much more affin to making will opt for the natural solution once the UK’s unnatural and artificially propped-up assembly-role ends: onshoring. Americans and Japanese companies are, unlike 1973, truly global today, and will quickly address the anachronism of their UK manufacturing footprint if Brexit renders all historical reasons for UK plants obsolete.

  • Arnold Kiel
    “For various historical reasons I do not dare to speculate about, Britain’s inclination and skill to “make” things had been largely lost around 1960.”

    The industrial base of Japan and Germany both took a beating in the war years. Conversely, much of northern UK industry survived. This created an in-built irony for Britain.
    Japan and Germany ‘re-tooled ‘their industries with 1950’s ‘state of the art’ technology. Conversely [and ironically], the young men coming back from war to factories in the Uk were left to work on old Myford lathes installed in the 1920s and untouched by war.

    This is one [of several] reasons, why Japan and Germany, were able to perform a technological ‘leap-frog’, of their industrial base, thus improving their productivity.

    What Arnold Kiel, hasn’t grasped, is that that same technological ‘leap frog’ can happen again, and again.
    The Grundig example, shows us that the German economic miracle for manufacturing cathode tubes, razors and electrical office equipment, also faced its nemesis around 1990, when it too, got ‘leap-frogged’ by Korea and Taiwan.

    Cutting this story short, a UK free from EU protectionism and interference, will be able to attract inward investment (ironically from German pension companies?), in order to design and build a British industrial base utilising 2021 state of the art A.I. and robot technology, that has the potential to make even Samsung ‘salivate’ in envy?

    I would recommend Arnold stops panicking about our British future. I know the British psyche much better than he does, and I can assure him that we’ll just ‘bumble along’ in our own British way, and ‘work something out’ post Brexit.
    Might not be sunny uplands enough for anti-glare sunglasses, but we’ll be fine.

  • Sheila Gee,

    inward investment for productive assets goes where the conditions of production (skills, cost, legal frmework) and selling (tariffs, standards, geography) are and promise to remain advantageous. Brexit will deteriorate all these conditions.

    Last time you had to “just ‘bumble along’ in our own British way, and ‘work something out’”, the result were the Empire, then the Commonwealth and lately EEC-membership. Note that this sequence also illustrates a descend in British dominance. Upon leaving this last club of equals, the geopolitically inescapable next step will establish positions of inferiority, e.g. in trade-deals with China and the US. I am curious to see how the poverty-proof “British psyche” you know so well will adjust to that.

  • Peter Martin 12th Feb '18 - 1:03pm

    @ Arnold Kiel @ Sheila Gee,

    Sheila is quite right we will probably bumble along OK. But we could do so much better. Our standard of living will be determined by what we can produce for ourself and what we can trade with others. Just like it always has done. We can’t make our own wine, at least not enough of it, or grow or own tea and coffee but we can trade with countries who can supply those things. There’s no reason for our living standards to fall after we get over the initial disruption to our existing supply lines.

    Hopefully, the EU wants to continue trading with us and there won’t be that much disruption. We’ve no problem with that. But if the EU spits the dummy, and takes its ball home (sorry about the mixed metaphor) then we’ll just have to readjust in other ways. There’s no real problem. We, as a currency issuing independent sovereign state can always ensure we have full employment.

  • Laurence Cox 12th Feb '18 - 1:10pm

    @Sheila Gee

    I recommend Tom Brown’s “Tragedy and Challenge – An inside view of UK engineering’s decline and the challenge of the Brexit economy” published last year, which I have just completed reading. It wasn’t just outdated tools; it was the accountants’ mindset amongst managers that meant these tools weren’t replaced.

    Tom Brown started his career in GKN and his experiences as a manager in GKN group companies in Scotland and South Tyrol demonstrates the problem vividly.

  • “I am curious to see how the poverty-proof “British psyche” you know so well will adjust to that.”

    It’s a very good question. I think it probably comes from our propensity for drinking Tea, as an antidote to flaccid attempts to thrust us into panic mode, every time some or other ‘EU expert’ tells us we should, ‘Be afraid, Be very, very, afraid’?

    I wholly recommend that the Dutch and German government drink lots more Tea, for the headache they will get as they realise that, they jointly, will probably have to fill the annual loss of £10 billion UK cash, from around 2021?

  • Arnold Kiel 12th Feb '18 - 3:36pm

    Sheila Gee,

    GBP 10 Billion is GBP 150 p.a. less paid per Briton, or GBP 22 p.a. (or 40p per week) less received per EU citizen. If that should cause a headache, what about the 2-8%, regionally up to 16% of UK GDP being lost?

    Barnaby,

    apart from RR, a nice collection of (valuation- not operation-) anecdotes. How many well-paid jobs for non-Russell-group graduates and non-academics do they provide? A small fraction of the numbers at risk.

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