Monthly Archives: February 2021

The government talks of teething troubles, but the red tape is here to stay

Feb 24th 2021

TWO MONTHS after Britain left the single market and customs union in favour of a trade and co-operation agreement (TCA), complaints are multiplying, from seafood sellers and pork exporters to fashionistas and musicians. Some of these are teething problems, but most are the consequence of Boris Johnsons decision to prioritise sovereignty over market access.

The biggest political problem is the Northern Ireland protocol, under which the province stays in the single market for goods and the customs union. The government chose this route as an alternative to a hard border on the island of Ireland. But now that border checks have begun, disrupting trade, the Democratic Unionist Party and some Tories are demanding that Mr Johnson should scrap the protocol entirely. He will not do that, but the protocol will be an issue in the elections next year to the Northern Ireland Assembly.

Trade across the channel is suffering even more. The British Chambers of Commerce report that almost half of exporters to the EU have met obstacles. Although the TCA promises zero tariffs and quotas, that is subject to rules-of-origin requirements to ensure that exported goods are not first imported from outside the EU. Rules of origin have hit businesses from supermarkets to pet foods to fashion designers. Strict sanitary rules are similarly obstructing exports of shellfish and many agrifoods. Daniel Kelemen, a politics professor at Rutgers University who is collating examples of Brexit trade barriers on Twitter, had by this week recorded nearly 200 cases.

Services are no better, mainly because the TCA omits them. The City of Londons hopes of retaining business across Europe through a grant of regulatory equivalence have evaporated. Instead, the EU crows about Amsterdam unseating London as the continents largest share market. Musicians, actors, fashion designers and professional-service firms are griping about expensive red tape and travel restrictions. A provisional decision to accept the adequacy of Britains data-protection standards is a rare ray of hope, and even this may be challenged in court.

The chances of reducing these barriers are small. Mujtaba Rahman of the Eurasia Group consultancy says there could be improvements at the margin, but anything substantial (such as Britain aligning with EU sanitary standards) would require Mr Johnson to cross his sovereignty red lines. The promotion of Lord Frost, the hardline negotiator of the TCA, to replace Michael Gove as minister in charge of EU relations, does not augur compromise. Nor does the row over the EUs ambassador in London, to whom the Johnson government (alone in the world) refuses full diplomatic status. Vaccine wars, even if only rhetorical, do not help.

The cost of Brexit may take time to emerge. Tom Sampson of the London School of Economics notes that the first goods-trade numbers for January will be known in mid-March. He thinks what he sees is consistent with the modelling of the TCA he did for UK in a Changing Europe, a think-tank, which points to a fall over ten years in British exports to the EU of 36% and in incomes per head of 6%, bigger than the impact of covid-19. There could be offsets from trade deals with third countries or regulatory divergence, but they are far off and uncertain.

Unusually for a big trade deal, the government refuses to conduct an impact assessment of the TCA, doubtless because it would produce negative results. Dominic Raab, the foreign secretary, says the benefits of Brexit will not emerge for ten years. He should recall the case of Switzerland, which after a narrow referendum loss turned its back on the single market in 1992. Over the following decade the Swiss economy grew more slowly than any EU members.

Yet Switzerland also offers Brexiteers some comfort. Three decades of ill-tempered negotiations with Brussels have not persuaded Swiss voters to change their minds. Indeed support for joining the EU has fallen: no political party backs the idea. Remainers hoping to use the TCA as a base for a closer relationship or even to revive the idea of membership may well be disappointed.

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Counting the cost of Brexits impact on trade - The Economist

British prime Minister Boris Johnson hosts a virtual meeting of G7 leaders in the Cabinet Room at ... [+] Number Ten, Downing Street on February 19, 2021 in London, England. The 2021 G Summit will be held in Carbis Bay, Cornwall from 11-13th June.

This November, U.K. prime minister Boris Johnson will crow about the benefits of Brexit once again.

That is when the U.K.s Glasgow, in Scotland, will host this years UN climate conference, effectively handing a megaphone to Johnson to boast about his countrys climate ambitions. And thanks to Brexit, he will have something considerable to brag about: a formal pledge by the U.K., under UN guidelines, to cut greenhouse gas emissions 68% by 2030, well above the EUs pledged 55% cut.

The U.K.s role as host to this years COP conference, as the annual gatherings are known, is an example of how the U.K.s break from the EU affords it new opportunities to burnish its climate reputation on the world stage. While the true climate impact of Brexit may be somewhat negative what the U.K. gains in bragging rights, after all, the EU loses Brexit is at minimum a major public relations gift to Britains ambitions to sell itself as an environmental leader.

The COP26 is not the only international summit this year where the U.K. will have a chance to shine a spotlight on itself. In another stroke of luck, the U.K. is also set to host a meeting of seven of the worlds largest economies, the G7, this June in Cornwall. Climate is set to be one of the summit's main priorities.

The U.K. sees decarbonization as one of the global challenges where it can show potential leadership, said Alastair Hamilton, a partner at consulting firm McKinsey. The confluence of Brexit happening in the same year as the COP26 and when it is chair of the G7, the U.K. will be seeing that as...a big diplomatic opportunity.

Philippa Spence, an executive director at Denmark-based environmental engineering consultancy Ramboll, agreed: The Johnson government is seeing the green agenda as an opportunity to rebrand after a damaging year in 2020, with COP26 as a chance to present the U.K. as a global leader in this space.

The U.K.s biggest climate coup may have been in freeing itself of the nettlesome West-East tug-of-war that has plagued the EUs ability to set binding climate targets. Central and Eastern European countries, which still rely heavily on coal-fired power, have fought bitterly to keep the EU Commission from adopting tougher headline targets. Only in December did EU heads of state manage to persuade Poland and other holdouts, such as Hungary and the Czech Republic, to raise the blocs official target to a 55% cut of greenhouse gas emissions by 2030 against 1990 levels, up from the previous target of 40%. (The EU needs agreement from all 27 of its member nations to change targets.)

Flexing its newfound freedom from the EU, the U.K. pledged its own emissions reduction target, as required under the 2016 Paris Agreement, the very next day, December 12, as part of its submission to the COP26 conference in Glasgow: an attention-grabbing 68%.

The U.K.s exit from the bloc also renews attention to the fact that the U.K. is actually running ahead of the EU on some other big environmental goals. For example, it has pledged to ban sales of petrol and diesel cars and vans by 2030, whereas the EU has opted instead only to steadily increase its fuel economy standards.

Despite the leadership-enhancing effects of Brexit, the U.K.s exit from the bloc has already exacted real costs.

The EU has lost a valuable member nation committed to aggressive climate overhaul. And both the EU and the U.K. have squandered valuable political capital, time and focus on Brexit negotiations when they could have been working to decarbonize their economies. Brexit hijacked the EU agenda, as one December 2019 academic paper put it.

Even the Johnson governments expected eagerness to promote its new 68% cut in greenhouse gas emissions by 2030 leaves unacknowledged a key fact: the U.K. would probably have committed itself to a similar target even if it were still in the EU.

Even before it left the bloc, the U.K.s climate commitments were largely spelled out in national laws, not under any agreement with the EU, pointed out Shane Tomlinson, deputy CEO of E3G, a European climate think tank.

There are a lot of pro-Brexit people who want to sell a vision that somehow the U.K. is now unchained from the EU and free to innovate, said Tomlinson. However, in general these arguments dont pass any scrutiny.

For example, the U.K. still would have had the freedom to increase its 2030 greenhouse gas cut to 68% even if it had remained in the EU, Tomlinson said. (Even back when the EU was still targeting a cut of 40% by 2030, the U.K. was already committed to a 57% reduction, he said.) Additionally, by remaining inside the bloc the U.K. might have been able to use its negotiating power to leverage bigger commitments from member nations such as Germany or France, he said.

Of course, if the U.K. really is serious about striking new trade deals with other countries, it may be able to leverage its influence on climate around the world in ways that the EU, with its existing bevy of trade relationships, perhaps cannot. But this is far from certain.

Brexit also could make the U.K. less attractive as a haven for cutting-edge energy and climate firms looking for new homes in Europe. While it is still too early to tell, some anecdotal evidence suggests that at least a few cleantech firms are opting for the EU over the U.K., seeking the blocs greater bigger talent visa-free talent pool, the reduced dependence on customs checks at the border or its greater policy certainty.

This month the Intercontinental Exchange (ICE) said it would move its carbon emissions trading operations out of London to Amsterdam, as the U.K. now has its own, separate scheme.

And David Hunt, the CEO and founder of Hyperion Executive Search, which finds talent for cleantech firms, said that one of his clients, a listed U.S. company involved in electric vehicle charging, has switched its attention from the U.K. to Germany as it eyes locations to set up a European base of operations. Among the reasons, Hunt said, was concern about potential issues with imports of components from the EU into the U.K.

For electric vehicle producers, rules of origin requirements in the new trade deals mean U.K. firms will have to prove that at least 40% of the value of parts in a finished car originated in the U.K., commodities news specialist Argus Media reported this month. That may mean the U.K. would need to produce its own batteries, anodes and cathodes, a big change that could drive some manufacturers across the Channel.

Still, the number of departures of green tech firms so far has been minimal, and there have even been some surprises: Jaguar Land Rover unexpectedly decided this month that it would retool its U.K. carmaking site in the Midlands as a new electric vehicle hub.

It is one thing to declare more ambitious climate goals. Can the U.K. actually achieve them?

Experts say that much depends on whether the U.K. chooses to lower its environmental standards as it pursues trade deals with non-EU nations. The post-Brexit trade deal contains non-regression clauses and other mechanisms to limit the extent of possible backsliding on standards, but the energy section of the deal is temporary and will expire in June 2026 unless a more comprehensive agreement is reached or the deadline is extended.

While there is an obvious incentive to pursue such a strategy lucrative free trading relationships there are good reasons to think the U.K. wont bite. If the U.K. ever fell far behind the EU on products standards, for example, it would probably get smacked with a heavy carbon border tax which the EU Commission is even now working to erect along its borders. How would the U.K. then export to its nearest very large trading bloc? Now that becomes a massive challenge, said James MacGregor, an environmental economist with Ramboll, the engineering consultancy.

Nor have Brexiteers shown special eagerness to back out of EU environmental commitments. Notably, in January 2018 Cabinet Office minister and devout Brexiteer Michael Gove argued in an opinion piece for Politico that the U.K. called for the whole body of existing European environmental law to have effect in U.K. law.

While it is still too early to tell, the U.K., having staked its global image on an ambitious post-Brexit climate agenda, would likely be loath to fall short. Its reputation, if not the climate itself, depends on it.

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Brexit Burnishes U.K.s Climate Image, But Exacts Real Costs - Forbes

DUBLIN (Reuters) - Members of Northern Irelands two largest pro-British parties are set to take part in legal action challenging part of Britains divorce deal with the European Union, the parties said on Sunday.

The Democratic Unionist Party (DUP) and Ulster Unionist Party (UUP) are to join other pro-British figures to challenge the Northern Ireland Protocol, which has created trade barriers between the British region and the rest of the United Kingdom.

The protocol, which is designed to protect the European Unions single market without creating a land border on the island of Ireland, has caused significant disruption to trade since it came into force at the start of the year.

Some British companies have halted deliveries to Northern Ireland and some supermarkets have been left with empty shelves.

The DUP said several senior members would join other likeminded unionists as named parties in judicial review proceedings challenging the Northern Ireland Protocols compatibility with Act of Union 1800, the Northern Ireland Act of 1998 and the Belfast Agreement, it said in a statement.

Neither the Northern Ireland Assembly, the Northern Ireland Executive nor the people of Northern Ireland consented to the Protocol being put in place or the flow of goods from GB to NI being impeded by checks, said DUP leader and Northern Ireland First Minister Arlene Foster.

The protocol was part of an international agreement signed by Prime Minister Boris Johnson last year.

The regions second largest pro-British party, the Ulster Unionist Party, said in a statement it would seek to explore every political and legal avenue to get the NI protocol annulled.

Reporting by Conor Humphries; Editing by Bernadette Baum

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Northern Ireland parties take legal action against Brexit deal - Reuters

And pro-Brexit think tank Facts4EU has concluded that the EUs economy has already shrunk by well over 2 trillion as a result of the UKs decision to quit. Former Brexit Party MEP Ben Habib has hailed the research as proof that Project Fear doubters had been wrong all along.

The truth was always the inverse. It is the EU that needs us and our markets.

Mr Habib added: This work undertaken byFacts4EU.Orgreveals clearly the damage done to the EUs economy by the UK departing their failing project.

We should have marshalled this negotiating strength and driven a tougher bargain for ourselves.

In any event it is good to see yet another leg of project fear dismantled.

The figures also underlined the wisdom of severing ties with Brussels, Mr Habib said.

He explained: The EUs economy is forecast to become as ever smaller part of Global GDP.

Growth is not in the EU, it is elsewhere.

And that is where we should trade.

Former UKIP MEP David Campbell Bannerman added: The EU has lost its biggest single export market as a member - 15 percent of all its former GDP.

No wonder it is feeling these effects.

"Instead of trying to make life difficult for the UK for leaving, the EU needs to be far more cooperative and helpful - for its own sake.

Professor Daniel Hodson, chairman of the recently launched CityUnited project as well as of The City for Britain, said: They dont seem to want to recognise the new reality.

Let's look forward to the day when they come to realise, dump the politics, and deal with us constructively as a partner.

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Brussels nightmare: Losing UK will cost 60 billion in just two years - bombshell analysis - Daily Express

Brexit finally became a reality on 31 December 2020, as the UK reached the end of the agreed Transition Period after the UKs departure from the EU.

The UK government has heralded Brexit as a historic opportunity to overhaul our outdated public procurement regime.With the UK government buying almost 300 billion of goods and services from the private sector every year, businesses in the UK and around the world must be asking how the new regime will affect them.How much will the process of government procurement in the UK actually change?

While the UK was an EU Member State, the government procurement process in the UK was based on EU directivesso both the regulatory environment and the practical tendering process was essentially harmonized across the EU.

One immediate change has been that the UK no longer participates in the open tender advertising process through the EUs Official Journal and Tenders Electronic Daily.The UK has started an equivalent system: an e-notification service called Find a Tender where UK government contracts above a value threshold are published (lower value contracts are published elsewhere).

In regulatory terms, the UKs procurement rules are largely staying the samefor now.Partly, the shortterm status quo is because the UK had traditionally translated the EUs procurement directives into national UK law via national implementing regulationsand those national regulations stay in place despite Brexit.

But going forward, of course, the UK has some degree of freedom to go its own way and do things differently from the EUalthough this freedom is not completely unrestricted because the UK is a party to the WTOs Agreement on Government Procurement (the GPA) and must stay within GPA requirements.

Membership to the GPA

Following the WTOs approval on 7 October 2020, the UK joined the GPA as an independent member from 1 January 2021.The GPAwhich weve discussed before in a previous alertis a voluntary trade agreement within the WTO, whereby signatory parties give access to foreign suppliers to their government procurement markets.Maintaining membership gives UK suppliers access to a 1.3 trillion international market, comprising of EU procurement markets as well as other markets (such as the United States, Japan, and South Korea).

However, the UK will have a reduced level of access to EU markets because the scope of activities covered by the GPA is narrower than membership to the EU single market.The UK has tried to address this gap in its trade talks with the EU.

Post-Brexit, non-UK bidders will have similar rights to bid for UK procurement opportunities as before the transition period ended.Bidders from other GPA countries will continue to have rights under the UK procurement regulations as long as the procurement scope is within the relevant GPA schedules.EU bidders will (continue to) have similar but slightly broader rights than other non-UK bidders on the basis of the coverage of the UK-EU trade and co-operation agreementsee below.

The UK-EU Trade and Co-operation Agreement (TCA)

The TCA covers a broader range of EU/UK procurement activity than that provided for under the GPA.

The TCA provisions also add to the UK and EUs existing GPA obligations, e.g., a UK supplier must not be required to demonstrate experience in the territory of the EU (and vice versa) as a condition for participation.

Unlike the GPAwhich does not apply to contracts below certain value thresholdsthe TCA provides that, when procuring a contract below the relevant financial threshold, the procuring party must treat EU or UK suppliers no less favourably than suppliers from its own country (unless covered by specific GPA exceptions such as security).

Streamlining the national regulatory framework

The UK Government has also published a Green Paper signalling its intention to simplify the existing regulatory framework into a single set of rules for all public contract awards.In doing so, the UK proposes, for example, to reduce the procurement procedures available to buyers from seven to three:

The Green Paper proposes changes within these procurement procedures, including:

There are also plans to reform the legal review system as well as to tackle claims over minor issues that delay contract awards, such as a new fast track system and capping the level of damages available to successful bid protest complainants to a maximum amount equal to legal fees plus 1.5 times their bid costs.

Preparing for the new public procurement regime

While the Green Paper is likely a good indicator of changes to come, the Cabinet Office will still take several months to reflect on the proposed approach before deciding what to put into draft legislation in late 2021 or 2022.

One part likely to stick is the Cabinet Offices emphasis on cutting red tapea common theme from the current UK governments agenda (in fact, the prime minister recently addressed a conference of 250industry leaders, inviting them to propose areas where his government can cut bureaucracy). At the same time, the UK has already started to show that, where it can, it is likely to be prepared to dis-align itself with legacy EU rules where it feels that it makes sense to do so.

Even so, the UKs freedom to diverge from EU public procurement rules is somewhat limited by its GPA membership and the TCA. So, while the UK government procurement rules are likely to change, those changes may not be too fundamental.

Georgia-Louise Kinsella, a Trainee Solicitor in the London office, assisted in the preparation of this article.

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Post-Brexit Government Procurement In The UK Spot The Differences - JD Supra

French level crossings display signs which say un train peut en cacher un autre. Like many European warnings, a literal translation can seem somewhat puzzling to British ears, even though the actual meaning is perfectly clear dont start crossing the tracks as soon as one train has passed because you may get hit by something coming the other way.

Think how different life would be for the food industry today if government had heeded similar advice when deciding not to extend the Brexit transition in the middle of a pandemic. As it is, we face a second major challenge even before the first one has gone. Or, to quote Michael Goves take-off turbulence analogy, we are not at the gin and tonic and peanut stage yetwhen we can enjoy a straight and level flight.

A key reason for this is that leaving the EU is much more like an operation to separate conjoined twins than a divorce. We have had years during which our economic viability has been dependent on shared supply chains and integrated business models. Separating these out requires the most delicate surgery, together with extensive preparation and support.

Many complications only become apparent once the process is underway, as is happening now with rules of origin. Did the negotiators really intend that Spanish wine bottled in Great Britain should be subject to tariffs if sent back to Spain? Or that tins of Italian tomatoes would suffer the same fate if shipped to the Republic of Ireland after being customs cleared here?

There are evidently ways around some of these issues. But they all come at a cost, in money and efficiency, at the very time when we are all doing everything we can to eliminate waste and conserve resources. And while people will get better at filling in the paperwork, which may itself improve, trading with our largest suppliers and biggest customers is going to be much harder than it used to be. Will that encourage us to look for alternative markets further afield? Over time perhaps, for those who are still around when that time comes.

Between now and then, there is friction where there was no friction before, ramping up further on imports from 1 April. That friction will inevitably end up on someones bottom line, which is the last place anyone wants friction to be.

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Brexit has complicated trade and that friction will end up hitting the bottom line - The Grocer

Two months on from the end of the EU transition period and the construction industry is still understanding the full impact of Brexit. There are questions that remain unanswered as we adjust to a new relationship with our biggest trading partner, but we are collectively far wiser from the lessons we have learnt.

In the face of the uncertainty that began with Brexit and was compounded by covid, businesses have been working with their supply chains to avoid disruption. This is an approach that we have long advised and many of our clients were exploring alternative sourcing and supply arrangements in the run up to 1January.

That advice remains pertinent not just today as we continue to navigate those challenges but also as the climate emergency looms large, and we plot a path to net zero. In all instances clients need an improved understanding of material and product options, their provenance and the logistics required to get them to sites.

Other sectors, especially parts of the food industry, are well ahead of construction when it comes to ensuring sustainability at every level of the supply chain

On the Brexit front, we remain reliant on European imports for many of the construction industrys key building blocks (including sawn wood, paints and structural steel), with 59% of imported materials used on UK building sites in 2019 sourced from the EU. While the sector avoided no deal tariffs, we should still expect fresh pinch points, bureaucracy and costs into the spring as volumes of imports rise after a quiet beginning to the year and the stockpiles amassed in December fall.

To safeguard project delivery over this turbulent period, investors and developers need to work closely with the construction industry and delve into the detail assessing exposure, stress-testing and war-gaming likely impacts, then swiftly eliminating weak links. This forensic focus will enable clients and their projects to adapt adjusting strategies to seek robust, reliable supply chain agreements.

> Also read:Countdown to zero: how can the UK meet its 2050 carbon targets?

>Clients bearing the brunt of covid costs, T&T says

Taking this approach will also stand them in good stead when it comes to net zero. Other sectors, especially parts of the food industry, are well ahead of construction when it comes to ensuring sustainability at every level of the supply chain. There is an opportunity for our sector to make a transformational leap forward. This may be by looking at the carbon miles of an imported material and the environmental impact of its production. It could shift our reliance on imported materials to a focus on UK-sourced products. This is critical to understanding the whole life cycle sustainability of a built asset.

The benefits of making supply chains more responsible also go wider than carbon. Since the start of the Brexit transition, the percentage of the total UK labour force made up of migrant labour fell from 13.4% to 10%, and this trend looks set to continue. Targeting investment towards home-grown UK talent to build up the skills we need here will support the levelling up agenda. It can also help to tackle issues such as modern slavery. To go full circle, such locally-based, modern construction skills play their own part in the carbon agenda too helping embed a new generational mindset of climate action.

In a year where both the climate crisis and Britain are in the spotlight with COP26 on the horizon all of this will serve to secure the construction sectors bright future as we emerge from Brexit and the pandemic. 2020 accelerated the pace of global change. This year presents us with the opportunity to sit in the driving seat for net zero.

Patricia Moore is UK managing director of Turner & Townsend

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Brexit-proof supply chains stand us in good stead to tackle net zero - Building

People who voted for Brexit are less enthusiastic about having a coronavirus vaccine, new research suggested yesterday.

A survey by YouGov for Oxford University showed Remainers are nearly 7 percentage points more likely to have the jab than people who voted Leave in the 2016 referendum, 93.8 per cent compared to 87.1 per cent.

Green Party voters are the least likely to take up a vaccine, a likelihood of 79.4 per cent, while people who voted for the Brexit Party in 2019 were 86.4 per cent likely to have the jab.

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By contrast, those who vote for mainstream parties are more likely to have the vaccine: 92.9 per cent for Conservatives, 93 per cent for Labour and 98 per cent for the Liberal Democrats.

Ben Ansell, professor of Comparative Democratic Institutionsat Oxfords Department of Politics and International Relations, suggested the gap could be to a link between vaccine hesitancy and a lack of trust in government and traditional politics.

However all respondents were generally more likely to take up the jab than they were five months ago.

Age was a strong predictor of vaccine willingness, with older people more likely to have the jab than younger groups. People on lower incomes were on average less willing to have a vaccine.

The survey of 1,200 UK residents were contacted in October 2020 and again earlier this month.

Researchers said there was no evidence that the UKs leading role in approving or developing the vaccine affected willingness to take it.

Prof Ansell said: People have become massively more supportive of taking the vaccine overall but important gaps remain especially among groups whose trust in politicians is typically lower: non-voters, younger citizens, and poorer households.

When so much of the UK Governmentslockdown exit strategy rests on successful vaccine roll out, these insightswill be of immediate importance to policymakers in both their internal deliberationon policy and their outward facing communication with the public.

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Covid vaccine hesitancy linked to Brexit voting patterns - iNews