The Committee for Exiting the European Union were given the chance to question David Davis MP, the Minister for Exiting the EU. I took the opportunity to ask him about a transition arrangement and the potential of a no deal scenario.
You can read the exchange below.
Stephen Kinnock: In your exchange with the Chair right at the beginning of this meeting, you said that the European Council had not yet come to a view on the legal basis for any potential transition arrangement, but that is not actually true, is it? In the EU Council negotiating mandate of 22 May, paragraph 19, the Council says, “Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply.” In essence, that phrasing was copied and pasted into the European Parliament’s resolution of 3 October. It is crystal clear that any transitional arrangements would be governed by the same regulatory, budgetary, supervisory, judiciary and enforcement instruments. Can you therefore confirm that that would be the basis for any transitional arrangement?
Mr Davis: What I actually said was that they had not agreed the final guidelines. I did not say “legal basis”; I said “the final guidelines”, unless I misspoke, which I do not think I did. Those final guidelines will be agreed assuming sufficient progress, of course, which we still do not have, in December. At that point that may well be their stance. Bear in mind, however, that this is a negotiation. Broadly speaking, that is consistent with what the Prime Minister said too. This structure will look quite like where we are now.
Stephen Kinnock: Do you feel that the Cabinet and your parliamentary party also understand that the transitional arrangements will be on this basis?
Mr Davis: There will be something like that. As I said, this is the negotiating position. This is not handed down. One of the things that always irritates me, frankly, about British public life is that people assume that anything that comes from Europe is on tablets of stone and everything we have is an opinion. It is not quite like that. That is their start position. It may be where we end up, but our position is what the Prime Minister laid out. It is not that dissimilar, but it is not identical.
Stephen Kinnock: Thank you. I wanted to move on now to the issue of a potential no deal scenario. I thought it might be useful to look at the issue of the port of Dover, as an illustration of the potential impact of a no deal scenario. As you may know, the Select Committee visited the port of Dover last week and we were told there that every two minutes added to customs processing and proceedings would create an additional 17 miles of tailback of heavy goods vehicles from Dover to Ashford. Of course, the port of Dover is processing around 10,000 HGVs per day. How do you feel is the state of preparedness for a no deal scenario in that particular context?
Mr Davis: I feel it is reasonable. Dover is not the only one. Dover is probably the sharpest example, because of its lack of parking capacity, bluntly. We would need to create some workaround for that. Now, there is a variety of ways of doing that. We are not in a position to publish it yet but, at some point, we probably will publish some of the components of the contingency planning. A lot of work is going into that, both in the Department for Transport and in HMRC.
Stephen Kinnock: Just to be clear then, for our no deal play, if you like, or negotiating position to have any kind of realism, you need to have this kind of issue absolutely clear and settled by very soon, because otherwise it becomes absolutely clear that the no deal scenario is just a bluff.
Mr Davis: It is not very soon. It has to be in place to work on 29 March 2019. That is what it has to do. It is not a bluff. In any event, Mr Kinnock, even if it were not a useful negotiating tool, we would need to do it anyway. The other way round, if we suddenly felt that parts of our economy would grind to a halt, the pressure on us to give in anything would be enormous.
Two minutes leading to a 17 mile queue sounds incredibly dramatic. At Dover we are talking ro ro, which is a little different. However, to give you a measure of the sorts of numbers we are talking about, for containers coming in across the common external tariff barrier into other ports, say Southampton or wherever, the clearance time on a single container is four seconds. That is for 98%. Those are the ones that do not get inspected. Most traffic across the borders does not get inspected; 2% does. You have got issues like that.
On other countries, I went to the Canadian/American border at Windsor/Detroit. I went there because I knew it from running business across it myself. I have sold across borders myself in the past and I knew this border well. It is an incredible choke point. It is a choke point like Dover is a choke point. Their clearance time is 54 seconds on an average truck, but they also use a whole series of systems clearing things before they get to port and authorised economic operators. These things become very important in Northern Ireland as well. An authorised economic operator is a trusted trader. We use them much less than other countries do and will increase that. Electronic pre notification is what accelerates most of the container traffic that goes through.
There is a huge amount of work going into all this deliberately to make sure that this is not a bluff, Mr Kinnock. This is the reality we have to cope with if we end up in that circumstance—not that we intend to. I keep stressing every time that that is not the aim, but it is what we may need to do in that circumstance.
Stephen Kinnock: The fundamental difference between this and those examples you just gave is, when the systems were being designed to enable that processing and that administration, the people designing the systems knew what kind of circumstances they were going to be in. In this case, everyone is in the dark. We do not know whether there will be a deal, no deal at all or whether it will be certain aspects of authorised economic operators, for example, or what will happen with the rules of origin. I really felt for the staff and management in Dover, I have to say, because they are being asked to design systems—I do not even know if they are being asked—without knowing what the future reality looks like. How can you design an infrastructure and an IT system without knowing your direction of travel?
Mr Davis: I sympathise with the staff at Dover too. They are not designing the system, by the way. That is being done by HMRC and physical aspects of it are being done by DfT. It is not true to say that we do not know what the parameters of the worst case outcome or the most stressed case outcome would be. For a start, in the event we are talking about WTO, we are then talking about the application of Union Customs Code, which we already apply in all the ports where we bring things in from outside the European Union. This is exactly what is being applied, and the Union Customs Code is what is already in the CHIEF system, which you probably saw. That is the green screen system. It will also be in the CDS system, which was under way before all of this started and will come into effect at the very beginning of 2019—1 January. Those two systems will operate in parallel, if need be, which gives us an extra contingency. They are not intended to but, if we need to, we can do that.
What is the case, and I do not think one should blink in the face of it, is that there would be an increase in volume of checking. It would not be quite pro rata what you see, because some of the stuff is coming from the European Union. We would have pretty good ideas of where it is coming from, what its phytosanitary background is and so on. It would be the same as the day before, but there is a lot of work to do on it and it is under way.