Adam Johnson, director of Leeds-based Tudor International Freight, was speaking following Chancellor of the Exchequer Sajid Javid saying, in an interview with the Financial Times, “there will not be alignment” between British and EU rules following the standstill post-Brexit transition period. This is set to begin when the UK leaves the bloc at the end of this month and conclude on 31 December, with the government pledging it will not be extended.
Mr Johnson said the chancellor’s remarks followed speculation that the government would agree to continuing significant British alignment with EU rules after the transition period. Some commentators had thought this would be necessary if a free trade deal was to be agreed with the bloc between talks about it opening in late February or early March and the autumn, a timescale which would have to apply if an agreement was to be ratified by the year-end.
He said: “Bodies representing major British industries set to be particularly affected by any retreat from alignment, including manufacturing, warned that the chancellor’s comments appeared to sound the death knell for frictionless trade with the EU, which buys almost half our exports. Maintaining arrangements which were as seamless as possible had been an aim of government policy previously.
“Those trade organisations also said such divergence could cost British companies billions of pounds, damage manufacturers and may well result in price rises.”
Mr Johnson said Dame Carolyn Fairbairn, director general of the Confederation of British Industry (CBI), in her reaction to the chancellor’s comments, had pointed-out alignment with EU rules “supports jobs and competitiveness – particularly in some of the most deprived regions of the UK” and asked the government “not to treat this right as an obligation to diverge.”
He added that the chancellor had reportedly declined to specify which EU rules he wished to abandon.
Mr Johnson said: “This uncertainty prompted Nicole Sykes, head of EU negotiations with the CBI, to point-out correctly that the chancellor’s remarks could have been intended to presage various possible scenarios. He might have been alluding to just the level playing field commitments - on issues such as environmental protections and labour rights - being demanded by the EU from Britain as conditions for a free trade agreement or a complete re-writing of the rule book, for example.”
On the same point, Mr Johnson said Claire Walker, co-executive director of the British Chambers of Commerce, had warned that “uncertainty around the extent of divergence risks firms moving their production elsewhere.”
He said Mr Javid, speaking at the World Economic Forum meeting in Davos, Switzerland, on 23 January, then remarked there would be no divergence “just for the sake of it” and the government would “always protect the interests of British businesses.”
Mr Johnson said he - and, he believed, manufacturing companies generally - shared the widespread industry unease about the chancellor’s original comments on alignment.
He added: “A wider lesson from this episode, however, is the sector’s businesses remain largely in the dark about the government’s objectives for the forthcoming negotiations and still don’t know exactly what they’re supposed to be planning for.”
Mr Johnson said the EU was preparing for the looming talks by conducting a series of seminars with member states, covering all the major relevant topics. The bloc then reportedly planned to propose comprehensive draft negotiating directives early next month and for these to be adopted by member states at a meeting on 25 February.
He said: “It would now be helpful if our government was more publicly thorough and specific about its intentions, including by issuing comprehensive written negotiating objectives, ideally after consulting industry representative bodies.
“Manufacturing companies need to understand in detail what the government’s vision would require of them on numerous issues - including systems, standards and training. This knowledge would give them time to prepare and trial their potential new arrangements before they took effect and perhaps avoid outcomes such as serious delays in transporting items from 2021.”
