Tuesday, 7 March 2017

Why Brexiters don't understand borders

When Brexiters talk about trade, they seem invariably to envisage it in terms of something being made in country X and then sold in country Y. As with so much else, with the referendum won they are now having to grapple with a world that is far more complex than they realised. This has come to public attention because of the emerging implications of Brexit for the car industry. The secret deal with Nissan last year seemed to have put a temporary lid on this, but it has resurfaced in the last couple of weeks partly because of the PSA takeover of Vauxhall and its potential implications for job losses post-Brexit, partly because of Ford’s announcement of job losses in Wales, and partly because of doubts as to whether BMW will build the electric mini in the UK. Moreover, since the Nissan deal, the government’s plan to exit the single market and customs union has been revealed.

What Brexiters are now beginning to understand is something well-known to those in my academic field of organization studies who study them and to those who work in them: many modern industries, including the car industry, are characterised by international supply chains. Again, there is a simplistic image of this as being like a transnational assembly line, with part-finished goods moving to their next stage in a different country. But, again, the reality is far more complex. In fact, car components move multiple times across borders before the finished item is ready for sale.

Thus, as a useful recent Guardian article explained, the crankshaft for a BMW Mini moves across the channel three times during production and this process is repeated (often with more than three shipments) for hundreds if not thousands of parts within a car. Moreover, it needs to be done with a time accuracy in the minutes, so any delays caused for example by customs checks are disastrous. No British-made vehicle is composed wholly of parts made in Britain. In fact, on average 41% of parts are made in the UK. That number is significant because 50% of a car (by value) must be made within a country for it to conform to WTO origin of production rules. With the exception of some models produced by Jaguar Land Rover, no British car meets this figure and most don’t approach it. For the Vauxhall Astra, for example, the figure is 25%.

It’s probably true that the car industry is the most extreme example of highly integrated international supply chain management, but the same principle applies to many other industries and, in any case, the car industry is especially important both in terms of the quality of the employment it offers and the numbers, directly and indirectly, employed. It’s not possible to be certain what the effects of Brexit will be on the car industry, but they cannot be anything but disruptive.

An article in the Daily Telegraph headlined ‘hard Brexit would be good news for Vauxhall’ was seized on by Brexiters, but it was a misleading headline: the point being made by PSA’s chairman was that it could be an opportunity to develop UK parts manufacture. But there is no guarantee at all that that will happen and if it does it won’t be cheap. Nissan have called for the government to invest at least £100M precisely in order to develop the indigenous parts industry or risk a pull out from their Sunderland plant.

Movement across borders has also come to the fore this week with the belated realization that hard Brexit will have massive consequences for the border between Northern Ireland and the Republic of Ireland, as explained in this excellent Daily Telegraph article. This will not have been news to readers of this blog, as I posted about it back in October. Issues here include things similar to the car industry – milk, for example, can move five times across Irish border during processing. However, for obvious historical reasons, what matters even more are the political consequences which become especially acute given the constant movement of people between, and their relationships across, the border.

Which brings us to the parallel matter of freedom of movement of people across borders. A repeated Brexiter refrain is about ‘regaining control of our borders’. It is wrongheaded, of course, in that since Britain is not a party to the Schengen Agreement we retain – and enforce – border controls. This conflation of free movement of people and migration was alluded to by Sir Ivan Rogers (p.10) in his recent evidence to the House of Commons Exiting the EU Committee:

They [the rest of the EU] genuinely do not understand a UK debate in which the two are conflated at all. They do not understand why a Government would have a migration target covering migration from within the European Union, which for other people is not migration. They do not call it migration; they do not call it immigration. They call it free movement… [t]hey said, “But one is migration, which is external to the European Union, and the other is free movement of people, which is not at all the same thing”.

This reflects the longstanding British failure to understand what a single market is and how it differs from a free trade area, which I have written about in another post. Because, indeed, within a single market it makes no more sense to talk about immigration between member countries than it does to do so between counties in Britain. Thus another issue which Brexiters are now having to face up to is that there is now a massive and longstanding intermingling of familial relationships between different countries. It is this which makes so especially significant the current debate about granting automatic residency rights to EU nationals in the UK: marriages, partnerships and children are caught up in Brexit.

This, too, flows from a naïve Brexit image, this time of immigration. As with trade, they seem to envisage it as a matter of person X moving to country Y and, typically, to take a job. But there is, so to speak, a metaphorical ‘international supply chain’ of human relationships – people moving backwards and forwards at different times and for different reasons which include, or may come to include, falling in love and having children. There are, of course, no WTO rules on the point of origin of a family, but a parallel set of issues in that many, many families have component parts from more than one country. There is no glibness intended in this metaphor – I personally have many friends who are caught in a limbo which is both massively anxiety provoking and also deeply insulting to them. People who have made their whole lives on the basis of what was understood to be a borderless Europe are being placed in an impossible position. The same is true for many British people in the EU.

There is a pervasive Brexiter response to all these issues which is to say ‘but we managed perfectly well before being in the EU’. With respect to business organizations, this is simply irrelevant: the world of international supply chains and just-in-time management barely existed in the early 1970s and not remotely in the form that it now does. With respect to Ireland, the Common Travel Area did indeed pre-date the EU (it dates to the 1920s) but the situation now is that Ireland is in the EU and there is free movement of people from other EU countries into Ireland; so on hard Brexit a hard border with the North is inevitable if Brexiters are to get their wish for border control. The Brexit vote is going to lead to us exiting the EU: it’s not a time machine that is going to deposit us back in 1973.

It is on free movement of people that the Brexiter response is the most perverse. Often I hear them say ‘but people moved countries, married people from other countries, worked in other countries before we had the EU’. And indeed they did – but with restrictions. The reason this is such a perverse response is that, on the one hand, EU free movement of people rights are seen by Brexiters as the one thing that above all must be ended and yet, on the other hand, that somehow doing so will not make the movement of people any less free!

I referred earlier to a very good article in the Daily Telegraph on the implications of Brexit for Ireland and Northern Ireland and, within it, there is a revealing sentence from an unnamed British civil servant work on Brexit: “It seems as if every day something new we hadn’t thought of comes up”. That could almost be the strapline (and perhaps will be the epitaph) for Brexit. At every stage in the debate, Brexiters insist that it will be easy and that those who say otherwise are doom mongers; but every time those claims meet reality there turns out to be far more complexity than Brexiters believed (or at least than they told the electorate). Borders and what they mean are perhaps central to the Brexiter mindset: it is to say the least unfortunate that they don’t understand them. It is doubly unfortunate that we are all going to have to pay a very high price for their enlightenment.

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