Divergence seems to be an example of a freedom passionately sought by the ignorant about trade and industry, on behalf of a group of people, many of whom do not want it, because they will have little use for it.
A company that exported to Europe on 31st December 2020, still doing so today has no option, but to comply with EU rules, standards and specifications.
On Twitter, it is not unusual for a certain type of Brexiteer to pop up and say, but only a small proportion of UK based businesses export into EU27.
That is true, but there are plenty of UK based businesses who do not themselves export into the EU27, but supply goods and services to those who do. If those suppliers wish to retain that business then they, too, will have to continue to comply with EU rules, standards and specifications.
Enter the star spangled chlorinated chicken. If you export ready meals with chicken in them to Europe and, at some point in future, US fowl is suspected of having entered your supply chain then you may well kiss goodbye to any future business with EU27 countries.
In addition, many countries around the world have adopted EU rules, standards and specifications as proxies. Why bother designing your own national rules, standards and specifications when someone else has already endured the pain of doing so?
And, of course, if companies in countries around the world want to export into the EU then they too will have to comply with EU rules, standards and specifications.
And a UK based company that exports nothing to Europe, but supplies goods and services to companies in third countries that do export into the EU27 will also … I think you know where I am going with this?
For the uninitiated, the EU Single Market is the largest single market in the world, measured by per capita disposable income. I gather even Australia is eager to negotiate a Free Trade Agreement with the EU27.
By the way, they chlorinate chicken in Australia.
I would observe that I and others have had Brexiteers tell us companies might run two production lines, one producing an inferior product for sale into markets not applying EU rules, standards and specifications.
Phrases like cost effectiveness, break even points, Just in Time, fixed and variable costs have no meaning for them. Just in Time is particularly baffling to some older Brexit voters, who lasted worked decades ago.
Of those who finally come to understand an innovation like JiT, many say as it was not around when they were at work then companies will just have to drop it, build cavernous warehouses and so on.
They never say where the money will come from to pay for such unremunerative expenditure.
Finally, there is the ‘small’ matter of implied racism.
Put simply, what does it say about your mind set, if you think a consumer of your product in Buenos Aires will be happy to purchase an inferior version of the one you are selling to a consumer in Paris, just because he or she lives in South America and not Western Europe?
And if you choose to go down that road, what is to stop someone setting up to produce for the Argentinian market a better quality version of the product you are trying to sell in Buenos Aires?
The underlying rationale for divergence seems to be partly based on a pile it high, flog it cheap approach to business. The sort of nonsense that helped get us labelled the Sick Man of Europe before we joined the EEC.
Adapting to life as a business in a third country
One thought on “Divergence! What is it good for? Absolutely nothing …”