In the spirit of gifted amateurism, the UK's future trade relationship with the EU is being formulated by a team that has never undertaken any international business itself.
One imagines the meetings where this subject is discussed are introduced with a playing of Vangelis' theme tune to "Chariots of Fire".
The head of the UK Customs service has stated that the so-called Max-Fac option will cause a cost to UK exporters of £20 billion per annum, although the assumption behind this number appears to be that in future exporters and importers will use neither electronic communication nor electronic documents, and will possibly also convert their lorries to being horse-drawn.
The proponents of Max-Fac, by contrast, do not know what investment will be needed to set it up, nor what the on-going friction costs will be, if any.
Those proposing that the Customs Partnership whereby the UK will collect customs dues on behalf of EU Member States have no idea whether that is a practical idea or not.
On the other hand the business world knows that shipments of goods can be pre-cleared via submission of electronic documents, and that there is no need to recruit staff to wear white hats and blue jackets, and hang about on the dockside with their clipboards at the ready to charge aboard cargo vessels as they prepare to discharge.
The level of applicable tariffs does not matter: the documentation and tariff payments can be accomplished electronically and in advance, whether the UK is in the Single Market, using Max-Fac or just trading on World Trade Organisation rules.
The discussion of the basis of trade has become conflated with the Irish border issue, and indeed with the political relationship between Northern Ireland and the Republic of Ireland. The latest wheeze from David Davis is to create a buffer zone along the border within which dairy produce can circulate in some form of DMZ, somewhat like at Panmunjom between the two Koreas: perhaps the Brexit negotiations will be continuing in a cantonment within it 50 years from now.
This deliberate conflation of the UK's future trade deal with memories of "The Troubles" serves to obscure the pressing economic needs of the Republic – to protect the business model that has been built up over the last 40 years.
The bald fact is that the UK has an annual trade deficit with the EU of £100 billion per annum. The UK exports £276 billion and imports £376 billion. If, under a No-Deal scenario, tariffs of 5% were imposed in both directions, UK exports would increase in price by £13.8 billion while the UK would levy £18.8 billion on imports. As the UK would no longer be bound by EU rules on subsidies, the UK could pay the entire £18.8 billion to its exporters such that their goods and services would be cheaper on a duty-paid basis in future to their EU customers than they are on a duty-free basis now.
The Republic of Ireland would be a major loser out of that, because the UK is their largest market for both physical and intangible exports, the former being mainly agricultural products and the latter being largely the licencing of IT-based products out of the European bases of Silicon Valley companies.
Without tariff-free trade from the Republic into the UK, Silicon Valley would establish a base onshore in the UK and leave the Republic out of the loop. That is the economic substance of the Irish Border issue and has nothing really to do with Northern Ireland or "The Troubles".
Being ignorant amateurs, the UK’s Brexit negotiating team knows nothing about the Republic's taxation of the IT industry or about commissionaire sales structures, the key additives to the EU's Freedom of Establishment within the Single Market. This brew is costing the UK at least £10 billion per annum in lost Corporation Tax as Silicon Valley shifts its profits into the Republic with the valued support and guidance of the Irish Development Authority.
Profit-shifting – not limited solely to the Republic but institutionalised by Luxembourg and the Netherlands as well (with Switzerland often sitting behind them within structures involving little Swiss branches of Dutch BVs) – is a major detriment of EU membership for the large Member States. Profit-shifting can and should be eradicated from the UK as part of Brexit.
It would mean interdicting existing invoice chains, but not necessarily supply chains. The route of physical goods is to take the shortest and cheapest route between place of creation and place of sale. The route of invoicing and passing of ownership from one subsidiary to another has as many legs in it as are needed to land the profits where they don't get taxed.
That's why coffee is invoiced into the UK, to coffee shop chains, from their in-house sister companies in places like Zug and Neuchatel and trading as Swiss branches of Dutch BVs: when goods arrive in Felixstowe they are presented as belonging to a Dutch BV, and therefore are treated as duty-free because they are construed as an intra-EU supply.
Then one checks the cargo manifest only to find that the bags were loaded in Mombasa or Santos, a long way from the extensive coffee plantations of central Switzerland.
These are practices that must be curtailed in order that the UK receive the right amount of tax to pay for public services, but to achieve that we need professionals conducting the Brexit trade negotiations rather than the Corinthians who have appointed themselves to the role.
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