20 July 2018

The UK and EU negotiators are at a crunch point over the Irish border and both sides are being vocal about their stepping up of no-deal preparations. Joe Owen says they must decide whether finding a way forward is the priority they claim.

Dominic Raab was in Brussels yesterday, with a copy of the white paper in his bag, sitting across the table from Michel Barnier for the first time. The UK’s proposal, thrashed out at Chequers and then trashed by a few (now former) Ministers, is just about intact – although the Prime Minister has expended significant political capital to get to this point.

But, as Barnier made clear today, the pressing issue is not the UK-EU relationship from January 2021 onwards, it is the Withdrawal Agreement; and there the big question left to answer is the Irish border. Unless there is agreement on that, there will be no transition – just a ’no deal’ exit in March next year.  

With fundamental differences between the two sides’ proposals, and deadlines approaching, talk of no deal is starting to spread. Both sides keen to stress they are ‘stepping up’ preparations, in part hoping the threat of no deal prompts compromises. Neither side is prepared to blink, yet.

Positions on the Irish Border are becoming more and more entrenched

Both sides agree on the need to avoid a hard border on the island of Ireland. Both sides also now seem to agree that ‘associated checks’ anywhere north or south of the border are not an option. The big question is what happens in the Irish sea.

The EU’s proposal sees Northern Ireland staying part of the single market in areas that are necessary for meeting the objective of avoiding a border, as well as remaining part of the EU’s ‘customs territory’. In short, there would need to be a customs and regulatory border between Great Britain and Northern Ireland.

The UK has been firm in its rejection of this proposal – and the EU seems to underestimate the strength of feeling on a Northern Ireland-specific solution in the UK. The PM has restated her position today – it is out of the question. Parliament didn’t even need to vote when an amendment was tabled to the Customs Bill that prohibited any such border in the Irish sea. The UK says any backstop should be UK-wide – featuring a ‘common rulebook’ on regulation and a temporary customs union until its new high-tech Facilitated Customs Arrangement is in place.

In reality, the details and wording in both proposals can change, but the big question is whether the scope of the agreement is UK-wide or Northern Ireland-specific. Neither side look like budging any time soon. There is a stand-off where the integrity of the UK union meets the integrity of the Single Market. 

With a stand-off on Ireland, both sides are making clear they are serious about preparing for no deal

Both sides are increasingly vocal about the fact that their ‘no deal’ preparations are ramping up. This might reflect the stage we are at in the process – the fact that government has worked out what needs to happen and must start communicating. Or it might be a result of dwindling confidence in a mutually acceptable outcome. Or it could be just a very expensive and risky game of chicken. In all likelihood it is a combination of the three.

Whatever is motivating these noises, and however high the volume, ultimately neither the UK Government nor the EU27 want to be staring over the cliff edge on 28 March 2019. But increasingly detailed articulations of the real consequences for business and citizens of a no deal exit – as already produced by the EU and apparently forthcoming from the UK government – are likely to ratchet up the pressure on negotiators to find a way through.

One of the lessons of the last week is that the PM cannot take parliamentary support for granted

To date, one of the go-to tactics on thorny Brexit issues has been to kick the can down the road. But the negotiations are starting to run out of road. If the UK can’t move further and the EU won’t budge, the Prime Minister may need to contemplate asking to extend Article 50, or propose some even more complicated multi-stage backstop, which would test her proposition that everything can be sorted through the future relationship. 

Theresa May will be only too aware that any deal reached in Brussels will need to be endorsed in the House of Commons, and then legislated for by Parliament. It is often said there is no majority in the House of Commons for a no deal exit, but the last week has shown there may not be a majority for a compromise either.

Votes on the Customs and Trade Bills laid bare how narrow a tightrope the Prime Minister is walking, a point her negotiators will no doubt be making clear to the EU. To avoid a massive rupture of the relationship, sooner or later something will have to give. Past performance suggests the UK will flex further, unless this really is a step too far.

Comments

It's already been anticipated that the UK may need to ask to extend Article 50. Would this be possible?

If the Irish border is a game of chicken then the EU will (again) win. If there is no deal then the EU will get a small shock, but the UK will be torn apart - Westminster elections, Scottish independence referendum, new EU referendum, Tory party splitting, Labour splitting, UKIP gaining strength, plus all the other stuff preceding and causing that - queues at Dover, airline flights shut down, food shortages, Rees-Mogg emigrating to Ireland to count his money etc.

My understanding of the situation is that since last December the EU has regarded 'No Deal' as the most likely outcome (however much they would prefer an agreed solution) and have been starting to prepare on that basis; hence the quick concession of a limited (but far too short) transition period, as they wish to contain the chaos and give stakeholders a hard date for which to aim.

The UK will pledge *initial* continued regulatory alignment in many areas in order to try to make the EU position look unreasonable and pose them difficult choices, but these will give the EU none of the assurance it needs with regard to monitoring, enforcement, oversight and remedies, and will offer none of the necessary guarantees of responsibility and accountability. Trust and goodwill will long since have fled the field completely.

When 'No Deal' materialises they will be left with three alternative solutions within their control — solutions which depend on the uncoerced cooperation of the UK will be of no value at this point.

1) 500km of chain link fence 4‒5m high topped with razor wire, with many cameras and relatively few open crossing points. Initial alignment means that construction will not immediately be urgent, but cannot delay matters indefinitely.

2) Ireland meekly accepts that the with an open border it becomes a satellite of the UK and submits to effective UK regulation of its own market. The corollary is that external border checks in many aspects are re-introduced between Ireland and the Continent, i.e. Ireland has been forced to choose between the UK and the EU.
In reality, this certainly doesn't fit with Irish policy, does extreme violence to Irish patterns of trade and, perhaps most importantly, it seems impossible to imagine any political party surviving the announcement that Ireland is to become in effect a British colony! (Also, some of the few sectors where this makes any sense at all are already handled on an all-Ireland basis.)

3) Pace ludicrous complaints of the EU wanting to "punish" the UK, the EU has in reality been rather politely deferrent to date, inviting the UK to make *its* proposals to solve the issues and for its desired future relationship; this can change.
In order to avoid the two outcomes described above, the EU may simply deploy its full leverage to ensure continuing complete regulatory integration of Northern Ireland with the EU, by proposing a detailed legal treaty and insisting on its acceptance as a pre-condition to *any* progress whatsoever on any other issue. This is what happens when one insists on picking a fight with the biggest sumo wrestler in town rather than talking things out amicably.

I don't get this fuss about the Irish Sea Customs Delineation (it is not a border; our legal system does not change).

Under the backstop, NI manufacturers will be able to "export" to GB without tariffs or checks, as the UK can waive intra-country customs.

The NI marketplace is immaterial to GB exporters and we, in NI, are not going to starve. We will get our foods, medicines, consumables, etc. in the same way as the Irish do (they make them or bring them from EU or NI). And for the big items, like cars, the GB players will remain geared up to sell their Land Rovers & Jags to EU - so will be well able to continue to get them into the NI market (and probably still quicker and more cost-effectively than BMW does). This will especially be the case now that Barnier has confirmed that NI officials, not EU officials would man the customs checks.

So this is a win for NI industry - we get to soak up any NI markets that GB manufacturers abandon -and we get continued access to UK and EU markets, not to mention any new/better trade deals that UK strikes.

Why is this difficult ?