Behind the alarmist noises, the UK and the EU have the basis of a deal. It will be criminal if they fail

David Frost and Michel Barnier standing together ( just about)

Lurking not far behind Covid is the self inflicted crisis over the next stage of Brexit.  To many including me, the prospect of a border at the Irish Sea is as revolting as a  physical border on the island of Ireland. It’s no consolation that there’s a disconnect between the political rhetoric and what’s actually happening on the ground.

The government has privately conceded there will be post-Brexit checks on goods crossing the Irish Sea, months after Boris Johnson insisted there would be no such trade barriers. In a letter to the executive office in Stormont the government confirmed there would be border control posts in three ports, Belfast, Warrenpoint and Larne.

After the latest round of UK –EU talks in Brussels  on the next steps after withdrawal including  the Irish/NI protocol, both sides complained of lack of progress. The June deadline for agreeing an extension of the talks looms. No Deal is threatened.  

(UK chief negotiator David) Frost said… he found it “hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement. In order to facilitate those discussions, we intend to make public all the UK draft legal texts during next week so that the EU’s member states and interested observers can see our approach in detail… The UK will continue to work hard to find an agreement, for as long as there is a constructive process in being, and continues to believe that this is possible.”

( Michel) Barnier.. accused the UK of trying to pick and choose parts of the EU single market, dismissing the government’s claims that it is seeking a typical free-trade agreement.

“Every time we meet they say they would be happy to have a Canada-style agreement, but at the same time … they ask for far more from us than is available under the Canadian model,” Barnier said, citing the UK’s desire for “virtually full freedom of movement” for short visits, maintenance of “existing arrangements” on electricity interconnection, as well as “broad and widespread” recognition of professional qualifications to enable British lawyers, accountants and auditors to work in the EU.

“We are not going to bargain away our European values to the benefit of the British economy,” Barnier said. “Economic and trading fair play is not for sale. It is not ‘a nice to have’, it is ‘a must have’.”

The “ideological” difference between an EU approach and the UK’s while culturally profound, is entirely familiar to both sides. They’ve been living with it for half a century. It lies in the fact that the EU finally relies on the legal formualae of the EU treaties adjudicated by the European Court of Justice and administered by a law making Commission  in the absence of  a EU-wide  “demos” or democracy; whereas the British approach is governed by  the political pragmatism that gets by without a similarly codified constitution  (although this is looking shaky under pressure from devolution increased  by Brexit differences). Its many critics like Philip Stephens below argue that this British ” exceptionalism ” ran it course long ago. On the other side, the Brexiteers look to the  EUs’ chronic division and feeble handling of the Covid crisis for evidence of the organisation’s political, economic and moral bankruptcy.  Each side may be calculating  on the other’s underlying strains and tensions  to achieve concessions.

But in a brilliant analysis, Jill Rutter of , UK in a Changing Europe suggests that  two sides are not as far apart as their current position implies.

A deal will require one or both parties to move. But they are less far apart than they look or than the rhetoric or accompanying commentaries seem to imply.

First, both are looking at a relatively distant relationship. The UK has decided it wants to sit on the bottom step of the Barnier staircase. Indeed much of its mandate is a demand for an “unspecial relationship” – it fillets the EU’s recent FTAs and asks to be treated pretty much like any other Canadian/Japanese or South Korean.

Both sides do of course recognise that the UK and the EU will inevitably have a relationship that is different from the one with a country thousands of miles, not a few kilometres away, and one with a land border which needs to stay open. The UK wants, for instance, agreements on continued cooperation on police and justice which is not part of those normal trade negotiations.

It explicitly says that road haulage arrangements need to recognise geographic proximity – and makes a bid for “operating flexibilities” in the name of the environmental benefits efficiency can bring.

It wants to go much further than the EU has ever done before on recognising professional qualifications: if progress is not made on ways of easing cross-border service provision there will have to be some sort of special deal for the island of Ireland: services was the big omission from the protocol agreed last year.

The EU sees the UK’s proximity as an argument for its notorious level playing field provisions to guarantee a rogue UK does not put downward pressure on European standards. Michael Gove pointed out that the EU did not try to impose those on the US in the failed TTIP negotiations, even though the volumes of trade are similar but also pointed up areas where the UK is already well above EU minima.

Objectively the two sides are miles apart on this. But the EU’s demands are more modest than their rhetoric. On environment and social protection, the EU has asked the UK not to row back from the position at the end of transition – and then added some language about maintaining “corresponding high standards over time”.

There is a reference to “appropriate and relevant” Union standards – but also to “international standards”. There should be a landing point on judging each sides standards on their substantive merits. On tax, the UK does not seem to be far from offering what the EU is looking for.

That leaves state aid as the outstanding LPF battleground: the EU wants the UK to apply EU rules forever: the UK simply offers notification and consultation. The UK seems to have set the offer low – to give scope to move up. But (apart from the issue of how much the UK has already committed on this through the NI protocol) this seems a prime area where the EU has other means of protection through simple trade defence if it thinks the UK is subsidising an industry unfairly.

Fish may be the battle of the summer. There is huge scope here for both sides to cut their noses off to spite their faces: both in terms of scuppering the wider deal but also in ensuring a lose-lose both for their fishers and for their fish consumers. But this is the ultimate identity symbolism versus economic rationality debate – and where we end up will show which is likely to come out on top.

The other big gulf is on the form of the agreement. The EU wants to avoid a Swiss style arrangement with multiple treaties and a governance gap – and sees an overarching association agreement as a means of fending off demands for the same treatment from other third countries who have so-called MFN clauses in their existing agreements.

The UK wants a set of independent agreements each with their own dispute resolution processes to ensure that the EU cannot punish UK transgressions under one heading by action on another where it may be more vulnerable.

The EU also wants the ECJ to stay the ultimate interpreter of EU law. That will be the EU’s reddest line – but one where there are workarounds. Even the EU accepts the ECJ will not be the final arbiter in disputes under the future agreement.

EU voices are already denouncing the UK deal as cherry picking. But it is picking from an already established fruit bowl and is miles away from anything the UK wanted under Theresa May.

The UK accepts there will be checks, friction and formalities, even as it seeks ways of reducing them (though bizarrely it is only now asking for business views on the economic impact of their proposals – a case of lighting the blue touchpaper and standing well back).

Whether we end up with a deal or not depends on two things.

First: is the EU prepared to take a bet that, for all its rhetoric, a “sovereign” post-Brexit UK won’t look hugely different from the one it has been used to living with for the last 47 years – and if it does, the EU has the means to defend itself?

(Answer, of course, lots)

Second, in the absence of the parliamentary pressure which forced no deal off the table last year, is the government prepared to take some domestic political hits to avoid leaving the EU on what it now dubs “Australia-style terms” – but which is really the  more familiar trading with our largest partner on WTO terms

In practical terms where might we go from here? The big urgent aim is get a system up and running which cuts costs, delays and bureaucracy to a minimum.

QUB’s Katy Hayward and Tony Smith prescribe  “principles

The first principle is that of partnership. Border management is complicated. The challenge will not only be in the hands of UK Border Force. A wide spectrum of actors will be involved: police, customs, policy specialists, data analysts, market surveillance authorities, veterinarians, freight hauliers, ferry operators… And that’s before you even begin to consider the diverse array of those (from massive supermarkets to small farmers) who will have new procedures to implement just in order to keep buying from and selling to the same people as before.

The second principle is that of cross-border cooperation. There is plenty of evidence to show that you don’t need to be in a political union to have good border management. What you do need, however, is a good bilateral or multilateral agreement and a level of confidence and trust between the parties.

The third principle is that of preparation. UK Border Force will have overall responsibility for conducting any regulatory checks and inspections on the GB/NI routes, in tandem with a range of experts from other agencies. These checks will be conducted under policy guidance on behalf of all the relevant agencies, including HMRC and DEFRA (or DAERA in the case of Northern Ireland). UK Border Force already has officers deployed in Belfast and Liverpool ports; but so far they have been preoccupied solely on extra-EU traffic. Intra-UK goods traffic is (perhaps ironically) a rather unfamiliar subject for scrutiny.

We don’t have to do customs checks by opening every box, crate and lorry. Future checks and searches have to be based on intelligence, not mere suspicion. And intelligence is refined information. There is already a wealth of data and technology across the supply chains that is not currently visible or accessible to the government. This is even more reason for government and industry to work together to facilitate compliant trade and traffic routes, whilst simultaneously ensuring compliance. But this needs to begin soon.  

A more detailed plan comes from Sam Lowe of the think tank the Centre for European Reform, well worth reading in detail. He has his principles too.

Determining whether goods are at risk of onward transport to the EU

Reducing checks and bureaucracy

While ultimately the change being inflicted upon Northern Ireland is a mess of the UK’s making, the EU does have a role to play in ensuring that the Protocol is sustainable in practice, and does not further destabilise the region. Some of the suggestions made in this piece will be palatable to the EU, and some will not. But on the condition the UK is also upholding its end of the bargain, there is a mutual interest in finding practical solutions that all parties can live with.  

 

The fiercely anti-Brexit  FT Commentator Philip Stephens concludes…
Britain’s strategy so far has been to convince the EU that it is ready to step over the no-deal cliff-edge. Some ministers say this will force Brussels to make a better offer. Others do not care: the shock of no deal, they say, will be lost in the wreckage of Covid-19. Either way, there will be nothing heroic about the outcome. British exceptionalism has run its course. The coming years will demand nothing so much as a long, unremitting slog to rebuild the economy after the ravages of the pandemic and the collateral damage promised by Brexit.

The pro Brexit optimists have yet the counter this analysis.


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