Richard North, 06/07/2019  
 


Events in Northern Ireland are taking shape, and not for the good. There is intense energy being expended to railroad the province's business community into accepting the findings of Shanker Singham's Interim Report from his Alternative Arrangements Commission (AAC), with Tory MP Greg Hands leading a charm offensive aimed at convincing businesses that the "alternative arrangements" are a credible substitute for the backstop, and can form the basis of a new plan.

What has clearly not registered on the mainland – and with the legacy media – is the extent to which both Tory leadership candidates are relying on this "snake oil" solution as the magic bullet to solve the Irish border issue, the strategy being to gain the acceptance of a baffled and harassed business community. It is being told that "alternative arrangements" are the best thing since the invention of sliced bread, even though it has expressed continued reservations over the viability of this scheme.

Latest into battle is the British Irish Chamber of Commerce which has published its own views following its attendance at a briefing by Prosperity UK, when the basics of the "alternative arrangements" were reviewed.

Confronted with a dense, 200-page report – the aim of which is to confuse and obscure – the Chamber was obviously at a disadvantage in trying to analyse something which has been given a largely easy ride by MPs, and which the legacy media have failed to dent. The "professionals" have sold the pass, and now it is being left for local business leaders to take up the slack, on an issue which should be at the centre of a huge national debate.

Nevertheless, the Chamber has raised a few technical points, starting with the proposal for a UK-Ireland SPS Zone, as it was acknowledged that this creates the biggest problem for any solution to be viable.

Unsurprisingly, Chamber members were concerned that the AAC was "over-simplifying the problem" and that there was "an over-reliance on goodwill and derogations from the EU". And right up-front this simply shows that the Chamber, under the combined weight of the BS, and the pressure to treat the AAC as if it was a responsible player, is almost completely out of its depth.

The Chamber is perfectly right in pointing out that problems are being over-simplified, but the assertion that is "an over-reliance on goodwill and derogations from the EU" is misplaced. Goodwill in the implementation of SPS rules is simply not an issue, while there are simply no "derogations" on which the AAC can rely.

As we have seen, the claimed exemptions on siting of remote Border Control Posts cannot apply to the Irish border, while the supposed permission to create mobile inspection units is pure fabrication.

One thing that did emerge, though, which has been given nothing like the attention it deserves – the issue of split loads of agri-food goods requiring different certificates and checks for transport. It was mentioned that one company trading across the border would need to have 35 vets on site every night to certify products under the proposed scenario.

The next concern raised on the impact of a UK-Ireland zone, where there was supposed to be "deemed equivalence" with the EU. This is one of Singham's obsessions – his stock "get out of jail free" card which is his answer to all and every regulatory issue. Whenever divergence is raised, his solution is that the EU should treat our different regulations as equivalent to theirs.

Chamber members rightly query whether such an equivalence would be granted. In fact, they say, any break between Irish regulations and those of the EU would likely result in increased checks and controls for Irish agricultural goods entering the EU market.

If there are any doubts about this, all Irish officials need to do is look at Canadian experience in the wake of CETA. As far as the EU is concerned, "equivalent" effectively means the same. This is no cheap access ticket into the EU's Single Market.

In fact, the whole issue of equivalence is a dangerous distraction. Endless times, M. Barnier has made it clear that we cannot enjoy the same rights and benefits of the Single Market once we are outside it. Any concession which allowed the UK equivalence would put it in a better position than members, affording it the rights of access without the obligations.

Other concerns raised were the potential for increased smuggling and the costs of implementation, with the Chamber worried that the proposed solutions would require significant investment from businesses in training staff, implementing new IT systems, securing customs guarantees or contracting external customs agents.

However, Singham's Alternative Arrangements had not been costed and it has been reported they could cost £13 billion annually. It should be noted, said the Chamber, that under the current backstop, businesses on the island of Ireland would see no increase in cost for cross-border trade as there would be no additional customs or regulatory requirements in this scenario.

This then brings us to the "tiered trusted trader programme", with concerns about how it would work in practice. Yet, to my mind, too much ground has been conceded on a scheme which is fundamentally flawed and provides no solution to the Irish border question.

In May last year, for instance, the Irish Independent had Carol Lynch, a partner in BDO Customs and International Trade, look at the difficulties in acquiring "trusted trader" status.

It is, she said, "a very comprehensive and time-consuming process", taking "six months to prepare an application and put in place the required procedures". Following the application, she said, "it can take another six months to actually obtain authorisation. Due to this you would need to start this process a year before you require authorisation".

There is the question of getting the EU to recognise UK schemes, normally done on the basis of mutual recognition. For the scheme to work on a cross-border basis into the Republic, the EU must accept our systems, all of which depend on the exchange of electronic data. Yet, for that to happen, the UK must gain the status of "data adequacy", under the EU's General Data Protection Regulation, something which is by no means automatic and is far from being assured.

This is something of an "elephant in the room", as we do not yet have a data adequacy agreement with the EU and there are no indications that one will be forthcoming. Yet, without free flow of information, a trusted trader scheme cannot work.

On a broader front, the Chamber has also noted the AAC's "over-reliance on MRAs (Mutual Recognition Agreement) with the EU based on deemed equivalence rather than alignment". The point has been raised that while the EU has included such arrangements in deals with Japan and Canada, it is less likely to do so with a significant economy in close geographic proximity such as the UK due to the unfair competitive advantage that may result for UK businesses.

It was also stated that any such MRAs are likely to have stringent "level playing field" measures (similar to those included in the backstop) on areas such as State Aid, Competition, Taxation, Environment, Labour and Social Protection. It was accepted that this is likely to be one of the more significant challenges for the UK in the negotiations of such a package.

What is missing from the AAC report, though – and from consideration by the Chamber – is a proper distinction between MRAs on conformity assessment and those on regulatory standards. While MRAs on conformity assessment are necessary and acceptable to the EU, mutual recognition of standards applies exclusively to Single Market members. It cannot apply to the Irish border.

As I have recently pointed out, this will leave as much as twenty percent of cross-border trade without the cover of agreed standards, requiring UK exports to conform with local rules at the point of entry into the market.

Many food and agriculture products rely currently on the mutual recognition principle. Post-Brexit we are faced with the prospect of many UK products traded across the Irish border having to comply with Irish regulatory standards. And not only does this raise regulatory complications, it has significant implications for the scale of cross-border checks. Where no EU harmonising standards exist for a product, Irish officials will have to check UK goods entering Ireland for conformity with relevant Irish law.

Yet, even without this, the British Irish Chamber's view of Singham's proposals is that, "no matter how genuine the initiative" (not), "they lack credibility in the reality of how all-island trade actually works". There is still a way to go, but this is a start. I shall be back.






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