EU Referendum

Brexit: miracle of the century


One of the oddest things about the media coverage of Johnson's "take-it-or-leave-it" proposal is the assumption that Northern Ireland will remain in the single market for all goods – for a period, at any rate.

That most of the media sources are saying the same thing suggests that they are working to some central crib-sheet, possibly produced by one of the news agencies, but it could even have been from a supplementary media briefing produced by the government.

As to the main government briefing, this is to be found in the explanatory note to the "UK proposals for an amended protocol on Ireland/Northern Ireland". And in that seven-page document (including the title page), there is no reference at all to Northern Ireland staying in the single market. What the explanatory note does say is that:
The introduction of a zone of regulatory compliance across Northern Ireland and the EU would remove the need for regulatory checks and related infrastructure at the border between Northern Ireland and Ireland, while enabling the UK and EU to maintain their own distinct customs regimes ((2) 6.).
However, although this is an official government document, there is an assumption which does not compute. Regulatory compliance is required of all exporters to the European Union. It is a condition of entry.

But compliance alone does not buy immunity from regulatory checks at the border. The privilege only comes with full membership of the Single Market, and that requires a lot more than just regulatory compliance. Conformity with the "four freedoms" and raft of so-called "flanking policies" is also required and - as I am continually pointing out - full implementation of what Barnier calls the "regulatory ecosystem".

It may, therefore, be rather presumptuous of the government to assume that, because Northern Ireland continues to comply with EU regulation in the relevant areas, goods are necessarily going to get free passage into the Irish Republic.

Nor is this detail a matter of pedantry. The EU has the integrity of the Single Market to protect, and it must comply with WTO non-discrimination rules. If it allows free access to goods from Northern Ireland into the Single Market, purely on the basis of regulatory conformity, then it will come under pressure from other third countries to allow the same level of access.

Needless to say, the devil will be in the detail – what may be acceptable to the Commission in principle may founder when the two sides have to get together to produce a workable system. And then there is the matter of services. The explanatory note talks only of goods, yet we know that services are a significant part of the trade bundle between the Republic and Northern Ireland – and the free movement of services will not be permitted.

This is a much understated problem. How, for instance, will the Republic authorities prevent a plumber from Northern Ireland darting over the border to service a client's boiler? This, in fact, is an issue which has been addressed on the border between Norway and Sweden, where tradesmen such as plumbers and carpenters are only allowed to take hand tools across the border. How would such restrictions be enforced on the Irish border, without a system of checks?

Furthermore, it is all very well calling for special provisions to be made for small traders – as the UK government is doing. None such apply on the border between Sweden and Norway, they certainly don't apply on the Turkish border and neither do SMEs in Ukraine get any special breaks. If Northern Irish traders are allowed special privileges, how long will it be before there are demands for equal treatment from other third countries?

We also hear nothing about the 20 percent or so of traded goods which rely not on harmonised regulation but on mutual recognition. The concession which permits free circulation of these goods applies only within the Single Market and, despite the media chatter, Northern Ireland will most definitely not be a member of the Single Market.

Taking all this into account, it is hard to see how the European Union will be able to permit the free movement of goods into the Republic from Northern Ireland, without imposing significant conditions and physical controls at the border. It will also be insisting on the ability to supervise and enforce regulatory conformity within the territory of Northern Ireland, while demanding implementation of the regulatory ecosystem.

But then, if the rest of the UK – as indeed is the case – is to go its own way, it will be imposing its own regulatory border between Northern Ireland and Great Britain. That will mean border checks carried out by UK authorities, controlling access of goods into Northern Ireland and, from there, into the Single Market. Again, one would expect the EU to impose its own conditions, including supervision and enforcement provisions, on this arrangement.

Despite this, there is probably nothing here which presents irreconcilable difficulties when it comes to negotiating a final deal, given that the UK is prepared to compromise on its ambition to regain control of its borders, and other conditions can be satisfied.

Here, one sees that the UK is seeking to rely on a trusted trader scheme, but there is an elephant in the room. Without the EU awarding "adequacy" status to the UK under its data protection legislation (which is yet to be resolved, and may take some years), the exchange of personal data required to make a trusted trader system work simply cannot take place.

But, even if such issues can be resolved, there will be a lot of detail to be addressed by negotiators which will require turning into legal prose before an agreement can be finalised. And these matters are only some of the aspects which need addressing, raising the spectre of the negotiators running out of time. With only about ten days left, it seems hardly possible that they can finalise a watertight legal draft in the time.

Then, this assumes that some of the fundamental issues can be resolved – such as the approval system which the UK government seeks to impose, and the four-year cut-off which allows unilateral termination of regulatory conformity by the Northern Ireland Assembly.

This is something which drives a horse and cart through the concept of a backstop. It passes the buck on the border question, leaving open the possibility that there will be a hard border at some time in the future, frustrating the EU's desire to settle on an arrangement which will last into perpetuity.

Another of those fundamental issues which could well prove a sticking point is the UK assumption that the EU will agree to introduce simplified customs procedures, alongside an "ambitious" temporary admissions arrangement. Both will require amendments to the Union Customs Code (UCC) but, given that the EU has only just completed extensive revisions, with the new code not fully in force, it will be extremely reluctant to countenance further changes.

Equally, the proposal on VAT assumes a degree of integration with the EU system that goes beyond Norway and exceeds that afforded to any other third country. This is unlikely to be conceded.

Looking at what is on "offer" from the UK, therefore, the proposal seems remarkably UK-centric, failing to take into account any of the sensitivities or constraints which might limit the EU's response. Something of this comes over in the letter from the prime minister in office to Jean-Claude Juncker, which is almost truculent in tone.

"Both sides now need to consider whether there is sufficient willingness to compromise and move beyond existing positions to get us to an agreement in time", writes Johnson, adding: "We are ready to do that, and this letter sets out what I regard as a reasonable compromise: the broad landing zone in which I believe a deal can begin to take shape".

It comes as no surprise, therefore, that Juncker's response is not exactly gushing with enthusiasm, even if he welcomes Johnson's "determination" to advance talks ahead of the October European Council and make progress towards a deal.

However, he also noted that there were still some "problematic points" that would need further work in the coming days, notably with regards to the governance of the backstop. Another concern related to the "substantive customs rules", while Juncker also stressed that "we must have a legally operational solution that meets all the objectives of the backstop".

The Commission was now going to "examine the legal text objectively, and in light of our well-known criteria", which could be taken as code for saying that it does not conform with those criteria.

Certainly, the vibes do not seem to be favourable, with the predominant Brussels response said to be "dismay". Barnier, we are told, fears that implementing the proposal could prevent Brussels from protecting its internal market.

With EU sources saying that the flaws in the UK's proposals are such that there appears to be scant chance of agreement by the European Council on 17 October, it looks as if Johnson might need to go back to the drawing board. But, since this is supposed to be a "take-it-or-leave-it" proposal, he seems to be on the verge of producing the miracle of the century - turning the European Council into leavers.