And what a structural change to the Withdrawal Agreement means for Northern Irelandby Allie Renison / October 18, 2019 / Leave a comment
At last we have an answer to the question of how this government was planning to remove the backstop from the withdrawal agreement. The Northern Ireland circle has been squared—in part—by frontloading a fudge of “solutions” into a deal that is only supposed to be about the exit process. The most contentious part of Theresa May’s deal, meant as an insurance policy, has become contentious again for a different reason—the backstop is now the “frontstop,” and with it we have a piece of the future relationship with Europe in plain sight. However, the new protocol still leaves an awful lot of important questions unaddressed.
For most people and businesses in Great Britain, there is little in the actual exit deal that has changed. The future relationship priorities have been pared back in the non-binding political declaration, and a looser arrangement is implicitly envisioned for the UK, although references to level playing field commitments on things like workers’ rights do still provide for a range of outcomes in this respect.
Labour’s concerns about the government unwinding commitments on social standards are not straightforward, as these were only ever binding in the event of the original backstop (which many on both sides said they didn’t want to ever have to trigger) being activated. The customs union foreseen in that scenario drove the obligations around regulatory standards. Nothing about the future relationship in the previous deal—or arguably ever during the exit process—was intended to be locked in, in light of the political declaration being unable to act as a binding treaty about the future.
But for Northern Ireland, the future is now more rapidly upon it with this deal. The new protocol added makes clear that its contents will be the starting point from the end of 2020. The hope will be that a future trade agreement and wider future relationship deal will answer many of the questions left open in this protocol. That is important because there are many. The previous backstop left some questions open on the practical issue of how to manage any extra controls needed at ports or commercial premises should it ever be triggered, but these were fairly small in number. This frontstop presents a far bigger set of open-ended questions that need answering to make it operational, and that derives from the government shedding some of the previous protocol’s all-UK commitments under the backstop.
Predominantly, these differences revolve around customs arrangements and—to a lesser extent—VAT. There is also the major political and constitutional question of how Northern Irish consent is arrived at, but that is beyond the scope of this article. EU law will apply to VAT in NI, but the UK government will collect VAT and excise duties. Some goods will be treated differently so that NI VAT can be zero-rated or reduced in these areas, but they are currently unspecified.
The questions around the new customs arrangements require even more filling-in-the-blanks. Rather than a contingency plan keeping the whole UK in the customs union, Plan A is now for a complex “dual tariff” regime for NI, straddling the EU and UK customs territories to eliminate the need for land border checks. But whether Northern Ireland benefits (even indirectly) from EU trade deals as well as future UK trade agreements remains unclear, and this matters for understanding how the dual-tariff idea, resurrected from May’s Chequers plan and applied to NI, will work. The issue of whether to apply or pay EU or UK tariffs will not matter in practice to trade across the land border, but will be enforced domestically and internally within the UK, meaning Irish sea checks. Some goods will be exempt, some businesses will be able to make declarations and others exempted, but we don’t really know on what or where, or which systems and processes will hopefully make these simpler and speedier in automated electronic form.
Understandably, as much as some may just want to get on with Brexit, businesses and politicians in Northern Ireland really want to understand all this detail, since it is now the official starting point for the future relationship rather than a contingency option down the line. A future trade agreement may help clarify some of this, but without knowing what this will be or when it will be completed, this is all the detail we have to go on for what the future for Northern Ireland looks like.
Some fear that the UK government may plough ahead will full departure even if a trade deal with the EU isn’t ready by the end of 2020 transition period, and so this will be in isolation what that future really is. Concerns about acute divergence between Northern Ireland and Great Britain require urgent clarity: what will Westminster do to safeguard and protect its domestic market from becoming too fragmented over time? The unilateral commitments undertaken by May, for the whole UK to “dynamically align” in areas where NI would have to continue doing so in step with the EU, clearly no longer apply.
The current deal is certainly miles better than a disorderly no-deal exit, although some point to the fact that that isn’t the immediate counterfactual here, in light of the Benn Act requiring the prime minister to seek an extension should MPs not pass the deal on Saturday. Of course, that doesn’t remove the possibility of a harder exit or even looser future relationship after an election takes place. But no one can argue this deal is just about the exit process anymore where Northern Ireland is concerned. And given the lack of comprehensive detail, scrutiny over what it means is essential.