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Negotiating a better deal with Europe will be tough

By John Simpson

Published 05/07/2016

The EU likely won’t be generous in negotiation
The EU likely won’t be generous in negotiation

The post-Brexit negotiations will be tense and contentious. What would be agreeable for Northern Ireland from the UK Government (London) could fall foul of difficult London-Brussels tension.

The negotiations about to take place will put tensions in relations between Belfast (and Edinburgh) and London, London and Brussels and, less directly, Belfast and Brussels as well as London and Dublin.

There are big questions on standards, competition, employment rules, taxation and state aid.

From a Northern Ireland perspective, the terms of the withdrawal from the EU will be important. Northern Ireland needs the UK government to leave the EU with as helpful a series of agreements with the EU as are consistent with the relations between friendly co-operating neighbours. Brussels, speaking for 27 other countries, will be in no mood to give the UK any special favours.

Northern Ireland needs an agreed resetting of the operational rules for devolution. Leaving the EU will mean that the UK Government will feel pressure to ensure orderly devolution - rationalising the decision-making of Northern Ireland, Wales and Scotland. The UK Government can be expected to try to prevent beggar-thy-neighbour tactics between parts of the UK. Also, the Irish Government (sometimes working within EU rules) will have a legitimate interest where trade and commerce on this island could be artificially distorted.

Northern Ireland wants to see the UK divorce from the EU to be constructively co-operative but cannot expect that the EU will be so generous that the UK is not disadvantaged by the Brexit decision. This will require fine judgement - with the UK as a supplicant starting from a weak bargaining position.

Although there is already a tension on whether, after Article 50 is applied, the UK will be part of the Common Market for trading purposes or may have a less favourable outcome, the expectation (or hope) is that trading arrangements will only be marginally disadvantaged for UK exporters.

Getting the EU to agree a set of acceptable trading arrangements will mean that a series of linked commitments on observing EU trading standards (particularly in continuing to accept EU determined quality and performance standards) will be expected. In practice such a commitment would be sensible but the downside would be a commitment to mirror EU standards without the ability to influence them.

That would be the first possible irritation. To persuade the EU to agree an acceptable arrangement to facilitate unimpeded trade may come with other more controversial conditions.

In anticipation of an exit from the EU, there are hopes that it would mean that Northern Ireland and other UK regions would no longer be constrained by EU restrictions on the scale of assistance that can be paid to attract investment projects, otherwise known as State Aid.

Naturally, from a Northern Ireland perspective greater local discretion on investment incentives would be useful. Whether the local budget could afford higher levels of incentives would be a budgetary constraint. However, there may be expected to be two sources of greater caution.

First, the UK Government will want to ensure that within the UK there is some budget constraint, monitored from London, to avoid expensive upward bidding between regions and devolved Governments. Second, on a wider front, the EU (and the Irish Government in particular) would see the emergence of unfair competition distorting commercial outcomes. To hold on to an agreement on acceptable trading conditions, Northern Ireland (and the UK) may have to decide whether EU competition policy and State Aid policies could continue to apply.

The settlement may mean that the new found taking of 'national control' on policies becomes more fettered than expected.

These are some of the easy questions. Problem solving will be as complex for farming, fisheries, energy, climate change, social policies and proposals to vary corporation tax rates and allowances.

The Brexit vote was clear: its implementation will be very difficult.

Belfast Telegraph

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