John Simpson: Brexit solution is as far off as ever after deal rejected
The 'meaningful' Brexit vote has taken place: it was rejected. There are many issues still to be decided and urgent arrangements to be made which were anticipated in the draft withdrawal agreement which Westminster has failed to approve.
Weekly Business Digest Newsletter
The draft withdrawal agreement, tabled after months of negotiations with the EU, still presents a formidable agenda of issues which, even if the agreement is now less relevant, must still be tackled.
The UK-EU negotiations painstakingly delivered a complex series of proposals to maintain the economic benefits, north and south, that have evolved since the Good Friday Agreement and avoid cross-border economic disruption.
The headline issue in the final Brexit negotiations was the wish to ensure a frictionless border. That issue, on its own, generated the logic of the back-stop arrangements which have been widely misunderstood. The backstop could potentially have given NI manufacturers a trading advantage with unique access to EU markets.
Business and political interests will want to ensure that, even after the rejection vote, answers are found to the wider questions posed as part of the Brexit negotiations. These questions (and suggested answers) can be found in the 585 pages of the stalled Agreement.
Specific topics each call for either endorsement of the draft negotiated outcomes or some alternative mechanism. Six in particular illustrate the range and importance of the local unfinished agenda.
• The agreed common travel area and defining Irish nationality
• The Single Electricity Market
• The application of State Aid rules
• Co-operation on competition policy
• The guidelines for co-operation on farming support policies
• Co-operation in the regulation of fisheries.
Businesses and employers will not need to be persuaded that these topics should be subject to some form of agreed implementation to avoid potential disruptive costs or unhelpful cross-border tensions.
The common travel area arrangements might be regarded as solely for the UK and Irish Governments. However, the proposal that, subject to choice, residents of NI may opt for Irish nationality has EU-wide implications for the recognition of people with Irish nationality when travelling or working in other EU countries. A UK-EU deal should formalise this wider remit.
The Single Electricity Market makes sense on an all-island basis but the added dimension of working within EU procedures should, if possible, be retained. This is at risk if there is no agreed UK-EU deal.
The UK-EU suggestion that State Aid rules should be harmonised has implications for policies on foreign direct investment, north and south, which could be used to create mutually agreed constraints. This all-island issue will also have wider implications for other EU countries and awaits a mechanism to ensure that there is formal agreement.
Similarly, a code of conduct on competition policy has the potential to constrain aggressive unwelcome policy differences. Competition policy is likely to be more difficult on a UK-EU basis unless set only in the all-Ireland context.
Two issues that emerge from the draft withdrawal agreement, now in abeyance, relate to farming and fishing. Both might be administered as devolved responsibilities in NI.
Somewhat surprisingly, the agreement was proposing that the EU (for Ireland) and the UK (for Northern Ireland) should agree a maximum annual level of support and minimum percentage for funding support for farming. This was motivated to impose procedures setting some limits on the scale of farm support. The details were still to be developed but this reflects concerns about commercial tensions if farm support evolved with differences of scale on each side of the border.
Less surprisingly, the draft agreement envisaged a degree of cross-border market opening for commercial fishing.
If, before March 29, there is no agreed UK-EU deal, then there is a concern that policies on State Aid, competition, farm support and agreed fisheries administration could develop in forms where non co-operation was harmful. A 'No Deal' would leave unwelcome questions.