Belfast Telegraph

John Simpson: Why UK going ahead with a cliff edge Brexit is reckless

 

Confusion reigns over Brexit implications
Confusion reigns over Brexit implications
John Simpson

By John Simpson

Is Brexit postponement inevitable and necessary? The end of preparation for Brexit is just days away. Unless there is an unexpected extension of the Article 50 timetable, on March 30 life will change. The detail of the changes is, even now, not generally understood. Will I still be allowed to drive my car to Donegal or Dublin? Will I need the international 'green' card? Will the Irish border be frictionless or a point of fiscal friction?

If cross-border trade on this island is to avoid customs processes, some form of 'backstop' arrangement to cope with regulatory requirements is needed.

At March 30, unless the United Kingdom government and the EU Commission reach an agreed withdrawal deal, UK membership of the EU will end. This is the 'cliff edge' scenario.

The alternative scenario would be that the UK Parliament will have endorsed the withdrawal agreement and any related supplementary deal, meaning that a transition period will commence. In the transition period, the present arrangements will continue broadly as at present until plans for an orderly Brexit are put in place.

Given the degree of uncertainty and lack of preparation, the other alternative is that the UK and EU might agree a postponement, by seeking an extension of the Article 50 timetable. In the search for an orderly Brexit, an Article 50 postponement is an attractive, short-term, delaying measure. Meanwhile, public service officials have been drawing up contingency plans for widespread disruption in public services.

The management of the withdrawal agreement by the UK government and Parliament has been one of the most confusing and uncertain processes. The list of unanswered questions, recently published by the Chambers of Commerce, is a serious criticism of what should have been decided months ago. In terms of business operations, Brexit is heading for a spectacular crash.

The Irish border question has proved to be a serious problem, well beyond the expectations when the search began for a frictionless border. At first sight, the Irish border questions seemed straightforward. As a specific detail of the EU withdrawal, trade across the North-South Irish border ideally should not face any new obligations, charges, or customs duties.

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The complications of the Irish border were always likely to be contentious. No one was suggesting that there would be no border. As a legal concept, the border exists and has existed since the island was divided in 1921. As a trading concept, the border was much diminished by membership of the EU. It did not disappear completely as is evidenced by different rates of excise duties. Daily cross-border trade has been mainly frictionless.

The emerging potential cross-border problems become clear when, or if, the UK is outside the EU Single Market and customs union.

Goods crossing the border may become liable to rates of import duty, where previously no duty was payable.

Also, with the UK outside the EU, there is the potential for divergence in trading standards if the required qualities for imported goods to be acceptable where UK and EU standards diverge overtime. The possible divergence of trading standards poses a serious problem. Although divergence of standards will not be an immediate issue, the government and the EU would be unlikely to turn a blind eye to back door trade distortion incentives if standards did diverge.

On both sides of the Irish border there is agreement that cross-border business should be nearly frictionless. However, that leaves a need for some form of monitoring. The unhelpfully named backstop is the unpopular reciprocal face to monitor frictionless trade.

Frictionless trading seems to be a shared objective from all sides. The institutional arrangements pose problems. The EU does not wish to have backdoor trading access to the whole EU through Ireland. The UK does not wish to have trade into Northern Ireland monitored to help to avoid that backdoor. The objectives are similar: the regulatory mechanisms have become politically toxic.

Can Brexit be postponed… please?

Belfast Telegraph

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