Belfast Telegraph

Negotiating stance for Brexit has just started: John Simpson

Analysis

By John Simpson

The negotiating stance of the UK Government during the Brexit talks is now slightly clearer than it was in the rhetoric of the Brexit referendum.

For Northern Ireland there are some easily agreed principles but other queries where problems have been seriously understated. The publicity offering a frictionless and seamless trading border on this island is far from convincing. The easier and more confident outcomes of Brexit for Northern Ireland are:

  • consensual agreement on trying to protect the Belfast (Good Friday) Agreement,
  • agreement on the continuation of the Common Travel Area and the wider citizens' rights that it brings
  • support for the principles and application of an all-island Single Electricity Market

Developing trade and payments arrangements affecting north-south business partly depends on the final outcome of UK-EU negotiations. If there is a comprehensive customs deal harmonising the approach of the UK and EU, then the Irish border will be less significant. An agreement to continue current single market tariffs and retain common arrangements for trading standards (including technical qualities and quality measures) would make trading UK-EU and north-south easy.

Only an optimist would rely on that possibility. There is expected to be a range of issues leading to tariffs or regulations as well as pressures for trading conditions affecting animals, animal health and admissible food standards.

A sub-set of special north-south negotiations is needed and calls for UK-EU special arrangements considering all-island interests alongside the wider UK-EU interests.

The sub-set of unfinished and debatable problems is long and wide ranging. The UK position paper is optimistic in language and aspiration for frictionless and seamless solutions. The position paper, however, will be tested by the EU to avoid wider trade distortions caused by any special measures.

The paper also falls well short of operational criteria that prevent or minimise the potential for incentives to distort trade and avoid EU objections.

The critical (understated) ideas presented in paragraphs 48-50 are ambitious if incomplete. The key points are:

(a) an exemption for smaller traders to continue to operate as they do now, with no new requirements in relation to customs processes (which also implies that larger traders would face new requirements). This idea, superficially attractive, does not suggest how a 'small trader' might be defined, whether it would apply to importers to NI and also to importers in the RoI, nor if it would be regulated by license and registration.

(b) for larger businesses, a faster customs streamlined clearance system in relation to the Irish border including for Trusted Traders who are ineligible to be deemed 'smaller'. This concession softens the application of any new tariffs but does not suggest exemption or special supply chain concessions for material in transit across the border.

(c) an ambition that for the UK there would be a partnership arrangement with the EU that would remove the need to introduce customs processes. Movement of goods would continue to be treated as they are now. That UK-EU partnership should avoid any need for separate north-south processes on this island. Even this ambition leads the UK paper to accept that there would need to be a robust enforcement mechanism to avoid trade through the UK being a back door to the EU, by developing a tracking mechanism to ensure correct tariff payments.

In the negotiations on the terms of the Brexit agreement, all of these ideas will be tested first for their acceptability and enforceability to satisfy the full EU of 27 countries, including the Irish Government who may hold an effective veto where distortions adversely affect Ireland and, second, to devise operational mechanisms that are simple enough to operate and avoid excessive administrative processes.

Each sector of the economy will now consider whether, and how, these special arrangements might work.

For example, will the EU accept that beef and dairy products, processed in an integrated supply chain on this island, can enter the rest of the EU (excluding Ireland) without any trading costs?

That's just a simple question for starters!

Belfast Telegraph

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