Monday , June 17 2024

Finger of fudge

It seems that a new Brexit deal has finally been agreed, for the time being at least. There are still hurdles to leap, not least in EU and British parliaments. Have developments been sufficient to give us all a treat?

Juncker has outlined a summary of intent: “There will be no border on the island of Ireland and the Single Market will be protected”.

For months, Remainers have latched onto proclamations from the EU that the earlier Withdrawal Agreement could not be reopened. As it happens, the first of two key changes is an amendment to the WA, specifically the protocol on the island of Ireland.

The second key change has been to the Political Declaration, emphasis on the future direction being away from “close regulatory alignment”  towards a free trade agreement (FTA). There have been compromises. If a deal comes into effect, with a view to an FTA, then GATT Article XXIV provides for a seamless transition on 1st November with no tariffs applied on trade between the UK and EU.

In essence, the Irish issue has been addressed by giving Northern Ireland its own status with a foot in two camps. Politically, the North remains as part of the UK. The Common Travel Area remains the same as it has since the 1920s apart from a WW2 gap.

As for trade, Northern Ireland is to comply with a proportion of Single Market rules. Effectively, a notional regulatory border would exist in the Irish Sea, although for practical purposes, processes would be carried out on land. Goods sent from the rest of the UK for use in Northern Ireland would have to be registered. Those for onward exports to EU via the republic would be subject to regulatory checks. No tariffs would exist between North and South.

Those goods crossing the border between the North and Republic would be subject to customs checks away from the border through a variety of compliance methods.

The effective change is that the `backstop’ is no longer indefinite. The North can remove itself from the backstop over a four year cycle. Further detail will emerge although it is clear that the rest of the UK will not be bound within the Customs Union.

Crucially, in order for the new deal to come into effect, Parliament has to approve the new deal. The recent Benn Act provides us with a time scale, by the 19th October, this coming Saturday.

It will be remembered the previous WA, was voted down in the House of Commons. The backstop had been a key point of contention. The so called Brady Amendment provided a key point of consensus, that the WA could pass if the conditions surrounding the backstop were to be limited, specifically to be replaced with alternative arrangements to avoid a hard border.

Ostensibly then, parliamentary arithmetic would have been satisfied had the current agreement been presented to Parliament now. However, doubts remain as to whether this will pass for some very key reasons.

Central to the debate will be politicians elected within Northern Ireland, notably the Democratic Unionist Party (DUP). They may point to the semi-detached status, extra regulation and costs being attached to trade from the British mainland, without the same freedom to diverge from EU standards, without any say in influencing EU regulations. A question mark over potential long term inward investment remains if the trading status is at risk of change every four years.

On the so-called right wing of the Conservative Party, the ERG, many other criticisms of the previous WA still apply. The divorce bill is still in the order of £39 billion. Control over fish waters is not immediate, there are still implications for shared defence policies. Early signs from the ERG include Steve Baker’s description of the new agreement as “tolerable”.

It is the job of her Majesty’s Loyal Opposition to oppose. Early signs are that opposition parties are focusing on changes to the Political Declaration, on the one hand allowing for divergence from EU standards, on another level potentially allowing the weakening of employee rights.

Given the state of the current Parliament, many of the objections are false objections. Boris Johnson runs a minority government having been defeated on every issue so far. A general election is surely imminent given the House ‘s ability to paralyse the executive. The future relationship will, in effect, be an issue between the EU27 and whoever forms the next government, therefore potentially subject to change.

What would be ruled out of the equation however, is that if the new deal is accepted, Britain leaves the EU on 31st October. Revoking Article 50 would be ruled out. Returning to the EU would require a fresh application, probably without the current rebate and with a commitment to move towards adoption of the Euro.

We therefore move to the real objections, thinly hidden behind the veil of a People’s Vote, second referendum or confirmatory referendum. Clearly, to vote against a deal leaves the option of leaving without a deal, often apparently used as a smokescreen, or revocation.

The balance of power could now be argued to be with two groups. One is what could be seen as the democratic wing of the Labour Party, those in predominantly Northern, Welsh and coastal constituencies. The other is what logically may be referred to as the left wing of the Conservative Party.

Some have already swapped their allegiance, the ever changing number of Change UK, the fastest growing parliamentary party, the Lib Dems who have gained seven new MPs since the last election, four of them former Tories.

The other members of that wing, largely Oxbridge `elite’, a significant proportion at university with Theresa May (Hammond, Duncan, Green, Grieve) are there to be exposed. If May’s deal was worth voting for, what of the outcast Oxford classicist Johnson’s deal?

Another referendum represents further delay. In order to do so, Article 50 provides for a request from the UK, meeting legal requirements under the Benn Act with the unanimous agreement of the 27 remaining EU states.

So, what of the EU view?

It has to be recognised that one of the winners from the new WA is the republic of Ireland. Within the text are provisions to maintain current transit arrangements for Irish exports to the EU, using airspace or an efficient road corridor from western to eastern British ports and onward transfer. The Irish power of veto in some areas of EU decision making provides a powerful weapon, the UK on its own being a dominant export market for Irish produce.

Early indications from the likes of Tusk, Juncker and Barnier have suggested no further extensions, which in any case have questionable legal grounds. No extension means no more referenda, therefore no deal. As Juncker summarised: “I rule out there being any kind of prolongation”.

In fact, given the state of some EU member economies, uncertainty over arguably the most important export market, the UK, has been biting in manufactured goods, particularly the motor vehicle industry. It only takes one country to veto an extension to ensure that it doesn’t happen. The default position reverts to WTO rules, some would argue better for the UK.

Questions remain, largely as a result of political processes The big question still to ask of all provisions is “when?”. The Transition Period is scheduled to end on 31st December 2020 but can be extended until 2022, perhaps future fudges extending that further. It will be remembered than many of the EU’s supposed negotiations are on hold, some for over a decade.

When will we finally leave, lock stock and barrel? When will Britain regain control of coastal waters? When shall we strike those Commonwealth and global FTAs?

On balance, the Johnson Agreement is a fudge of the Irish issue. It has become, the only, therefore best deal on the table. Whether by accident or design, Boris’s efforts have produced a situation where anyone other than the DUP who votes against a deal is exposing themselves as an opponent to the referendum outcome. Electoral success is probably assured.

Yes, 31st October could be a Halloween trick but in fact, the fudge provides a multi pack of fingers, salvation for the Republic of Ireland economy, the best of both worlds for Northern Ireland, maintained export markets for the rest of the EU27. In fact, to borrow Steve Baker’s phrase, the finger of fudge, although not perfect, is just enough to give a treat to all but the lactose intolerant and political vegans.

This post was originally published by the author on his personal blog:

About Rex N

Rex is a freelance writer in medical affairs, economics and sport. A former teacher and examiner of Economics, his interest in European Union affairs took root when discovering the depths of the Maastricht Treaty. He is a committed democrat having campaigned for a popular vote to decide on further integration measures, based on fact rather than spin.

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