Friday, 29 June 2018

Breaking the impasse (part 1) - Backstop as a Stopgap

The Brexit negotiations appear stalled, stuck on the thorny question of the Irish border. The EU and UK are at loggerheads over the EU's current backstop proposal, which even the supine Mrs May said "No UK prime minister could ever agree", and there appears to be no agreement in sight.

However, my reading of the  Phase 1 Agreement and NI Protocol in the Draft Withdrawl Agreement suggests that the EU has  already (if unwittingly) agreed to a backstop that is: (1) UK-wide, (2) Cherry-picked, i.e. covers free movement of goods only (excludes services) ; (3) excludes EU free movement of people, (4) temporary until a "soft" border solution is implemented. In other words, the backstop provides a UK-wide stopgap to a full agreement and solution.

Firstly, let's consider the general commitments made by the UK regarding NI in the Phase 1 Agreement:
  1. Avoid a "hard border, including any physical infrastructure or related checks and controls" (para 43). Not, as commonly mis-reported, a commitment to no border. There are already checks required today against counterfeits, contraband and to police the existing excise border. The logical interpretation is that controls or checks will be undertaken away from the geographical NI-RoI border.
  2. Protect "the integrity of the UK internal market and Northern Ireland's place within it" (para 45). The same paragraph also confirms that the "UK leaves  the  European  Union's  Internal  Market and Customs Union" - emphasising again that the UK commitment is simply to avoid a hard border, not avoid any border at all.
  3. Preserve the 1998 Belfast / Good Friday agreement, especially North-South & East-West co-operation (para 48). Note that:
  • The 1998 agreement quite explicitly clearly refers to two distinct jurisdictions (each side to remain accountable to the Assembly and Oireachtas respectively). Cross-border co-operation exists precisely because there are two distinct jurisdictions, each with their own legal and constitutional order. The 1998 agreement neither creates nor requires a single all-Ireland jurisdiction.
  • Contrary to much uninformed commentary, the 1998 Agreement says nothing about customs borders. It refers to borders only in the context of removing military & security infrastructure, which is not going to be reinstated due to any future trading relations.
Secondly, let's consider the specific commitments made regarding a backstop in the Phase 1 Agreement, which is intended to deliver the above general commitments in the absence of any other agreed solutions with the EU:
  1.  "UK will maintain full alignment" (para 49) - the backstop does not just apply to, or for, Northern Ireland - the whole UK is encompassed.
  2.  "with those rules of the Internal Market and the Customs Union ..." - i.e. not all rules. The backstop is clearly based on "cherry-picking".
  3. "The UK will ensure that no  new  regulatory  barriers  develop  between  NI and  the  rest  of  the  UK, unless ...  the  NI   Executive   and   Assembly   agree   that   distinct arrangements  are  appropriate  for  NI." The backstop must not create any new barriers to GB-NI trade and cannot imply an Irish Sea border, unless NI voluntarily decides to diverge from GB.
Thirdly, let's consider what are the selective " rules of the Internal Market and the Customs Union" that apply to the backstop ?  The NI Protocol in Draft Withdrawl Agreement  (chapter III) defines a common regulatory area:
  1. Article 4, covering Free Movement of Goods implies being inside the EU's Customs Union. References to  Regulation (EU) No 952/2013 require : Common Customs Tariff (i.e. Common External Tariff and preferential rates of EU's FTA's) must be applied to imports; ports will be subject to EU customs law and oversight.
  2. The section on free movement of goods also includes EU laws on goods, agriculture & fisheries, single electricity market, environment, North-South co-operation, State Aid.
  3.  Article 8 lists the areas of North-south co-operation as:  environment, health, agriculture, transport, education & tourism, as well as energy, telecommunications, broadcasting, inland fisheries, justice & security, higher education & sport. In other words many of the areas are not covered by EU laws on trade or are outside EU competence.
  4. Article 2 covers free movement of people, which refers to the UK/RoI Common Travel Area (CTA) and not to EU's rules on free movement.
  5.  Article 11 states the "Court of Justice of the European Union shall have jurisdiction".
It should be noted that much of the Draft NI Protocol is in un-highlighted text (indicating it is not yet agreed by UK and EU) most notably the jurisdiction of Court of Justice of the European Union. The only items highlighted in green (indicating UK & EU agreement) are Free movement of people (via CTA) and North-south co-operation. The State Aid clause is highlighted in yellow (indicating UK & EU agreement in principle). Nonetheless, the Draft NI protocol clearly outlines a single market and customs union in goods only, without EU free movement of people (agreed as covered by continuation of the Common Travel Area (CTA)).

Fourthly, let us consider how the Phase 1 Agreement and Draft NI Protocol make clear that the backstop is not meant to be a permanent arrangement:
  1.  Phase 1 agreement para 46 states that commitments made for the unique circumstances on the island of Ireland will not pre-determine the outcome of wider discussions on the EU-UK future relationship.
  2. Phase 1 agreement para 49 states the UK intention to address unique circumstances of Ireland via the overall UK-EU FTA, or via solutions specific to the island of Ireland - with the backstop only applying if no solutions have been agreed
  3. NI protocol article 15 states that the protocol (including backstop) will cease to apply if a subsequent UK-EU agreement addresses the unique circumstances in Ireland.
Given the  Phase 1 Agreement calls for (i) UK-wide "full alignment" and (ii) commitment to integrity of UK internal market (and NI's place within it) - the logical interpretation is that the EU have signed up to a UK-wide goods-only backstop without EU freedom of movement, that is only temporary in application. The EU may not like the implications of what they have agreed, but if they renege on their commitments to date, then what chance is there we can reach any kind of workable agreement ?

The current impasse has arisen because the EU insist the backstop can only apply to NI (which contradicts the phase 1 agreement) and because they show no interest in addressing the NI border issues via a UK-EU FTA or specific solutions (in effect they want and expect their version of the backstop to be permanent). At the same time, the EU believe (not without foundation) that the UK Government are trying to leverage the NI border issue to gain a permanent UK-wide Swiss-style regulatory equivalence and customs alignment deal. While such an outcome may be sought by the likes of Philip Hammond, it is not acceptable to Leavers, Re-Leavers, or the EU.

It seems to me that the only way out of this impasse is for both sides to agree a backstop that is temporary - essentially a stopgap - to allow time to implement a permanent "soft" border solution for the NI border. Such a stopgap will also allow businesses & customs authorities in both UK and EU to fully prepare for UK outside the Single Market & Customs Union. The stopgap arrangement should be written into the Withdrawl Agreement in unambiguous terms:
  1. Stopgap agreement should be unpalatable in equal measures to both sides. That way both sides have an incentive to move on from the stopgap to a full and final agreement. 
  2. The UK could concede on ECJ jurisdiction and some continuing payments for the period of the stopgap.
  3. The EU should concede on a UK-wide goods-only arrangement without EU's Free Movement of People rules for the period of the stopgap - as per what has been agreed already in Phase 1 and Draft Withdrawl treaty. The UK government should stand firm on free movement, despite hints May would like to compromise on this.
  4. A definition of (including proposed timescales) and commitment to a "soft" border solution in NI, together with a break or sunset clause so that the stopgap does not simply extend forever.
It is now crucial that all parties consider and agree how an overall UK-EU FTA and special solutions for Ireland can provide a "soft" border solution for Ireland. As you may expect, I have some thoughts on how these arrangements may work - but that is a topic for another post.

1 comment:

  1. Excellent work Paul, many thanks for making sense of all the nonsense that is spouted on this issue. Looks like a good routemap towards a proper Brexit. Just hope the Brexiteers manage to outwit the civil servants at the get together next week.