Opinion

That brand new Tory plan for Brexit? Here’s why it’s dead in the water

The chances of the EU accepting an interim free trade agreement, drawn up in a matter of days or weeks, are close to zero

Black London taxi cabs are driven past pro-Brexit demonstrates as they protest opposite the Houses of Parliament in London. Photograph: Daniel Leal-Olivas/AFP/Getty Images

David Henig
Tue Jan 29 2019 - 13:12

There is considerable excitement in the Conservative Party on Tuesday morning. It looks as if a deal has been reached on Brexit. There's just one problem, that, from what we can gather of the so-called "Malthouse compromise", it stands no chance of being acceptable to the EU.

There seem to be three fundamentals to the plan: the extension of the implementation period to 2021, technological solutions to ensure no border infrastructure requirements on the island of Ireland, and an interim free-trade agreement to be tabled immediately. This has been termed a “triple-lock”.

The first element is uncontroversial and indeed already part of the draft withdrawal agreement between the EU and UK. It means a standstill period during which trade carries on as before, and the UK continues to follow EU rules and trade policy, including a common external tariff.

It is the second and third parts that are almost certain to be unacceptable to the EU. Technological solutions for the Irish Border have been endlessly debated, but there is no border in the world outside of the EU where there are no physical checks, including the often cited Norway-Sweden and Switzerland-EU borders. Only where both countries are in a customs union and have more or less the same product regulations backed by a common court have checks been eliminated.

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For customs checks to decide whether tariffs are payable, a border is the only place where you always get the transport, declaration, supporting documents and goods together at the same time. Without this, the opportunities for smuggling are too great, and it should be remembered that checks are based on a risk-management approach, aimed at smugglers rather than regular traders.

Non-customs checks, typically on animals and animal products, or potentially dangerous products such as chemicals, are equally tricky. The document on which the compromise is based appears to be Shanker Singham's A Better Deal. It says that "The parties agree that inspections on veterinary and SPS [Sanitary and Phytosanitary Agreement] regulations shall be done at the premises of the exporter, importer, or at official border inspection facilities, located in the vicinity of the point of entry into the territory of the other party." This in fact recognises that there would almost certainly need to be border infrastructure of the type the backstop, with alignment of Northern Ireland for customs and product rules, was designed to prevent.

The backstop is a firm red line for the European Commission, and there are numerous reasons why it will not be changed. The EU will demonstrate that its word cannot be trusted if it reverses. It is a guarantee promised to a member state, and to prioritise the interests of a soon-to-be third country over a member state would be devastating to the EU’s credibility. It has consistently rejected the view that technology solutions could replace a border. Finally, the EU does not trust the UK not to backslide from a vague no-border commitment, based on the fact that so many in the UK have downplayed the issue.

The interim free-trade agreement, to be tabled immediately, would not help avoid border checks. Even without tariffs there is no full free trade outside of a customs union, for rules of origin must be checked to ensure the product is eligible for a zero tariff, for example to stop a Chinese product being rebadged and passed off as a UK product. The agreement also envisages UK regulations differing from those in the EU.

And the chances of the EU accepting an interim free-trade agreement, drawn up in a matter of days or weeks, are close to zero. The EU typically takes upwards of five years to reach such agreements, in large part to make sure it is a good deal that will benefit the whole economy and has widespread support among member states. The UK would be wise to take the time needed in order to achieve this, not least because sensitive questions, such as which food standards and other regulations we should follow, are bound to be controversial.

There is a mistaken belief that the prime minister will be strengthened by a unified Conservative party position. However, such a position has to be realistic, and one that directly attacks the most fundamental red line of the European Commission is not. It is almost as if the commission suggested the UK abandoned its commitment to end freedom of movement. On the contrary, this compromise is likely to infuriate the EU and member states, who will see in it a continued failure of the UK to grapple with the choices brought by Brexit, and a rerun of ideas already rejected. – Guardian

David Henig is director of the UK Trade Policy Project at the European Centre for International Political Economy

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