The in principle agreement at Monday’s EU-UK Joint Committee between its co-chairs, Michael Gove and the European Commission’s vice-president, Maroš Šefčovič, took many Brexit-watchers by surprise. Clauses 44, 45 and 47 of the Internal Market Bill designed to ensure the integrity of trade between Great Britain and Northern Ireland in the event of EU regulations seriously inhibiting the flow of goods between the two parts of the UK should there be no trade deal, were supposedly the UK’s bargaining chip. So why was Michael Gove concluding an agreement in Brussels that involved the British government dropping the offending clauses?
Much, and perhaps too much, has been made of those clauses. Politicians – including president-elect Biden – expressing horror at the “specific and limited” breach of international law that they involved and what they took to be the consequent threat to the Good Friday Agreement (although that document had nothing to say about cross-border trade posts) made the mistake of taking the Johnson administration at face value. Equally misled were those on the Tory backbenches who were encouraged to believe that the offending clauses were a vital safeguard against Brussels making life difficult after 31 December.
The Protocol already includes a clause (article 16) allowing the British government to unilaterally suspend Protocol provisions that are shown to be causing “serious economic, social or environmental difficulties” or which risk causing likely long-term “trade divergence.” Enabling that clause would have been a more sensible approach if the EU had chosen (as it threated in July) to regard all trade from the British mainland to Northern Ireland in the at risk category of entry into the Republic of Ireland and therefore liable to tariffs. The Internal Market Bill was a provocation to Brussels, but not one that frightened it. Thus as a bargaining chip its value was never high. That is why the British government has tossed it aside.
Why did it ever go through the trouble of tabling it? Signaling that the government was a strong defender of British integrity, it is hard now to see it as being anything more than a bluff aimed at reassuring Brexiteers as much as at frightening Brussels. The prime minister may recall Sir Lynton Crobsy’s sagacious observation that you cannot fatten a pig on market day. The confidence of the party must be assured before, and not just on, the date of the vote on whatever terms the government secures.
The far-reaching consequences of the agreement concluded between Michael Gove and Maroš Šefčovič should not be over-stated either by its enthusiasts or critics, for it reduces the immediate effect of – but does not remove – the penalties of creating a UK in which only one part of it (Northern Ireland) remains within the EU’s Single Market from 1 January onwards.
The most pressing concern, illustrates the complexity of what this involves. Supermarkets in Northern Ireland were at imminent risk of bureaucratic strangulation because of the wide range of different food items in their lorries requiring export health certificates from 1 January under the new rules. Requiring to be signed off by a veterinary inspector, these certificates can cost as much as £200 per product.
Monday’s Joint Committee accord provides the province’s supermarkets with short-term relief, giving them a three-month grace period in which their goods will not require certification. For chilled meats (including sausages – subject to especially tough EU rules), the grace period will exist for six months. Michael Gove was at pains in the Commons on Wednesday to paint this as a triumph, since “originally the Commission argued that that would be impossible or if it did exist that it could only be a matter of weeks.”
But it is a minor victory precisely because it is a temporary one. What happens at the end of the grace period? There would need to be a fresh agreement – perhaps relatively straightforward in the event of an EU-UK free trade agreement, but not otherwise. Perhaps because he anticipates that a FTA will materialise at any moment between now and 31 December, Michael Gove seemed remarkably relaxed, reassuring Hilary Benn that three months was “sufficient time, we understand, in order to ensure that supermarkets are ready.”
They may, by then, be sufficiently prepared for the bureaucracy, but that does not mean that the paperwork will not be a major cost. If they calculate that burden will be a permanent feature from April onwards, will the province’s supermarkets not re-examine their supply chains and source their goods from (or via) the Republic of Ireland? It would make life a lot easier for them. And by such ways do the commercial sinews connecting Northern Ireland with the British mainland fray.
It is possible to make too much of the checks being made on British livestock arriving in Northern Ireland after 1 January. After all, whilst there will be additional checks, livestock already are subject to health examinations upon arrival at Larne. It should be noted though, that additional infrastructure is nevertheless being built there and at Belfast, Foyle and Warrenpoint.
Since when did customs inspectors expect to live in an embassy?
Ultimately the greater issue is the EU’s determination of which goods from the British mainland arriving in Northern Ireland are “at risk” of entering the EU through the open border with the Irish republic. Here, the trusted trader scheme is designed to ensure goods travelling between Great Britain and Northern Ireland are not unfairly subjected to the tariffs that would apply if their end-point was in the Irish republic. The detail is yet to be etched in tablet, but the spin is that the scheme will help 98 percent of this trade avoid “at risk” tariffs. The remaining 2 percent will be able to reclaim the tariff levied once it is demonstrated the product did not cross from northern to southern Ireland.
Much is being made by the British government of the unobtrusive presence of EU officials in policing the cross-UK commerce across the Irish Sea. The agreement does allow for a small number of EU officials to operate, but they will be engaged in background consultation and data-sharing with British customs officials. The upfront inspections will be done by British officials. The British government is keen to draw our attention to this victory, pointing out the EU officials will neither be in uniform nor residing in a “mini-embassy.” Since when did customs inspectors expect to live in an embassy?
There is greater comfort that EU state aid rules will not apply to the grants the Northern Ireland Executive makes to farmers and fishermen. How the application of EU state aid rules might constrain businesses whose operations are on the mainland but with a peripheral presence in Northern Ireland certainly needed clarifying. Michael Gove’s claim that “firms in Great Britain stay outside state aid rules where there is no genuine and direct link to Northern Ireland and no real foreseeable impact on Northern Ireland-EU trade” is welcome. But again, much will depend on interpreting links and impacts.
The British government has won some skirmishes but cannot undo the enormity of what it has conceded in placing Northern Ireland under the EU’s regulatory jurisdiction. Still unsupported by detailed documentation, what is to be made of this demarche? It feels like a holding statement, filling a pregnant pause before the real deal is to be done.
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