Brexit Views 24 April 2018

As predicted last week, the negotiations in Brussels did not lead to the breakthrough that is very much needed on Brexit. Instead, the past week has seen the UK Government’s stance on Brexit, and in particular the Customs Union, challenged more openly and widely than ever before.

In the House of Lords, the EU (Withdrawal) Bill is now in report stage and as expected, the Peers are voting through a number of amendments to the Government legislation. Lord Kerr’s amendment requiring the Government to strike a deal with the EU that “enables the United Kingdom to continue participating in a customs union with the European Union” was passed comfortably in a vote of 348 for and 225 against with 24 Tory Lords voting against the Government to make the change. The Government also endured losses on other votes including two key defeats on amendments to maintain protection for workers, consumers and the environment, and to keep most of the EU’s charter of fundamental rights in domestic legislation after Brexit.

With only two days of report stage debate in the House of Lords passed so far, and another four scheduled over the coming fortnight, further defeats can be expected­­­ before the legislation is returned to the House of Commons where MPs will have the opportunity to retain or keep the Lords’ amendments. Further information on the passage of the Bill can be found on the Parliament’s website here.

The Government’s Brexit plans came under further pressure with reports emerging that its Customs proposals were subjected to a “systematic and forensic annihilation” during negotiations with the EU last week. The two proposals put forward were reportedly rejected on a number of grounds.

The proposal for a customs partnership that would see the UK collect duties on behalf of the EU was rejected because it would require the EU to rely on a country outside its supervision and infrastructure levy duties; it would apply to high a burden on businesses; and implementation of such a scheme would be too expensive.

The proposal for streamlined customs operations through an advanced “trusted trader” scheme was dismissed as it fell short of what is needed to avoid a border and risked setting a precedent for “turning a blind eye” to potential abuses of the system. It was also pointed out that regulatory alignment is also essential in order to achieve the conditions needed for borderless trade to continue.

The proposals endured further dismissal by the UK’s former Ambassador to the EU, Sir Ivan Rogers who said that they were viewed as “a fantasy island unicorn model” in European capitals.

As the weeks progress it is becoming increasingly clear that the commitments for the border on the island of Ireland cannot be met if the UK Government continues to maintain its current position. News that the UK intends to stick to its customs proposals so forensically dismissed by the EU is worrying as it means the possibility of reaching a trade-based solution for the border is becoming more remote.

As a result, we are now in Checkmate on the border. Last night in Hannover, Michel Barnier was clear that it is up to the UK to make the next move. He called on the UK to “come up with its vision for the future, which should confirm the UK’s red lines or adapt them”. If it confirms them, the best the UK can expect is an FTA as outlined in the European Council guidelines.

The longer this debate goes on, the more convinced the British Irish Chamber is that our Big Principles provide an alternative way forward and a practical solution to the problems we now all face. Businesses are getting ready to implement their Brexit plans and the launch of a super ferry in Dublin Port at the weekend shows that some are beginning to prepare for customs checks to return between the UK and Ireland.

There are still opportunities to influence the debate. The option of remaining in the Customs Union is to be debated in the House of Commons this week and while any votes from this debate will be non-binding, they could set the scene for what might be the mother of all legislative battles next month when MPs will be required to vote on amendments to the Taxation (Cross-border Trade) Bill and the Trade Bill that could force the UK Government to seek a Customs Union with the EU.

The British Irish Chamber will continue to advocate, on behalf of its members, to MPs in Westminster to ensure the full implications of the UK Government’s red lines are understood before these key votes take place.