Peter Foster @pmdfoster Europe Editor of the Daily Telegraph. Formerly based in Washington DC, Beijing and New Delhi. Opinions my own. Oct. 10, 2018 5 min read

Brexit is the backstop; the backstop is #Brexit.

After 3 days in Belfast, talking to all sides, here's what I've learned - on the business and the politics of this deal. And its viability.

1/Thread

First the business/technical aspects of how a backstop would work.

I talked to business lobby groups, Stephen Kelly from @ManufacturingNI fresh back from talks with Barnier. And bosses of big companies.

The are surprisingly sanguine. /2

 https://www.telegraph.co.uk/politics/2018/10/09/backstop-can-benefit-northern-irish-businesses-dup-plays-ball/ 

If the backstop emerges as the British want (and that is still an 'if') it would look as follows:

- all-UK in a temporary customs Union
- Northern Ireland only in Single Market for goods, via devolution
- no checks GB-NI
- 'de-dramatised checks on regs NI-GB

/3

Take these in order quickly:

- customs-union removes need for companies to do declarations when they sent their product to GB (since Single Market rules require companies to declare what leaves as well as what enters).

- So if UK gets 'all-UK' customs arrangement, big tick./4

NI stays in SM for goods.

Based on what @ManufacturingNI and others picked up in Brussels, the EU is prepared to allow UK authorities to certify their goods/products for EU - at least in agri products. Less clear for industrial goods.

But if that regime confirmed...

NI businesses cd get dual/simultaneous certification to UK & EU markets - when GB businesses do NOT. That's a potential competitive advantage.

(UK now accepts that GB biz will face SM frictions 'Dover-Calais' in this scenario, to obviate EU claims backstop is cherry-picking) /6

There remains a major question about VAT, and whether NI stays in side EU VAT regime - it is not clear. But more details of consequences of that here /7

 https://uktradeforum.net/2018/10/09/what-leaving-the-eus-vat-area-means-for-small-and-medium-sized-businesses/ 

So what about checks on goods going from Northern Ireland to GB?

Clear guidance from source - and NI groups concur - is that this will be a 'one-way' border.

So UK Govt won't need to check. That's a 'tick' for the DUP on 'not being treated any differently'....

BUT.../8

What about GB to NI trade - here checks will be needed to protect the 'integrity of the single market'.

Question? How to square this with Para 50 of the joint report that promised no new barriers? /9

So here we get to the thorny bit.

UK negotiators tells me they reckon they can get "pretty close" to delivering on Para 50 IF they get enough flex from Barnier.

So what does that look like?
/10

The UK govt says there are already 30 unique regulatory checkst GB-NI.

The Lobby groups & business say that when you narrow it down, it's really 'food and pharma' that are the risk areas.

Looking at food..../11

100% of live animal exports are already checked at Larne.

But what about 'animal-derived products'.

The expectation I heard was 100% paperwork checks, but - given trusted traders/supply chains - physical checks in low single digit % /12

Is that enough to protect against the infamous chlorine-washed chicken, if it comes?

Well. First point is will it? In the immediate term there will not be great and harsh diversion. So what the EU needs is the *capacity* to ensure compliance, as and when the need arrives. /13

Second point. If UK vets can certify goods in NI for EU (ie mutual recognition) then why can they not police supply chains.

There is not much 'white van man' traffic over the Irish Sea. It's big supermarkets and exporters with farm-to-fork traceable supply chains /14

These 'trusted traders' as Declan Billington, the vice-chair of NI Food & Drink tells me, have a vested interest in maintaining a clean sheet.

The mantra is "audit the system, not the transaction" /15

Also worth noting that other checks - like, for example unauthorised GMOs also take place already.

So to summarise, as Stephen Kelly tells me, there is "nothing insurmountable" here for NI biz. Maybe even an upside.

So what about the politics? /16

Well first point is that, given all the above, why aren't these more sanguine business views reflected in hardline 'no way' approach currently being adopted by Arlene Foster @DUPleader and @sammywilsonmp ? /16

The first answer is that business and their lobbies don't fund political parties in Northern Ireland like they do in GB...for obvious historical reasons. So they have limited traction.

The second point, is that this is about the heart of Unionism, not the head /17

Viewed though a 'orange-green' prism, the DUP campaigned for Brexit - Nationalists will say this was indeed to re-erect a border they lost in the Good Friday Agreement - but this backstop leaves them 'behind' in the EU single market for goods. /18

Where, a senior DUP strategist asks me, does that leave, say Belfast's new FinTech sector? If GB can diverge in brave new Brexit world and reap the dividend, where are we?

This might be pretty hypothetical, but you can see the broader point. /19

Or put another way. Does the 'backstop' as envisaged take us a notch closer to the Nationalist goal of a united Ireland, or strengthen the Union by a notch?

Could the DUP, at its root a party of protest, support that process? Another Tory betrayal? /20

After three days here talking to business, journalists, political and civil society groups on both sides, it is hard to find many backers for the (Westminster) presumption that the DUP will cave - for pork, for power etc.

Don't know if that's right, but that's what I heard. /21

The NI context is also important and often missed in GB.

This place is polarizing horribly. Middle class Catholics are flocking to Sinn Fein, demand is growing for Ireland to extend EU citizens' rights to Irish passport holders. /22

The 'ash for cash' and other corruptions scandals and the divisive issue of how to handle the Troubles' 'legacy' is deeply toxifying Northern Ireland, and Brexit is a huge amplifier for this.

In that context, the 'fixes' noted about, feel like a flimsy defence. /23

In short: Mrs May, if she can cut this backstop deal (the reasons why the EU might yet balk are for another thread) she may well need to do it without DUP support.

With all that means for her confidence and supply arrangement, and the devolution settlement. Gulp. 24/ENDS

ADDENDUM/CORRECTION

As has been pointed out (and I think is clear from what follows) I got my GBs and NIs back to front.

Backstop envisages:
NO checks NI-GB.
Some regulatory/compliance checks GB-NI

Sincere apols for any confusion on a topic that's confusing enough.


You can follow @pmdfoster.



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