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Good day. The UK briefing after Brexit is back for 2022, the year in which Brexit will finally be really “finished” – or at least the first phase of Brexit.
If everything goes according to plan, this will come in two parts: first, an agreement in the next two to three months to put the post-Brexit trade rules for Northern Ireland on a politically and economically viable footing; second, the gradual introduction of full border controls for imported goods from the EU into the UK, more of which will be in later editions.
As for the Northern Ireland trade issue, after a Christmas and New Year break where officials have really taken time off, serious talks will begin in the UK next week after a Christmas and New Year break to try to reach an agreement with Brussels. Irish Foreign Minister Simon Coveney is also in London this evening to set the course.
When considering the challenges of the upcoming negotiations, it is important to remember right away that the EU and the UK already have an agreement that was negotiated in 2019 – the Northern Ireland Protocol. It’s just that the UK government has retrospectively declared this unsustainable.
The original agreement remains the basis on which the EU will measure its concessions and this is likely to be a fundamental source of tension between the two sides as they attempt to negotiate a compromise.
After Lord David Frost’s resignation, Foreign Minister Liz Truss will now negotiate with EU Brexit Commissioner Maros Sefcovic. But while Truss may lighten the tone with her signature goofy optimism, that doesn’t change the underlying problems.
That remains the fact that Boris Johnson’s decision to leave Northern Ireland in the EU’s single market for goods – which requires EU-style border controls for goods going into the region from the UK – has been honored in violation since it came into force in 2020.
The agreement was never fully implemented, initially because the EU and the UK agreed “grace periods” to give companies time to adapt, but later because the UK extended these transition periods first unilaterally and later with the reluctant tolerance of Brussels .
The difficulty is that the UK’s foundation for success is to further reduce the already partially implemented border with the Irish Sea, while the EU side is still trying to defend the basic concept of the protocol, which requires goods to comply with EU rules .
However, while Frost’s decision to tone down his demands for the removal of the European Court of Justice and the recognition that certain controls would be required on the Irish Sea border has built some momentum towards an agreement before Christmas, the two sides remain far apart.
In October, the EU presented ideas for smoothing the border, which, according to Sefcovic, will reduce customs controls by 50 percent and the so-called “SPS” controls for plant and animal products by 80 percent. However, these are not numbers that local UK or Northern Irish industries will recognize.
One reason is that the EU could argue that it has reduced SPS controls by “80 percent” from the original agreement – which required the full introduction of export health certificates (for goods going from Dover to Calais) that never required were required.
Some EU officials speak of reducing the “intensity” of the controls rather than the “quantum”. So the number of lines on a customs form can be reduced by 50 percent, but you still need the form.
That’s fine, but it’s the practicality, rather than the semantic subtleties, that Truss will deal with when trying to hit a deal that she can sell to restless backbenchers, and with luck, even more moderate unionists in Northern Ireland.
A major point of contention raised by officials and trade groups is the EU’s offer to create a “dual carriageway” for goods that are known to be intended for use in Northern Ireland only – but limited to “primary UK origin”. .
In practice, trade groups say this means that a UK-based food manufacturer who uses, for example, Brazilian beef in ready-made meals, must “export” the product to Northern Ireland either via the continental EU or via Dublin. It is said that this is impractical.
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The EU – referring to the original agreement – argues that such a restriction is fundamental to the protocol and necessary to prevent Northern Ireland from becoming a backdoor for non-UK products into the EU’s internal market. She also argues that there is a lot of meat in the domestic market that can be made into pies for Northern Ireland.
Ultimately, that was the deal Johnson signed, but expect court-released press this month from Northern Ireland trade groups and the UK trying to explain to the EU the challenges this approach poses for NI supply chains. and the impact it has on making understandable consumer choices and politics in the region.
There are also gaps for goods going in the other direction – from Northern Ireland to Great Britain – where the British government has promised “unrestricted access” for NI companies to the British internal market.
The difficulty is that, according to EU rules, an exit declaration has to be made for goods leaving the EU internal market. Given the political symbolism, the EU agreed in the 2019 agreement that this procedure is not required for shipping Northern Irish goods to the UK, but accepts that data from shipping manifests can serve as a substitute.
However, in calling for protocol reform last July, the UK government said the system would “not work without introducing annoying new requirements to gather more information” and called for a new deal “to do away with those requirements for good”.
The EU did not address the issue in its proposed package of changes last October, so as things stand now, Brussels is sticking to the original agreement. Fixing this will be another important part of the negotiations.
Fixing loopholes in these types of problems is the essence of any workable arrangement. The UK has accepted that shipping goods from Birmingham to Belfast cannot be exactly the same as shipping from Birmingham to Brighton. The question is, how different does it really have to be?
With the upcoming elections in Northern Ireland in May, the pressure is on to reach an agreement, not least because the UK government is facing a number of other headwinds – inflation, labor shortages, supply chain problems, rising energy prices – that affect a sizable segment of The Cabinet wants the Northern Ireland issue to be settled.
And Truss, as foreign minister with a view to the top job, probably has a broader understanding of Britain’s strategic priorities than Frost, while the EU side also refers to the logic of an agreement.
But all politics are ultimately local. Every deal Truss hits will crystallize a trade frontier in the Irish Sea that Johnson has always denied. And to sell that at home, Truss needs wins that measure against the UK benchmarks, not the EU.
Do you work in an industry affected by the UK’s exit from the EU internal market and the customs union? If so, how will the change harm – or even benefit – you and your company? Please hold your email@example.com.
Brexit in numbers
The negotiations are of course threatened by a deteriorating economic climate, which, according to the annual FT survey of economists, will be exacerbated by Brexit.
This is not as simple as pure trade frictions, but a combination of additional bureaucracy that reduces imports and exports; a less flexible labor market due to the end of free movement; and a less optimistic investment climate, partly hampered by the UK’s no easy entry into the EU internal market.
According to the opinion of Paul de Grauwe, Professor at the London School of Economics: “Recovery is driven by optimism about the future. . . Brexit will lead to chronic pessimism about the future of the UK economy. “
The business mood already seems gloomy. According to December PMI survey data Great Britain was the only western economy with falling exports – and a quarter of British manufacturers cited Brexit as the reason for the decline.
And finally, three not to be overlooked Brexit stories
A year later, Brexit for Northern Ireland is far from over, writes Jude Webber from Belfast. As she points out in this excellent article, the UK region is in a significant election year, with polls showing unionist parties are on the way to losing their majority for the first time – and on top of the agenda in the May 5 elections. Northern Ireland post-Brexit trade deal.
The Tories wonder what happened to the promised Brexit, says Robert Shrimsley in his latest column. As he writes: “With the recent personal and corporation tax hike, ministers pledging not to restrict employment rights, and the increasing role of the state, the permissive vision of a low-tax, low-regulation UK after Brexit seems further distant to be as always. As long as Singapore on the Thames, hello Sweden. “
The government overtakes England’s Agricultural Subsidies after Brexit and plan to restore almost twice as much space as London over the next two decades. Initial projects will aim to restore 10,000 acres of wildlife habitat and reduce carbon emissions equivalent to 25,000 cars while improving the habitat of around half of England’s most endangered species. Find out what they are and learn about the new plans.
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