MPs must amend the repeal bill to keep Britain in the single market

1 Oct 2017

 

If you want to know precisely why the Brexit negotiations are stuck – and will remain stuck – look no further than the European Parliament’s draft resolution on the “state of play”.

 

The authors state that it is the responsibility of the UK government to provide a solution that “prevents a ‘hardening’ of the border” and “fully ensures the integrity of the internal market and customs union.” They conclude that the UK’s proposals “fall short in that regard”.

 

They also point out that the Prime Minister has “excluded any physical infrastructure at the border, which presumes that the United Kingdom stays in the internal market and customs union or that Northern Ireland stays in some form in the internal market and customs union”.

 

This is because, when Britain leaves the single market, it becomes a “third country” and the Irish border automatically becomes the outer frontier of the EU’s internal market.

 

In order to “ensure the integrity of the internal market” the EU has specific rules dealing with third countries. Consider the EU’s rules for importing foods of animal origin, set out in Article 229 of Regulation (EU) 2016/429; among other things, consignments of goods must be presented to a Border Control (inspection) Post (BCP) – where many are inspected. Exporters must also pay fees and submit the "Common Veterinary Entry Documents" before they can be given customs clearance.

 

Even countries that have a Free Trade Agreement or customs union agreement with the EU are not exempt from these rules – and others covering chemicals, pharmaceuticals, aviation and everything else.

 

Only Switzerland has managed to build something approximating single market membership without actually being a member, through more than 120 bilateral agreements. But the EU is reluctant to replicate such a system because of problems around insufficient surveillance and dispute settlement procedures; and there is little to no chance of negotiating anything comprehensive enough to resolve the Irish border question within the next few years, never mind within the Article 50 period.

 

This is why the EU wants to solve the Irish question before, and separately from, trade talks. Therefore, in order to avoid a hard Irish border, either the UK or Northern Ireland alone must remain in the single market, as the European Parliament has pointed out.

 

Seeing as though the government has explicitly ruled out the former, the only solution is to move the external frontier of the internal market to the Irish Sea, replacing the hard border with a wet border.

But such a solution would be completely unacceptable to the DUP. As MP Jeffrey Donaldson said in no uncertain terms on BBC radio in July, “There is no way that the DUP would go for an option that creates a border between one part of the United Kingdom and the other”.

 

Without jettisoning its agreement with the DUP, the government is unable to consider the only viable solution to the Irish question. It needs to combine the border talks with the trade talks, and is hoping that the EU will rethink its approach to Article 50. But the EU has said from the very beginning that Irish border comes before trade. Just this week, Barnier said that there can be “no possible link” between the divorce talks and future arrangements. We have an impasse.

 

Fundamentally, the disagreement is over what the talks are about. The government thinks Article 50 is about getting everything done and dusted within two years, plus a transition period. The EU sees Article 50 as the process of sorting out the divorce and, at most, “taking account” of the “framework” for any future relationship. Any future trade deal will have to wait until after we leave.

 

The danger now is a breakdown in the talks over a lack of progress. All it takes is for Theresa May to start listening to people like Ian Duncan Smith, who has called for the government to deliver an ultimatum: start talking trade or we walk. What if such a gamble doesn’t result in the EU completely rethinking its entire approach and succumbing to the UK’s demands?

 

The answer, as we all know, is the World Trade Organization (WTO) option. But let us be clear on what this means. We would not be trading on the same terms as the US, Japan or China, as Arron Banks recently tweeted. All of these countries have various mutual recognition and conformity agreements with the EU, as a cursory glance through the EU’s treaties database shows.

 

Dropping out of a regulatory union in today’s highly interdependent world, without the necessary systems in place, would be nothing short of a national catastrophe.

 

To name but a few of the issues associated with trading on WTO terms: we drop out of the open skies agreement and flights are grounded; customs checks are introduced without the necessary infrastructure in place, which means trade grinds to a halt as motorways fill up with miles of parked lorries; as a result, supplies of fresh food run dry, medicine supplies run short, as do oil and gas imports. And while we’re trying to build the necessary border infrastructure and software systems, EU businesses will be shopping around for new suppliers, probably never to return.

 

This will happen if we leave without a deal. And realistically, we will leave without a deal unless the government changes its approach to the Article 50 negotiations.

 

But MPs have the power to force the government to think again. They could back MP Chris Leslie’s amendment to the EU Withdrawal Bill, which would ensure the UK remains a member of the European Economic Area (single market) until the government releases a white paper assessing the costs and benefits of leaving. And when that white paper comes, they could decide that the costs outweigh the benefits.

 

It may be the only way to break the impasse and prevent a national crisis.

 

 

 

 

 

 

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