Explainer: How the Brexit border deal collapsed as the task ahead looks bigger than ever
First news of a deal, then suddenly no deal. What is going on?
It was a dramatic day. We woke to news that a deal was possibly some way off and then came the sudden revelation that a draft text of an agreed wording was doing the rounds on the thorny issue of how to deal with the Border. The UK had agreed to allow Northern Ireland to retain the same regulatory rules as the EU, we were led to believe. Tánaiste Simon Coveney told us to expect a “positive statement” from the Taoiseach. Then that statement was postponed as British Prime Minister Theresa May and European Commission President Jean-Claude Juncker were meeting in Brussels. That was the first hint that there might be a hitch.
The DUP happened. The Unionist response was swift and, perhaps not surprisingly, not welcoming of a deal that would potentially see a form of economic border between Northern Ireland and the rest of the UK. Arlene Foster, flanked by senior colleagues, gave a statement at Stormont that poured cold water on the plan, and reportedly gave Mrs May pause for thought. After a phone call between Mrs May and Ms Foster, there was suddenly no deal, at least for now.
What exactly does the deal allow for in relation to the North? What is regulatory alignment?
We haven’t yet seen any document, so we’re light on detail. Essentially though, we understand it allows for the alignment of regulatory issues and rules between Northern Ireland and the Republic, ie Northern Ireland and the rest of the EU. That, in theory, would mean trade could continue as it is now across the island, avoiding the need for any customs checks or potentially costly paperwork. It would also maintain existing standards.
The British Irish Chamber of Commerce noted last week in its proposal to avoid a hard Border that 80pc of Border checks currently conducted in Ireland, on goods traded with third countries, are to ensure that goods being imported comply with EU standards and regulations. “This is most notably required for the import of medicines and in the area of animal health,” it said. Only about 20pc of checks are for traditional customs measures. If you have regulatory alignment, then that ensures, at least in theory, that there is no need for Border checks.
I thought the buzz phrase was no regulatory divergence. Where did the phrase regulatory alignment come from? Is that a fudge?
No, says Taoiseach Leo Varadkar. He stressed that it didn’t matter what you called it, the meaning was the same. In effect, Northern Ireland would remain a de facto member of the single market and customs union in all but name. But regulatory divergence was in a draft circulating over the weekend, but the text was changed to regulatory alignment. It is understood it was viewed as a softer form of language.
So it would essentially be special economic status for Northern Ireland?
Effectively, yes. And it means the Border will be down the Irish Sea, hence unionist anger. To many, that has always been the only way to avoid a hard Border on the island. But if it does get the go-ahead in the form that we currently understand, it is, in a way, a messy compromise that raises a number of questions.
Northern Ireland, outside of the EU, would have the same regulatory rules and standards as the Republic, a different jurisdiction still in the EU. Potentially, though, if Britain doesn’t mirror the single market, it means that Northern Ireland would see regulatory divergence between it and the rest of the UK. In that case, could it mean it will become more burdensome – and possibly more costly – for firms in Britain to sell goods into Northern Ireland? And of course, in terms of standards, how do you ensure that goods that do not comply with EU standards in Britain post Brexit, do not make it into the Northern Ireland market, and then over the Border into the Republic?
There will inevitably have to be Border checks on goods or food products either leaving Britain bound for the North, or arriving at ports and airports in Northern Ireland. Even in that case, how can the EU be sure that the checks are rigorous enough, as they will have to be carried out by UK customs, and not EU? What would happen, for example, if a case of Irish lamb destined for the restaurants of Paris was found to contain a leg of New Zealand lamb that found its way into Northern Ireland from Britain, and onwards over the open Border into the Republic?
It wouldn’t be good for brand Ireland. Those finer details will have to be thrashed out in phase two, if a deal gets done in the next few days.
Are there any economic opportunities?
For Border businesses in the Republic and Northern Ireland, it is of course a good arrangement. It could also make Northern Ireland an attractive location for foreign investment, as the only UK region with a special connection to the EU, assuming of course that a comprehensive free trade or customs partnership arrangement is not agreed in the second phase.
If agreed, it will also be a diplomatic coup for the Government, as its long-held position will have been secured. But we’re not there yet. Mrs May was positive on a deal being done, but she faces considerable challenges.
Do you think she can get the DUP on board?
The Taoiseach was clear that the Government will not accept a change to the agreed wording that alters its meaning. So Mrs May has little wriggle room in her talks with the DUP.
It’s worth saying that it seems remarkable that the DUP was not already on board if the wording of a text was agreed that was acceptable to the Irish Government.
The challenges are also not just from the DUP. Scottish First Minister Nicola Sturgeon jumped on the idea that if Northern Ireland can have a special economic deal, so can Scotland. London Mayor Sadiq Khan and Welsh First Minister Carwyn Jones also made similar calls. Mrs May has a huge task ahead of her in the coming days.