Thursday 27 June 2019

Warnings not enough: firms must fight for customs union

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Brendan Keenan

Brendan Keenan

THOSE 2014 commemorations for the centenary of the start of the Great War threw up a surprising analysis. As those around the Kaiser argued for peace or war, there was no clear answer to what Britain would do. The reason? London was preoccupied with Ireland.

It is an uncomfortable analogy for 2018. Thank goodness (and perhaps the EU) that we are not talking about war, but Brexit is potentially as serious a peacetime crisis as it is possible to imagine. It is in trying to prevent that potential becoming reality that the parallels with 1914 begin to alarm.

It would be going too far to say the British government is preoccupied with Ireland. There is no Curragh mutiny threatening a military coup and the absence of a Belfast administration, while far more dangerous than seems generally recognised, it is not an imminent threat.

Just as with 1914 though, the key question is what will Britain do? This is the background to last week's paper on the Irish Border from the Commission negotiator, and to the unusual stance of the Irish Government.

The uncertainty has pushed everyone into uncomfortable positions. Dublin finds itself appearing to say that preserving cross-Border trade is a matter for London to sort out. Brussels came close to eating and keeping cake, by talking about special arrangements for Ireland with no change to EU laws and procedures.

There is much in the accusation that Britain's stress on the Irish question was an attempt to engage in trade negotiations (or at least discussions) before the departure details had been agreed. Equally, the EU's position on that was based more on a lack of trust and fear of encouraging Nexit than it was to any sensible way of conducting successful negotiations.

The peace process itself developed the mantra that nothing is agreed until everything is agreed. That would have been a good formula for Brexit but it was never practical politics and cannot be resurrected now.

The best way to start to reduce the uncertainty is for everyone to be clearer about their objectives and limits. That is beginning to happen and the key question for business is to what extent it is prepared to campaign for its own interests.

Anyone who appreciates the legendary Japanese restraint will understand that their statements on the implications of Brexit are among the toughest of any group or government. Others, including Irish business, should consider following suit, in less polite terms.

One has to be a bit careful of course. There are enough sensitivities here to keep an army of dentists happy but last week's dinner of the British-Irish Chamber of Commerce did see signs of a more robust approach.

Tánaiste and business minister Frances Fitzgerald said that, with time running out, the Government had decided in recent weeks to be more forthright about its concerns.

"Respectfully, with our EU partners, we are asking the UK government to think again. There are options available, particularly around the single market and customs union, which can resolve this major problem, if the UK government is minded to propose them," she said.

Former EU Commissioner and former Northern Ireland Secretary Peter (now Lord) Mandelson was more explicit; "All this could be avoided if the British government took the sensible decision, on leaving the EU, to remain in the Single Market or at least the Customs Union. Or preferably both."

The reality is that are no solutions which will not result in economic loss and political instability - and not just in Ireland - other than the UK remaining in at least the Customs Union: or perhaps "a" customs union.

That little indefinite article has been appearing, not just in the comments of outsiders but in Britain as well. These are the realities which all concerned, apart from the diehard Brexiteers, now recognise.

Many of them recognise it as well; they just think the price worth paying, but their numbers are falling, at least in Westminster. The British Labour Party is suggesting a transitional union which goes on for ever.

That shows how far removed the British debate still is from reality, which in turn may explain why general support for Brexit has not changed much since the referendum. Another reason may be the fears of business about getting into politics.

There is no escaping politics in an issue like this and time is running out for relying on warnings alone. Influential companies and organisations may have to actively campaign for the retention of a customs union, along with precise details on what they intend to do if that does not happen, to have any chance of making it happen.

The onus in this case is on UK firms, or those with a significant presence there. It is all a bit more difficult for Irish companies, because the Republic's status is not changing, but they will have to overcome their misgivings.

Perhaps it is a bit easier for a body with "British/Irish" in its name. It was its president, Eoin O'Neill, who said it would openly campaign for Britain to remain in "a customs union" and it was now time for pragmatic action rather than theorising.

One should not underestimate the difficulties for such a campaign, with the implication that others are not being pragmatic, or even sensible, but it is clear that nothing else is going to work from an Irish point of view.

An end to the Customs Union will wreak havoc everywhere, and in places one would not immediately think of if one is not involved, such as horse racing. The industry says it would be "decimated" (although its estimates were even worse than the strict meaning of decimation).

The Irish Government scored a victory in getting Ireland on to the first phase of negotiations. Logically, as the British point out, it should have come later, with the trade talks, but that risked it being ignored in a wider agreement.

Moving it forward, though, has made Ireland look like a standalone issue, which it is not.

Its vulnerability is unique but there is no Irish solution to what is an EU problem. As expected, the movement of people question is almost resolved but the other all-island solutions look deeply unconvincing.

There may be some limited scope - important nevertheless - in the area of agriculture and food which would allow fairly free movement of produce and animals. A different farming regime irks unionist sensitivities less than full border controls on the Irish Sea.

Apart from that, if there is no Customs Union between the UK and the EU, almost everything else looks pie in the sky. The economic damage will be immense but, as we know, economic damage can be repaired over the medium term.

Worse is the possibility that the constitutional settlement (we could stop calling it an 'agreement' for a start) would unravel: possibly not just the peace process but peace itself.

Speaking of which: how about renewing an old slogan. "What do we want?" "A customs union!" "When do we want it?" "Um, 2021 would do."

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