Thursday 20 September 2018

Hopes for an open border fading fast whether Brexit comes hard or slow

Despite the reassurances from Government ministers last December, the road to an open border is looking increasingly unworkable and unlikely. Photo: Getty Images
Despite the reassurances from Government ministers last December, the road to an open border is looking increasingly unworkable and unlikely. Photo: Getty Images
Richard Curran

Richard Curran

I was driving across the Border early on the morning of December 8 on my way from home north Donegal to Dublin for work. Taoiseach Leo Varadkar's voice came on the radio with reassuring tones for anybody who crosses the Border regularly.

Announcing details of a new agreement with the UK regarding regulatory alignment, Mr Varadkar assured us the deal meant there would be no hard border on the island of Ireland.

He confirmed that under the deal there would be no cameras, customs checks or patrols on the Border, something he said everyone north and south of the Border should appreciate as a major achievement in the Brexit negotiations.

It was a huge relief. For me, the best route from my home in the Republic of Ireland to the capital city of the Republic of Ireland involves crossing the Border four times - eight times per round trip.

Avoiding the Border on a trip to Dublin would add 120km (72 miles) each way to the journey or 240km (144 miles).

On that morning in December, Fianna Fáil leader Micheál Martin gave us even more confidence about the future when he said: "From the British perspective, it seems to me we are edging towards a soft Brexit, something the Brexiteers may not want to hear, but there are certain realities dawning."

A reasonable analysis at the time, but scroll on less than two months and the tone is shifting.

Chief EU negotiator Michel Barnier visited London this week for the latest round of talks.

On Monday, Downing Street said the UK was "categorically leaving the customs union" and would not seek to replicate it.

This followed a weekend of internal Tory political unrest. Theresa May had pronounced that Britain would seek a customs deal that allowed it to set its own tariffs and strike third-country trade deals.

Mr Barnier responded immediately by saying: "The only thing I can say is that without a customs union and outside the single market, barriers to trade in goods and services are unavoidable."

Barriers to trade means covers everything from tariffs and border checks to regulatory issues.

Funny enough, he didn't mention regulatory alignment at all and how it would ensure no such barriers would exist on the island of Ireland.

The Taoiseach said he wanted the British government to clarify if it intends remaining in the customs union after Brexit. Well it has and the position right now is that it is leaving.

Speaking on Monday, Mr Varadkar referred to the December deal and said: "What we have in the agreement made in December are some very specific commitments that we will avoid a hard border, any new barriers to trade and the movement of people between Northern Ireland and the rest of Ireland and we can avoid that in one of three ways.

"Either through the new relationship between the UK and the EU, through bespoke plans that the UK [is] mandated to come up with, or thirdly a unique arrangement with Northern Ireland in which there will be a full and ongoing regulatory alignment."

Taking the comments from Downing Street and Mr Barnier into account, all three of those avenues to an open border now look extremely unlikely or unworkable.

The Irish Government is not to blame here. If anything, it has played the best hand it could with the cards it held.

It isn't just unnerving for people in Border communities. It is very troubling for every business in the country that trades with the UK. The issues with the Border are sensitive for historical, cultural and community reasons, as well as practical ones.

But the potential economic damage of borders and high tariffs for businesses in Dublin, Cork, Limerick and anywhere else, could have much deeper economic ramifications for more than just Border areas.

Yes, there is still a long way to go. That is true but the political landscape in the UK looks ever-more troubling for those of us in Ireland who are genuinely worried about Brexit.

The Tory Party Remainers are sanguine that at the very least, the transition deal will drag on for a lot longer than two years and things will continue in limbo for a very long time. At least that limbo would reflect pretty much business as usual, they would argue.

From an Irish perspective, a five-year transition period would buy us all more time, but time to do what? It would prolong uncertainty about the final outcomes, which could be extremely detrimental to our economic fortunes.

It would buy time for Irish businesses to reconfigure their supply chains and look to other markets.

In continental Europe, very few people are remotely exercised about any of this. For your average French, German or Belgian, the UK has effectively left already and that is the end of it.

The Brexiteers have overplayed the extent to which large European companies are worried about the future trading relationship. I doubt German motor company executives are crying into their schnapps about whether they can sell into the UK without tariffs or not.

For the Brexiteers, their timing could not have been worse in all of this. The EU economy is on the up right now and many businesses and politicians in places like Italy, Germany or France will feel a lot more positive about what they see on their economic horizon. It is feeding into the stance adopted by the EU negotiating team. They are in the mood to play hardball.

The same is true of Irish business now. Irish businesses are growing, hiring and expanding. They could easily take their eye off the ball with Brexit.

Remainers in the UK take some comfort from the idea that there might be a second referendum. This does not look like a runner at all. Their argument is that people are now more familiar with the economic consequences of Brexit and on that basis more of them would vote to Remain second time round.

This is not guaranteed at all. And we in Ireland should not cling to it as a realistic deliverance from the difficulties of a hard Brexit.

If anything, the Remain side won the economic argument in the referendum but still lost the vote. Remember Brexiteer Michael Gove saying the country had enough of "experts", as economic study after study showed the downside of leaving the EU.

The referendum was passed on issues other than the economy, primarily around immigration and greater legislative freedom.

Politically, Brexit still has a long way to go, with many possible twists in the plot. However, as things stand I see two scenarios looming. One is a takeover of the process by the hard Brexiteers. The other is an extremely long transition arrangement which maintains a certain status quo but will also ensure that Brexit is a divisive issue in British politics for years to come.

If the hard Brexiteers topple Theresa May, they could overplay their hand in pushing towards a chaotic exit and no deal. If things continue as they are, the British government will try to buy more time to negotiate the future trading relationship with the EU during a lengthy transition period.

Both scenarios are bad for the Irish economy. Once out of the customs union and the single market, the UK can organise its own tariffs on goods, which would drive up the cost of Irish exports. Supply chains for entire sectors would be caught in the upheaval.

Unfortunately, Irish businesses will have to prepare for the implications of a hard Brexit regardless of the reassuring tones of Government ministers last December, when they gave it their best shot.

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