Warn­ings not enough: firms must fight for cus­toms union

Irish Independent - Business Week - - BUSINESSWEEK -

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.”

Get­ting Ire­land on to the first phase of talks was a vic­tory but it has made it look like a sep­a­rate is­sue, which it is not

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