Seven months to go and still few firm an­swers on Brexit

Belfast Telegraph - Business Telegraph - - News - with John Simp­son @bel­tel_busi­ness

There are many ques­tions for which agreed an­swers are needed when it comes to pre­par­ing for Brexit in North­ern Ire­land, but sadly, with just over seven months to go, there are few firm an­swers.

Ei­ther there will be an in­tensely com­plex de­bate through the com­ing win­ter or, as now seems more likely, an ill-pre­pared mud­dle sur­rounded by busi­ness and po­lit­i­cal un­cer­tainty, as the exit date from the EU comes closer.

How close are the UK-EU ne­go­ti­a­tions to a com­pre­hen­sive agree­ment on the is­sues of im­por­tance to North­ern Ire­land and the Repub­lic of Ire­land? Is a fric­tion­less bor­der on this is­land achiev­able?

Will UK-EU trade in man­u­fac­tured goods and farm prod­ucts be dis­rupted by fail­ure to agree a cus­toms union and/or a sin­gle mar­ket?

How will the ‘common travel area’ for the UK and Ire­land op­er­ate?

How will the post-brexit en­vi­ron­ment af­fect the at­trac­tion of in­ward in­vest­ment, north and south, and how will this in­flu­ence policy de­ci­sions af­fect­ing FDI?

If the UK-EU ne­go­ti­a­tions fail, then a crash land­ing will be an un­wel­come event, north or south, on this is­land.

The Ir­ish bor­der has been cen­tral to the Brexit de­bate.

Much of the de­bate has been in generic terms: a fric­tion­less bor­der, no hard bor­der.

The main ob­jec­tive for busi­ness, north and south, is to avoid trade bar­ri­ers for lo­cally man­u­fac­tured goods and farm pro­duce which dis­rupt busi­ness across the is­land.

The bor­der ques­tion might be bet­ter un­der­stood as a search for a mech­a­nism that gives an un­changed mar­ket for goods and ser­vices of Ir­ish and North­ern Ire­land ori­gin.

The Ir­ish bor­der should not be a prob­lem, be­cause it may be­come a back-door to the EU for goods routed through the UK.

A ‘rules of ori­gin’ agree­ment could be a bet­ter tar­get than a duty free, cus­toms free, for­mula. Goods of non-ir­ish ori­gin, traded through the Ir­ish bor­der could be sub­ject to nor­mal cus­toms du­ties with sen­si­tive cus­toms clear­ance obli­ga­tions.

If there is a UK-EU agree­ment that UKEU trade can be treated as func­tion­ing with the equiv­a­lent to the same ar­range­ments as a cus­toms union, the Ir­ish bor­der ques­tion might be solved co-in­ci­den­tally at an in­ter­na­tional level.

If there is no free trade agree­ment for the UK-EU, then the Ir­ish bor­der, un­avoid­ably, be­comes an in­ter­na­tional fron­tier and any UK cus­toms duty will be levied on im­ports from the EU (of 27).

One of the ma­jor un­cer­tain­ties to be clar­i­fied as part of Brexit is the ex­tent and op­er­a­tional de­tail of the Uk-ire­land common travel area.

If the two na­tional gov­ern­ments wish to max­imise the ben­e­fits of the ‘common travel’ ar­range­ments (and if the Ir­ish gain the sup­port of the EU on the Ir­ish de­tails) then this ar­range­ment might be more than a Schen­gen-type travel agree­ment.

How­ever, this could po­ten­tially be a wider agree­ment. The agree­ment might al­low cross-bor­der changes of res­i­dence and an un­fet­tered abil­ity to seek em­ploy­ment across the UK and Ir­ish borders.

If the UK-EU does not re­tain the ex­ist­ing cross-bor­der so­cial se­cu­rity and health ser­vice ar­range­ments, as seems likely, then the UK and Ir­ish gov­ern­ments will be ex­pected to find a com­pa­ra­ble ar­range­ment for cit­i­zens.

A spe­cial knock-for-knock health, pen­sions and so­cial se­cu­rity agree­ment might be wel­come and not prove con­tro­ver­sial.

For the ben­e­fit of both parts of Ire­land, there is a case to be made that at­tract­ing ex­ter­nal busi­ness in­vest­ment should be de­vel­oped in a way which avoids ex­ces­sive com­pe­ti­tion for FDI.

Crit­i­cally im­por­tant would be a common rule book for state aid (of­fered to in­vestors). An agree­ment to ac­cept state aid lim­its and a mon­i­tor­ing mech­a­nism would make sense.

Oth­er­wise com­pe­ti­tion through ex­cess aids could be mu­tu­ally dis­ad­van­ta­geous.

If, in the event of ‘no deal’, the Ir­ish bor­der be­comes a le­gal hurdle, the common travel area be­comes a nom­i­nal but in­ef­fec­tive re­as­sur­ance, and north-south de­vel­op­ment poli­cies be­come more com­pet­i­tive, not co-op­er­a­tive, then next April, Brexit will have done the peo­ple of this is­land a dis­ser­vice.

Brexit in NI raises many ques­tions

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