Backstop can benefit Northern Irish businesses, but only if DUP play ball
IT WAS a familiar plan for Arlene Foster as the Democratic Unionist Party leader went to Brussels to redraw her “blood-red” Brexit battle-lines.
As UK and EU negotiators were cloistered away yesterday working out the details of a compromise over the “Irish backstop”, Mrs Foster warned against a betrayal of the Good Friday Agreement that would leave Northern Ireland “annexed” to the European Union.
But 700 miles away in Belfast, where the business community is trying to prepare the best it can for Brexit, despite all the uncertainty, the tone was markedly less apocalyptic.
Declan Billington, the chairman of the Northern Ireland Food & Drink Association lobby group and boss of the animal feed manufacturer Thompson’s, was just back from his own trip to Brussels where he met members of Michel Barnier’s Task Force 50.
His consultations about how the Northern Ireland backstop might actually work, if it kicks in at the end of the transition period in December 2020 or in the event the EU and the UK cannot reach a trade deal, were rather more reassuring than Mrs Foster’s.
Under a compromise being proposed by the British Government, the whole of the UK will remain in a customs union with Europe (to avoid a customs border in the Irish Sea) but only Northern Ireland would stay aligned to the EU single market for goods.
For Mr Billington – and the farmers who are his customers – that raises the question of how to obtain the certifications and approvals needed to trade in the EU if the backstop kicks in. What he heard in Brussels surprised him.
“They said that where factory-based tests are taking place, the UK authorities in Northern Ireland would still be considered a ‘competent authority’ to certify goods for the EU,” he said. “That seems a big concession on their part.”
Put another way, in a ‘‘backstop world’’, companies like John Thompson’s & Sons would not need two separate inspection regimes for the EU and UK internal markets – a major relief in an industry where typical profit margins can run below 3 per cent.
It might not be apparent from listening to Mrs Foster, but many Northern Ireland businesses can even see a potential upside to a world where they get the benefit of a mutual recognition of EU standards and market authorisations – and the rest of the UK does not.
Stephen Kelly, the chief executive of the Manufacturing NI lobby group, which also went to meet Mr Barnier’s team, is among those arguing that a backstop that offers “dual certification” of goods for both markets could be the best of both worlds. “There was nothing we heard in Brussels that sounded insurmountable,” he said, “and all the business groups present were agreed
‘The UK would still be considered a “competent authority” to certify goods for the EU’
that a backstop is clearly better than ‘no deal’, and may yet deliver competitive advantages to Northern Ireland.”
Still, there is a great deal to be worked out. Mr Billington may be pleased that his existing inspection regime can continue unchanged, but for others like Enda Cushnahan, the boss of SDC Trailers, which makes trailers for the Eddie Stobart group among others, there is a worrying lack of clarity.
Mr Cushanan says that he has currently been advised that the UK’S Vehicle Certification Agency (VCA) will not be able to certify his trailers for EU roads after March 29 2019 – meaning he must send his new designs for costly authorisation in other EU countries.
“If the Department for Agriculture in Northern Ireland will be able to certify foods, then why could not the VCA in Northern Ireland do the same for our trailers,” he asks. Questions such as this are part of these negotiations, but while a ‘‘common supervision structure’’ would help with access to the EU single market, the biggest concern for the DUP is what will happen to goods going back and forth between Northern Ireland and Great Britain.
In December, after a four-day standoff, the DUP were promised “the same unfettered access” to the UK’S internal market as before Brexit – a promise that Mrs Foster reminded the Government of again in Brussels yesterday.
British negotiators think they can get “pretty close” to delivering on that promise – but only if Mr Barnier shows sufficient flexibility on the checks.
The first obstacle is to get the EU to
‘A backstop deal may yet deliver competitive advantages to Northern Ireland’
agree that the entire UK should remain in a customs union with the EU – without this, businesses like SDC would find themselves making customs declaration when they send their trailers into the UK. That, says Mr Cushnahan, would be a disaster. There is also the issue of smoothing the regulatory checks that would still be needed to protect the EU single market if, say, the UK diverged and allowed imports of chlorine-washed chicken or hormone-injected beef.
Details are still to be confirmed, but the assumption is that the border will work “one way” and the Governement will not impose checks on goods coming from Northern Ireland to Great Britain; that just leaves the issue of regulatory checks, particularly on potentially “dangerous” goods such as food and pharmaceuticals coming the other way.
UK officials argue that at present there are 30 different checks between Great Britain and Northern Ireland – 100 per cent of live animals are checked at Larne for example – but that and other standards checks can be pared right back.
For Mr Billington the key is to convince the EU to adopt a “risk-based” approach that allows trusted traders, such as big supermarkets with a proven ability to track and trace their supply chains, to enjoy light-touch regulation. “The key is to audit the system, not every transaction,” he says.
But even if this light-touch backstop were possible – and it will require plenty of negotiation with the EU side – it is still far from clear that the DUP could accept it.