Another week has gone by, and it has been another week in which the fate of Brexit has still not been resolved. Prime Minister, Theresa May, did survive a vote of no confidence earlier this week, but she still has a lot of work to do to ensure an orderly exit from the EU come March.
One of the main sticking points for opponents of the deal that May currently has on the table with the EU is the idea of a “backstop” at the border between Northern Ireland and the Republic of Ireland. The Irish border is the only on-land border that the UK shares with another country, so it’s critical for continued economic activity at that border that the Brexit transition goes smoothly.
15% of Northern Ireland’s exports are to the Republic of Ireland. If sales to the rest of the UK are not counted as “exports”, then it’s 35% that goes to their neighbour across the border. The Republic of Ireland, in 2016, sold £1.3 billion worth of goods to Northern Ireland. And that doesn’t even include services sold across the border, which is done so freely while both Northern Ireland and the Republic of Ireland are still members of the EU.
Neither the EU nor the UK wants a return to the “hard border”, physical checking of persons and goods crossing the Irish border in either direction. But after Brexit, Northern Ireland will no longer be a part of the EU’s single market system or its customs union, while the Republic of Ireland will remain an EU member state, placing each country in a separate customs and regulatory market.
So, the compromise that May reached with the EU is a plan for a “backstop”. This “backstop” would continue to allow free movement of goods throughout the island of Ireland to avoid a return of tensions in the region and a stifling of its economy.
In order to achieve this free movement of goods, Northern Ireland would need to remain in the EU customs union. The original argument between May and the EU was whether or not this would apply to only Northern Ireland or the UK as a whole.
Essentially, if it applies only to Northern Ireland, then they and the rest of the UK will be governed by different customs agreements, creating trade barriers within the UK itself. The BBC suggested that if it also applies to the rest of the UK, that would mean a primary component of the whole idea of Brexit would be ignored – being able to make its own trade deals and not having to live with whatever the EU has set in place with other countries.
The final deal reached between May and the EU was to keep all of the UK in the EU customs union and Northern Ireland still following some, but not all, of the EU market regulations.
So, what is business’ take on the deal?
Businesses in Northern Ireland are overwhelmingly in support of May’s deal. There is widespread agreement that if Northern Ireland can no longer enjoy free trade with the EU, then businesses in Northern Ireland will face a crippling shortage of investment. The director of the Confederation of Business Industry, Angela McGowan, has expressed concern that a no-deal Brexit would result in lost jobs, lack of food and medicine, and hastily drawn bilateral trade deals. Irish prime minister, Leo Varadkar, agrees.
But the backing of the deal by the business community of Northern Ireland is not so much a whole-hearted support of the current deal as it stands as much as it is a fear of the possibility of a no-deal Brexit should this deal not be agreed to.
But May isn’t having much luck convincing Parliament of these benefits. Some MPs don’t like different rules for Northern Ireland and the rest of the UK; it’s seen as a threat to the unity of the UK as a whole. And other MPs don’t like that it keeps any part of the UK following any EU rules whatsoever; they want to get on with Brexiting.
The BBC noted May has backing from the business community now, government leaders in opposition to the agreement are courting the same business leaders that May has tried to reassure. We have yet to see if this lobbying effort will have an impact on business’ view of the deal.
Next stop is Brussels for May, where she will try to gain firm commitments from the EU about the UK’s understanding of the “backstop” arrangement. According to the Irish Times, May has also told business leaders in Ireland that sure is certain the “backstop” is only a last resort that won’t be needed because a better arrangement will be figured out by then.
That begs the question, if a better arrangement is indeed possible, why hasn’t it already been decided on in the two and a half years since the UK voted to leave the EU?