Northern Ireland may not get any trade favours from EU

Few can be inspired by the United Kingdom’s state of preparedness, as it quits the European Union, particularly in Northern Ireland where a lack of political leadership before and after last year’s referendum has exposed significant gaps.

British Prime Minister Theresa May’s decision to flag the importance of the Irish/UK Common Travel Area and the Good Friday Agreement is welcome; so, too, the EU’s recognition of “the unique circumstances on the island of Ireland”.

The question is how will such interests be protected? Governments in London, Dublin and Belfast, to varying degrees, clearly wish to maintain as much as possible of the status quo to ensure that trading arrangements and political and societal co-operation are maintained.

Yet to achieve this, new arrangements and new structures are needed, the more so if the UK opts for a "hard" Brexit outside the EU's single market and customs union. Northern Ireland's status, somehow, will have to be altered.What form that change takes remains to be seen. Three of the parties in Stormont want a "special status" for Northern Ireland: Sinn Féin and the SDLP insist this means the North being within the EU; the Alliance accepts the likelihood of being outside the EU.

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For unionist parties, however, “special status” is a non-starter. There is, though, tacit acceptance in certain quarters that some NI-specific arrangements may be needed, but neither the DUP nor the UUP have set out their ideas.

Meanwhile, London rejects calls for “special” treatment from any of the devolved administrations, including the Scottish Government’s demand that Scotland should be allowed to stay in the European Economic Area.

Challenges

Some of the particular challenges facing Northern Ireland were noted in the British Government’s White Paper; but there was no hint that any “special status” would be considered, bar a note that challenges would be “taken into account when preparing [for] exit”.

How such preparations will be made is anyone’s guess. The intention appears to be to try to resolve issues on a bilateral UK-Ireland basis, along with direct efforts by Dublin, London and Stormont to minimise “frictions” and administrative burdens.

With Brexit, the land border between the Republic and Northern Ireland ceases to be simply the border between two member states and becomes an external land border of the EU. Future decisions about it are as much a matter for Brussels as Dublin and London.

Recent statements made in Brussels and Dublin by the Northern Ireland Secretary, James Brokenshire, acknowledge this, as he implied at least a willingness to consider treating Northern Ireland differentially.

Referring to securing “frictionless arrangements”, he signalled that the UK is “open-minded” about ‘associate membership of a Customs Union’ and a “bespoke customs agreement”. Does this open up the possibility of differential treatment for Northern Ireland?

Innovative thinking is undoubtedly needed since, in Brokenshire’s own words, the question of the Border “presents one of the most complex challenges” in the UK government’s Brexit preparations.

The EU’s draft guidelines for the Article 50 negotiations call for “flexible and imaginative solutions”, and importantly not just for the border. Bold thinking, if it happens, could produce solutions that do actually allow much of the status quo to be maintained.

Existing arrangements

One option is for a post-Brexit Northern Ireland to become part of the European Economic Area (EEA). This would retain existing arrangements regarding the free movement of goods, services, capital and people across the border. Free trade with the rest of the UK would be maintained as well.

Importantly, it would also mean that there would be no non-tariff barriers to most trade across the border, something that a free trade agreement with the EU, no matter how comprehensive, does not automatically involve.

The EEA option – something the Scottish government is seeking – would address many of the concerns voiced by Arlene Foster and Martin McGuinness in their letter to Theresa May last August. If won, it would ensure that existing levels of integration could be largely maintained.

The current regime relating to the single electricity market on the island would also be maintained and both jurisdictions on the island should be able to remain members of the EU’s Internal Energy market.

Participation in the EEA would, however, see Northern Ireland, along with the rest of the UK, outside the Common Agricultural Policy and the Common Fisheries Policy, outside of EU rules on indirect taxation such as VAT and beyond the formal jurisdiction of the Court of Justice.

Being outside the CAP does raise the challenge of how Northern Ireland farmers can retain current levels of access to EU markets, while UK ministers’ talk of “comprehensive, bold and ambitious free trade agreements” appear at times to be oblivious of reality.

Under current arrangements, the simple fact is that no non-member state has comprehensive tariff- and quota-free access to the EU’s notoriously protectionist market of agricultural goods.

The UK could become the first to achieve such tariff- and quota- free access; but it would set a precedent that other non-member states would want for themselves. That, among other factors, could well deter the EU from granting the UK’s wishes.

If that is the case, how might an all-island market for agricultural goods be maintained? And would Northern Ireland producers be able to trade freely with the rest of Ireland?

David Phinnemore is Professor of European Politics, Queen’s University, Belfast