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AN EU/UK AGREEMENT ON PLANT AND VETERINARY ISSUES COULD UNBLOCK THE PROTOCOL IMPASSE.

There were contradictory signs in the past week about the possibility of resolving the impasse over the Northern Ireland Protocol. 

The prospect of a visit to Britain next spring by United States President, Joe Biden, creates a time line towards which EU and UK negotiators could work, if they can agree to start talking to one another and a minimum level of mutual trust is achieved.

After all , the US is closely allied with both the EU and the UK in its effort to sustain the territorial integrity of Ukraine in the face of Russian invasion.

The US needs the EU and the UK to be seen to be  working together, and pooling their resources, rather than imposing sanctions on one another because of their disagreements over the Protocol. 

Another positive sign was the almost casual announcement, to journalists while on a plane on the way to the US, by the new UK Prime Minister, Liz Truss, that a post Brexit Trade deal by the UK with the US was no longer a realistic prospect.

Former President Obama had told the British public this during the 2016 Referendum campaign but Liz Truss is the first UK Prime Minister to accept it. 

Apart from longstanding Irish American concerns about British policy in regard to Northern Ireland, there is a general reluctance in US public opinion and in Congress the reduce barriers to foreign imports. During its period of rapid growth from the mid nineteenth to the mid twentieth century, the United States remained a highly protectionist country, with high tariffs and regulatory barriers to foreign imports. The UK, in the other hand, was a champion of free trade.

The fact that the UK is now no longer pitching for a trade deal with the US means that it is no longer under pressure from the US to scrap, its still in force and EU originating, bans on Chlorine washed chicken and hormone treated beef.

If, in order to keep open the possibility of a trade deal with the US, the UK were to insist on getting rid of these bans on chlorine washed chicken and hormone treated beef, it would have been impossible for it to negotiate a Plant and Veterinary (SPS) agreement with the EU. A deal on those lines would not pass in the European Parliament.

Plant and Veterinary issues are at the heart of the disagreement over the Protocol.

Denial of access to British sausages and to English garden centres are among the most prominent practical problems cited by Northern Irish objectors to the Protocol . These difficulties would disappear if there was a comprehensive SPS Agreement between the UK and the EU.

But what form might such an Agreement take?

The EU has a land boundary with the UK.  So Plant and animal diseases can pass easily from one jurisdiction to the other. There is a single food chain encompassing both the EU and the UK. The connections are so close that the EU will insist an Agreement under which the EU and the UK would have the same rules governing plant and veterinary health.

The UK, on the other hand, wants an agreement whereby the UK would make its own separate and different rules, but that these British rules would be accepted by the EU as “equivalent “to the EU rules. In other words, the UK rules could be accepted by the EU as “different but just as good”. 

In order to justify Brexit, the present UK government is planning to scrap all EU originating laws, and replace them with British originating laws, by the end of next year. Any EU rule still in place by the end of 2023 will simply lapse.

This process of removing and replacing EU rules will be a hugely burdensome bureaucratic exercise. It will be hard to justify all the effort, if all that emerges, at the end of 2023, are new British laws that are so similar to the EU laws they replace, that they qualify as being “equivalent” to them. 

If that happens, people will ask what was the point of Brexit?

So there is a clash between the rhetoric of Brexit, and reality of trade.

Having a single set of rules for standards of goods across the continent of Europe eases the path for exporters from Britain. But adopting EU rules to achieve this removes the central justification of Brexit.

This is a choice Liz Truss will have to make in coming months. 

AUTUMN CHALLENGES FOR THE EU

The European Union is facing some pretty severe challenges this autumn. 

GAS PRICES AND THE GERMAN ECONOMY

 The biggest one is the high price, and insufficient supply, of natural gas.

This will have a disproportionately damaging effect on Germany and Northern Italy, which are the manufacturing hubs of western Europe. Both countries have already been hit by the recession in China and the loss of export markets that that has entailed.

I have always been of opinion that, without Germany, there would  be no such thing as a real European Union. ,

Germany provides the financial backstop on which all the EU’s ambitious plans, including the Green Deal, and the recently acquired capacity of the EU to borrow, rest. Without a healthy German economy, and a Germany that is prepared to think of its neighbours as well as of itself, the EU would wither. Other EU states need to show energy solidarity with Germany during this winter, when its economic model is under particular stress.

Meanwhile, the EU is facing other threats that could also become existential.

One is from Poland, and the other is from the United Kingdom.

POLAND AND AN INDEPENDENT JUDICIARY

In the Polish case, the courts system there has been politicised, to suit the agenda of the ruling Law and Justice Party.

 In effect, Polish Courts are rejecting the primacy of EU over Polish law, in disputes around issues that are within the competence of the EU under the Treaties.

This principle of the primacy of EU law, to be authoritatively interpreted by the European Court of Justice, is not new.

It dates back to European Court of Justice (ECJ) decisions of 1964 and 1970.

 By having a single ultimate interpreter of EU law, namely the ECJ, we have been able to create a Single market with consistent rules, consistently interpreted, and  more or less consistently applied, across all 27 countries of the Union.

The Polish government has interfered with the independence of its Courts by putting in place a Disciplinary Tribunal for Judges, one effect of which has been to encourage a nationalistic and Eurosceptic interpretation of the position of Polish law within the EU.  Some Judges, disliked by the government, were sacked.

Cases on the interpretation of EU laws, as applied in Poland, are not being referred to the ECJ for authoritative interpretation, as is the normal procedure in most EU countries. Thus the primacy of EU law in Poland is being slowly eroded. If a big country, like Poland, gets away with this, there will be many imitators (like Hungary which is an even worse case), and the European Union will begin to decay.

Notwithstanding all this, Poland was, in June 2022, allocated 36 billion euros in EU funds, even though it has not yet dissolved the Disciplinary Tribunal, as required to by previous EU decisions , and had not addressed the primacy of EU law issue at all.

 In a split vote the Von der Leyen Commission voted to release the funds, on the understanding that Poland would meet certain “milestones”, including the abolition of the Disciplinary Tribunal , but not the affirmation of the primacy of EU law.

 Obviously the burden being borne by Poland in aiding Ukraine influenced this decision. But the trade off is fundamentally damaging. The rule of law is one of the EU values for which Ukrainian people are giving their lives, and one the reasons Ukraine and other countries want to join the EU as a full members.

The advantage of the EU, for a small country like Ireland, is that it makes its decisions based on clear rules, and not on the basis of raw power. Ireland should not be indifferent to what is happening in Poland. That said, the EU should also be conservative in asserting what comes within the legal competence of the EU.

Meanwhile the integrity of the Single Market, and the primacy of EU law, is also being challenged, albeit in a less fundamental way, by British tactics over Brexit. 

BRITISH BREXIT TACTICS

 Under the Protocol, and to avoid the need for customs controls on the Irish land border, Northern Ireland is to be allowed unfettered access to both the EU and the UK Single markets.

But the UK says it does not want the ECJ to be the final interpreter of EU rules, as applied in Northern Ireland, and it also wants NI exempted from EU State aid and VAT rules. Such a precedent for a territory within the EU Single Market, if set,  would , like the one the Poles are attempting, undermine the level playing field that is  essential to the EU Single Market.

The incoming UK Prime Minister, Liz Truss, appears willing to provoke a major crisis with the EU on these matters.

 She seems to believe that, if she is strong, the EU will cave in. In a way, the problem is that UK has never taken the EU very seriously and takes a patronising attitude towards it.

So the EU should not wait until the UK has started to disapply the Protocol, to outline to the trade sanctions it would impose on the UK. Once the Protocol disapplication Bill reaches Committee Stage in the House of Lords, the EU Commission should publish the full list of its proposed trade sanctions, to come the day the legislation is implemented. That  advance notice would give time for cooler heads to assert themselves in London.

Meanwhile, I have no doubt that practical compromises can be reached on the implementation of the Protocol.

 In July,  the Europe Committee of the House of Lords published a very interesting report, with the evidence it received, on the Protocol.

It was balanced. It showed that the Protocol had adversely affected the retail sector in NI, but had advantaged manufacturing investment there

I drew two conclusions from reading the report and the evidence.

UK UNLIKELY TO WIN IN COURT

The UK will lose the Court cases it is facing, for attempting to walk away from the Protocol. Under the Vienna Law on Treaties, the UK would have to show it had been suffering from “coercion”, or “improper process”, when it signed and ratified the Protocol. Given that the negotiations had been going on for more than a year, the UK will not be able to do that.,

EU AND UK OFFICIALS SHOULD HOLD JOINT CONSULTATIONS IN NI

The other conclusion I drew was that the best way to find solutions to practical problems thrown up by the Protocol would be for UK and EU officials jointly to meet the various sectors of the NI economy. Each have had separate meetings with the sectors, but that cumbersome format is not conducive to constructive thinking or to problem solving.

One of the advocates of Brexit, Michael Gove, suggested in February 2021 that there be a joint EU/ UK Business Consultative Group of officials,  who would to talk, together in the one room, with all the relevant economic actors in NI. If Liz Truss wants to keep open the option of a negotiated agreement, as she says she does, she should activate this proposal of Michael Gove this week.

Otherwise we are all heading for unnecessary trouble, when we have so many other problems to deal with.

 

 

BREXIT CRISIS LOOMS OVER PROTOCOL

Notwithstanding the positive sounds emanating from Monday’s meeting between Liz Truss and Maros Sefcovic, the talks between the European Commission and the UK government over the Protocol on Northern Ireland are probably heading to a major crisis in the next month. There has been no movement of the UK side, and immovable deadlines are approaching.


The UK agreed to the Protocol as part of their Withdrawal Treaty with the EU. The Protocol was an intrinsic part of the Treaty. The UK Parliament ratified the Treaty, including the Protocol, but now the UK government is trying to scrap it altogether, under a this pretence of “renegotiating “ it.


The fundamental problem is that the British negotiating strategy is being driven by old fashioned, populist, and simplistic notions about trade. The EU strategy, on the other hand, is driven by a legal imperative to protect the most advanced form of economic and commercial integration between sovereign nations that has ever been achieved. The clash is a clash of mind sets. The arguments of either side are based on fundamentally incompatible assumptions.


There is the added complication that the negotiations between Liz Truss and Maros Sefcovic are taking place in the midst of a political crisis in Britain, in which any compromise is liable to be used as a political weapon in a struggle to lead the Conservative Party.
Conservative Britain always pretended to see the EU as simple free trade area. But the rest of the EU members realized one could not have truly free trade, unless there were four other things

  • common rules on the quality of products
  • freedom for people and money to move from country to country,
  • common trade policies vis a vis the rest of the world, and
  • a shared set of political goals that facilitated day to day compromise.

A big segment of English opinion never accepted this latter concept of the EU. This makes it difficult for them to even to understand the necessary implications of the Protocol .


The Protocol makes Northern Ireland part of the EU Single market for goods produced in Northern Ireland. Meanwhile Britain has left the EU Single Market. Britain has no more than a bare bones trade agreement with the EU. This makes a big difference. But it is what the UK government and Parliament agreed.
Goods produced in Northern Ireland (NI) are being treated as EU goods, whereas goods produced in Britain are non EU goods.


In the case of goods made up of parts, ingredients or components coming from different countries, The parts, ingredients or components produced in Northern Ireland qualify, for rules of origin purposes, as “European”. Meanwhile parts, ingredients or components originating in Britain are of non EU origin.


This distinction can be very important in deciding whether a final product is sufficiently “European” to benefit from duty free access to the EU market. If one wants to ensure that a sufficient percentage of a final product is “European”, it makes sense to source ingredients or parts in NI rather than in another part of the UK.


Goods coming into NI will be subject to EU Customs rules and tariffs, whereas goods coming into Britain will be subject to (potentially very different) UK Customs rules and tariffs.


This gap has to be policed, if there is not to be abuse. In the Protocol the EU and the UK agreed how this gap is to be policed.
The gap will become progressively wider, if the UK seeks to exploit the freedom it won by Brexit by making new (and different) British standards to replace the old standards that it might claim had been “imposed by Brussels”.


The more the standards diverge, the more will checks be needed on goods entering the EU market through NI, to ensure that they comply with EU requirements.


Then there is the question of the European Court interpreting EU rules as they apply to NI goods circulating freely in the EU Single Market . The UK agreed to this but now is objecting to it.
For NI businesses to be free to export their products within the EU Single Market under the Protocol they have to be able to convince their competitors and customers in France and Germany that NI goods are fully compliant with EU rules. These rules are interpreted, in final analysis, by the European Court of Justice. That ensures consistency.
The rules must be interpreted in the same way for NI goods, as they are for goods produced in France or Germany. The role of the ECJ in the Protocol is the passport for NI goods into Europe, one of the biggest markets in the world.


The role of the ECJ is, of course, confined to EU rules applying to goods. It will have no general jurisdiction in NI on other matters. There the final arbiter will be the UK Supreme Court.


There is a logjam in the negotiations because the UK side keeps repeating the same talking points , pocketing EU concessions without reciprocity, and withholding cooperation with the EU authorities on access to data. It is also stalling on building installations in Belfast Port that would allow customs officials there to do their work safely and conveniently. The UK is using “grace periods” to defer indefinitely controls it agreed to. It is almost as if the UK does not want to face up to the implications of Brexit.


The UK, and some unionists, talk about using Article 16 as if this would allow the ending of checks in Belfast port. That is not legally possible. Article 16 only allows limited and temporary derogations. To use it to go beyond that would be a straightforward breach on international law.
We are facing a moment of truth.

THE UK VOTES TO LEAVE………WHAT HAPPENS THEN?

The-UK-and-EU-flags-010

Paper prepared by John Bruton, former Taoiseach, on what would happen if the UK votes to leave the EU, the procedures and options available, and the implications for Ireland , the European Union and the UK itself.  

Next June the people of the UK may vote to leave the European Union. At the moment, a narrow majority favours remaining in the EU, but a large group are undecided. That group could swing towards a “leave” position, for a variety of reasons, including what might be temporary EU problems with refugees. However temporary the reasons might be, a decision to leave, once made, would be politically irreversible.

So it would be wise for Ireland to give thought now to how it might react to a decision by UK voters to leave the EU , and how it would play its hand in the subsequent negotiations. A number of scenarios will arise and Ireland needs to identify its red lines in each one of these.

THE NEGOTIATIONS COULD ONLY TAKE 21 MONTHS

The negotiation of a UK withdrawal from the EU will be done under Article 50 of the Lisbon Treaty. It will have to be a quick negotiation because Article 50 contains a two year time limit. In practice the negotiation of withdrawal arrangements will all have to be finished in about 21 months.

From the date that the UK Prime Minister informs the European Council of his/ her decision to implement the referendum decision, the two year time limit starts to run. Assuming a June 2016 Referendum, I calculate the Withdrawal Treaty would have to been negotiated, ratified, and brought into force by July 2018.

So the negotiations themselves between the EU side and the UK side would probably have to be finished at latest by April 2018, to allow time for parliamentary ratifications.

In the event that no agreement had been reached within the deadline, the EU Treaties “would cease to apply” to the UK. The UK would simply be out of the EU, without even a trade agreement.

This would be exceptionally disruptive of the UK economy, and of some, but not all, EU states’ economies. It would be particularly bad for Ireland. Our exports to the UK would be at risk, and the border would be deepened with incalculable consequences.

UNANIMITY OF ALL EU STATES NEED TO EXTEND THE TWO YEAR LIMIT

The two year limit could be extended, but only with the consent of all 27 members of the EU. If the negotiations had become contentious, or if the UK demands bore heavily against the interests of one or two states, one could see the required unanimous consent for an extension of negotiating time being withheld.

This risk of a single refusal to extend time for negotiation, adversely affects the dynamics of the negotiation, from a UK point of view, because the UK has more to lose from failure. It is not inconceivable that a populist government in a member state might hold a time extension for the UK hostage to obtain some other unrelated matter, such as debt relief. A European Parliament in election year could also be a source of uncertainty.

While a time extension would require unanimity, the actual negotiation of the terms of withdrawal would need a “Qualified Majority” within the European Council.

NO GUARANTEE OF PROTECTION OF IRISH INTERESTS IN WITHDRAWAL TREATY

That means that the terms of the Withdrawal Treaty would need to support of 72% of the 27 EU governments, collectively representing at least 65% of the total EU population. Ireland, on its own, could not block a Withdrawal Treaty that contained terms that were against Irish interests. Nor could Ireland guarantee it would be agreed on terms that would adequately protect Ireland’s interests. For example, Ireland could not necessarily prevent passport controls or customs posts on the border in Ireland.

While 72% of EU member state governments must agree to the Treaty terms, 100% of the 27 national parliaments must do so, and ratification could become entangled in General Elections in some states in the interim.

While our fellow EU member states will undoubtedly recognise the Ireland will suffer more than any other EU state from a UK withdrawal, that does not guarantee that Irish interests will be taken into account in all cases. Quid pro Quo will apply, and that could cause difficulties on vital Irish interests on EU issues that have little direct bearing on the UK Withdrawal as such.

Given the short time involved, the UK will not have the option of pursuing a relaxed post referendum exploration of different types of external association with the EU. It will probably have to decide at the outset what form of relationship it is seeking. It will have to choose among options that do not require the EU itself to change its Treaties.

The options were well described in a recent paper by Jean Claude Piris, former legal advisor to the European Council.

OPTION ONE…..UK JOINS THE EUROPEAN ECONOMIC AREA

The simplest would be to join the European Economic Area (EEA), while leaving the EU itself. The EEA allows Iceland, Liechstenstein and Norway to take part in the EU Single Market, but without being in the EU Agricultural, Fisheries, Judicial and Foreign Policies.

In the EEA, the UK would still have to contribute to the EU budget, to apply EU Single Market rules without having the say it now has in them, and to allow free movement of EU migrants to work in the UK on the same terms as locals.

Ireland’s problem with this option would be the departure of the UK from the EU Common Agricultural Policy which would raise issues of fair competitive access for Irish farm produce to the UK market. Management of Atlantic Fisheries would also become more contentious.

OPTION TWO……THE SWISS APPROACH

Less simple, would be for the UK to seek to make tailor made agreements with the EU, like Switzerland has. This negotiation would be a very complex process where tradeoffs would have to be sought between different sectors and national interests. The Swiss model has not worked well from an EU point of view, and one could expect EU negotiators to take an exceptionally tough line if this is what the UK seeks. The issue of access to the UK labour market for EU citizens would certainly be a demand from the EU side in such a negotiation.

In practice, if not in theory, the UK would have to implement EU law in all the areas for which it sought access to the EU market. This would be very problematic from the point of view of the financial services exports from London to Europe.

Once such a deal had been concluded, the EU side would be under pressure to tilt its own internal rules to favour financial service providers in the EU itself. If a system of mutual support and mutual supervision of financial service providers existed within the EU, and the UK was not part of that, there would then be valid grounds for objecting to UK financial service providers benefitting from a market they were not supporting on the same basis as EU providers.

This could hurt London, and Dublin could be a beneficiary. Outside the EU, the UK could do little to stop this. The European Banking Authority would have to leave London and there would be a good case for relocating it in Dublin.

OPTION THREE……A CANADA STYLE AGREEMENT WITH THE EU

Another option would be for UK just to seek a trade agreement with the EU, like Canada has. This option is favoured by some of those who want the UK to leave the EU, so it needs to be studied.

The first thing to say about this is that it would have to be negotiated within the two year time limit applying to a Withdrawal Treaty under Article 50, and would presumably have to be part of the Withdrawal Treaty. The existing Canada Agreement took 6 years to negotiate and dealt with a much less complex relationship than that between the UK and the rest of Europe. It is very hard to see how all this could be done in the time frame. The European Parliament would actively involve itself in the details. The UK would be excluded from the European council discussions on the topic.

A Canada type agreement would not necessarily mean continuing tariff free access to the EU for all UK goods. Some tariffs remain on some Canadian goods for the time being.

It is unlikely that a trade agreement like this, or even a Customs Union of the kind Turkey has with the EU, would allow the UK access to the EU financial services market and financial services are one of the UK’s biggest exports.

It is clear that under a Canada style agreement, the UK would have to comply with EU rules on any goods or services it wanted to export to Ireland or to any other EU member state. The UK would have no say in the framing of these rules, but it would still be bound by them.

Of course, the UK would be free to make its own rules for goods and services sold within the UK, but the downside of that would be that UK firms would then have to operate under two different rule books, one for the UK and another for the EU, thereby adding to their costs and damaging their competitiveness.

Once a Canada style agreement had been made, the UK would be out of the EU and would have no control over any further rules on new topics that the EU might need to make.

The Canada agreement is clear that it does not restrict the EU making “new laws in areas of interest” to it.

If the Canada model was followed there would be a Regulatory Cooperation Forum to cover this sort of thing. In the Canadian model, this Forum would allow

  • “exchange of information and experiences”,
  • “only provide suggestions and make no rules” and
  • “not have decision making powers”.

In other words the UK would be in a worse position than it is as a voting member of the EU.

If , after the UK had withdrawn, the EU deepened its service market further, allowing new access rights across border for service providers within the EU, the UK would miss out on this and would have to negotiate access for its service providers on a case by case basis.

The rights of the 1.8 million UK citizens now living in EU countries would also be less secure. UK citizens, living in Ireland or the continent, would enjoy only what Canadians enjoy.

WHAT WOULD HAPPEN TO EXISTING EU TRADE DEALS, AND TO EU LAWS NOW ON THE UK STATUTE BOOK?

Furthermore, the UK would have to start from scratch negotiating trade agreements with countries all over the world, to replace the trade agreements it now has with all those same countries as a member of the EU.

The UK Parliament would certainly be busy as well, in that it would have to pass new UK laws to replace all the EU regulations that are now part of UK law.

The only alternative to this would be for the UK to decide to leave all the “acquis” of EU rules and regulations, which are now supposedly so objectionable, on the UK statute book, as they are, for a long time to come.

One proponent of UK exit from the EU, Lord Lamont, admitted, in a debate with me recently, that this is what they would have to do.

Leaving the EU, only to leave EU rules on the UK statute book, seems like a lot of trouble to achieve very little!

A SECOND REFERENDUM?

There would be no second referendum on the final terms of any Withdrawal Treaty.

This has been made clear by Chancellor Osborne. That has to be his position because, if there was to be such a referendum, the choice would presumably be either to leave on the basis of the terms of withdrawal Treaty, or stay in on the basis of the EU membership exactly as it is today.

If such a second referendum was formally in prospect, it is hard to see that the EU side would have any incentive at all to offer the UK any concessions at in the Withdrawal Treaty negotiations. They would be mad to do so, because all the concessions would achieve, would be to make withdrawal more attractive.

CONCLUSION

I believe that the architects of the UK’s renegotiation/referendum strategy did not adequately consider how hazardous the voyage is, on which they have so casually embarked. They may have overestimated the EU’s political capacity to devise yet another special deal for the UK.

Ireland, for its part, will have to adopt a very tough, deliberate, and multifaceted negotiating strategy, as long as this avoidable uncertainty prevails.

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