"If a last minute deal can be reached that will mean a hard border in Ireland as an unintended consequence, one wonders whether the rest of the EU would stick with the backstop."
Last week, two years after the British referendum vote to leave the EU, we got the first detailed statement on what the British government wants to achieve with Brexit.
After a day long crisis meeting in the prime minister's country retreat at Chequers, the divided Cabinet agreed a 98-page White Paper (government policy document) setting out the Brexit they would like to have when Britain leaves the EU next March.
From Ireland's point of view the simple fact that the British government had at last produced a detailed document was welcome since it gave us some idea of what lies ahead. Even better, it was a plan for a soft Brexit, with the U.K. staying as close as possible to the existing trade and customs regime in the EU while still leaving.
For Ireland this would be in our best interest, since it would cause us minimal trade disruption and avoid a hard border between north and south. So it was very good news for us.
But alas, the significant breakthrough was short lived. Just a day later two of the most senior Cabinet members changed their minds and resigned, saying that on reflection they could not support the plan because it was a betrayal of the people's vote to make a clean break with the EU.
Chaos reigned, with British Prime Minister Theresa May looking increasingly vulnerable as others followed the example of Foreign Minister Boris Johnston and Brexit Minister David Davis and quit. This week May is fighting off a growing rebellion within her party against her soft Brexit plan, a revolt which could see her lose the leadership.
Meanwhile this week, the Irish government is holding a special Cabinet meeting to assess the unfolding situation. They are still hoping for the best but are now preparing for the worst, the possibility that all this could end in a hard Brexit, or even in Britain crashing out of the EU with no deal at all. Either would be a disaster for us.
None of this should be a surprise. The Conservative Party and May's Cabinet are hopelessly split and no solution is in sight. Even now, two years after the referendum vote to leave, they still cannot agree on what leaving will actually mean.
The core problem is that the simplistic yes or no vote by the British people on whether to leave the EU was the easy bit. The hard bit is working out exactly how the victorious no vote should be implemented. It's now two years since the no side won and there is still bitter division on the best way forward for Britain.
The problem is that after 45 years of being part of Europe, Britain is deeply enmeshed in the EU's single market and customs union with all its rules and regulations and agreed standards affecting not just thousands of products and services, but almost every part of economic activity as well as the movement of people and capital.
Even some of those who campaigned for a leave vote most vociferously are now realizing that disentangling Britain is unbelievably complicated and could be hugely damaging to its economy and jobs. That is why May's plan is for a soft Brexit. It's not her being weak; it's her being realistic.
The problem she faces is that so many of the British people who voted leave, including politicians in her own party who should know better, think that getting out is simple and Britain should just walk away if it does not get both continued free access to the EU and the freedom to make its own trade deals with other countries.
That will never be conceded by the EU because if every other country in Europe did that it would destroy the single market. In fact the EU is likely to reject even May's soft Brexit proposals because they still amount to the U.K. trying to have its cake and eat it.
What the White Paper has proposed is that Britain will agree a "common rulebook for all goods,” which is tantamount to saying that Britain will continue to apply the EU standards for all kinds of products that have been agreed over many years. It's not just agri and food products, it's products in many other sectors like pharmaceuticals, electrical, textiles and so on.
The problem is that this would make it very difficult for Britain to do trade deals with other countries around the world where standards are different -- including the U.S. That is the reality Donald Trump was referring to during his visit to the U.K. last week when he said that a soft Brexit would "probably kill" any chance of a trade deal with the U.S. Trump's bull in a china shop bluntness upset May and her supporters, but the truth is he was merely stating the obvious.
There are different standards and rules on opposite sides of the Atlantic in the food sector, for example. It's not just the frequently mentioned hormone-fed beef or chlorine-washed chicken; it's GM crops, antibiotic use, additive labeling and so on. And that's just the food sector. The same complications apply in many other trade sectors as well.
May's soft Brexit is even more problematic on services. Probably because financial services could be a huge part of British export earnings in the future, what her plan proposes is "regulatory flexibility" with the EU, which amounts to abandoning the EU rules on services to do whatever deals the U.K. wants with other countries. This already has financial firms in London that do a lot of business with the EU deeply worried.
Abandoning the EU rules on services would be a red line for Brussels. (It would also be difficult for Ireland since our digital sector trade with the U.K. is now so important, almost up there with agri and food, even if few people seem to be aware of this.) So the soft Brexit plan could be rejected by the EU on that basis alone.
Customs, as you might expect, is a big issue (particularly for Ireland because of the border). What the plan proposes is a "facilitated customs agreement" which would remove the need for customs checks by treating the U.K. and EU like a "combined customs territory.”
The U.K. would apply EU tariffs and standards on all goods entering the U.K. which were subsequently to be exported to the EU. This would leave it free to apply low tariffs, etc. on imports for its own use.
What this means is that the U.K. would become a tariff collector for the EU. The logistics and paperwork involved would be horrendous and there are doubts about whether it would be workable at all.
There are also doubts about whether this would negate the need for a visible hard border in Ireland, as the plan claims. In theory it might, but in practice it sounds like a tax-dodging smuggler's charter. Even if everyone played by the rules, the paperwork and checking required would imply some level of border spot checks -- and possible delays.
With all this in mind, it's not surprising that the Irish government this week is vocally warning business (as well as all government departments) to start preparing for all possibilities, including a hard Brexit or a no deal. Although the EU will politely consider May's plan for a while, it is likely to seek major changes in it or even reject it altogether. And when that happens, anything is possible.
In all of this one has to feel some sympathy for May, who is grappling with an impossible task. You can't be both in the EU and outside at the same time, despite what some of the hardline Brexiteers seem to think. They have a rude awakening ahead.
For Ireland, none of this looks good. The latest official figures this week show that our exports to the U.K. this year so far are down eight percent, more than likely due to Brexit factors. And apart from economic difficulties, there is the border problem.
Despite the claim that May's plan would obviate the need for any hard border in Ireland, there are real concerns. Let's take one example, beef.
One of the main attractions for the U.K. in being outside the EU would be the ability to import cheap food from the global market. Cheap South American meat would be a bonus for British consumers after Brexit.
The question is how much of this (and similar products) would end up in Northern Ireland and then be moved to the south, where it could be relabeled and then shipped elsewhere in the EU for a tidy profit.
In that scenario, not only would Irish farmers be demanding extra security along the border but the EU would be insisting on it as well. As we have said here before, the pressure after Brexit for a visible border with controls and checks would not come from the British. It would come from the EU, including the south.
Both the British and the EU have said that a precondition for any Brexit deal must be that there will be no hard border in Ireland. This is referred to as "the backstop,” and so far it is being observed, although it has yet to be given full legal standing.
Whether it will remain in place as negotiations between the U.K. and the EU become fraught towards the end of this year remains to be seen. With March 2019 now fast approaching time is running out, and the pressure to find a deal will be enormous.
If a last minute deal can be reached that will mean a hard border in Ireland as an unintended consequence, one wonders whether the rest of the EU would stick with the backstop. They are likely to suggest that there are borders all around the EU and that the Irish should be able to cope with one. They are also likely to point out that a market of 500 million people should not be held to ransom by a few dozen republican dissidents in Ireland.