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Analysis

About that ‘backstop’, PM. It ain’t gonna work

by Hugo Dixon | 11.06.2018

The EU’s forensic analysis of the prime minister’s temporary fix to customs and the Irish border has found it full of holes. Given that Theresa May clearly can’t develop a viable policy, MPs should tell her what to do when they vote on the issues tomorrow.

The European Commission has today published a set of slides that take the so-called backstop apart in painstaking detail. And it’s not just because the wheeze won’t provide certainty over the Irish border if it is only temporary, though that remains the killer objection.

The backstop is supposed to be a short-term fix to keep the border open until the government figures out a long-term customs arrangement that allows trade to flow smoothly. During this stopgap, we would follow the EU’s tariffs.

The prime minister’s backstop is a sort of second transition that kicks in after the first one ends in 2020. She says she expects it will finish no later than the end of 2021. But this is dishonest as there’s no way a long-term plan could be ready so soon.

Apart from the temporary nature of the backstop, other issues and questions identified by the EU include:

  • The prime minister has made no proposal to align our rules with the EU’s. Without that, there will have to be border controls.
  • How would we coordinate action if there’s a trade war, like the one Donald Trump seems to be launching?
  • Will we agree to let the EU’s fraud squad vet our systems so importers don’t cheat on VAT and excise duties?
  • Will we let the European Court of Justice rule if there is a dispute?
  • The EU’s existing trade deals with over 60 other countries would have to be renegotiated so we could benefit from them during the backstop. Otherwise, there would have to be frontier checks.
  • We would also have to benefit from any new EU trade deals that take effect during the backstop. May wants a say over those deals. But why should the EU agree if we’re not staying for the long haul?
  • What happens to technical but important matters such as VAT, quotas, rules of origin and allocation of customs revenue?

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As the EU slides say, the prime minister’s backstop is a “complex and unprecedented arrangement for short duration”. If the EU was less diplomatic, it would say: “Why on earth, should we bother to create such a cockeyed scheme for something you only want to last a year?”

The slide also notes that businesses may have to adapt multiple times. This seems right. There would be one adjustment when we move from the transition to the backstop; then another when we move from the backstop to the final end-state. This is contrary to the prime minister’s promise that business will only have to adjust once. It would mean further uncertainty, which would stifle investment.

The EU has one final objection. As Michel Barnier, the chief negotiator, put it on Friday: “Our backstop cannot be extended to the whole UK.”

Some people have interpreted this to mean that a backstop could only apply to Northern Ireland. But this isn’t quite true. Barnier’s comment was precise. It only applied to the EU’s existing proposal.

This leaves open the possibility that some new backstop could be crafted that would apply to the whole UK. That, though, would presumably look pretty much like the current customs union and chunks of the existing single market – along with the need to pay into the EU’s budget.

That’s not what people voted for two years ago. All the more reason why the public should get a vote on the final deal – with the option to stay in the EU if they don’t like it.

Edited by Luke Lythgoe