Stephen Booth is Director of Policy and Research at Open Europe.
The so-called “backstop” is understandably the most controversial aspect of the Brexit deal parliament will begin debating this week. It is certainly less than perfect, but it offers the UK far more than its fiercest critics suggest. It provides an exit route from the EU, would free the UK from many of its current obligations, and provides a platform from which we can improve our position in future. It creates genuine problems for Northern Ireland, but also the potential to act as the gateway for securing free trade in goods with the EU.
Although billed simply as an insurance policy against a hard border in Ireland, it is actually quite likely that, following the standstill transition, the backstop will provide the basis for the UK-EU relationship as negotiations over the future relationship continue. So what would this mean?
Importantly, the backstop is a much looser relationship than membership of the Single Market and would turn off the tap of almost all new EU rules. The UK will take on the stock of existing EU legislation, but would be able to amend much of these laws applying in Great Britain in future. Northern Ireland would need to maintain and update the rules set out in the backstop, which might lead to some degree of regulatory divergence across the Irish Sea, but (other than for food and agricultural products where there are already checks) necessary checks would primarily be done in the marketplace and all by UK authorities. Brexit inevitably means some degree of special arrangements for Northern Ireland, which otherwise would either move away from the UK (upsetting Unionists) or away from Ireland (upsetting Nationalists). But, importantly, the UK can veto any attempt by the EU to widen the scope of the backstop by applying new rules to Northern Ireland.
At a stroke, we would be free to set our own rules on the biggest area of our economy – services, which account for nearly 80 per cent of GDP. The free movement of people would no longer apply and the UK could set its own immigration policy for EU and non-EU nationals. The UK would be required to maintain a floor of standards and protections in areas such as employment law and environmental policy, but could achieve these in new ways that better suited its economy. The UK would not be compelled to make any financial contributions to the EU other than for those programmes it chooses to take part in.
By establishing a UK-wide customs union, the backstop would limit the UK’s independence in trade policy. For services, we could potentially do independent or deeper trade deals than the EU, but we would need to align with EU tariffs and agreements for goods. Over the long-term, a customs union is unlikely to be politically sustainable and greater independence would be desirable. The EU has also agreed at political level that the UK will regain independence over its trade policy in future. However, it is also true that the UK’s customs systems are not yet ready and a period of time in some form of customs union after the end of the 21-month standstill transition was likely to be inevitable under a negotiated deal.
While the UK has secured many advantages, some aspects of the backstop are certainly hard to swallow. But the EU has also paid a high price for its insistence on a backstop. The UK’s commitments to maintain EU standards are far weaker than many member states would want and there is real concern in some capitals that the UK can use the backstop to secure privileged access to the Single Market in goods with very few obligations and, over time, at a competitive advantage. This is why, despite the lack of a firm time limit in the backstop, the EU is very unlikely to want to live with the arrangement indefinitely.
It is clear that the Government faces an uphill struggle to get this Brexit deal approved by Parliament. Presumably rejection of the deal on 11 December would set the stage for some last-minute haggling in Brussels and tweaks before Theresa May tries to convince MPs a second time around. However, it is also clear that the EU will not accept a deal without a backstop for Northern Ireland. And, if the UK does seek changes, it could prompt the EU to reopen issues such as fishing rights. Ultimately, the choice remains whether to accept a deal with a backstop or reject it.
No Deal is the theoretical default if this deal cannot be ratified, but the parliamentary arithmetic might suggest a softer form of Brexit along the lines of ‘Norway-plus’ is a more likely outcome, although that is far from a simple path. The truth is no one can predict what would happen. This is why both sides of the debate should consider carefully the merits of the compromise on offer before risking a much worse outcome in search of their ideal.