The UK’s position papers on its future customs arrangements with the EU and, more specifically, on the border with Ireland have seen London take a pragmatic stance on key issues, Ben Cooper writes, which will please the food sector.
The two greatest enemies facing the UK – and its food manufacturers – in achieving a beneficial Brexit settlement that allows the country to go forward from the momentous decision it made 14 months ago are time and dogma.
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The publication last week of position papers by the UK government relating to future customs arrangements with the EU and the border with Ireland suggests the threats posed by both have receded.
The papers were the first of a series of documents the UK government is launching which comprehensively set out its positions in the Brexit negotiations which are already well underway. The EU negotiating team set out its positions in nine papers published at the end of May.
Two further papers, covering respectively goods being traded at the time the UK exits the EU and information sharing, were published yesterday (21 August) and a fifth was published today covering cross-border legal disputes.
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Last week’s papers naturally attracted greater attention. Customs arrangements are a defining issue of the Brexit negotiations and the UK’s future relationship with the EU, while the Irish border question has been identified as a priority by both sides. There is more common ground with the EU on the topics covered in yesterday’s documents. However, the UK’s position paper on the European Court of Justice, expected to be published tomorrow, addresses another highly controversial aspect of Brexit and will be keenly awaited.
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By GlobalDataThe UK government has been under pressure to provide greater clarity and a full response to the detailed positions laid out by the EU. While the UK clearly needed to set out a detailed negotiating position, the final publication of the papers helps ease pressure on the Government in other ways.
When negotiations officially began, the apparent unpreparedness of the UK negotiating team attracted criticism both at home and in the EU. Politicians and commentators in the UK and Europe also accused the UK of adopting an arrogant and bombastic stance to negotiations, and the delay in publishing its positions undoubtedly helped feed this type of criticism.
A further delay in publishing its positions was due to the UK government having to adjust significantly its position on Brexit in the wake of the shock general election result in June.
Overall, the UK now appears to be projecting a more conciliatory tone, and is perceived to be taking a less dogmatic approach to Brexit than it was six months ago when its 12-point plan was published.
The change in the UK government’s stance and the political rollercoaster ride it has been on over the past six months is reflected in the papers. This is no longer Theresa May’s Brexit. The Prime Minister is still in post but is universally acknowledged to be doing so in a caretaker capacity, having been irretrievably damaged by a disastrous performance in a General Election she did not have to call.
These positions have been composed and presented in a way which reflects and emphasises – as much as is possible – consensus within the UK government. Crucially, they embody the prioritisation of the economy and trade over the vision of the Brexit ideologues of the UK Independence Party and elements in the Conservative Party.
So, a healthy dose of realism has been injected into proceedings. Coupled with this, the new documents reflect the importance of agreeing transitional arrangements with the EU, and broad political acceptance and support for this to be a defining aim of the UK’s negotiating strategy.
In its paper on customs arrangements, the UK government covers the question of an interim period under the heading “Delivering new arrangements and providing certainty and stability for business.”
An interim period would “provide the necessary time for both the UK and EU Member States to implement any agreed long-term solutions, and put in place facilitations and technology-based solutions to make the customs regime as smooth as possible for importers and exporters”, the paper states. It would also “ensure that businesses, intermediaries and other third parties in the UK and the EU have the necessary time to implement the new arrangements, thereby providing businesses with certainty and enabling a smooth transition”.
This is unquestionably among the most crucial issues for industry generally, and particularly for food companies given the level of trade, both in finished goods and raw materials, between the EU and the UK and the particular penalty food and farming pays if the flow of goods is slowed by new customs procedures.
The Food and Drink Federation (FDF), which represents UK food and soft drinks manufacturers, welcomed the greater clarity the paper provides and said the proposals for an interim customs regime went “some way in protecting business from a cliff edge”.
Such a significant change in the administration, governance and trade structures, after 40 years within a constantly deepening alliance, was never going to be finalised, with every wrinkle ironed out, by the end of March 2019. That this now appears to be widely accepted will be nothing less than an enormous relief to many food companies, not only in the UK but throughout the EU.
Nevertheless, the FDF added the important caveat that terms for the interim period had to be agreed with the EU and, in that context, time is still worryingly short.
While acknowledgment that 31 March 2019 should mark the beginning of a transition phase is welcome, reaching agreement on what the beginning of that transition period will look like is an immense challenge.
Across the range of options and ideas being put forward some have been or will be dismissed by those representing EU interests.
European Parliament Brexit coordinator Guy Verhofstadt predictably called the UK proposals “fantasy” but the EU Commission said last week’s papers represented a “positive step towards really starting phase one of negotiations”.
That the Commission said this about both the customs and the Irish position papers is encouraging. The Irish border question is without doubt one of the most difficult challenges facing the UK government with regard to Brexit. The paper received a fairly mixed reception but even on this most intractable of issues the UK government has, on balance, taken a step forward.
That its vision for a frictionless border with no infrastructure was hailed by some as creative and imaginative does sound like damning with faint praise. On the other hand, creative thinking is vital when facing seemingly insoluble dilemmas. More importantly, what the Irish position paper showed was a resolve not to be bound by preconceived ideas and received wisdom.
The UK’s opening gambit on Ireland was always likely to raise as many questions as it might offer to answer and so it has proved.
One positive for food companies is that while they are massively exposed to any negative impact Brexit could have on UK-Ireland trade, the importance of food and drink within the Irish border issue is acknowledged in the paper, something the FDF specifically welcomed. It also welcomed the Government’s commitment to preserve a seamless, frictionless, open border with Ireland but again pointed out this could only become a reality if agreed by the other 27 member states.
A particular stumbling block on all customs arrangements, whether in relation to Ireland or the EU as a whole, will be the UK’s continued intention to pursue other new trade deals while in any interim period. That will make the terms of an interim period much harder if not impossible to agree.
While this intention remains firmly on the table for the UK, it is not being given the same weight politically as it was a few months ago. Thanks in no small part to the political empowerment of Chancellor of the Exchequer Philip Hammond in the wake of the election, protecting EU trade and mitigating any immediate economic threat posed by Brexit have become the critical priorities. That will be noted and welcomed by EU counterparts. Significantly, this aspect of the customs paper did not feature in the FDF’s response. Such is the importance of the EU to UK food supply and its food system that the industry’s clear priority must be to safeguard what it has before considering hypothetical development elsewhere.
EU negotiators have also always insisted the “divorce bill” and citizens’ rights have to be addressed before other arrangements are discussed. That these comparatively far less thorny issues are nowhere near settled is worrying. To quote Michel Barnier’s favourite phrase, “the clock is ticking”.
However, the UK is at least – albeit far later than would have been ideal – setting out its position, and what it is proposing arguably represents a more realistic starting position, and one food companies will generally consider more palatable.
