Brexit Bites, 8 May 2018

May 08, 2018

EU Chief negotiator Michel Barnier visited the border region last week and said that the EU is seeking practical and operational solutions to the border issue.  Institute Council Member Philip Maguire was among the NI business people who met Mr Barnier and raised with him issues in relation to VAT and the future recognition of professional qualifications.  However the UK Prime Minister is under pressure in the UK to arrive at a customs solution that will satisfy all sides of the debate.  Also next in our series of getting Back to Brexit Basics, we look at what the loss of passporting rights might mean for UK financial services companies. 

A border visit

EU Chief negotiator Michel Barnier visited the border region on the island of Ireland during a two day visit last week.  During the course of the visit, Mr Barnier said that the EU is open to any solution that the UK government can put forward to maintain the Good Friday Agreement and keeping the border open.   He said that the EU’s preferred solution was the backstop arrangement which would see Northern Ireland continue to follow EU rules.

Speaking at the all island Civic Dialogue in Dundalk, Mr Barnier said “The backstop is not there to change the UK's red lines.  It is there because of the UK's red lines.  The UK's decision to leave the Single Market and the Customs Union creates a risk that the hard border will return.  This is why it is necessary to have a self-standing backstop solution.”

Mr Barnier said that Ireland has the full support of the EU and the EU is “not playing tactics with Ireland’s vital interests… and that the EU is “seeking practical, practical and operational, solutions to a complex problem. No more, no less.”


The customs conundrum

UK Prime Minister, Theresa May would like to solve the Irish border problem by creating a customs partnership with the EU.  But these plans have faced heavy criticism from some pro-Brexit cabinet members.

The customs partnership model could ultimately mean that the UK would have to stay in a customs union with the EU and remain aligned to the rules of the EU Single Market.  This could mean that the UK would collect EU tariffs for goods coming into the UK on behalf of the EU.

While this model might allow free flowing trade and prevent a hard border on the island of Ireland, there are fears that the plan would cause issues for the UK when trying to pursue an independent trade policy after Brexit.

With some finding this model as totally unacceptable, it’s become increasingly difficult for the Prime Minister to find an option that will be agreed by all UK MPs as well as the EU

More work is needed to be done to establish an option which will mean no hard border on the island of Ireland and as frictionless trade as possible between the EU and the UK.