Last weekend Northern Ireland played host to the British Open for the first time since 1948. Irishman Shane Lowry won emphatically and as the week rolled on, the congratulations continued to roll in for the Offaly man. Naturally our media-savvy Taoiseach was quick with the praise and, as so often is the case, what was particularly interesting to see on Mr. Varadkar’s Twitter feed was not his congratulation but what lay below that – a seemingly innocuous tweet referencing a French minister’s pledge of Brexit solidarity with Ireland.
In fact, this is a symptom of something much greater and we don’t have to delve too deep into the recesses of our memories to the last time Mr. Varadkar stood by a promise from the French government.
When I cast my mind back to Leo and his trademark grin propping up the under-pressure Emmanuel Macron in March as he pledged his solidarity to the Irish, I wince. Only a couple of days later, the French leader was holding up Brexit extension talks to the detriment of the Irish. A No Deal and no plan on the Northern border meant Ireland would have temporarily been withdrawn from the customs union until such a time that we could verify all goods leaving Ireland had not come from the North.
At the time, Simon Coveney refused to entertain the notion of border checks and simultaneously refused to accept the possibility that Irish goods could be stopped in the Irish Sea before entering Europe through France or elsewhere – two contradictory ideas. The Irish Government sees Brexit as a zero-sum game and this is detrimental.
Interestingly, as Brendan Simms pointed out last week, this approach by the Taoiseach and his Government may well be in breach of the Good Friday Agreement. Simms argues that if Varadkar insists on refusing to allow checks at the North-South Border, then equally he should refuse to create checks in the Irish Sea. As the border checks would affect Nationalists in Northern Ireland, the check in the Irish Sea would affect Unionists in Northern Ireland.
Therefore, Varadkar’s insistence on supporting nationalists and ignorance towards unionists is diametrically against the spirit of the Good Friday Agreement, which acknowledges the rights of both Nationalists and Unionists. Therefore, it is in the interest of the Taoiseach to seek an outcome that satisfies this agreement and their zero-sum approach is particularly lacking.
To borrow more thoughts from the Irish golfing success, it is interesting to note how many people delivered their praise while referencing how this result was “fantastic for such a small country”. Common among praise from Irish people was a sense of ‘aren’t we great punching above our weight?’.
However, I would vehemently disagree with such an affectation being attached to our success as a nation in any regard. Not only does Ireland produce a significant number of top-class sport stars (England’s Cricket World Cup-winning captain Eoin Morgan honed his cricket ability in my own school), we compete on the world stage on a number of levels – industry, arts and of course business.
We are a small island, but one that belongs on the world stage; we don’t momentarily appear on it. However, when our Taoiseach stands up and remarks that Boris Johnson’s claims are “not in the real world” and that he will not discuss any terms with the UK, he perpetuates a small nation attitude.
This has been the Taoiseach’s approach for some time now, as he regularly made jibes and slights at Theresa May’s expense. A nationalistic overture runs rapid through Mr. Varadkar’s Brexit rhetoric and, as I have discussed, this is damaging to the spirit of the Good Friday Agreement and all the good it does for people on the island of Ireland.
With Boris Johnson installed as the new Prime Minister and his new Cabinet now having been revealed, there is a chance for a new approach to Brexit for European leaders and, in particular, for Leo Varadkar and Simon Coveney.
Ireland might be a geographically small country, but there is no need for us to behave like a small nation and, while the new Prime Minister may be accused of unfortunate comments in the past, we should never measure ourselves with someone else’s ruler. The changing Cabinet brings with it a chance for change and a chance to lift the deadlock on Brexit.
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As we have been reflecting over the last few days on the success of the US mission 50 years ago to put man on the moon, it is worth reflecting on John F Kennedy’s role in that, and the role of leadership in bringing change.
JFK was far from a saint, but his ambition and inspiration set the scene for great task-focused independent decision-making and investment and innovation that made the moon landings possible and led to many consumer spin-offs that have underwritten the US economy for the last 40 years.
Without his incantation “We choose to go to the moon, not because it is easy but because it is hard”, and commitment of government effort, Silicon Valley may well not have had the impetus and imprimatur for the ecosystem that encouraged so many different personalities and sources of capital and ideas to pull together to achieve the goal.
Although the world of trade, customs and regulation sounds more prosaic, the effect on UK prospects of doing these things well after we leave the EU, with authority and holistic purpose, could be equally dramatic. To paraphrase JFK, we choose to leave the EU, not because it is easy, or hard, but because our choosing matters.
Boris Johnson’s ability to reach millions of people makes him the man for our moment. Like JFK, he asks us to take responsibility for what happens, and deliver on the nation’s choice. Give each citizen agency, however big or small, inspire greatness in each individual, and the public good will be elevated.
Boris can unite the country with his optimism, can level with people and inspire them. He can reassure with action but also with words. PM Boris and his Cabinet communicating a positive vision that people respond to would be more than a breath of fresh air. They are the wind needed for our sails.
We need relentless optimism in our presentation of the benefits of a positive working relationship to the EU. Yes we would like to agree various things to make interaction work well when we leave, and we stand ready for such mutually beneficial agreements. The draft Withdrawal Agreement won’t pass though, as it rides roughshod over the independence our people directed, so we may need to come formally to those agreements after we leave.
We want the EU’s wonderful produce. We want to drive their cars. We want to contribute our creativity and commitment to Europe’s defence and its culture. We’d like our people to feel they want these things more, not less.
They should however complement, not constrain, our global and domestic focus that was the cri de coeur of the referendum. If the EU’s wish is to obstruct those things, then we will have to make other arrangements.
It does take two to tango, and the EU and UK need to trust each other. Clarity on what we want and what we will do are the first steps. After all, it is we who have made the move.
So we should accept the offer Donald Tusk made of free trade. We should agree to facilitate trade and cooperation on the island of Ireland without a hard border through the “alternative arrangements” we are working up that look to involve the Good Friday Agreement institutions. We should guarantee citizens’ rights, and talk about an appropriate financial settlement.
If we keep EU-level agreements autonomous and away from Investor State dispute mechanisms and investment provisions, they can be concluded rapidly without need for ratification by each EU Member State.
In any event, we should reciprocate the EU’s unilateral “no deal” contingency measures, which are actually types of deal that already cover for example air services, haulage permits and product acceptances to keep things moving in any scenario.
In the mean time, we should plan trade policy to move rapidly to improve trade conditions with the rest of the world after October 31st. We should prioritise benchmark comprehensive free trade agreements with Australia and Japan, and continued work towards free trade agreements with the US and key states that cover services, procurement and intellectual property intensive industries. Trade partners can make mostly low-tariff access to the UK, offered temporarily to all after October 31st, permanent and better by signing UK free trade agreements.
If Boris is chosen to lead, his Government must move at pace and in scale though, to change the game with respect to things in its power.
It must get behind our farmers with marketing support and tax breaks for local production and environmental stewardship, especially where EU market access or other pressures may be difficult.
It must get the Treasury to review and make forecasts using actual cost figures not unrealistic negative assumptions, and actively mitigate, defray cost of, and communicate business needs for new processes.
It must help EU traders navigate the need for new regulatory declarations and registrations and any related checks, and support business organisations in their efforts to do so.
It must support logistics providers, not just customs brokers and big companies, to facilitate trade by consolidating shipments, driving out costs and taking advantage of simplified procedures. Arrangements for pre-clearance and Transit in premises and logistics hubs and stops must be made, and communicated on the ground with traders and shippers so they will use them ahead of arrival at the Channel ports, to have smooth passage through them and beyond.
It must rapidly invest in people and systems for Border Force and HMRC, in their interfaces with counterpart agencies in the EU and elsewhere, and their resource needs. It must make sure procedural simplifications and mitigations work in the real world of logistics. Ease of use of new processes to manage the differences between jurisdictions should be the primary goal.
It should reduce VAT and excise rates to lowest neighbouring levels to reduce incentives for non-compliance.
The new Government should shock and awe with improvements to business conditions in the UK more generally.
It should introduce lower, flatter, simpler taxes, and proper incentives for hard work. It should raise NIC thresholds that discourage people from earning more. The safety net should be provided not just through general taxation and national insurance, which has become just another tax spent in-year, but also through progressive actual insurance of pooled risk, for example to fund social care.
It should incentivise saving and investment in UK operations that generate local jobs, skills and technologies – incentives similarly applied whether people are employed, self-employed or in corporate or partnership structures. It should make the UK the place of choice for people to keep and invest their capital, by transforming and broadening the capital and investment allowances system and treatment of onshore funds and their owners.
It should stand by sectors and communities which are in transition to different processes and opportunities, and back them with local infrastructure, skills development and incentives.
A relentless “can do” attitude and focus on the goal of making a success of independence, is how we will do this and deliver on people’s ambition.
Our country can do much to make this work – it must – and Boris is the one to lead it.
In return we should ask, as JFK did, what each of us can do for our country, to make it happen.
Today the Prosperity UK Alternative Arrangements Commission, which I co-chair with Nicky Morgan, has set out its road map to a Brexit deal, by finding a way to supersede the maligned Irish Backstop, while simultaneously ensuring there is no hard border in Ireland and the Belfast / Good Friday Agreement is upheld.
Critically, our Final Report includes two new draft Alternative Arrangements Protocols, produced with the help of the international law firm Herbert Smith Freehills. The new Prime Minister, the EU and the Irish Government will now have both the technical material and the legal basis for coming to a Brexit agreement as soon as possible.
The first Protocol, Protocol AB, could be used within the existing Withdrawal Agreement. It incorporates a list of obligations that the UK must satisfy in order to ensure the Backstop would not be triggered. The second, Protocol C, is a stand-alone Protocol that delivers Alternative Arrangements in any other Brexit scenario, such as a Free Trade Agreement or even a No Deal.
There should be confidence that a Brexit deal is now achievable. Adopting Alternative Arrangements to the Backstop, as construed by the Brady Amendment, have already achieved a majority in the House of Commons. The Prosperity UK Commission has taken that vote, and with the help of a team of 23 technical experts, we have turned it into something tangible and workable.
On the EU side, it has already conceded that both sides should seek to find Alternative Arrangements to the Backstop via the Strasbourg Declaration. But it said it would only commence the work after the Withdrawal Agreement came into force.
These Alternative Arrangements can be up and running within three years, with the ability to implement some measures far sooner. They consist of harnessing existing technologies and customs best practice, currently used on borders around the world; they do not rely on futuristic high-tech solutions.
Furthermore, they have been compiled within the boundaries of certain constraints, namely, the supremacy of the Belfast / Good Friday agreement, the preservation of the Common Travel Area, the need for a deliverable and real UK independent trade and regulatory policy, the need to ensure the seamless flow of East-West trade flows and the need to ensure that all proposals can be up and running within two to three years.
Our Alternative Arrangements Commission advocates the maximum possible choice of options for people and traders, respecting the Common Travel Area Agreement. It suggests a multi-tier trusted trader programme for large and medium-sized companies, with exemptions for the smallest companies; no checks at the border and a common Sanitary and Phyto-Sanitary (SPS) zone for the UK and the island of Ireland, but with the right for the UK to diverge and a mechanism to ensure that the people of Northern Ireland can make the choice as to whether to follow the UK divergence or remain aligned to SPS rules in Ireland. In the event this cannot be achieved, SPS checks can be carried out by mobile units away from the border.
As regards implementation, the Commission recommends the creation of two new funds, paid for by the UK, to assist with the implementation of Alternative Arrangements on both sides of the Irish border for small businesses, as well as a capacity building fund to support customs development. It suggests the creation of an independent arbitration panel and a specialist committee to advise on implementation.
The work of the Commission, conducted in good faith, following the failure of government to start this work much earlier, has been entirely focused on delivering solutions that are politically independent and sympathetic and which can ultimately deliver Brexit. This report has not only been based on the work of technical experts, but on feedback from numerous stakeholders on the island of Ireland and in the EU. It should therefore be considered very carefully by all parliamentarians in the House of Commons as well as by the Irish Government and by the EU to ensure that they use this piece of detailed and technical work to present a way forward.
So far, the two contenders for the leadership of the Conservative Party have endorsed our Alternative Arrangements Interim Report. I am now confident that our plan to develop the Alternative Arrangements outlined in our Final Report today can pass in the House of Commons. It is imperative that MPs from across the House come together to read this report and to find a way to implement Brexit so we can all move on to delivering the better country the voters want.
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Throughout the negotiation of Mrs. May’s Withdrawal Agreement (WA), and her subsequent attempts to have Parliament approve it, the issue of the Irish border loomed large. In fact, it was the EU’s intransigence over the border issue that finally undermined the WA.
But it has now become totally clear that the EU’s position on the border was a falsity peddled in order to exercise maximum pressure on the UK while they negotiated the terms of the WA and then to maintain that pressure, via the backstop, while a free trade agreement was established.
The EU’s argument was essentially as follows:
Any Withdrawal Agreement must simultaneously assure the integrity of the Single Market and the adherence by the UK to the terms of the Good Friday Agreement (GFA). It was claimed that the GFA requires that the border between the Republic of Ireland and Northern Ireland be open at all times, thereby prohibiting border infrastructure/a “hard border”.
The argument continued that the only way to achieve this, without breaching the integrity of the Single Market, was to keep Northern Ireland within the Single Market (the backstop) until such time as adequate technology existed for customs controls to be implemented away from the border. The EU further insisted that, without its agreement, Northern Ireland would not be entitled to exit the backstop.
Had the UK signed up to the backstop, it would have been locked into the EU – possibly in perpetuity – without any say and obliged to adopt all EU laws as well as freedom of movement. As a result, it would have found itself without any negotiating position while the future trading arrangements with the EU were being established. It was the invidious potential effects of the backstop, amongst other things, that prompted many, including myself, to describe the WA as the equivalent of political and economic unconditional surrender by the UK.
But the EU’s position has now been busted.
First, the Good Friday Agreement does not require an open border. The only place in which the border features in that agreement is in the section on security. During the Troubles there were heavily fortified army barracks, police stations and watchtowers along the border. The GFA merely required the removal of these and the demilitarisation of the border. It refers to the normalisation of security arrangements. There is no suggestion that there should not be any arrangements for customs to be collected or passports checked.
Second, it is frankly impossible to close the 300-mile border. The notion is absurd.
Third, also from a practical perspective, the value of cross-border trade on the island of Ireland is about €2.6 billion per annum or less than 0.5% of total UK trade with the EU – it is tiddly in trading terms. Irrespective of the mechanisms put in place to collect tariffs, any customs leakage would not even amount to a rounding error in the accounts of either the UK or the EU.
And finally – and what has prompted me to write this article – is the declaration by the Irish Government yesterday that, in the event of a no-deal Brexit, it would not implement a “hard border” and that customs checks would, as has been argued by the UK Government for years, take place away from the border. It has at last admitted that it can live without such a border.
This admission has revealed that the EU never actually needed the backstop. In that revelation it has proven itself to have always been in bad faith in its negotiations with the UK.
In commercial negotiations of lesser importance, such bad faith may have been tolerable, but this act of bad faith all but triggered a constitutional crisis in the UK. It is abhorrent that the EU held such a false position, given the enormity of the consequences. It proves that the institution is entirely untrustworthy. Armed with that knowledge, we must decline any further negotiations with it. We must simply leave the wretched institution at the very earliest opportunity.
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Developing Alternative Arrangements to avoid a “hard border” on the island of Ireland is the key to unlocking Brexit, solving the problems created by the Irish backstop in the Withdrawal Agreement and thereby restoring business and investor confidence – not just in Britain but across the EU.
Prosperity-UK, an independent organisation I co-chair, will today be publishing its interim report, setting out the blend of arrangements which we believe will make it possible to avoid a “hard border”. In July we will be publishing a new Alternative Arrangements Protocol, framed in such a way that it could be inserted in the Withdrawal Agreement or utilised in any other Brexit outcome.
The combination of these two elements could be enough to deliver a path to agreement and to solve the Brexit conundrum.
Prosperity-UK was set up two years ago to bring people together, on a cross-party basis, to examine Brexit solutions and opportunities. When 10 Downing Street failed to address adequately the fundamental issue of the Irish border, we established the Alternative Arrangements Commission to do so, chaired by the senior Conservative MPs Nicky Morgan and Greg Hands and supported by 23 technical experts.
Our Commission had three strict remits. First, that any Alternative Arrangements must uphold the Belfast/Good Friday Agreement. Second, that any solutions would be based on existing best practice and would not be dependent on “unicorn” technology. Third, that the Alternative Arrangements should be compatible with any Brexit outcome.
We believe our Commission has met all three remits and that delivering Alternative Arrangements within three years, so that the backstop is superseded, is eminently achievable.
There is not a single answer to Alternative Arrangements. The solution will be found in a combination of political, practical and technical arrangements. These will include use of existing flexibilities in the WTO and Union Customs Code, multi-tier trusted trader schemes and Approved Economic Operator schemes; pre-clearance in facility and special solutions for small traders as well as exemptions for those below even the VAT threshold.
Agriculture is a vital sector in Ireland and the development of satisfactory phyto-sanitary arrangements is a key challenge. The report discusses the pluses and minuses of an all-Ireland Sanitary and Phyto-Sanitary (SPS) Area, echoing the already existing Common Bio-Veterinary Area, which applies to livestock, as well as the Common Travel Area, which operates for people movement. Another option would be a Common SPS Area which applies not only for the island of Ireland but for the whole of the UK plus Ireland.
The report also examines inspections away from the border such as already happen in Rotterdam (up to 40km from the order) and will occur in France post-Brexit.
Although our solutions do not rely excessively on technology, there is scope for technological innovation. Many companies, such as Fujitsu, Vodafone and others are contributing exciting ideas to make transit and border arrangements work more effectively.
Ultimately of course the Brexit conundrum is less practical than political. It is primarily a trust issue – and therefore soluble under the right political leadership.
The UK has had the wrong leadership.
In the summer of 2018, it redefined the original EU requirement of “no physical infrastructure at the border nor related checks and controls” to a much more onerous self-imposed hurdle of “no checks or controls in Northern Ireland.” In 2019, despite the Brady Amendment (in favour of Alternative Arrangements) being the only vote to pass the House of Commons during the parliamentary farce of the past nine months, the British Government itself made no effort to develop these arrangements. Indeed, the Treasury and No. 10 seem to have actively blocked efforts by the Home Office and others to make progress on Alternative Arrangements.
On the EU side, there has been an unwillingness to provide an end-date for the backstop or to reopen the Withdrawal Agreement. But there has been some diplomatic movement. The Strasbourg Instrument, published in March 2019, committed both sides to work on developing new technologies at the border to be ready for December 2020 “with a view to assessing their potential to replace the backstop solution in the Protocol on Ireland/Northern Ireland.”
But this work was only due to begin after the Withdrawal Agreement had been ratified, which means that precious months are now being wasted.
Our proposal is that a new Protocol is drafted which could be inserted into the Withdrawal Agreement or used on a stand-alone basis. Such a Protocol would describe the necessary steps for the UK, Ireland and the EU to be satisfied that the new arrangements adhere to the Belfast/Good Friday Agreement. Either there are conditions which can realistically be met to solve the border issue, in which case all sides can work on them in a spirit of goodwill. Or there are no conditions which will satisfy the EU, in which case the UK would be ill-advised to enter the Backstop.
Finally, we need a recovery of political goodwill on the island of Ireland. As we have learnt from our own visits to Ireland, there is a perception on both sides of the border that the UK and the EU have been aloof, showing no attempt to engage the local communities. Yet it is they, rather than civil servants in Brussels and Whitehall, who should be looked upon to develop practical, local solutions. As one very senior politician said to us in Dublin, “what needs to happen first and foremost is the restoration of trust on the island of Ireland.”. That is where we hope to have made a start.
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It’s funny, but every time one mentions ‘Article 24’ publicly – meaning (using the correct Roman numerals) Article XXIV of the General Agreement on Tariffs and Trade (GATT) which predates the World Trade Organisation (WTO) – you receive a barrage of hysterical abuse from Remainers, often with long academic titles. They are clearly terrified we’re on to something.
They say: ‘The EU would never agree to it!’, ‘The EU would not be minded to do a deal if we leave on bad terms!’, ‘You can’t do it in a no-deal situation’ and ‘We’d have to levy tariffs not just on EU goods but all good from around the world’. This last point was made on Radio 4’s Today programme discussion of Article 24 yesterday morning.
But these claims are wrong. We know they are wrong because collectively we have asked the EU: its Chief Negotiator Michel Barnier, its trade advisers and personnel, and people David has worked with for ten years on the International Trade Committee of the European Parliament doing trade deals. And together we’ve asked very senior people at the WTO and top trade lawyers too, such as the impartial Article 24 expert Lorand Bartels of Cambridge University.
Their conclusion: GATT Article 24 is not only doable, it is desirable. Here are a few facts relating to Article 24:
1) Let’s not confuse what ‘deal’ or ‘no deal’ we are talking about: we are not seeking to renegotiate the Withdrawal Agreement or attempt ratification of that deal by 31st October. Angela Merkel and other EU leaders have made it clear that ‘deal’ is not negotiable.
So this is not a deal based on the Withdrawal Agreement under EU law such as the Lisbon Treaty’s Article 50. Nor is it a trade deal conducted under the EU’s ‘Future Relationship’ or ‘Political Declaration’ provisions either with its binding legislation – it is a separate deal done under World Trade Organisation rules.
2) The World Trade Organisation makes trade rules, not the EU. There’s a clue in the title. The EU quite correctly works within the global rules system on trade via the WTO. Most EU free trade agreements incorporate WTO level agreements like GATS – the General Agreement on Trade in Services.
3) GATT was the predecessor to the WTO and Article XXIV/24 is contained within these global GATT rules which all individual WTO members – that includes the UK as an individual full WTO member, every EU member state as individual WTO members and the EU as an entity – agree to implement.
4) The whole point of the WTO is to promote free trade around the world. The WTO does not like tariffs (taxes on goods entering), quotas (a certain quantity of goods entering at a certain tariff) or barriers to trade (e.g. excessive regulation advantaging home producers or in services). So the WTO will not like it if the UK and EU return to imposing £13bn tariffs on EU goods and £5bn on British goods into the EU. It goes against the grain.
5) GATT Article 24 is there to allow two countries or blocs to move towards a free trade area or a customs union. It basically allows the two countries to level lower tariffs and quotas than what is called ‘Most Favoured Nation Rules’ (MFN). Ironically it is the very basis of the EU’s zero tariff Customs Union which took between 1957 and 1968 to actually enact.
By offering one country a better deal than other WTO members you are discriminating – you are offending the rule that everyone must be treated the same – so you must levy the same MFN tariffs to all. This is such an important rule it is actually Article 1 of GATT. But Article 24 is a specific exemption to this.
Free Trade Agreements (FTAs) are really a licensed form of discrimination where you are allowed to offer better terms to one country over all the others but only if you really free up trade – particularly getting rid of at least 90% of tariffs.
6) So given the WTO hates tariffs (it’s not happy with President Trump and others reimposing tariffs but that’s another story), then it is amenable to ways of avoiding tariffs without disadvantaging its other members.
So if the UK and EU go to the WTO jointly and say that we have agreed to move to a full and comprehensive Free Trade Agreement (what we term ‘SuperCanada’ – that is better than the EU-Canada FTA) – that keeps tariffs at zero with no real change to other members, the WTO is happy to allow us a period of time to keep tariffs and quotas at preferential rates. GATT 24 allows what are called ‘standstill’ arrangements – much remains the same and this is essentially a WTO form of a transition – but is not an interim arrangement as is often claimed.
We can keep tariffs at zero for as long as the two partners need to negotiate the full works: that comprehensive FTA. Legally this could be up to ten years, but most are two to three years to negotiate. That is GATT 24.
7) Yes, GATT 24 needs a temporary agreement between the EU and UK, but frankly it could be written on the back of an envelope. Lorand Bartels has helpfully written a one-page FTA properly that is sufficient to allow Article 24 to apply. This is a ‘basic deal’ or a ‘temporary FTA’. But it is entirely manageable and legally sound.
So to our Remainer friends – yes, you need a deal, but one or two pages of FTA is much easier than the 585-page Withdrawal Agreement to agree.
8) So why would the EU agree?
Well, the UK is the fifth largest economy in the world and the EU’s largest single market – bigger than the USA, China and India. The EU has a £96 billion goods deficit with us (we have a £13bn services surplus). Over a million German jobs alone rely on British consumers buying German goods like BMWs. Without a basic GATT 24 deal, the EU would have £13bn tariffs slapped on its goods – 10% on VWs; 12% on wine, 40% on cheese. They would suffer far more than the UK simply because they sell more to us than we do to them. The EU – particularly Germany, which accounts for nearly a quarter of all EU trade to the UK – does not like the idea of this. Better for everyone surely to keep on an even keel?
There is also the question of money. The UK may well be prepared to pay a fair contribution, if not anywhere near the £39 billion associated with the Withdrawal Agreement, but this would be contingent on such a basic deal. It is also much easier to deliver by the end of October.
In the absence of EU agreement to GATT 24, the UK can unilaterally and universally change its import tariffs, and be open to cutting all tariff rate quotas – but obviously the UK would not be able to control EU import tariff rates.
9) What about services and standards?
Services will be a part of the future trade deal but will be along the lines of ‘Mutual Recognition’ of standards or ‘enhanced equivalence’, not on a harmonisation or rule-taking basis.
10) What about all the the other non-trade elements, such as aviation flying rights?
GATT 24 is not the only basic deal needing to be done if there is no Withdrawal Agreement. It will need an accompanying flotilla of what we call ‘mini deals’.
But – good news – the EU has already quietly agreed most of these through emergency legislation. As an MEP, David has voted on 17 main pieces of legislation to keep trucks rolling, planes flying, trains running, goods flowing, fishing boats sailing, visa costs eliminated, energy efficiency maintained, social security cooperation, the Northern Ireland Peace programme running, Erasmus+ for students allowed, and other affairs. The UK just needs to reciprocate.
The reality is that much of the non-controversial elements of the Withdrawal Agreement can be agreed as separate ‘mini deals’ in exactly the same way – for example, the elements on citizens’ rights – but can be done outside the provisions of the European Court of Justice. This is the case with other EU free trade deals including Canada and Switzerland.
11) What about the Northern Ireland border and Good Friday Agreement?
Iain served as a soldier in Northern Ireland and well knows its challenges, whilst David worked on the Peace Process 20 years ago as a Government Special Adviser. There is no mention of the border in the Good Friday Agreement for a start (rather a sensitive subject!).
With Ireland only checking 1% of goods imported now and with existing trusted trader and other current mechanisms available, such as checks in factories and warehouses, even the EU admits alternative arrangements can be done with the border remaining free. No one wants a hard border. But the detail of this can await the negotiation of the bigger free trade agreement – and is part of that.
What GATT Article 24 represents is a Clean Managed Brexit – and what’s more it is deliverable by 31st October.
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First the bailout, now the backstop. The Irish Government’s solution to the financial crisis in 2008 was a blanket guarantee for the liabilities of the failing banks. It has some worrying similarities to the current position on the backstop.
Initially, the guarantee was regarded as an extremely clever move which would put one over on other jurisdictions, stabilise the banking system and would never be called in. It was tactically clever, but strategically disastrous. It was based on a bluff and our bluff was called. Large deductions are still being made today from every pay packet in Ireland to pay for this folly.
The backstop appears to have been retrieved from the same bluffer’s drawer in Dublin’s Government Buildings. The original backstop, which only covered Northern Ireland, was hailed as a smart manoeuvre which gave Ireland and Brussels the whip hand in the Brexit discussions.
Again, the early expectations that the backstop would be a trump card began to fade as the House of Commons refused to stomach it. The British Government had it extended to cover the whole of the UK in the Withdrawal Agreement, but again it hit the rocks. In reality, it was never a runner.
Not only has it has scuppered the premiership of Theresa May, it has also sent the moderate, pro-EU wing of the Conservative Party into total retreat. Meanwhile, Nigel Farage’s Brexit Party is threatening to inflict huge damage on both Conservative and Labour traditional bases outside London.
Boris Johnson is odds-on favourite to move into 10 Downing Street and adopt a much more confrontational attitude to Brussels, and indeed Dublin. Even if Boris stumbles yet again, the next occupant of that famous address will have a fairly similar approach.
We may be faced with a demand from London to conclude a free trade deal on the lines of the Canada-EU agreement (CETA), coupled with a declaration that the UK will not initiate any hard border on the island of Ireland, using advanced technology instead.
It would be the Taoiseach’s nightmare that in a messy Brexit, Brussels demands that Dublin respect the integrity of the Single Market and start erecting barriers. Ireland’s junior European minister, Helen McEntee, took up this theme when she opined that in a no-deal outcome, it would be very difficult for the Irish Government to reconcile its obligations to the EU with protecting the Good Friday Agreement.
And it was all so unnecessary. A few simple concessions could have allowed both sides move on to the next stage of Brexit, the future trade arrangements. The insertion of a time limit on the backstop would, in all probability, have secured the passage of the Withdrawal Agreement through Westminster.
The Irish Government’s bluff is being called and its Brexit policy is in tatters. Instead of giving lectures to the British people, the authorities in Dublin need a deep and critical examination of how they managed to contribute to the present unsatisfactory situation.
But such a reflective process is not the forte of Irish administrations and the Irish media, with the occasional notable exceptions.
Even if Boris or another new Prime Minister is not able to get the House of Commons to back his or her approach to Brexit, it is only a matter of time before a Brexiteer administration is returned to power, even if we have a short interregnum of a Corbyn/Lib Dem administration. No wonder that Presidents Macron and Juncker are coming around to the view that keeping a fractious and divided UK inside the EU would be a major mistake.
Meanwhile, our recent guest, the US President, is leaving nobody in any doubt about his support for a true Brexiteer in power in London. A future trade deal between a fully independent UK and the USA, coupled with trade wars between Washington and Brussels, is the stuff of nightmares for Ireland.
The London consultancy firm Primary Access, in analysing Irish investment abroad and Foreign Direct Investment in Ireland, stated that “Ireland has €93bn committed to the US, and €88bn to the UK in direct investment abroad; the comparable numbers for France and Germany are €4.4bn and €3.1bn respectively. The same pattern repeats in terms of inward direct investment. The US has €179bn, and the UK €58bn invested in Ireland; France has €15bn and Germany €5bn”.
As I have stated on many previous occasions, Ireland’s economic connections with mainland Europe are overwhelmingly those of the multinational (mainly American) companies located within the Republic.
If the international climate changes and these companies no longer feel comfortable in Ireland, we will be left with precious little else. In the meantime, our two closest economic and cultural partners, our neighbours to the west and east, as well as home to the majority of our diaspora, will have moved on without us.
In the European elections, the governing coalition parties in Germany recorded a vote which was over 18 per cent below their totals in 2014. The Greens and the Eurosceptic AfD gained ground. In Britain, the Brexit Party emerged as the clear winners, while Marine Le Pen’s group outpolled Macron’s party in France. In Italy, the Lega under Matteo Salvini stormed to victory and the left-wing pro-EU Democrats suffered heavy losses.
The four largest countries in the EU all recorded deep disillusionment. Yet to listen to Irish media, or indeed the EU Commission-financed Euronews, one would have imagined a triumphant endorsement of the present set-up.
Ireland (North and South) was one of the few countries which experienced a drop in turnout, which was particularly noticeable in Dublin, where only a 42 per cent poll was recorded. So much for Euro-election enthusiasm.
The Taoiseach is right. We are entering a dangerous period. And we have the backstop, and that bluffer’s drawer, in significant measure to thank for it.
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The Prosperity UK Alternative Arrangements Commission, which launched earlier this week, is a serious attempt to address the complexities of the Irish border and break the Brexit logjam. Co-Chair Nicky Morgan and I have decided to take an entrepreneurial approach to solving the conundrum of the Irish border, and ask the private sector for its help.
Our starting point is to find out what is possible by asking a panel of technical experts to develop credible Alternative Arrangements for the Irish border, which can be delivered in a timely fashion, and without the presence of physical infrastructure at the frontier.
The Commission will be made up of a broad spectrum of MPs and Lords, representing many different views on Brexit. The Commission is agnostic on the preferred future relationship between the UK and EU. Our work will be compatible with virtually all of the EU-UK end states currently under consideration and will ensure that the UK retains full flexibility in its future negotiations with the European Union.
There are three common misconceptions about Brexit which are relevant to the Commission.
The first is that Alternative Arrangements will not be necessary. But in every single scenario bar staying in both the EU Customs Union and the Single Market, for goods and agrifood, alternative arrangements of some kind will be necessary. And if we are in that scenario, we would have no ability to execute an independent trade policy or improve our domestic regulations, taking away all the potential economic gains of Brexit.
It is not well understood that free circulation of goods comes from both the Customs Union (CU) – and the rules of the Single Market. If the UK were a full member of the EU Customs Union, this would only address rules of origin. Checks would still be needed on animals, animal products (including processed food), plants and plant products. Technical regulations and standards that define specific characteristics of a product would also require checks. If the UK was in a CU, not the CU (like Turkey), the UK would need movement certificates for all relevant goods. For these very reasons, a customs union on its own does not solve the Irish border question.
Let us look at some of these potential scenarios:
- Membership of the EFTA/EEA? We will need to prove origin, and consequently, there will be customs checks.
- Membership of a Partial Customs Union? We will need movement certificates and there would need to be checks for standards, TBT (Technical Barriers to Trade) and SPS (Sanitary and Phytosanitary) issues.
- A Customs Union and EEA? We would still need movement certificates and some customs checks.
- A comprehensive Free Trade Agreement between the UK and the EU? Yes, this will require the complexities of the Irish border to be addressed.
- But what about leaving on WTO terms, a so-called ‘no deal’ scenario? Leaving the EU without a deal doesn’t absolve us from finding a solution to the Irish border. If anything, it makes it more important.
The second misconception is that there is no majority in Parliament for any Brexit alternative. But as avid BrexitCentral readers will know, the Brady Amendment was the only amendment during the recent Brexit debates to gain a parliamentary majority. Central to the amendment was the need to come to an agreed path on alternative arrangements for the Irish border.
The Alternative Arrangements Commission is – and was designed to be – a broad church. We welcome any parliamentarian who is committed to finding a workable solution to the Irish border, which means the UK can leave the EU.
The third misconception is that Alternative Arrangements for the Irish border would be a hi-tech unicorn, dreamt up by some futurologist in Silicon Valley and which would take years to develop. To that, I say, no, absolutely not. We are seeking solutions based on existing, working technology and processes. There just has not been sufficient practical work done on this by the Government or anyone else. And whilst this lack of work is regrettable, it does no good to look backwards.
The Commission has engaged a Technical Panel comprising border and customs experts, practitioners and lawyers with detailed knowledge of Ireland as well as the EU, UK and international trade regulations in order to create draft processes and procedures to fulfil our goal. In addition, the Commission will engage with established technology providers in order to develop a comprehensive set of solutions and timelines for review.
The Technical Panel will address the most challenging aspects of the Irish border including small traders, tax issues, security and movement of people, trusted trader schemes, rules of origin, financial settlement and issues relating to Sanitary and Phytosanitary Measures (i.e. treatment of food and plant-based goods).
The Commission is seeking solutions that are both realistic and sustainable and recognises that their formulation and implementation will require the engagement of many stakeholders in the UK, the Republic of Ireland and Europe. Central to the proposals will be a commitment to protecting the Good Friday Agreement.
There are no easy answers with Brexit, but I hope this Commission into Alternative Arrangements is the impetus for finding both the technical solutions and the political consensus for a deal with the EU. We owe it to the country, and Northern Ireland in particular, to do everything we can to create a seamless border in Ireland. Just because it has not been done before, does not mean it is impossible.
Anyone wishing to offer their expertise or to make a submission to the Commission can do so by emailing Greg Hands.
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As we rapidly approach the final showdown on the Withdrawal Agreement, it’s worth recalling what the problem with the backstop is.
At a visceral level, it really is about how we see our country. Are we going to keep the United Kingdom together? And what sort of trading country do we want to be once we leave the EU?
The United Kingdom as a whole gave notice under Article 50 that it was leaving the EU. That’s how it has to be under EU law: only states can be members. The EU has no legal basis at all, under the Treaties, for requiring that one part of the departing state be treated differently from the rest.
Yet we have acceded in that requirement without demur and the Withdrawal Agreement provides that Northern Ireland will be treated differently from the rest of the United Kingdom. Some say that this is because the Good Friday Agreement demands a different treatment and that it “trumps” the UK’s legal right to leave the EU under Article 50.
I have given my own views on the core issues in Ireland here. Our Government could have argued that there was hardly a word about borders and trade in the Good Friday Agreement and that it could be made perfectly consistent with our departure from the EU. The Government could have pointed out that, when Ireland ratified the creation of Article 50 in the Lisbon Treaty, it entered no reservation or objection that it might be inconsistent with the Good Friday Agreement – perhaps because it isn’t. As far as I know, these arguments were never made: we accepted that Northern Ireland had to be treated differently.
Now Northern Ireland is indeed different in one important respect and that is that its constitutional status within the UK is subject to the Good Friday Agreement, an international treaty that both recognises that it is fully part of the UK and makes provision for it to leave the UK and become part of the Republic, subject to a separate referendum in the two parts of the island of Ireland. In effect that provides the people of Northern Ireland with a guarantee of no constitutional change without their consent. It also means, as the Irish Taoiseach said at the time, that the decision on Irish re-unification is no longer one for the British government.
I have no doubt that the British government will and must adhere to that binding commitment. But we should bear in mind that it has two elements: the people of Ireland will decide if there is to be constitutional change; and the people of Northern Ireland have a veto on it, solemnly, through a referendum. The Withdrawal Agreement is heavy with declarations that it does not involve constitutional change in Northern Ireland. But this is like a burglar leaving a note in your ransacked sitting-room to say that he hasn’t burgled you. It doesn’t make it any less of a burglary. And the fact is that major constitutional change is being imposed on Northern Ireland with only opinion poll evidence that the change is acceptable. The people of Northern Ireland get no say and all but one (Lady Hermon MP) of their only functioning elected representatives are opposed.
And the constitutional change being imposed on them is significant. They will, under the backstop, be subject to the direct effect of EU law with no representation and a border will be erected in the Irish Sea going way beyond the plant and animal health checks that currently operate, putting Northern Ireland firmly in the EU’s economic sphere and outside that of the UK.
We will not therefore be leaving the EU together, as a single country, as we are entitled to do under international law, but in two broken bits, Northern Ireland and Great Britain.
But this backstop may never come into effect, surely. And the EU assures us it is temporary (but they won’t re-open the text to commit to that) while we sort out our future relationship. In fact no: the backstop as drafted is effectively permanent and it determines everything about the future relationship.
That is because the Withdrawal Agreement is explicit that the Irish Protocol stays fully in place “unless and until” it is replaced. Replacement is contemplated of course, in the form of a new trading relationship between the EU and the UK, but that new relationship will require assent from all EU member states, including Ireland.
So imagine if Ireland said, as is very likely, that they wanted the special economic status that Northern Ireland has in the backstop rolled over into the new trading relationship. Without that they’d veto the future trade deal. The UK could say no, and do without a formal trade deal. But then the backstop would remain in force, because it wouldn’t have been replaced. So if we agree to the demand, Northern Ireland retains its special status. And if we say no, Northern Ireland retains its special status. It’s the perfect EU snooker. Who would sign that?
So much for keeping the United Kingdom entire. But how does the backstop determine our future trading relationship, not merely with the EU, but with the world?
The impulse to maintain the Union is strong in the Conservative Party and not at all absent in other parties represented at Westminster. Mrs May and her team clearly decided at some stage that the economic severance between Northern Ireland and Great Britain would be too stark if the backstop kept the former in the EU economic sphere while the latter became an independent trading entity able to strike its own deals around the world: the full panoply of EU border controls at Larne, on UK sovereign territory, wouldn’t look good. So she persuaded the EU, somewhat against their will, that in the period when the backstop applied, Great Britain too would have a special status: not quite as fully under EU law as Northern Ireland, but in a basic customs union.
Confusingly (and the confusion may have been deliberate) she dubbed this proposal the “backstop to the backstop”, later shortened to “backstop”. So when the Government uses the word, it can mean one of two things or both, as the mood takes them. And it is probably true that many Conservative MPs, when they object to the “backstop”, are more fussed about this separate relationship between the EU and Great Britain than they are about the special status imposed on Northern Ireland.
This basic customs union for Great Britain is, in the eyes of the EU, definitely temporary: it was a concession they never wanted to grant. Both they and the UK expect to see it replaced in the future relationship. But with what?
It could in theory be with a Free Trade Agreement modelled on that signed by Canada. The EU has offered this (though it wouldn’t include Northern Ireland). It could be a much closer and subordinate relationship, similar to that between Norway and the EU. It could be as distant an economic relationship as that enjoyed by Moldova. In fact the EU has a whole suite of off-the-shelf models from which it has been inviting us to select for the last year.
The Government has declined to make that selection, partly because to choose is to divide your own followers, but also because selecting a point on the spectrum between “close and subordinate” and “distant but free” exposes the fundamental sacrifice of UK sovereignty in Northern Ireland.
The Government accepted early, and certainly by December 2017, that the decision as to what constituted a “hard border” in Ireland would be made by the EU and has spent the time since trying to pretend that this doesn’t oblige the UK as a whole to choose between maintaining its economic integrity and having an independent trade policy. That is the nub of the obfuscation and mistrust in which the Government has covered itself.
But behind the smoke, the Government, in agreement with the EU, has set a direction for the future relationship that resolves that choice at some mid-point between the two extremes. The special status of Northern Ireland, in the EU Customs Union and in large parts of the Single Market, will be set forever if we sign the Withdrawal Agreement. And to disguise the severance that creates in the economic integrity and sovereignty of the United Kingdom, Great Britain will enter some form of permanent Customs Union, shorn of any substantive ability to make trade deals and willingly subject to a broad array of EU law and regulation with no say.
This is not Brexit. Disruptive though it may be, we cannot go ahead from this point. We cannot sign the deal as it stands. The Irish backstop must go, or be rendered time-limited or terminable at the sole discretion of the British government. If the Attorney General cannot negotiate text (with the same legal status as the Withdrawal Agreement itself) that achieves one of those outcomes, then we need to take another path. That can only be fulfilling our obligations to British democracy and leaving with No Deal.
The post Why the Northern Irish backstop makes the draft Withdrawal Agreement unpalatable appeared first on BrexitCentral.
This past week has sadly brought further damaging rhetoric in the Brexit process and some who ought to be statesmanlike have been anything but.
This is surely a moment for statesmanship and for finding a way through the current impasse. We must calm things down and focus on developing a common sense solution to Brexit and the Irish border question in particular. In this context I welcome the visits of both the Prime Minister and the Taoiseach to Belfast and the meeting between both leaders in Dublin: this is the kind of engagement and leadership that is needed to help find a sensible way forward.
I recognise that the UK and the Irish Republic do not agree on Brexit itself and that many in Ireland feel hurt by the decision of the UK to leave the EU. Nevertheless, it is important we all respect democratic decisions of this nature, even when we don’t agree with them. Undoubtedly, the last two years have seen damage done to the three sets of relationships that formed the core of the Good Friday/Belfast Agreement.
The absence of the political institutions, including the Assembly and the North-South Ministerial Council, has been to the detriment of all of us. Just think how differently we might have handled this very difficult situation if such institutions had been in place to provide a forum within which Belfast and Dublin could engage and take a more considered view on all of this. Instead, the politics of cooperation has been replaced by the old ways of megaphone diplomacy.
However, we are where we are and leaders on both sides of the border have hitherto shown a remarkable capacity to overcome enormous challenges in the peace process to find our way to the common ground. In the remaining weeks leading up to 29th March, we must do so again. Whilst it is London and Brussels who take the lead in negotiations, I believe that Dublin and Belfast can play a constructive role in helping to find the solutions.
We can begin by recognising that we already occupy significant common ground.
We all agree that the need to protect the peace process and the political and institutional arrangements of the Good Friday, St Andrews and Stormont House Agreements is vital.
Secondly, none of us want a hard border on the island of Ireland or the creation of a new border in the Irish Sea. Both the Republic of Ireland and Northern Ireland do a substantial amount of trade with Great Britain as well as with each other. The Common Travel Area ensures the free movement of people across the islands and is accepted by the EU. Now we need to find a sensible solution to ensure a similar approach on the smooth movement of goods. We in the DUP are of the view that a pragmatic approach can deliver an outcome on customs and trade that does not fundamentally undermine the EU single market or the UK single market.
Thirdly, both countries want to avoid a ‘no-deal’ outcome if possible as we recognise this could have significant implications for the short- to medium-term economic stability and prosperity of both parts of the island. Building stability and prosperity goes hand in hand with building peace.
For us, the primary problem with the draft Withdrawal Agreement is the backstop. It is not only the DUP that has concerns about the backstop and our opposition to it has been supported by many from all parties across the House of Commons.
On two occasions now, the House of Commons has voted decisively to reject the backstop in its current form and to call for legally-binding changes to these potentially harmful proposals. Our position on the backstop is also supported by other unionists like Nobel Peace laureate Lord Trimble, who has said that the proposals have the potential to “turn the Belfast Agreement on its head and do serious damage to it.”
Lord Trimble is in the process of taking legal action to challenge the legality of the backstop and his case is supported by leading experts on the Good Friday Agreement such as Professor Lord Bew. For such key architects of the Good Friday Agreement to raise serious concerns about the damaging nature of the proposed backstop must surely encourage the Taoiseach and others to pause and consider other options which are capable of commanding a wider cross-border and cross-community consensus.
If the current impasse between the UK and EU over the backstop results in no-deal then it will further damage relationships between Northern Ireland and the Republic and undermine the prospects for restoring the political institutions. The absence of these institutions over the past two years has seen a re-polarisation of attitudes on both sides in Northern Ireland.
In my opinion, securing a deal on Brexit that is broadly acceptable can only improve the prospects for restoring the institutions. It may suit Sinn Fein to have a chaotic situation, but it surely can’t be in the interests of anyone else. Sinn Fein has tried to exploit the uncertainty over Brexit to raise the border poll issue, hoping to force a referendum in the near term. This is, of course, a party that was fiercely opposed to Ireland’s membership of the EU and sought to vote down each successive European Treaty. Clearly, Sinn Fein is self-serving, and its claim to act in the wider interests of the ‘Irish people, north and south’, is bogus.
The consequences of a no-deal outcome will undoubtedly impact on the economies on both sides of the border, with their heavy dependence on the agri-food sector. InterTrade Ireland commissioned the Economic and Social Research Institute (ESRI), an Irish think-tank, to conduct an analysis of the impact of Brexit on the Irish border. ESRI looked at several different scenarios, including one where trade between Ireland and the UK would be based on WTO rules. The resulting imposition of tariffs and non-tariff barriers in this scenario could result in Irish trade to Great Britain falling by 12%, British trade to Ireland falling by 6%, Irish trade to Northern Ireland falling by 14%, and Northern Irish trade to Ireland falling by 19% – resulting in a total reduction in cross-border trade of 16%.
Agri-food in particular is a sector that has expressed concerns about no-deal. A study of the impact of a no-deal Brexit on the EU’s agri-food industry has claimed that beef and cheese exports from Ireland to the UK could collapse by up to 90% with the loss of over 3,500 jobs. No amount of preparation by any government can nullify the significant economic implications outlined.
Additionally, a further fall in the value of sterling in a no-deal scenario would worsen the outcome for Irish exports to Great Britain and Northern Ireland. In this scenario, Irish trade to Great Britain would fall by 20%, British trade to Ireland would remain broadly similar (at +0.3 %), Irish trade to Northern Ireland would fall 21%, and Northern Irish trade to Ireland would fall 11% – so there would be a total fall in cross-border trade of 17%.
Despite these stark statistics, there are some who seem determined to impose the backstop. Yet the Withdrawal Agreement and backstop in their current form have been roundly rejected in the UK Parliament because they could lock us indefinitely into an arrangement that undermines the economic integrity of the UK. The backstop is designed to prevent a hard border but could ultimately result in no-deal and actually compel the EU to impose a hard border in Ireland.
Having been an MP for over 20 years and in frontline politics since the early 1980s, too many times have I seen politicians become wedded to an idea and intent on implementing it, even when they are aware of the dire consequences. Now is not a time for brinkmanship but for leadership.
I am convinced that there are better solutions than this. Whilst I am not going to be prescriptive in this article about what they may be, I am aware of several ideas, including the ‘Malthouse Compromise’, that are surely worthy of serious consideration. If the political will is there on both sides, I firmly believe we can find a solution.
The people of the United Kingdom voted by a majority to Leave the European Union. Despite this, the leadership of the EU and some in the UK have sought to frustrate the will of the people and to make it as difficult as possible for our country to Leave. The indefinite nature of the backstop would harm the constitutional and economic integrity of the UK.
The EU leaders have asked Parliament to state clearly what we want. That answer is now clear and the EU must address British concerns about the backstop if a no-deal outcome is to be avoided.
If the EU truly want to avoid harm to the peace process and to protect the political arrangements established under the Belfast/Good Friday Agreement, then they need to take account of unionist concerns as well as those of nationalists, otherwise, as Lord Trimble has said, they violate the core principles of the Agreement.
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