25.In advance of the Parliamentary approval vote on 15 January 2019, the Prime Minister wrote to Presidents Tusk and Juncker seeking a commitment that negotiations on the future relationship will consider:
all available facilitative arrangements and technologies for replacing the backstop with permanent arrangements that ensure its underlying objectives continue to be met. These ideas need not replicate the provisions of the protocol in any respect, and the UK is ready to work ambitiously and creatively with the EU on this.45
President Juncker’s response stated:
Given our joint commitment to using best endeavours to conclude before the end of 2020 a subsequent agreement, which supersedes the Protocol in whole or in part, the Commission is determined to give priority in our work programme to the discussion of proposals that might replace the backstop with alternative arrangements. In this context, facilitative arrangements and technologies will be considered. Any arrangements which supersede the Protocol are not required to replicate its provisions in any respect, provided that the underlying objectives continue to be met.46
26.The Attorney General subsequently wrote to the Prime Minister stating that:
The Council’s conclusions would have legal force in international law and thus be relevant and cognisable in the interpretation of the Withdrawal Agreement, and in particular the Northern Ireland Protocol, albeit that they do not alter the fundamental meaning of its provisions as I advised them to be on 13 November 2018 [ … ] It is my opinion, that the balance of risks favours the conclusion that it is unlikely that the EU will wish to rely on implementation of the backstop provisions.47
27.In the following section we make two proposals which could build confidence that the backstop arrangements will not become ‘base camp’ for negotiations on the future relationship:
28.On 22 November 2018, the negotiators agreed a Political Declaration setting out the Framework for the Future Relationship between the European Union and the United Kingdom, which expanded on and replaced the earlier outline Political Declaration of 14 November.48 The declaration calls on the UK and EU to agree “an ambitious, wide-ranging and balanced future economic partnership” with “a free trade area” and “wider sectoral cooperation” where it is in the mutual interest of both parties.49 Unlike the Withdrawal Agreement, the Political Declaration is not a binding legal document and it is unlikely that it could bind the parties to anything beyond a commitment to negotiate for a future relationship in good faith, which is set out in Article 184 of the Withdrawal Agreement.50
29.The Political Declaration contains references to a future relationship consistent with the UK’s preferred approach of specific solutions and maximum facilitation:
[The EU and UK] intend to consider mutual recognition of trusted traders programmes, administrative cooperation in customs matters and mutual assistance, including the recovery of claims related to taxes and duties, and through exchange of information to combat customs fraud and other illegal activity. Such facilitative arrangements and technologies will also be considered in developing any alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing.51
30.However, the Political Declaration also contains the following passage at paragraph 23 on tariffs:
The economic partnership should ensure no tariffs, fees, charges or quantitative restrictions across all sectors, with ambitious customs arrangements that, in line with the Parties’ objectives and principles above, build and improve on the single customs territory provided for in the Withdrawal Agreement which obviates the need for checks on rules of origin.52
31.An almost identical passage, referring to the EU and UK’s common objective of establishing “ambitious customs arrangements” that “build on the single customs territory provided for in this Protocol” is also included in the preamble to the backstop.53 Martin Howe QC, Chairman of Lawyers for Britain, told the Committee that this passage is not compatible with a conventional free trade agreement because:
all conventional free trade agreements necessarily involve rules of origin checks on goods that pass between the free trade members. The reason for having those checks is that they are the necessary counterpart of the freedom of each free trade party partner to set its own tariffs in dealing with third countries.54
Similarly, Victoria Hewson, Senior Counsel at the Institute for Economic Affairs, said:
[Paragraph 23] envisages customs arrangements that build on the single customs territory and the regulatory side says that the UK will consider aligning with EU regulations. Actually, the future relationship track is not that far away from the track that the backstop is on anyway, so in an effort to avoid triggering the backstop, as someone who supports leaving the customs union and embarking on an independent trade policy, I would be very worried that in order to avert the backstop we essentially formalise it as the permanent future relationship.55
32.We recommend that Paragraph 23 of the Political Declaration be amended and the preamble to the Protocol be clarified in a judiciable form to make absolutely clear that the backstop arrangements are designed to prevent a hard border only and should not be taken as the baseline starting position for negotiations on the future UK-EU relationship. These changes, which are compatible with the EU’s stated intent, would build confidence for the UK that the EU is genuinely open to a future relationship that will enable it to have an independent trade policy.
33.The Withdrawal Agreement does not provide a clear definition of the conditions any future UK-EU agreement must meet before it can supersede the backstop. Article 1.3 of the backstop, in conjunction with the preamble, states any future relationship must:
34.The Committee questioned the former Secretary of State for Exiting the EU, Dominic Raab MP, on whether he had ever discussed the meaning of the term “hard border” with Michel Barnier. On 30 January 2019, he told us:
Not in abstract conceptual terms, no. Whenever we talked about checks, the EU would say—I paraphrase—“We have to make sure that our rules and equities are respected and that the indivisibility and integrity of the single market is preserved”. We would say, “Of course, you do not need checks at the border for that”.57
The Committee questioned experts on their interpretation of these crucial phrases from the Withdrawal Agreement and received a variety of responses. Some witnesses interpreted these commitments as strictly referring to the avoidance of physical infrastructure. David Henig, Director of the UK Trade Policy Project, said:
I try not to use the phrase “hard border”. I try to use the phrase “border infrastructure”, because that is a more helpful definition, so that is how I have been defining it.58
Similarly, Martin Howe QC said:
I would have thought the obvious meaning is related to the physical infrastructure on the border, or maybe it means having checks and controls with a van that turns up and places itself on the border.59
Dominic Raab told us:
In the worstcase scenario, a hard border envisages or depicts going back to some of the checks that characterised the position before we had the Belfast agreement, with all the Troubles. I prefer to think that the threshold or the litmus test, if you like, is the one Jon Thompson used, which is no additional infrastructure at the border.60
35.However, other witnesses gave a much broader definition of what could constitute a hardening of the border in Northern Ireland. Colin Murray, Reader in Public Law at Newcastle University, said:
There was a rather flippant story last week about roaming charges returning as soon as the UK leaves the EU and how that is going to affect holidaymakers. I suppose, at the border in Ireland, that is not a holidaymaker issue; that is a day-to-day, lived reality. Your phone will keep flipping between different providers. Everything that changes the arrangements at the moment and makes life more difficult you could characterise as a hardening.61
Tony Lloyd MP, Shadow Secretary of State for Northern Ireland, described the ease with which people travel and work across the border today and concluded that “any impediment to the normalcy that has been developed over the last 20 years” could be part of the hard border.62 Dr Etain Tannam, Associate Professor of International Peace Studies, Trinity College Dublin, also supported a “holistic definition” which encompasses “the peace process, cultural and work links”. She said:
In terms of the security risk, there has been a focus on the physical side because of dissidents targeting that if there is physical infrastructure, but it is a broader concept.63
36.Isabelle Van Damme, Counsel at Van Bael and Bellis, posited the following analysis for the inclusion of these broad concepts in the Withdrawal Agreement:
[The EU and UK] might be trying to describe a situation where they are trying to protect the status quo as it is today, in circumstances where the regulatory framework is entirely changing. EU law and free movement facilitated the implementation of these arrangements in the past and now that framework is disappearing, so they are trying to put something in place whereby the status quo, whatever it is today, is somehow maintained.64
This point was echoed in the response of Tony Lloyd MP, who described the Government’s preparations for Brexit as indicative of “an acceptance that things will change and that there will be a creation, through Brexit, of a changed status”.65
37.Sir Stephen Laws, First Parliamentary Counsel 2006–2012, encapsulated the spectrum of responses in stating, “I certainly would not say that hard border is an expression that everybody would understand within its natural meaning.”66 Other commentators have identified differing UK and EU interpretations of these key commitments in the Withdrawal Agreement. A report by Dr Katy Hayward and Professor David Phinnemore of Queen’s University Belfast concluded:
The UK in the Joint Report recall a commitment to avoiding ‘any physical infrastructure or related checks and controls’, although subsequent statements have suggested that this is understood to be ‘at the border’—so opening up the possibility of checks near or further away from the border. The EU, on the other hand, understands a hard border in much broader terms of trade friction, referring to, for example, non-tariff barriers to trade. The persistence of such differences highlights the reasons why the decision to exit the terms of the backstop cannot be a unilateral one. It also highlights the need for clarity on the conditions for such an exit or a disapplication, and on the process.67
38.In a research note for Policy Exchange, Professor Guglielmo Verdirame and Professor Richard Ekins also raise concern that the EU and UK “may not share a common understanding” of the relationship between the Belfast/Good Friday Agreement and the backstop.68 The paper highlights their view that the Withdrawal Agreement leaves “unspecified” the type of agreement which could eventually supersede the backstop and recommends that the Government “hold the EU to a reasonable interpretation” of the type of agreement capable of superseding the backstop.69
39.The UK’s decision to leave the EU necessitates change. It is understandable that in the context of a post conflict society change to the status quo is met with caution. It is incumbent on all parties to work together to ensure that these changes do not undermine the normalcy of cross-border relationships on the island of Ireland.
40.Establishing an agreed understanding of the terms used to describe the border and North/South cooperation is crucial. These criteria will delimit the possibilities of the future UK-EU relationship. Some witnesses interpret the avoidance of a hard border with maintaining, in every detail, the current regulatory and customs environment in Northern Ireland. Under this interpretation, any change, from a switch in mobile roaming charges to increased veterinary inspections, may constitute an unacceptable hardening of the border.
41.The lack of clarity over key terms in the Withdrawal Agreement, which sets out the conditions any future UK-EU agreement must meet in order to succeed the backstop, is not conducive to trust or transparency. It heightens the scope for misunderstanding. The Withdrawal Agreement must not repeat the mistakes of the Joint Report in allowing differing interpretations of key commitments to persist unresolved into the next stage of negotiations. We recommend the EU and UK clarify, in legally recognisable terms, before the 12 March 2019, their joint expectations regarding these key phrases to ensure that both sides share the same understanding of what a future relationship, that can supersede the backstop, could look like.
42.The amendment passed on 29 January 2019, requiring the Prime Minister to replace the backstop with “alternative arrangements”, has placed a renewed focus on the tension between regulatory alignment and the UK’s preferred option of specific solutions or maximum facilitation.70 The Prime Minister subsequently announced the establishment of an Alternative Arrangements Working Group which would investigate other options for avoiding a hard border.71 The Secretary of State for Exiting the EU, Stephen Barclay MP, and other Ministers have been meeting with backbench MPs to support the work of the group.72 One proposal, commonly known as the Malthouse Compromise, advocates replacing the backstop with a free trade agreement. The proposals rely on technology, customs techniques and enforcement away from the border in place of regulatory alignment.73
43.During our previous inquiry, the Committee investigated different border systems across the world, looking for a working model of an infrastructure-free border which could be adapted to meet the needs of Northern Ireland. We visited the Swiss border at Basel, took oral evidence from Norwegian and Gibraltarian officials and scrutinised international examples such as US-Canada. None of these share Northern Ireland’s security imperative to avoid infrastructure at the border and, in the case of Switzerland, we heard of plans to streamline border processes further.74 However, we were bound in our report, to observe that “we have had no visibility of any technical solutions, anywhere in the world, beyond the aspirational, that would remove the need for physical infrastructure at the border”.75 Whilst there was indeed no ‘off- the shelf’ solution, we have heard further evidence on the possibility of designing bespoke arrangements which could meet the requirements of the EU and UK in respect of Northern Ireland.
44.The Committee questioned two experts, former Director of Capacity Building at the World Customs Organization, Lars Karlsson and, Brexit advisor at SGS Government and Institutions Services, Hans Maessen, to establish the viability of a maximum facilitation approach for the island of Ireland. Both have published papers setting out proposals for managing the flow of goods on the island of Ireland after the UK has left EU.
45.It is notable that although their proposals for managing trade outside the EU differ in substance, both Hans Maessen and Lars Karlsson agree with the fundamental point that leaving the EU means new regulatory and customs controls for goods crossing the land border. Hans Maessen said:
In all scenarios for Brexit, there will be the need for border controls. Only if Brexit does not take place, this will not be necessary. There are fiscal and non-fiscal reasons for border checks. Import duties and VAT need to be administered as goods are exported and imported. Regulatory checks are necessary to secure that all regulations concerning health, safety and environment are met.76
Lars Karlsson told us:
Even if you have a free trade agreement it does not remove the responsibility to have some border formalities for other reasons than tariffs—sanitary controls, intellectual property rights, product safety, agricultural reasons and 10 or 15 other types of legislation that are there—that the UK and the EU want to control. That will still be there.77
46.Consequently, their proposals both work on the basis that the required documentary and physical controls on goods crossing the land border could be enforced without recourse to traditional physical infrastructure or checks at the border line.
Box 1: Lars Karlsson’s proposals
Lars Karlsson was commissioned by the European Parliament’s Committee on Constitutional Affairs to write a paper exploring how modern customs techniques could be used to avoid a hard border on the island of Ireland. It is important to note that all the separate elements which make up the proposal “have been tested somewhere in the world just not in one single border” and as such the border in Northern Ireland would be “the first and a leading example in the world of this kind.”78 The following elements make up his technical solution for the Northern Ireland land border:
47.In our previous report, we noted that Lars Karlsson’s proposals reference automatic “gates” operated using mobile phone technology and border surveillance using cameras. As these elements strongly suggest physical infrastructure at the border, we invited Mr Karlsson to appear before the Committee to clarify the details of his proposals. He told us a border without any infrastructure or gates is possible but would require digital surveillance via the use of Automatic Number Plate Recognition cameras on border roads.79 In light of the two-year implementation period set out in the Withdrawal Agreement, we also enquired how long it would take to deliver a smart border model in Northern Ireland. He replied:
If there is a decision that the highest level of trust is there so we do not need any infrastructure, then there is no time limit to put that in place, but the soft infrastructure would not be there for 29 March. That is too short a period to get people to fulfil the obligation, so both sides would be comfortable with a solution like that. We have seen in other places to get the soft infrastructure in place we are talking about something between one and a half to two years. That is what it takes to do it. In the scope of a transition period it would be possible to get a soft infrastructure in place [ … ] Obviously, there would still need to be a lot of work done on education of traders, of building electronic systems, so it is possible for them to fulfil these obligations that are there with minimum cost, with minimum disruption and extra burdens on the private sector.80
Box 2: Hans Maessen’s proposals
In July 2018, Hans Maessen authored a report entitled ‘Drive through borders: a comprehensive UK and EU customs strategy for Brexit’ which proposes a toolkit of 13 customs simplification techniques which could be tailored depending on the situation from ports to the Channel Tunnel or the Northern Ireland land border. His solution is based on the following elements:
48.Hans Maessen told us that because his solutions already exist in the EU’s Union Customs Code it would be possible to “organise the system within the transition period” and have it “all working fine”.82 Hans Maessen also contributed to the ‘Better Deal’ proposals, published 12 December 2018, which underpin the alternative arrangements set out in the Malthouse Compromise below.83
Box 3: Proposals in the Malthouse Compromise
The Malthouse Compromise proposes two options to break the impasse in Parliament over the Withdrawal Agreement. The first option is to replace the backstop arrangements with a free trade agreement based on a maximum facilitation approach. If this option is non-negotiable, securing a two year “transitional stand still period” in which to negotiate further and allow both sides to prepare for the UK leaving on World Trade Organisation terms.84 Annex 1 in the blogpost setting out the Malthouse Compromise provides the following details about the free trade agreement it proposes will form “The New Backstop”:
49.However, David Henig, Director of the UK Trade Policy Project, and Co-Founder of UK Trade Forum, expressed reservations about the evidence the Committee heard from Lars Karlsson and Hans Maessen, he said:
They are not considered by many in the customs field to be representative. There is a lot of scepticism about the evidence they are providing and the solutions they are suggesting. On that basis, I can understand why people are being cautious.86
Mr Henig’s main objection to their proposals is regarding the timeframe required to implement a system based on technical solutions. He said:
Let us put realistic timescales on this. There was the e-Borders system that the Home Office commissioned in the early 2000s and admitted in 2014 would never in fact be fully operational.87
50.A common theme running through the evidence that we have heard on the backstop arrangements and technical solutions is the role of trust. Sir Stephen Laws, First Parliamentary Counsel 2006–2012, characterised this in relation to finding an exit mechanism:
We have discussed various ways in which there might be a legal solution to this, but that does not address the real problem. The problem is not that there is not an exit from the backstop; the problem is that there is a lack of trust on each side that is triggered by the backstop. Finding a solution to the problem of lack of trust is more difficult, perhaps, than finding a solution to the backstop.88
51.Lars Karlsson told us that the most important factor for achieving an infrastructure-free border is the level of trust between the countries operating that border:
At the highest level, which is what you are asking about, there would be no infrastructure at all. This is about how much trust there would be on these different levels. If the trust would be on the top level, we do not have any examples like that yet [ … ] Then you could use the fact that you have a trusted exporter here, a trusted transporter driving, a trusted importer on the other side and you use the timestamp instead of the border at the premises of the importer.
David Henig told us he could envisage “these sorts of solutions” playing a part in ensuring there was no border “in perhaps 10 years or more” but he also admitted, in terms of a timeframe for a technical solution, that this was a “guesstimate” and that “I cannot put an exact number on it”.89 He said:
This is not just primarily about technology. This is a process question. How do you actually make sure you go through all the processes, you build up all the trust, you build up all the legal systems possible, such that both sides are completely sure that you can do this? [ … ] These systems take a long time; the processes take a long time; the trust-building takes a long time. I do not doubt it can be done. That actually puts me at odds with quite a lot of customs experts who say it can never be done. I do not doubt it can be done, but it will take a long time .90
52.If the UK leaves the EU without a deal on 29 March 2019, there will be no transition period, and trade between the UK and EU will be conducted on World Trade Organisation terms.91 The Government’s analysis of the implications of a no deal scenario for Northern Ireland includes the following points:
53.EU Chief Negotiator, Michel Barnier, told the Exiting the EU Committee on 3 September 2018:
If there is a no deal there is no more discussion. There is no more negotiation. It is over and each side will take its own unilateral contingency measures, and we will take them in such areas as aviation, but this does not mean mini-deals in the case of a no deal. We want a deal. We want an overall agreement; otherwise each will take their own contingency measures on their own side. That is why I want an agreement. I know full well, the worst scenario is indeed the no deal scenario.93
The EU, UK and Ireland have all published contingency planning documents setting out unilateral measures to reduce disruption in a no deal scenario. Irish Taoiseach, Leo Varadkar, has acknowledged that a no deal scenario would require Ireland to have “very difficult discussions with our EU partners” to work out customs and trade arrangements “compatible” with its EU membership.94
54.The impasse over future arrangements for Northern Ireland in the Withdrawal Agreement is symptomatic of a fundamental lack of trust between the UK and EU in the negotiations. The UK has committed that any future relationship will avoid a hard border on the island of Ireland and respect the integrity of the EU’s single market. The EU has committed to start work immediately on finding specific solutions for avoiding a hard border. However, mistrust has led both the UK and EU to focus on securing legal guarantees to protect their own positions as they see them, rather than negotiating a future agreement which can deliver on the stated aim of avoiding a return to the UK-Ireland border of the past.
55.All the proposals we have heard for a maximum facilitation approach would require the EU, UK and Ireland to share highly integrated digital systems such as TRACES, ECMS, VIES and the Common Transit Convention, put in place special solutions for agricultural goods and to collaborate in the implementation of highly sophisticated risk-based enforcement measures away from the border. This is not a simple, quick-fix solution and implementing it in Northern Ireland would represent a world-first. The balance of the evidence suggests that, far from being a ‘unicorn’, such a solution is possible and that it could be designed, trialled and piloted within the 21-month implementation period, which would be a substantial achievement. The key obstacle is the lack of trust and goodwill between negotiating parties rather than the absence of systems and technologies. It is not a promising start for the next phase, the determination of the future trading relationship.
46 Joint letter of President Tusk and President Juncker to Theresa May, Prime Minister of the United Kingdom, 14 January 2019
47 Letter from the Attorney General to the Prime Minister on the Northern Ireland Protocol, 14 January 2019
48 Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as agreed at negotiators’ level on 14 November 2018.
49 The Political Declaration on the Framework for Future EU-UK Relations, House of Commons Library Briefing No. 08454 21, December 2018
50 The Political Declaration on the Framework for Future EU-UK Relations, House of Commons Library Briefing No. 08454, 21 December 2018
51 Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom, 25 November 2018
52 Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom, 25 November 2018
53 Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council, 25 November 2018
56 Article 1, protocol on Ireland/Northern Ireland, Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council, 25 November 2018
67 Brexit and the backstop, UK in a Changing Europe, 7 November 2018
68 Strengthening the UK’s position on the Backstop, Policy Exchange, 29 January 2019
69 Strengthening the UK’s position on the Backstop, A Policy Exchange Research Note, Professor Guglielmo Verdirame and Professor Richard Ekins, January 2019
70 Tuesday 29 January 2019 Order Paper No.240: Part 1
71 [Prime Minister] Hansard Volume 654, Leaving the EU, 12 February 2019
73 The Malthouse Compromise – an official explainer in full, Conservative Home, 3 February 2019
74 [DaziT transformation programme] The land border between Northern Ireland and Ireland, 16 March 2018
75 The land border between Northern Ireland and Ireland, Northern Ireland Affairs Committee, HC329, 16 March 2018
76 Drive through borders: a comprehensive UK and EU customs strategy for Brexit’, Hans Maessen, July 2018
77 Q83[Lars Karlsson] Oral Evidence to Northern Ireland Affairs Committee, Follow-up inquiry, 13 November 2018
78 Q6, Q74, [Lars Karlsson] Oral Evidence to Northern Ireland Affairs Committee, Follow-up inquiry, 13 November 2018
79 Q90, Q96, Q2, Q69 [Lars Karlsson] Oral Evidence to Northern Ireland Affairs Committee, Follow-up inquiry, 13 November 2018; Q1165 [Lars Karlsson] Oral evidence to Exiting the EU Select Committee, 20 March 2018
80 Q14 [Lars Karlsson] Oral Evidence to Northern Ireland Affairs Committee, Follow-up inquiry, 13 November 2018
81 Drive through borders: a comprehensive UK and EU customs strategy for Brexit, Hans Maessen, July 2018, Correspondence, A general customs solution after Brexit for EU UK trade and the Irish land border, Hans Maessen, 12 December 2018
83 A better deal, Shanker A Singham, Robert MacLean, Hans Maessen, 12 December 2018
84 The Malthouse Compromise – an official explainer in full, Conservative Home, 3 February 2019
85 The Malthouse Compromise – an official explainer in full, Conservative Home, 3 February 2019
91 What if there’s no Brexit deal? House of Commons Library, CBP08397
92 Implications for Business and Trade of a No Deal Exit on 29 March 2019, 26 February 2019
94 No-deal Brexit ‘means hard border’, BBC News, 23 January 2019
Published: 9 March 2019