Oil and gas industry warned British government's Brexit proposals unlikely to be agreed by EU

Adam Johnson, director of Leeds-based Tudor International Freight, said the government had apparently sent the EU some ideas for replacing the so-called Irish backstop. This was the element of the current draft deal that would effectively keep the whole UK in the EU’s customs union temporarily after Brexit, which had been a main cause of its decisive rejection three times by MPs.

The backstop’s aims - all of which the EU says must be achieved by any replacement mechanism - are avoiding a hard border, protecting the all-Ireland economy, preserving north-south co-operation and maintaining the integrity of the EU single market and customs union.

Johnson said the Prime Minister’s suggestions for an alternative to the backstop seemingly included trade-related provisions, such as common rules for Northern Ireland and the republic - which will remain an EU member - covering agricultural items like live animals and plants.

He was also said to be advocating the use of aids such as modern technology, online form completion, trusted trader schemes and a general exemption from customs procedures and reporting for Northern Ireland’s businesses below the VAT threshold.

Johnson said: “The backstop question is no parochial Irish matter, as it’s the key reason oil and gas sector businesses still face the possibility of a calamitous no-deal Brexit. This is despite recent events in Parliament apparently having made this less likely on the current deadline day of 31 October.

“However, the Prime Minister’s reported proposals - which would effectively make Northern Ireland a special economic zone within the UK - seem unlikely to be agreed. For one thing, while an all-Ireland approach to agricultural items such as animals and plants is understandable, as this forms the most significant category of cross-border commerce, it still only accounts for 30 per cent of this traffic.”

Johnson said overall 13 000 lorries used the border’s 300 road crossings daily and the government’s idea was apparently that other elements of the backstop, relating to important areas such as the treatment of industrial and manufactured goods, customs and VAT, should simply be abolished.

He said: “It’s also noteworthy the Prime Minister is not seemingly suggesting complete regulatory alignment even for items like animals and plants, as he’s said to be proposing Northern Irish exemptions from measures such as EU labelling rules for them. In addition, the idea creates the prospect of two borders - one at Irish ports for this agricultural cargo and another between Northern Ireland and the republic for everything else - which seems implausible.”

Johnson said one reason to dispute the suggestion that aids such as technology and trusted trader schemes could now make a border invisible was the UK had yet to produce workable, detailed proposals itemising how this could be achieved, despite well over three years having passed since its EU membership referendum. Another was the fact that even at frontiers between countries with similar relevant regulations, such as Norway and Sweden or Canada and the United States, some infrastructure was still necessary.

He said: “A customs and reporting exemption for small businesses is unlikely to be agreed by the EU either, for various reasons. One is that 94% of companies sending goods from Northern Ireland to the republic are thought to have fewer than 50 staff and their shipments account for 47% of the value of north-south trade.

“Such an exemption would therefore largely provide an open door into the EU single market and customs union for goods which didn’t necessarily meet their regulations, including those transported by smugglers. The proposal appears to assume that every risk associated with waiving customs and reporting requirements is posed by goods sent from larger firms which seems, to put it politely, questionable.”

Johnson said these, and additional, trade-related weaknesses were supplemented by others in the reported ideas, plus associated differences between the government and EU, in areas such as wider economics, politics and timescales. It therefore seemed the Prime Minister’s suggestions may not form the basis for a revised withdrawal agreement, certainly by the end of next month, partly because the EU would not see them as achieving all the backstop’s aims.

He said: “It’s thus probable - barring unforeseen events - that the choice confronting the government in October could be between requesting a further deadline extension and flouting the law by attempting to achieve a damaging no-deal Brexit, which we sincerely hope doesn’t happen.”

Read the article online at: https://www.oilfieldtechnology.com/special-reports/30092019/oil-and-gas-industry-warned-british-governments-proposals-unlikely-to-be-agreed-by-eu/