17 October 2019

What Boris’ deal means for Northern Ireland and the DUP

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The DUP again finds itself in the uncomfortable position of opposing a Brexit deal agreed by the Conservative government, with which it is supposed to be allied.

Previously, it rejected Theresa May’s Withdrawal Agreement alongside MPs in the European Research Group (ERG) of Tory eurosceptics. Now, many high-profile Conservative Brexiteers have expressed support for the prime minister’s renegotiation. It’s difficult to judge how many ‘Spartans’ will stick by the DUP if it doesn’t change its mind.

In theory, Brussels has dropped some of its most uncompromising red lines, but Northern Ireland’s relationship with the rest of the UK is set to be redrawn drastically in the face of demands from the EU and the Irish Republic. The new arrangements aren’t an ‘insurance policy’ in case a trade deal fails to come up with ‘alternative arrangements’ for the border. This is intended to be permanent, even if an exit mechanism is available in theory.

Is it possible, then, for the DUP to soften its opposition to the deal and accept the revised Northern Ireland protocol without alienating voters?

The new agreement effectively creates a customs border down the Irish Sea, contrary to repeated promises from two prime ministers that this could never be allowed to happen.

Northern Irish companies will pay tariffs to ‘import’ goods from the British mainland that are ‘at risk’ of later entering the EU. This ‘at risk’ category includes any material that will be ‘processed’ into a finished product – unless a joint committee set up to oversee the Withdrawal Agreement’s implementation expressly decides otherwise. Businesses will be entitled to recoup tariffs if they can show that the relevant goods stayed in the UK.

The DUP has previously expressed opposition to any deal that treats Northern Ireland and Great Britain differently for the purposes of trade. Yet, the party undermined its own argument by backing Boris Johnson’s initial plan to introduce regulatory checks for goods moving between the British mainland and Ulster.

Before this morning’s deal was announced, the DUP said it “could not support what is being suggested on customs and consent and there is a lack of clarity on VAT”. It seems that Arlene Foster and her colleagues are still not satisfied that these problems have been resolved.

The customs arrangements sound a lot like the ‘max-fac’ scheme that Brexiteers once proposed for the whole country, limited now to Northern Ireland. While the province remains in the UK customs territory officially, the British authorities are responsible for applying EU customs rules and tariffs.

This might seem like a fair compromise, but it introduces serious trade barriers between Great Britain and Northern Ireland. The economist Esmond Birnie told the House of Commons’ Northern Ireland Select Committee this week that Northern Irish businesses could pay an estimated £500 million each year in up-front duty.

Several high-profile firms in Ulster have recently gone bust, because of cash-flow problems, so extra costs, even if they are temporary, may result in job losses and bankruptcies. Business organisations have focussed almost exclusively on the possible effects of Brexit on north-south trade, but Northern Ireland sells four times more goods to the mainland than it does to the Irish Republic and it buys six times more goods from Great Britain than it buys from southern Ireland.

Politically, the plan is even more troublesome for the DUP.

While the idea of an all-Ireland economy is largely a nationalist fantasy, a regulatory and customs border in the Irish Sea will encourage companies to switch their focus from the UK. Writing in this morning’s Belfast News Letter, Lord Empey, who represents the DUP’s main unionist rival the UUP, conjured up an image of the Northern Irish port, Larne, becoming “a frontier town, maybe with red and green customs channels when we get off the ferry!” He says, “it will feel like we are entering a different country. Awful!” It’s still likely that the Dublin government will become Northern Ireland’s conduit to Brussels, where decisions will be made that affect the province’s future.

The DUP also has problems with a rejigged method for Northern Ireland to provide consent to the new arrangements. The government’s initial proposals, which the party supported, required the Stormont Assembly to agree up-front to a regulatory border in the Irish Sea. The mechanism was never explained in detail, but it was understood that a ‘petition of concern’ could be triggered so that the vote would require the consent of a majority of both unionist and nationalist MLAs. For that reason, the EU and the Dublin government objected, claiming that it amounted to a DUP veto on Johnson’s plans.

In contrast, the new deal applies automatically after the end of the transition period which expires on the 31st December 2020, with no consent required up-front. After four years, Stormont would vote on whether to extend the customs regime and regulatory alignment with the single market. The text stipulates that this decision must be taken in “a manner consistent with the 1998 agreement” but a ‘unilateral declaration’ by the government later specified that a ‘majority of Members of the Assembly, present and voting’ would be required to endorse the decision.

Stormont hasn’t sat for almost three years, so the declaration allows for an alternative process for seeking MLAs’ consent, if the devolved institutions are not officially operating. In either situation, it looks like the ‘petition of concern’ will not apply, and unionists will not be able to get Northern Ireland out of the single market on current arithmetic at the Assembly.

For the DUP’s part, it is already under fierce attack from unionist opponents for its role in the lead up to this agreement. Lord Empey argues “unionism would not have ended up in this mess, with a border in the Irish Sea, if there were different (Ulster) unionist voices in the House of Commons”. The TUV leader, Jim Allister, accused Boris Johnson, in whom the DUP placed its trust, of “shocking betrayal”.

With a general election imminent, Arlene Foster will have to calculate how the party’s next move will be interpreted by voters. Yet, at such a critical moment, it would be deeply irresponsible for the DUP to make decisions on the basis of electoral considerations or any financial inducements that the government may offer Northern Ireland.

There are strong arguments that compromise was always going to be necessary to reach an agreement with the EU. But, for unionists in Ulster, this isn’t an abstract exercise in the art of negotiation. This deal will have a real impact on the province’s future and on the fate of the Union.

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Owen Polley is a writer, commentator, consultant, and the co-author ‘An Agenda for Northern Ireland After Brexit‘