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8 December 2020updated 09 Dec 2020 10:20am

Is the government preparing to cave over Brexit, or is something else going on?

It’s not clear whether we’re seeing the beginning of a no-deal Brexit or the complete collapse of the United Kingdom’s negotiating strategy.  

By Stephen Bush

Is the Conservative retreat over the lawbreaking clauses of the Internal Market Bill and the Taxation Bill a sign that the British government is preparing to make concessions in order to get a free trade agreement with the European Union – or of something else entirely?

The offending clauses would have allowed the government to put aside the commitments agreed to under the Northern Ireland protocol, which maintained the open border on the island of Ireland by hiving Northern Ireland off into the customs and regulatory zone of the European Union.

Shared regulatory alignment between the United Kingdom and the Republic of Ireland has been a policy priority of both countries, long before the creation of the single market and the customs union, in order to facilitate an open and peaceful border between and within the two states. Since this has previously been facilitated by European integration, continuing that policy after Brexit has become emotionally fraught for some pro-Brexit politicians, but the policy imperative is one that has nothing to do with our institutional relationship and will remain in place regardless of Brexit.

The approach preferred by Theresa May, the so-called backstop, kept the whole of the United Kingdom in the customs and regulatory orbit of the European Union. I thought, and still think, this was a major diplomatic coup for the UK, but it came at a cost from a Brexiteer perspective, because they feared that it placed limitations on how far England, Scotland and Wales could diverge from the EU after Brexit. Boris Johnson’s “new” withdrawal agreement came at the cost of accepting the EU’s original preferred approach, which was to deepen the customs and regulatory border in the Irish Sea, giving England, Scotland and Wales a far greater degree of freedom to diverge from EU regulations after Brexit.

While you could in theory achieve just as great a level of divergence for England, Scotland and Wales under the Northern Ireland backstop as under the Northern Ireland protocol, the difference is that under the backstop that divergence is theoretical and could be contested, whereas under the protocol, the divergence between Northern Ireland and Great Britain is explicit in the text.

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But the major benefit of either for Brexiteer ultras is that, by signing up to the Northern Ireland protocol or the backstop, you could take the option of a no-deal Brexit at the end of the free trade agreement without creating a hard border on the island of Ireland and throwing decades of shared Anglo-Irish policy and strategic objectives into doubt. A no-deal Brexit still comes with a high economic cost – but if the Northern Ireland protocol remains in place you can avoid the concomitant security nightmare.  

It has never been clear what the British government wanted to achieve with the Internal Market Bill or the Taxation Bill. It does not matter what the UK’s institutional relationship with the EU is: the policy challenge of maintaining the status quo on the Irish border can only be met through regulatory and customs alignment between the Republic of Ireland and Northern Ireland, which, for as long as the Republic remains an EU member, means regulatory and customs alignment with the EU. You can’t bluff, cajole or hardball your way around that challenge. If the genuine purpose of the bills, as some in government insist, was to show a tough posture to the EU, then they were flawed and their failure inevitable.

There’s an important “but” here, though. One reason to include those lawbreaking clauses is that if you are a Conservative and Unionist government that has signed up to establish a border within your own country and is planning to roll back parts of devolution and you don’t at least make a glancing attempt to address that in your Internal Market Bill, you risk an internal eruption among more committed Unionist members of your party.

We can’t be sure what is happening here: is the UK removing an important barrier to a free trade agreement, or is the UK removing an important and dangerous variable in the event of a no-deal Brexit? Are we seeing the political management of a planned no-deal exit play out or are we witnessing the collapse of a fact-free, bravado-heavy approach to forcing a deal? Either remains possible at this stage.

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