Distilling the Malt - what do our colleagues supporting the Malthouse compromise actually want? - as published in The Times 14 Feb 2019 

Distilling the Malt - what do  our colleagues supporting the Malthouse compromise actually want? - as published in The Times 14 Feb 2019 

MPs proposing the “Malthouse Compromise” need to be realistic about the challenges it poses to negotiators and much clearer about what they wish to achieve. 

Time is tight. If changes are to be negotiated then the “asks” need to be precise, detailed and easily explicable to the EU27. This requires targeted microsurgery, not a broad brush or scattergun approach.

Part of the confusion is that MPs who say they back the “compromise” want different solutions. 

A number of MPs are concerned about the permanency of the backstop and the lack of explicit termination provisions. They would be comfortable with a ‘Mini-Malt’. If changes are made that enable the Attorney General to change his legal advice on termination or if a hard deadline for the backstop is agreed, then these MPs are ready to change their vote. Given that the EU and the UK have already agreed that the backstop cannot be permanent this may be negotiable.

However followers of the ‘Full Malt’ ask for more. They have a Plan A and Plan B. Plan B suggests an indefinite “temporary” standstill while the new long term relationship is negotiated. The proposed legal basis is Article 24 of GATT. However, this Article is explicitly for countries seeking closer integration. It has never been used for two jurisdictions seeking to diverge. We are only aware of one time this basis has ever been used, for a temporary standstill between EU and Kenya when the permanent agreement was nearly completed. To us, Plan B feels very fictional.

Plan A seeks to remove the Northern Ireland protocol and replace it with elements of a long-term UK-EU Free Trade Agreement. This isn’t practical in the timescale. It would require the Commission to go back to all 27 EU leaders, secure a new mandate and establish a new set of negotiating guidelines before talks can even start.

Setting aside the procedural issues, what do the Full Malters actually want?

Early drafts of Full Malt removed the commitment to regulatory alignment, and replaced it with regulatory “equivalence” even in the area of agri-foods. The Irish Border is farming country. Over five million animal movements occur across the Irish border each year. That’s actual cows, sheep and pigs - not unicorns. Health checks matter, the 2001 foot and mouth outbreak was devastating on both sides of the Irish border. Today the cross border animal movements are underpinned by common standards and common veterinary procedures. Equivalence suggests removing those common practices and introducing a third country regime. This would mean checking agri-food products enter at Border Inspection Posts, for example the EU- Canada Free Trade Agreement (CETA) includes an “equivalence” regime but means every single animal is checked, and ten percent of milk imports are physically tested. Sixty million litres of milk crosses the border each year, introducing something similar to CETA Irish border would be a massive change. 

Then there is the question of where a border check might occur. Even the most frictionless of borders have some form of border check posts. The Full Malt paper suggests these could be pushed back from the border, but a border post 10 miles away is still a border post. This is completely impractical for the many farms where animals literally walk across the border in the fields every day. It raises major questions about how many border posts would be constructed and where. Most comparable borders have an ‘approved road’ system, which would potentially mean closing many the roads, bringing back challenging memories of the troubled past.

ArticleFollowers of the Full Malt proposal are now focusing on the so-called Alternative Arrangements which suggest managing trade in goods with technology. Technological systems are welcome, but they are not yet available. There is currently no customs border anywhere relying solely on technology. It is right to explore the role technology can play in the future- but that will take more time. Technological solutions can be expensive for smaller traders to implement, which be resolved by small trader exemptions. But giving multiple exemptions could lead to smuggling or to fake or fraudulent products hitting the market. There are ways to help address these concerns such as by via market surveillance, but more work needs to be done to make such an exemption robust. Furthermore any novel technological solution would need to be agreed by the World Trade Organisation and World Customs Organisation, as well as the EU. It is not credible to argue that technology can today entirely remove the need for infrastructure. This needs to be part of the long-term discussions. It cannot be sorted in the next few weeks.

Britain voted to leave the EU, but leaving with no deal would bring massive economic consequences. Everyone needs to step back from the brink, rub the visions of Unicorns out of their eyes and place the crock of gold back under the rainbow. Conservative MPs must stop talking amongst ourselves about fantasy solutions, and focus on finding the route to a deal that can be accepted by the EU and delivered in the best interests of our great nation.