by Frank Schnittger
Tue Jan 31st, 2023 at 11:21:33 AM EST
Recent discussions about the Protocol in Northern Ireland have focused on the problems it poses for the DUP. But from an EU perspective it seeks to solve a far larger problem for the EU as a whole. Much of the analysis of Brexit has been in terms of it being an English nationalist project. What has been missed is the extent to which it is also a political libertarian project.
Much of the driving force behind Brexiteer ideology has been the belief that the "Brussels bureaucracy" and its focus on regulation has been stifling British innovation, dynamism and the potential for growth. The main `benefit of Brexit' was always supposed to be the freedom it gave Britain to chart its own way in the world, with its own trade deals, and with much freer and closer relations with the rest of the world.
`Singapore-on-Thames' would become the gateway and bridge between some of the most dynamic economies in the world - in the Far East, the pacific rim, the Commonwealth, and in the USA. (Let us ignore, for the moment, the fact that Singapore is actually one of the most heavily regulated and strictly enforced places on earth). Global Britain would triumph where a sclerotic bureaucrat ridden old Europe would fail to compete.
And let there be no doubt that this Brexiteer vision has survived the fall of a bumbling Boris Johnson and the more radical Liz Truss, who tried to accelerate the process with her `dash for growth' through tax cuts and de-regulation. Most of the focus in Northern Ireland has been on the NI protocol Bill and its proposals to empower British Ministers to unilaterally dis-apply parts of the Protocol not to their liking. But the most fundamental Brexiteer project has been "the bonfire of regulations" contained in the Retained EU Law (REUL) Bill, which proposes to dis-apply an unknown number, somewhere north of 4,000 EU laws, which have accumulated during 45 years of EU membership, often at the urging of the UK government of the day itself.
The Brexiteer belief, almost an article of faith, is that this will enable a wave of innovation to sweep over the UK and wash away all those EU cobwebs that are holding Britain back. Sure, some of those regulations may turn out to have had a useful function, and a few may even have to be re-applied. But that will be done only if it is specifically in Britain's interest to reapply them, as determined by a libertarian Brexiteer government ideologically opposed to them in principle, if not always quite so much in practice.
For the EU this poses an enormous problem. The whole basis of the Single Market and the wider economic and political integration project is the creation of a common set of regulations which can create an even playing field for all its member countries. Thus, Greek products will not be held up at the German border in order to determine whether they conform to German regulations, and vice versa. Spanish products can be trusted to conform to the same standards on entry into the French market because they are governed by the same regulations and regulation monitoring and control system.
Sure, there will be the occasional scandal where substandard products leak into a neighbouring market, but there is a system of laws and regulatory agencies to deal with such breaches. Sure, the whole system creates a bureaucracy and costs money, but it also creates a huge market for companies to compete in on a level playing pitch, and it is so much easier for a company to conform to and receive certification for its products if there is one set of laws and agencies to comply with rather than a different set in each of the 27 markets it may wish to compete in. The economies of scale trump the initial compliance costs.
This is why there has been such a negative reaction by NI companies to the proposal that they could produce products to two different standards for the UK and EU markets. Far, far simpler to just focus on one set of products for one market, and since the Single Market standards are the ones that are currently in place, they will remain the default going forward. Creating new and inconsistent standards for the UK market would simply cut most NI companies off from that market as they don't have the resources and economies of scale to compete in both.
The EU have frequently been criticised (mainly from the left) for extending this system of common regulations to State aid rules restricting the ability of governments to aid companies within their jurisdiction. Ryanair, or example, have frequently complained that they are competing with national carriers receiving government subsidies and bail-outs. It may have been in the Italian national interest that Alitalia survived, but it is hardly fair on Ryanair that they have to compete without such subsidies. So Alitalia had to go.
The whole subject becomes extremely complex and messy when you throw in differential tax rates as well. Sometimes certain (say green) industries are deemed to be of strategic importance to the EU as a whole and the achievement of its climate change goals, so some supports for the industry as a whole may be permissible. What tends to be forbidden is specific subsidies for specific companies, as this opens up a whole new world of possibilities for the corruption of government officials by commercial donors to officials, politicians and political parties.
There is currently a heated debate on how to respond to the USA's 2022 Inflation Reduction Act which introduces US state subsidies for certain green industries and places EU industries at a competitive disadvantage. The EU is concerned that some of its industries competing on world markets will re-locate or redirect investment to the USA as a result, and is therefore trying to develop an EU subsidy package in response.
Whatever about the UK being able to compete with such challenges, particularly with a libertarian free market interference averse government in charge, there is no chance of a relatively small country like Ireland being able to maintain such a huge infrastructure of regulation, enforcement, research, policy development and state subsidies on its own. New products and services are being developed all the time which may require new expertise and regulations in response.
Ireland is currently the lead country in Europe for the regulation of the global IT behemoths - Facebook, Twitter, Google, Microsoft etc. - because their European headquarters are located here. The Irish Regulator is coming under huge pressure from her EU counterparts for not being proactive, aggressive, and speedy enough in pursuing alleged infractions of EU regulations. This is a huge, complex, and rapidly evolving business, and doing so for almost every product in every market can only be done as a collective effort with one set of regulations for all.
So what happens if the UK comes to be seen as a regulation free, free for all; a sort of wild west frontier capitalism enclave within the heart of Europe? A country where metaphorical mad cows with foot and mouth, and pandemic viruses can incubate and mutate freely only waiting to spread their contagion to the rest of Europe? Where back spot infected oranges from Latin America can be imported freely to spread their incurable contagion to Mediterranean citrus growers? Where cleared rainforest reared anti-biotic and hormone treated Brazilian beef can undercut EU producers? Where increasing divergence between EU and UK regulation and enforcement systems reduce trust and put EU producers and consumers at risk?
What happens is that a Cordon Sanitaire will gradually be erected between the EU and UK on an increasing range of products and services, and Northern Ireland will, increasingly, be on the frontline of that divide. For the EU the issue is not a border in the Irish sea between Great Britain and Northern Ireland, it is a cordon sanitaire between the island of Britain and the islands and mainland of the EU.
Of course, phyto-sanitory controls have been a long term and uncontroversial feature of the sea border between Britain and NI. When the foot and mouth disease effecting cattle in Britain resulted in a halt in British beef exports, Ian Paisley successfully defended the NI Beef industry by declaring that while NI might be British, the cattle were Irish! Similar sophistry may be required to resolve the Protocol dispute.
For the EU, whatever happens to the DUP is just so much collateral damage in a far larger conflict. It is about the survival of the European model of shared regulation and standards against those who would seek to destroy that model by undercutting it with cheaper produce produced to questionable standards from abroad. It is the battle of governments to continue to have some control over what we produce and consume. It is about consumers taking back control (to borrow a phrase) in an increasingly globalised world.
So my apologies to those in NI who think that the battle over the NI Protocol is all about them. That it is about rescuing the DUP from its own perfidy or restoring devolution to NI. That isn't the half of it.
The debate on the Protocol in NI is being driven by an entirely false narrative. The protocol is not some proxy for a united Ireland, but part of a much larger conflict of ideologies between the UK and the EU. Between libertarian capitalism and social capitalism models of development. It is important that we inject this other perspective into the debate, which all too often gets bogged down in tired old unionism versus nationalism tropes. There are valid reasons for people to take either side in this debate, but we are having the wrong conversation. And we won't arrive at a satisfactory resolution of the conflict until and unless we can come to terms with the realities that both sides in the negotiating process face.