Now the EU has declared Chequers unworkable, a Free Trade Plus deal is the only realistic option

Now the EU has declared Chequers unworkable, a Free Trade Plus deal is the only realistic option

The “free trade plus” plan for the UK’s future engagement with the EU and the rest of the world, as set out in Plan A+ by the Institute of Economic Affairs – or in a very similar way – is the only realistic solution to deliver an exit from the EU for the UK acceptable to both sides, which honours the EU referendum result.

It delivers on the commitment to avoid a hard border in Ireland. It delivers on keeping just-in-time supply chains running smoothly for business. And it delivers on the desire expressed in the referendum for the people of the UK to control their own destiny, especially when regulating their domestic market.

It also delivers on the EU’s interests in preserving its order, engaging with neighbours in a positive way and retaining efficient access to one of its industries’ largest markets. Importantly from the EU perspective, the UK would not be keeping what the EU perceives as the benefits of being in the EU, without the obligations, and the EU would not have to make major changes to the way it operates.

On this basis, the plan should be supported by the vast majority of people in the UK and EU, their Parliaments and their negotiators. It should be attractive to MPs with Leave- and Remain-voting constituencies. The benefits to both the UK and EU are tangible.

Both the UK and EU have to compromise for this deal to be reached. UK-EU trade will not be frictionless, but it can be made very efficient, much more so than in the wild assumptions of barriers used in the negative economic forecasts emanating from the Treasury and some commentators. And with a free trade deal, cumulation of rules of origin with third party trade partners is possible, meaning domestic resources do not have to be inefficiently diverted.

The “backstop”, for conditions in the island of Ireland should there be no deal, will not be either Northern Ireland, or the whole UK, staying in the EU’s Customs Union and Single Market, or a simulacrum. The UK Parliament wouldn’t vote for that. Communities and businesses could under the “free trade plus” plan, however, be confident to go about their business, in both jurisdictions in the island of Ireland, without “hard border” processes.

It was made clear last week in Brussels, by the vast majority of professionals from all over Europe in the customs and freight forwarding industry who gathered to discuss the future of EU-UK customs with HMRC and the European Commission, that the Chequers proposals for technical customs procedures are not implementable and would not be taken up by market participants.

Aside from problems they would create for the EU’s legal order, they would not obviate the need for cross-border tracing of the origin of goods; not be readily understood or implemented by exporters, importers and subsequent owners of goods; and not be compliant with WTO rules.

It is good that the EU has now clarified that this proposal is unworkable and should be dropped.

The EU does however need to move on its concept of the operation of the “backstop” in the island of Ireland, to get a “free trade plus” deal. Jobs and businesses in the EU – and Ireland in particular – depend on such a deal being reached, and the alternative for them is bleak. Customs Union and Single Market membership is a dead end for the negotiation, and would in any case not allow the UK and EU to move on.

The EU has proposed behind the border processing in discussion of East-West customs cooperation for UK-Ireland trade. This could also be implemented North-South, as well as for Dover-Calais where they have already indicated it could be used. The European Commission have further helpfully clarified that they could consider extending the operation of the EU’s VAT Information Exchange System to businesses in Northern Ireland after the UK leaves the EU.

This is important because it means cross-border businesses could use their existing systems for VAT to lodge other information relevant to regulatory and customs differences – such as customs declarations, declarations of origin and other regulatory compliance documents – away from the frontiers themselves. It opens the door to a light-touch, risk-based approach being taken to verification, well behind the border, meaning supply chains needn’t suffer delay.

We need all parties to understand the benefits and viability of “free trade plus”. We need to spread the message that “free trade plus” will be good for the UK and EU, and that regulatory cooperation is in this case better than rule taking. It gives both the UK and EU political, trade and regulatory independence. It frees the UK to make deals with the rest of the world while maintaining efficient trade with the EU, bringing economic growth, investment and jobs. These are good for EU exports too. It liberates the UK from restrictive EU policy, tariffs and quotas, but does not undermine their operation in the EU.

We’ve had some hot rhetoric, but it’s now time for leaders in the EU and UK to embrace these practical and available measures, so we can build a new and positive future together.