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A new offer from the UK Government, but what does it mean for UK tech?

The Prime Minister has set out his new offer to the EU in a letter to European Commission, but will this new plan fly and what does it mean for UK tech?

The Government has put forward a new offer to the EU. The basis of this new offer is a dual Northern Ireland customs process that would see Northern Ireland remain tied to the EU’s single market for agri-foods and manufacturing goods. This means there would be checks between Northern Ireland the UK in these two areas.

However, the plans also set out that Northern Ireland would not remain in the EU customs union, meaning that goods which fall outside agri-foods and manufacturing goods would be subject to checks and customs process when moved between Northern Ireland and the Republic.

This customs proposal, or as some have called it the creation of ‘two borders’ at its route seeks to minimise checks and customs process and then split them across two fronts reducing the strain on any single point, with the aim of creating a manageable customs settlement.

However there remain big outstanding questions.

The principal question is that these proposals are subject to a Stormont veto, meaning that the (currently suspended) Northern Ireland Executive would have to give its consent for this arrangement to continue, first at the end of the transition period which is expected to end in 2020 and then every four years after this.

It is not clear from the Government’s existing proposals and explanatory note what would happen if Stormont consent was withdrawn, putting the longevity of this proposal in doubt.

At first instance it is hard to see how these proposals would be acceptable to the Republic of Ireland and the EU as it crosses many of the red lines set out in the Joint Report and the conditions the European Commission has set for any proposals which could replace the Northern Ireland backstop.

However, what we must remember is that this is a political process.

The proposals put forward by the Prime Minister are not set out to be immediately agreed but designed to be enough to secure a place at the negotiating table.

If the Government is able to do this it will seek to convince the EU and, most importantly the Republic of Ireland that it must work with these proposals or face the possibility of no deal.

The Government will seek to do this by talking up its ability to get around the EU Withdrawal No.2 Act (the so called Benn Act) which requires the Government to seek an extension to Article 50 on 19 October if a deal has not been agreed and voted on by Parliament.

The Government will also seek to demonstrate that if there is an extension and a General Election, the Government will be returned with a bigger majority meaning the EU would face a stronger and more determined UK Prime Minister following such an election.

If successful, this strategy would force the EU to consider the balance of risks between seeking to strike an imperfect arrangement now or facing the prospect of no deal later.

It is not clear how successful this strategy will be, and big questions remain about the scope for further compromise on each side ahead of any final thrashing out of legal text at the European Council on 17 October.

The proposals published yesterday focus largely on revisions to the Northern Ireland Protocol of Theresa May’s Withdrawal Agreement, we are currently waiting to see what, if any further changes the UK is proposing to the rest of that Withdrawal Agreement.

These new proposals on Northern Ireland will likely raise the question of what role technology can play in facilitating the new customs arrangement.

However, until there is a full agreement between all sides such a role for technology is purely speculative. While customs technologies can play a role in supporting a new agreement, technology cannot resolve a political disagreement, nor can it resolve the potential issues that may emerge from the strongly held identities of Northern Irish border communities.

In his letter the Prime Minister has said that the ‘Political Declaration for the Future Relationship’ negotiated by Theresa May is no longer the position of the UK Government.

Any new Political Declaration will form the basis for the negotiations around a free trade agreement between the UK and the EU. It is this which will be of most significance to the UK tech sector.

We urge the UK Government to maintain the business friendly objectives that appeared in Theresa May’s political declaration, such as the commitment to negotiate an adequacy agreement between the UK and the EU by the end of the transition period.

In a recent survey of our membership 71% of our members said that a no deal would have a negative impact on their business. Over the next few weeks techUK strongly encourages the Government to reach an agreement with the EU that will ensure that the UK can maintain its position as one of the best places in the world to start and grow a tech business.


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