Brexit and Scotland – the Row over the Backstop

Kirsty Hughes | 19 November 2018

© 2017 SCER

The backstop for the Irish border in the draft withdrawal agreement has been the focus of a major row between the Scottish Conservatives and the Scottish government in recent days. Beyond that, there have been criticisms in Scotland that the withdrawal deal mentions Northern Ireland, Cyprus and Gibraltar amongst others but not Scotland (though in fact it doesn’t mention England either).

Both sides accuse each other of exploiting Northern Ireland’s special deal – a deal vital to ensure Brexit doesn’t disrupt, any more than it already has, the Irish peace process and the Good Friday Agreement. But is either side right and is it in any way realistic or desirable for Scotland to have a deal like Northern Ireland? The short answer to all these questions is ‘no’.

The issue here is differentiation: why are other countries or territories getting special deals and not Scotland (nor England)? In the case of Cyprus and Gibraltar, there is pre-existing differentiation: the UK’s Sovereign Base Areas in Cyprus are not in the EU but apply EU rules; Gibraltar is a British overseas territory, in the EU’s single market but not the customs union. The only differentiated set up of any real interest to Scotland is the ‘backstop within the backstop’ for Northern Ireland.

So can and should Scotland aspire to also get access to such a potential deal, like Northern Ireland (potential since it will only happen if and when the backstop kicks in at the end of transition – which now looks like it could go on til 2022)?

For the Scottish Tories, David Mundell and Ruth Davidson argued last month that there should be no differentiated deal for Northern Ireland that could undermine the ‘integrity’ of the UK. This positioning appeared to prioritise the union over the peace process. But one month later, and Mundell has shifted his position to accept the special arrangements for Northern Ireland in the Brexit withdrawal agreement, ironically now accusing the Scottish government of playing politics with the peace process.

On their side, the SNP has always supported such arrangements for Northern Ireland and still do. So, with Mundell’s shift, the two sides in fact appear to agree. But Nicola Sturgeon has also said the deal for Northern Ireland shows a similar deal could be possible for Scotland. It could be argued this is not exploiting the deal for Northern Ireland since the Scottish government published its ‘Scotland’s Place in Europe’ paper almost two years ago, arguing that Scotland should stay in the EU’s single market even if the rest of the UK did not (a policy that SNP, Green and Labour MSPs later backed).

But, faced with the reality of the draft withdrawal agreement, arguing now for the same or similar for Scotland is fraught with difficulty. The backstop deal means that, if there isn’t a UK-EU future trade deal that would keep the Irish border open, the whole UK will remain in a basic customs union with the EU. And Northern Ireland will stay in a deeper customs union and effectively be in the single market for goods (with provisions too for agriculture and fisheries products).

Why has the EU agreed to such a special status for Northern Ireland? Simply – and profoundly – because of the peace process and Good Friday Agreement. The EU refused to go along with Theresa May’s Chequers proposal – cherry-picking the single market for goods – for the whole UK but has allowed it as a backstop for Northern Ireland for the fundamental reason of maintaining the peace process.

So the SNP needs to consider what it means to ask for a similar deal. The EU would have no such reason to grant Scotland such ‘cherry-picking’. But also note the backstop is not full single market membership for Northern Ireland – it doesn’t cover services (with a few exceptions notably the single electricity market on the island of Ireland) nor free movement. So Northern Ireland will still be hit by Brexit even if not as much as Scotland and the rest of the UK.

And note too, in the draft withdrawal agreement, if and when the UK and EU agree a future relationship, then the backstop may go in part or in whole – so some of the backstop could be superseded by a future deal, some not. The Scottish government’s demands are aiming at a moving and uncertain target.

The Scottish government would surely be better to stick to its policy of asking for full single market membership for Scotland – including services and free movement. But is this at all realistic now either? The draft withdrawal agreement is done: it might conceivably be re-opened to agree a full ‘soft’ Brexit for the whole UK, if there was a rapid change of the UK’s position (though why then leave the EU at all). But the EU has no reason to consider a special deal for Scotland at this stage, let alone when the UK government hasn’t asked for it (and rejected the proposal in March 2017).

And imagine if Scotland did get a differentiated deal of being in the EU’s single market. This would then be a better deal than Northern Ireland has which could destabilise the backstop deal agreed.

The intensely difficult talks to keep the Irish border open via the backstop also highlights the border challenges that differentiation brings.

With the UK staying in a basic customs union, Theresa May has avoided most customs checks in the Irish Sea – but there will be much more intensive agricultural, food and live animal checks. And there will be regulatory checks – even if May were to keep the UK in line with EU regulations, the EU will still check for regulatory compliance at the UK-EU border (even if for Northern Ireland most checks are done away from the border itself). There will need to be regulatory compliance certification on goods going from the rest of the UK (ruK) to Northern Ireland – though the backstop deal insists that there will not be barriers to goods flowing from Northern Ireland to rUK (no such promise is made for the other direction).

The Scotland-England land border would pose a host of different challenges to the Irish Sea border – not least for controlling agricultural and animal health checks on a land border amongst others. There are existing checks at existing ports between Britain and Northern Ireland. But there would need to be new structures for any similar Scottish-English checks – and there would too be non-tariff barriers from England to Scotland even if, in parallel to Northern Ireland, there were none in the other direction.

This is all part of the wider, impossible conundrum the Tories face: the EU will not concede frictionless borders between the UK and EU if the UK remains outside the single market. So if Scotland were in the single market, there would be frictions from Scotland to rUK.

So should the Scottish government just accept the backstop as is? Nicola Sturgeon has talked about the diversion of foreign direct investment to Northern Ireland putting Scotland at a competitive disadvantage. There is probably some truth in this. But it’s also likely to be rather small compared to the overall impact of Brexit.

Any company considering investing in Northern Ireland not the rest of the UK, because it is staying closer to the EU, would need to consider the partial single market membership that Northern Ireland may get if and when the backstop kicks in – and the lack of free movement of people and the barriers to services trade. It’s not the most attractive proposition compared to investing in the EU 27 member states.

The big economic damage to Scotland from Brexit comes from Brexit as a whole not from the Northern Ireland backstop. There will be damage to both goods and services trade even within the backstop customs union. Growth, trade and investment will be hit even more than they are already. The Scottish economy will suffer from the ending of free movement.

And the push for a ‘soft’ Brexit of the whole UK staying in the EU’s single market and customs union is surely a distraction: why aim to create a major democratic deficit when staying in the EU means having the single market, customs union, a voice and a vote.

So it’s a strange political choice to focus on demanding something similar to the Irish backstop when the only way to stop the major, chaotic damage of Brexit to Scotland is to stay in the EU. The Brexit endgame is unfolding and it’s not a moment to lose sight of the main issue nor to damage Scotland’s political capital in Brussels by demanding to cherry-pick the exception given to Northern Ireland because of the peace process.

Kirsty HughesKirsty Hughes | Twitter

Scottish Centre on European Relations

Dr Kirsty Hughes is Director of the Scottish Centre on European Relations. She is a researcher, writer and commentator on European politics and policy, and she previously worked for a number of leading European think tanks.