CBI responds on Alternative Arrangements to the Irish backstop

The Alternative Arrangements Commission is the most influential policy group in Westminster working on customs proposals. The commission has published an interim report on their views – a report with recommendations likely to be highly impactful with the next Prime Minister, and already referenced by both Boris Johnson and Jeremy Hunt. The government has also established its own consultation on alternative arrangements to the backstop, on which the CBI’s Northern Ireland Director, Angela McGowan sits.

The politics and policies around the Irish backstop have been an issue of contention for many months, and given the controversy and significance, the CBI drew on rapid consultation with its members, particularly those who are customs experts or based in Northern Ireland, in order to provide the business view to the Commission.

Through its consultation, the CBI responded by welcoming the Alternative Arrangements Commission’s constructive approach, open dialogue and honest acknowledgement of constraints, but repeating its long-held view on the backstop, which is that:

1. Protecting all-island supply chains and business models on the island of Ireland is essential.
2. CBI members in Northern Ireland, and the business community in the region a whole, broadly support the backstop.
3. A customs union and deep regulatory alignment for goods are the only way to truly achieve frictionless trade.

Yet members also wanted to see no deal avoided. If the only way to achieve that politically is through the design of alternative arrangements, it is important they are as practical, realistic and viable from a business perspective as possible. The CBI therefore also highlighted some very noteworthy elements in the Alternative Arrangements Commission’s report, concluding:

1. Seeking to supersede but not remove the backstop is a sensible political step.
2. Businesses would see a lot of value in a Common Travel Area-related communications campaign.
3. Firms agree that, if trusted trader systems are to be a significant part of the new customs system, reform is needed.
4. Focusing on regulatory solutions rather than technical solutions for Sanitary and Phytosanitary measures is the right approach.
5. Recognising the ramifications of diverging from EU regulations on manufactured goods is essential.
6. Steps to ensure that services professionals can continue to ply their trade across the border without disruption are very sensible.

However, there are also a number of challenges contained within the proposals made in the Alternative Arrangement Commission’s interim report that would need to be developed and resolved, including:

1. The burden of these proposals for businesses would be heavy.
2. There is a real risk of disruption to supply chains because of the delays imposed by new requirements.
3. Firms have genuine concerns about smuggling across the Irish border, which need to be taken seriously.
4. There must be realism about the time required to make changes to the customs system, particularly at the Irish border which requires so many unique adjustments.
5. The reality of the economic situation in Northern Ireland must be taken into account when considering the scale of changes facing the region.

Members provided some high quality analysis, insights and examples to a very rapid-turnaround consultation – which the CBI is grateful for. Because of the breadth of the report’s coverage and the tight deadlines, not all aspects could be incorporated into the CBI’s immediate response but all input will be included as the CBI moves forwards with its engagement with the Alternative Arrangements Commission.