Richard North, 11/07/2019  

To the four Northern Ireland trade groups that have rejected Shanker Singham's Alternative Arrangements Commission (AAC) interim report, another can now be added. This is the Mineral Products Association Northern Ireland (MPANI), which has produced its own response which, in turn, has been reviewed by the Irish Times.

To say that the response is uncompromising is probably a fair description, as it starts by calling into question the origins, the purpose and the evidence upon which Singham's findings and recommendations are founded.

In so doing, it addresses a high-flown piece of rhetoric in the Singham report, where he claims that, "All over the world, technological advances are delivering seamless borders". Thus, Singham asserts: "our goal should be to ensure that the Irish border is the most seamless anywhere and certainly state of the art technology should be an aspirational goal for all policymakers and stakeholders".

Coming right down to earth with a bump, MPANI observes that, nowhere in the actual report "does the Commission actually produce any evidence where this is the case". What the Commission does is offer a series of country-specific examples where some facilitation techniques are used, but says MPANI, "the report fails to observe that an infrastructure free border does not exist in any of the examples given".

In other words, Singham is talking the big game about seamless borders but he is unable to offer any examples (outside the EU's Single Market) where truly seamless trade applies. And, effectively calling out the BS, MPANI goes straight for the jugular, declaring: "We would caution that this Interim Report gets treated as having more status than it deserves".

That was certainly the case on Tuesday evening when Singham's vainglorious efforts were vastly over-praised by the two Tory leadership candidates, taking a wholly undeserved position as the favoured solution for replacing the Irish backstop.

Such is the grip of this dementia on the body politic, though, that the government has just advertised four Senior Policy Adviser posts to progress the concept of "alternative arrangements", together with a Head of Ministerial Support Unit for DExEU which is said to be earmarked for the charlatan himself, Shanker Singham, should he deign to work for as little as £70K per annum.

Potentially five staff, costing the taxpayers better than a quarter of a million pounds in salaries, would be better employed in painting unicorns – for all the good that they will do. But it seems there is no idea so mad that the government can resist hurling money at it, even deluding itself that the fruits of its team might be used in EU-UK negotiations.

Back in the real world, MPANI raises an interesting point about the post-Brexit ability of Northern Ireland companies to tender for and win work in the Republic of Ireland as they have done for years.

Where companies produce relatively low-value community products such as ready-mix concrete and aggregate, the main economic contribution is in the added value, where the raw materials are only a small part of the total contract. And if Northern Ireland firms cannot partake in the service element of cross-border contracts, then they could be gravely disadvantaged.

I was mooting on this the other day when our fitted refrigerator failed, and Mrs EU Referendum was rather insistent on it being replaced. There were plenty of bargains to be had, but the crucial elements were the ability of the suppliers fit the new unit and to take away the original.

Basically, without the fitting service, there could be no sale and one wonders what the situation might be with a Northern Ireland retail firm. It might be able to sell domestic refrigerators, washing machines and the rest in the Republic, but would its fitters be allowed to cross the border to install them? And then, would cross-border disposal be possible?

Small wonder that the Northern Ireland Civil Service (NICS) has now come up with an assessment of the impact of a no-deal Brexit which makes for very sombre reading, suggesting that there will be profound and long-lasting impact on NI's economy and society.

While Johnson continues to assert that the cost would be "vanishingly inexpensive", the NICS anticipates a sharp increase in unemployment, with at least 40,000 jobs at risk, based on EU export exposure. A no-deal would have immediate and severe consequences for both NI's competitiveness in the all-island economy and its place in the UK internal market.

Particularly, the impact of EU tariffs and non-tariff barriers will mean that whatever the Irish Government and/or the EU may do or not do, many businesses will no longer be able to export to the Irish market, leading to a major reduction in NI's exports to Ireland.

The impact of EU tariffs could reduce NI's exports to Ireland by eleven percent and the inclusion of non-tariff barriers could see a decline of 19 percent. This equates to a decline of between £100-180 million in NI's exports to Ireland.

Analysis of import volumes and commodity prices shows that NI businesses would have increased vulnerability to low cost non-EU imports in the GB or NI market. This risk, NICS says, is particularly acute for the agri-food sector where certain commodity prices for larger agri-food exporting non-EU countries are much lower than local prices (especially for beef).

In the view of the NICS, therefore, a no-deal would place a "twin pressure" on NI's access to the EU and UK markets, leaving businesses with very limited options and the NI economy facing an absolute reduction in exports and external sales. Tradable services, it says, would be similarly exposed. For example, businesses exporting services to Ireland would face an average increase in the cost of doing business of 14.5 percentage points.

Much of this stems from being caught in the net of non-tariff barriers, which range from the administrative cost of completing customs documentation to the regulatory barriers to trade in certain products.

These regulatory barriers to trade, NICS says, are very significant for some products such as agrifood products, medicines or chemicals to trading into the EU without a trade facilitation agreement. These barriers include the requirement to batch test medicines within the EU or that products must enter the EU via a Border Inspection Post (BIP). Most agri-food products must clear a BIP on entry to the EU, of which Ireland has just the one in Dublin, which creates additional transportation and administration costs.

For services, it adds, these barriers can relate to restrictions on data transfer between the EU and non-EU countries, lack of recognition of professional qualifications or the requirement to be an EU resident to provide certain services.

Yet, for all the gloom, I still think they are under-estimating the problem. Taking the example of my fridge, in a sale with an invoice value of £500, the fitting cost £90 and disposal £20. These services are highly competitive – all the big players offer the same prices, so if an NI firm can't deliver the service or its price rises, its actual losses will be far greater than just the service element.

This we saw with my piece back in February 2017, when I wrote about the passenger lift business. Looking at the structure of one big player, only 36 percent of its value came from new installations and 16 percent from modernisation projects. The largest single contributor (48 percent) was routine maintenance, largely a service operation.

The interrelationship between the sale of goods and services, with the former dependent on provision of the latter, is something I explored further last year. Interruption in service provision will doubtless have a significant effect on the NI economy, but the impact could be far greater than anticipated. How does an NI firm sell a car or truck into the Republic, for instance, if it cannot provide maintenance services?

For all that, none of these issues are addressed by Singham's fantasy excursion into the realm of "alternative arrangements", yet vacuous politicians remain eager to soak up his flim-flam, ignoring the reservations from the real world.

In a sense, it might be highly appropriate for Johnson to lord over this dung-hill as prime minister. As Pete says, he's the perfect figurehead for an utterly degraded politics of a politically immature, decadent country informed by an ignorant and incurious media - the ideal captain to steer the Titanic to the bottom of the sea.

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