11 July 2017

CEPS: The Irish border as a customs frontier after Brexit

The steady growth of trade and networks across this contested border over the past two decades have been largely attributable to their common EU membership and the peace process they have supported in Northern Ireland. Even aside from political sensitivities, any disruption to this integration will have an economic effect that Northern Ireland and the Irish border region can ill afford. As such, the European Council, European Commission and the UK government have repeatedly expressed a desire to avoid the return of a ‘hard border’ across the island of Ireland. Yet the practicalities of retaining such an open border after Brexit are highly complex, particularly as it looks set to become a customs border once again.

Current conditions for the movement of goods across the Irish border

The vote in the House of Commons on 26 June 2017 to approve the UK government’s plan to leave the EU’s Single Market and Customs Union means that the Irish border will become a customs border. If the UK leaves both the Customs Union and the Single Market, and if Northern Ireland is not to have controls on the movement of goods to and from Great Britain, it will be part of a third country. This will utterly change the conditions for the movement of goods across the Irish border, which are currently very straightforward because both the Republic of Ireland and the United Kingdom are in the European Union. The vast majority of goods currently crossing the Irish border thus currently fall under one of two broad categories: goods in free circulation or goods in ‘duty suspension’ (a temporary exclusion from paying excise duties). To have the status of being in ‘free circulation’ means that they are treated as domestic products of the Single Market and there is no need for customs checks because there are no import duties to be collected, no commercial policy measures to be applied (e.g. quotas) and no other formalities to follow (e.g. animal health certificates). In many ways, the common directives, standards and regulations arising from EU membership have ensured an efficient cross-border single market in several sectors, especially in agri-food, which constitutes 55% of cross-border trade on the island. [...]

Essential controls around a customs border

Clearly, if the Irish border became a customs border this would increase the economic attractiveness of smuggling, because many more goods would be subject to customs controls.. Customs controls serve to protect citizens’ safety and security and are also a means of revenue for the treasury. Controls for the collection of duties protect legitimate trade by ensuring a level playing field for all economic operators; active customs enforcement in this area may concentrate on the misclassification or under-declaration of goods, by quantity and/or value, and the correct application of the rules of origin. Secondly, customs controls enable the detection of illicit drugs, weapons, and counterfeit goods and the exclusion of dangerous and substandard goods (e.g. fake pharmaceuticals). For a customs regime to be effective, therefore, the customs control system has to efficiently facilitate legitimate trade whilst also retaining the capacity to identify and inspect high-risk goods. [...]

Full analysis on CEPS

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