19 June 2017

Bruegel: Brexit and the future of the Irish border

The UK's confirmation that it will leave the EU's single market and customs union implies that customs checks with Northern Ireland will be needed. However, there is little desire for hard controls from any of the parties involved. This is especially true for PM May's potential partner, the DUP.

The DUP position on Brexit: get the best possible Brexit deal for Northern Ireland

In their political manifesto, the Democratic Unionists listed many objectives for the future relationship with the EU [...].

They conclude that “the stronger and more positive the agreements reached, especially on trade and customs relationships, then the better for the particular circumstances of Northern Ireland”.

However, this wish list is not internally consistent, in particular regarding the impact on cross-border movement of goods and people. [...]

No major impediments to the maintenance of the Common Travel Area

No matter the result of the Brexit negotiations, Irish people should continue to have the right to travel, live and work freely in the UK. UK citizens should retain the same rights in Ireland. This is the result of the Common Travel Area (CTA), a bilateral arrangement which long predates Irish and UK membership of the EU.

There is consensus between the UK and Irish Governments that the Common Travel Area arrangements should be retained, and this has been recognised also within the EU Commission’s negotiating directives. Analysis by the Irish authorities has not identified any obvious legal barrier to the CTA being maintained bilaterally in a manner consistent with Ireland’s EU obligations. In particular, Ireland’s non-participation in Schengen would facilitate the continuation of the CTA, because it means that all entrants to the CTA are checked by UK or Irish authorities, even those arriving from EU countries.

These CTA-based freedoms to travel, live and work will apply to British and Irish citizens only. The implications of Brexit for the free movement of EU citizens across the border are another question. But, so long as the UK and EU reach an agreement which at least continues to allow visa-free travel, as is very likely, then EU citizens will be free to visit the UK for a short period for holidays or to conduct business. Thus, looking purely at the movement of people, there should be no need to close the Irish land border to travellers and instigate universal document checks.

As pointed out by Raoul Ruparel, co-director of Open Europe, “border checks from a purely security perspective are already in place since the UK and Ireland are not in Schengen and it seems likely the UK could continue to trust Ireland to enforce the border of the Common Travel Area.” Once people have entered the UK, “the enforcement of ensuring people do not over-stay cannot be at the border but via other mechanisms such as regulating access to social security and the job market.”

All the parties want minimum disruption, but is wanting it enough?

So far, the Irish and UK governments as well as EU representatives have stated that they do not wish a return to a “hard border” between Northern Ireland and the Republic of Ireland. This is because of the considerable negative economic, social, political, security and psychological impacts on people of the border communities.

However, the Secretary of State for Exiting the European Union, David Davis, bluntly described the complex reality of things:

“How on earth do you resolve the issue of the border with Northern Ireland and the Republic of Ireland, unless you know what our general borders policy is, what the customs agreement is, what the free trade agreement is, whether you need to charge tariffs at the border or not? […] You can’t decide one without the other.”

As a matter of fact, if we presume the stable continuation of the CTA, the future of the border in terms of the movement of both goods and people intrinsically depends on the scope of any post-Brexit trade arrangement.

Custom checks will be unavoidable in case of withdrawal from the Customs Union

While negotiations are underway, there will be no immediate establishment of customs posts along the border. However, after the official withdrawal of UK will effectively make the Republic of Ireland-Northern Ireland border an external EU border.

If the UK also withdraws from the Customs Union, it will be inevitable to re-establish some sort of customs control. This is because goods from outside the Customs Union must pass through full customs clearance processes. This is not least to address risks around the origin of goods and the application of the common external tariffs.

As noted by de Mars, Murray, O’Donoghue and Warwick, there are light-touch models of customs enforcement (with limited spot checks and electronic filing of customs documentation) practiced on EU borders with EEA countries. One example is the border between Sweden and Norway, which is not a member of the customs union but is part of the EEA. However, even in such a scenario Ireland will still have to comply with the requirements of the Union Customs Code. And a more onerous arrangement is likely if the border is not an EU-EEA border, but a fully external border. For example, some sanitary and phytosanitary checks would be introduced for agri-food products, especially if regulatory divergence emerges. This has been recognised by the European Union Committee of the House of Lords in its report on the UK-Irish relations: “the experience at other EU borders shows that, where a customs border exists, while the burden and visibility of customs checks can be minimised, they cannot be eliminated entirely. Nor, while electronic solutions and cross-border cooperation are helpful as far as they go, is the technology currently available to maintain an accurate record of cross-border movement of goods without physical checks at the border”.

Philip Hammond, the Chancellor of the Exchequer, reaffirmed yesterday that UK will leave Europe’s single market and customs union. It therefore seems unavoidable that there will be some form of customs checks on the Northern Ireland-Republic of Ireland border.

Looking ahead to future arrangements, we must therefore presume that the final destination of Brexit will be a new UK-EU Free Trade Agreement (FTA) that would allow UK to exercise an independent trade policy and conclude its own trade agreements with states outside the EU. KPMG has reviewed the two main existing models: the Comprehensive Economic and Trade Agreement (CETA) with Canada; and EEA membership with exclusion from the Custom Union like Norway. In both these cases goods cross a customs border, which means customs clearance would be unavoidable, inevitably resulting in some form of physical manifestation of the Irish border.

A peculiarity of the Norwegian option is that this process is streamlined, with much of the bureaucracy completed in advance. This makes the Norway model more attractive for UK. However, Norway is an EEA member and, according to the KPMG analysts, “there is no guarantee that the EU would offer the same streamlined procedures to a country outside the Single Market. EU customs law is currently directly applicable to the UK. Without it being so, the EU is simply less likely to accept that goods coming from the UK are of British origin, without evidence in advance”.

Could a special status for Northern Ireland offer a “flexible and imaginative solution”?

In the EU Commission negotiating directives, formally endorsed by the European Council on 22 May 2017, it is recognised that “the unique circumstances and challenges on the island of Ireland will require flexible and imaginative solutions. Negotiations should in particular aim to avoid the creation of a hard border on the island of Ireland, while respecting the integrity of the Union legal order”.

One way to avoid a “hard” land border for goods would entail moving custom checks so that they fall between the islands of Ireland and Great Britain – between Northern Ireland and the rest of the UK. Many analysts believe that this approach would be less disruptive and easier to implement than applying controls at the Irish land border. As noted by James Anderson, of the Centre for International Borders Research at Queen’s University Belfast, this solution “would limit Brexit’s damage to two substantially integrated economies. Ports and airports connecting the island of Ireland and Great Britain already have physical infrastructures for controlling freight separate from people. Not so the land border where controls would mean costly delays and clog up border roads for the thousands who regularly criss-cross to work, study, shop and socialise, living their lives on both sides”.

This option would be strictly dependent on the recognition, under some hybrid EU arrangement, of a “special status” for Northern Ireland such that free trade continues between the Northern and Southern parts of Ireland. But even if this were possible, it would be in stark contrast with the DUP’s rejection of any internal border within the UK. [...]

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