Brexit Briefing No.3 - Ireland

After a long summer break, Brexit negotiations finally began again in Brussels this week.

However negotiations remain slow going, mainly because there is still disagreement on which areas to negotiate. The EU insist that discussions should be nearing completion on the first phase of issues, the so-called divorce bill, citizens’ rights and Ireland, before opening a second phase on the future arrangements.

The UK want to bundle both discussions together, mainly because some issues, like the Irish border, can only be decided once the future trading arrangements are agreed.

This week’s discussions didn't bridge the gap between the two positions, in fact both sides appear to be entrenching their positions, particularly on the financial settlement, which will make an agreement ever harder to reach. However the European Commission need to tread carefully here. Already some EU governments are getting concerned about the limited remaining timeframe for negotiations and if the Commission don't show some success in the negotiations soon, there is a good chance that the member states start taking over to ensure that some viable future relationship, even if it is only a transition, can be negotiated.

The border between Northern Ireland and Ireland remains one of the most difficult issues. Since the Good Friday Agreement, which brought an end to the "troubles" which had lasted for over 30 years, there has been no border on the island of Ireland. Goods, services and people flow seamlessly across the border and both economies have flourished as a result.

The relationship between Ireland and the UK is as close as it has ever been and the reconciliation process in Northern Ireland has also brought communities closer together than ever thought possible during the troubles. If you drive from the Republic to Northern Ireland you will not go through any border or notice any division at all. The only sign that you have crossed a border are the road markings, which change from the yellow of the Republic to the white of the UK. Farm businesses that straddle both sides of the border have developed along with processing facilities that mean that some farm products, such as milk, need to cross the border many times during the production process.

Brexit therefore, if not managed properly, could have an extremely detrimental effect on this progress, especially if a hard border re-emerged. Avoiding a hard border is therefore the main priority for everyone. The UK government, the Irish government and all political parties in Northern Ireland are all fundamentally opposed to any border, and the EU has also stated its desire to avoid a border.

However this border will become an external border of the EU after Brexit and will therefore be the border which divides the single market, the customs union and free movement of people from the rest of the world.

Without a border people could freely enter the UK or the EU even if they had no right to be there, goods could be smuggled across and undermine whichever rules existed on different sides of the border.

Any loopholes in free movement of people can likely be addressed through the Common Travel Area which already exists between the Republic and the UK, allowing citizens of both countries to live and work in either country. This will continue post-Brexit.

However, for goods the situation is much more complex. If there are different standards in one of the two jurisdictions there needs to be a border to check that goods are allowed to come in and that they have paid the right tariffs if the UK has a different trade policy to the EU.

Ireland

There are two options that are regularly proposed to deal with this. But neither can work. The first is that the UK stays in the customs union. This would be the easiest option from the border perspective as there would be no need for a border at all and is the option the Irish government propose. However as I have explained here (https://www.danieldaltonmep.co.uk/news/why-staying-customs-union-long-term-will-not-work), this cannot work from the UK perspective and has already been rejected by the UK government.

The second option often discussed is that some sort of special status is developed for Northern Ireland, which would mean it applied EU rules and therefore would not need a border. But this scenario would mean that Northern Irish rules would diverge from the rules in the UK and the island of Ireland would become one economic unit, separate from the UK which would have to impose border checks on goods that came from Northern Ireland once they arrived in the UK.

As Northern Ireland exports to the UK are five times more than those to the Republic, this makes little economic sense. As it would effectively mean a united Ireland separate from the UK in economic terms it is also not viable from a political perspective. Both the UK government and many in Northern Ireland would not support it.

So a more flexible, bespoke arrangement is needed which will be directly linked to the overall final trade agreement negotiated between the UK and the EU. It is for this reason that the issue is impossible to separate from the discussions around the future EU/UK relationship, something the UK government has highlighted from the start.

Even so, this appears to be one of the most difficult situations ever seen in trade negotiations. Virtually every rule in the traditional play book would have to be ripped up in order to have a deal which allows the UK & EU separate trade and customs policies, different rules on standards and restrictions on who can legally live and work on both sides yet still provides an open border.

However there is a path that could work. But it would rely on flexibility from the EU and deep cooperation between the two sides, some sort of bespoke joint customs union agreement, specific rules on customs facilitation, mutual recognition of the bodies which make standards which could allow some small deviation in standards as long as the outcome is the same and a strong agreement on rules of origin, which would ensure goods pay the right tariff and do not use trade deals agreed by one side to undermine the tariff in the other. It may even need the UK to collect the EU tariff on the EU's behalf in Northern Ireland, if those goods are continuing on to Ireland and the rest of the EU.

None of these options are easy nor have they ever been done before. However, everyone's priority in the UK and Ireland is for a frictionless border. All sides should judge themselves to have failed if the border is not frictionless. Therefore the goodwill that currently exists between London, Dublin and Belfast is a base to build a solution on, even if the answers are not yet evident.