During the run-up to the UK referendum on European Union membership in June 2016 the difficulties which Brexit might cause in political, economic and administrative relations between Northern Ireland and the Irish Republic were recognised, but not seriously considered. Since then the issue of Brexit and the Irish border – how to avoid creating some form of border within the island of Ireland – has emerged as one of the most difficult in the entire Brexit negotiation. Supply chains, and even many farms, straddle the border and much economic activity in both Northern Ireland and the Republic relies on free movement between the two, and with the rest of the UK.
The European Council’s first set of negotiating directives to the EU chief negotiator, Michel Barnier, identified the Irish border question, together with citizens’ rights and the UK financial settlement, as one of three key issues on which significant progress must be made before negotiations could move on to Phase 2, namely to the substance of withdrawal terms and the future EU/UK relationship.
In December 2017 the official negotiators for the EU and UK sides submitted a joint report setting out a package of understandings on these three issues. These understandings were widely described as a “deal”, but in fact were agreements in principle which would take effect only when reflected “in full detail” in the final Withdrawal Agreement. On two subjects, namely the issue of establishing reciprocal citizens’ rights between the EU and UK post-Brexit, and methodology for determining the UK’s financial obligations arising from withdrawal, the package represented significant progress.
On the Irish question the December document however marked little or no practical progress, consisting largely of generalities. It reiterated the total commitment of all parties to protecting the Good Friday (or Belfast) Agreement of 10 April 1998 “in all its parts”, that is to maintaining and strengthening the peace process in Northern Ireland. It also committed the parties to further deepening of North-South cooperation in Ireland and to avoiding a hard border, including avoidance of any physical infrastructure together with the checks and controls which such a border would entail.
As broad principles, the December report noted that the UK recognises Ireland’s ongoing membership of the EU and its integration into the Internal Market and the Customs Union. At the same time the UK reasserted commitment to Northern Ireland as an integral part of the UK and its internal market. In the very next paragraph however the document notes that the “commitments and principles” outlined in it “will not pre-determine the outcome of wider discussions on the future relationship….. and are, as necessary, specific to the unique circumstances on the island of Ireland”.
Both UK and Irish governments are committed to maintaining the common (passport-free) travel area between Britain and Ireland, which the UK accepts can continue to operate without affecting Ireland’s obligations under EU law, including freedom of movement. The UK remains committed to “protecting and supporting continued North-South and East-West cooperation across the full range of ….. North-South implementation bodies”.
Finally, the document notes that “given the specific nature of issues related to Ireland and to Northern Ireland, and on the basis of the principles and commitments set out above, both parties agree that in the next phase work will continue in a distinct strand of the negotiations on the detailed arrangements required to give them effect”. This careful diplomatic wording recognises the unique sensitivity of the Irish border question and the absence of any clear sense, both within the UK and between the UK and EU, of how to address it.
The UK Government’s majority in the UK House of Commons currently depends, as regards budgetary matters and issues of confidence, on support of the ten members representing the Northern Ireland Democratic Unionist Party (DUP). The DUP leader has firmly rejected any suggestion that special solutions for Northern Ireland which had the effect of differentiating the Province from the rest of the United Kingdom could be acceptable. This appears to rule out even practical measures based on regulatory decisions.
Crudely put, therefore, the UK Government is committed simultaneously to maintaining the political, social and economic status quo as between Northern Ireland and the Republic including avoidance of creating a new physical frontier; to assuring the integrity of Northern Ireland within the United Kingdom; and to the possibility of negotiating special arrangements for Northern Ireland.
The major legal and technical problems arising from this combination of commitments could be avoided, in relation to trade in goods, by the UK’s remaining within the EU customs union and continuing to apply established rules under the common commercial policy; and more widely and in relation to provision of services, by remaining within the Internal Market. However staying in the customs union would preclude or at least limit the UK’s ability to strike bilateral trade deals with non-EU countries. Remaining in the Single Market would entail continuing subordination to the jurisdiction of the EU Court of Justice in the matter of regulatory systems, especially for services. Both these options are firmly ruled out by “red lines” which the UK Government has adopted. Indeed, on February 5 the UK Government repeated its explicit refusal to contemplate remaining within the present customs union or indeed any form of customs union with the EU.
What are the practical options for future UK trade relations with the European Union?
Assuming that continued membership of the Customs Union is ruled out, there are in principle two alternatives: (1) leaving the EU on 29 March 2019 with no agreement in place; or (2) some form of preferential trade agreement.
On leaving the EU the UK will cease to apply the EU’s common customs tariff, and will have to submit new national tariff schedules to the World Trade Organisation. This means that in the event of “no deal”, the UK and the EU would each impose tariffs on imports from the other party which it decided should be dutiable. On the EU side these would be the duties prescribed under the existing common customs tariff. In the UK case, national tariff rates would remain to be determined, following potential negotiations within the WTO, but disruption and damage to trade could be mitigated by the UK’s maintaining the EU tariff rates which it currently applies. Whatever the rates of duty to be applied in future, “no deal” would involve, in the case of goods, customs declarations and mechanisms which do not currently exist in UK/EU trade for assessing and collecting duties payable. Separately, UK suppliers of services would find themselves excluded in many areas from automatic approvals to trade in EU member states, and depending upon decisions to be taken by the UK Government, EU services undertakings could be subject to restrictions in the UK market.
“No deal” would inevitably have the effect of creating a new border between the Irish Republic and Northern Ireland. This might not involve fences, border posts, watchtowers and routine vehicle checks, but it would be present in the form of an entirely new range of administrative procedures governing intra-island trade which would be binding on both sides. There would have to be declaration and scrutiny of goods consignments for the purpose of tariff classification and duty assessment; and new tests for compliance with e.g. health and safety requirements on both sides of the border, especially in circumstances where such standards might in future diverge. Any attempt to preserve the special trading relationship of Ireland and Northern Ireland would however involve a degree of continuing subordination to the jurisdiction of the European Court of Justice which is the final arbiter of all regulatory matters in the EU. It would inevitably fall short of the terms of a clean “no deal” break, and would breach the UK Government’s commitment to maintaining the strict integrity and uniform treatment of all parts of the UK including Northern Ireland.
A new bilateral EU/UK preferential agreement
At the time of writing there is no clear indication of the UK’s priorities, and certainly no idea of what might emerge from negotiations for the future UK/EU trading relationship. Whatever new bilateral agreement might be reached would need to fulfil the WTO requirement for “free trade agreements” that restrictions on “substantially all” the trade in goods between the parties must be removed. Whatever form such an agreement took, it would impose significant legal and administrative obligations on providers of goods and services and on customs and other government authorities in both the UK and the remaining EU member states.
For the moment, discussion of the negotiating options loosely focuses on a choice between the so-called “Norway” model, or the “Canada” option (in practice there is a range of possibilities between these two models). Under “Norway” the UK would join the European Economic Area – EEA – enjoy tariff-free and unrestricted trade in goods with the EU, and stay in the Internal Market for services and wider regulatory issues. It would continue to observe EU trade rules, policies and regulations without having any say in their formulation. The “Canada” option, based on the FTA recently negotiated between the EU and Canada, would envisage an orthodox free trade agreement largely removing tariffs and other restrictions from trade in goods, but with much more limited coverage of market access for services sectors.
Any agreement that fell short of the Norway/EEA option would entail significant new legal and administrative procedures in UK/EU goods trade. These would include customs declarations to determine the correct tariff classification for goods, certificates of origin in order to establish what goods qualified for preferential treatment under the agreement, and quite possibly tests for compliance with standards which are not required in UK/EU trade at present. All this would impose substantial new and time-consuming obligations on traders and could delay trade in both directions, even allowing for the greater speed and convenience of electronic data filing under modern customs procedures. As regards services, any bilateral agreement would lay down terms for approval under the respective regulatory procedures of the UK and the EU which, even if existing EU-wide standards were maintained under such an agreement, would involve subordination to the regulatory laws and rules of the host market, in the case of the EU market the European Court of Justice.
Consequences for Northern Ireland
A new preferential agreement which on the UK side applied to the whole United Kingdom must also necessarily create a new border – even if not a physical border – between Northern Ireland and the Irish Republic. It might provide for tariff-free trade, but even if both sides applied the same standards to goods and/or services trade, new tests for compliance, e.g. with origin rules and regulatory standards, would be required in intra-island trade. The procedures and scrutinies which this would entail would be incompatible with free movement of goods and people between the whole island of Ireland and the UK which has obtained for nearly a century, and which both the UK and Ireland are committed to maintaining. An attempt to square this circle, for example, by resorting to tailor-made measures of “regulatory convergence” between the Irish Republic and Northern Ireland, would breach the UK’s and the DUP’s insistence that Northern Ireland must in no way be treated differently from the rest of the UK. It could also involve a measure of effective subordination to the jurisdiction of the European Court. Any special arrangement which applied only to the island of Ireland could threaten free movement of goods between Ireland and the rest of the European Union. This would clearly be unacceptable to the Republic of Ireland.
What now for Ireland?
All the hardest aspects of the Brexit negotiation have now to be tackled. Politically the Irish border issue is probably the hardest of all. UK and Irish politicians are acutely and rightly responsive to the many difficulties and challenges posed by Irish history, and to the great political and social sensitivities which obtain throughout the island of Ireland. But at the same time, and for what Brexit supporters see as fundamental reasons of national sovereignty, the UK Government rules out continued membership of any form of customs union with the EU, and also continuing membership of the Internal Market. It refuses to contemplate a hard border within the island of Ireland; but simultaneously it rules out as incompatible with the integrity of the United Kingdom practical measures which could avert the need for such a border, such as a separate regime for Northern Ireland based on specific measures of regulatory convergence with the Republic (and hence, inevitably, with the remainder of the EU).
These are irreconcilable positions, and cannot be simultaneously resolved. Currently the preconditions set by the UK Government, with the support of the DUP, appear to rule out practical compromises. But if within a final Withdrawal Agreement there is to be a solution to the Irish border issue that preserves the overwhelming priority of implementing the Good Friday Agreement, and indeed if Brexit is to move forward at all, something will have to give and compromise solutions will have to be found.