How hard would the border become in the event that Brexit talks collapsed?by Katy Hayward / November 7, 2018 / Leave a comment
It is no coincidence that, after another run of dramatic headlines about the Irish border, there is a growing sense that we are tipping towards a “no deal” Brexit.
The Irish border remains the stubborn obstacle to progress in the exit negotiations. The UK’s integration with the European Union has formed a much-needed context for the softening of Northern Ireland’s relationship with Ireland—with direct benefits for the peace process. Extracting Northern Ireland from this context with none of the legal certainties and soft landing provided for in the draft Withdrawal Agreement is a grim prospect.
People in the Irish border region and Northern Ireland often use the term “collateral damage” to describe their position. But what would a “no deal” Brexit really mean for the Irish border? Would it be chaos, or would things trundle along much as they are? Complicated as it is, this is one of the most important questions as we near the Brexit crunch.
Let’s get technical
Since mid-September 2018, the British government has released dozens of technical notices on preparation for a no deal. The majority of them have a few paragraphs—usually towards the end—that address Northern Ireland.
In languagequite different to thetechnical jargon of the documents, these paragraphs carefully reiterate the government’s commitment to certain principles: it upholds the Belfast (Good Friday) Agreement of 1998, it wants to protect North-South co-operation on the island of Ireland, and it seeks to take “full account of the unique circumstances of Northern Ireland.”
There is no small irony in the fact that it is precisely the effort to meet these principles that has resulted in the prospect of a “no deal” scenario. The “backstop” in the draft Withdrawal Agreement is meant to guarantee there will be no hard border. The backstop debate centres on differing UK and EU interpretations of what is necessary to avoid one and how to protect the 1998 Agreement.
Notwithstanding the fact that avoiding a hard border will remain a priority of the UK and EU even in the event of a “no deal,” it is possible to read acrossfrom many of the technical notices produced by the British government (and by the EU) to see quite how “hard” the Irish border could be if normal third country rules apply to it as a UK-EU boundary.
Customs and borders
In the first instance, the UK-EU border would become a customs border. Those trading across it would have to be registered and make customs declarations on all goods being transported. Such declarations must include the correct commodity code and value of the goods.
And, in many instances, tariffs would have to be applied to these goods. This can be ad valorem (charged as a percentage of the value of the goods), unit based charges (by quantity or weight), or both. All goods going from Northern Ireland would have the EU’s Most Favoured Nation (MFN) tariffs rates applied; and those going from Ireland into Northern Ireland would have the UK trade tariffs applied (expected to be very similar to the EU’s). As well as tariffs, excise duties and VAT will have to be paid on entry to the other jurisdiction.
There are some means of assisting businesses with the challenge of customs facilitation, such as trusted trader status for businesses and customs clearance agents. However, there is no dedicated facility for this in Northern Ireland; businesses have to apply through HMRC and the waiting time extends months beyond April 2019. Moreover, there are currently nowhere near enough customs clearance agents in Northern Ireland capable of handling cross-border trade on the island.
Of course, a hard Irish border would not merely affect trade. The Single Electricity Market between Ireland and Northern Ireland operates within a framework of common EU rules. If there is no deal, the EU rules will cease to apply in Northern Ireland leaving key elements of the Single Electricity Market without any legal basis, with the risk it can no longer continue. While this would not immediately mean “lights out,” it would mean higher prices and much reduced capacity.
More fundamentally, daily life around the Irish border at the moment embodies the wide and deep effects of European integration. Many things covered in the British government’s technical notices may seem only remotely or occasionally relevant to those in Great Britain: the absence of mobile roaming charges, for example, or the continuation of cross-border rail services. These same things have a direct and daily relevance for those in Northern Ireland, especially in the border region.
Is there a choice?
In frustration at the stumbling block posed by the Irish border in the Brexit negotiations, there are frequent claims that the UK could simply decide to not conduct border checks: a “throw open the borders” option. This is quite an extraordinary idea for a country that is seeking to make its mark on the world stage as a serious trading partner.
WTO rules are intended to reduce disparities and unnecessary bureaucracy when it comes to managing customs controls. But they assume customs controls will always be imposed. The idea that a country would refuse to fulfil its duties with regard to customs facilitation is bizarre and self-defeating. If the UK (or Ireland) decided to turn a blind eye to the traffic of goods across their borders, they would be leaving a gate wide open for smugglers. And smuggling not only means losses to public revenue; it causes harm to legitimate traders, poses risks to consumers, and funds criminal activity.
The truth is that, although a “no deal” scenario would leave citizens and businesses in Northern Ireland most dangerously exposed, the negative effects on the Irish border would not be confined to the border region but seep out across the wider UK and even EU. It is for these very reasons that the “backstop” of the Protocol on Ireland/Northern Ireland exists in the Withdrawal Agreement. And it is in the interests of all the UK to secure it.