Sunday, 12 November 2017

Brexit: why Northern Ireland comes first


Belatedly, and with some understandable difficulty, we are starting to talk about the mechanics of the Irish border question. The technicalities are, as ever, complicated - particularly those surrounding VAT. If I am to do what I set out to do, and inform the informers, a breakdown of the components involved in this facet of Brexit is preferable. This post will focus on the bigger picture: why the border question comes as part of the divorce settlement and thus before general talks about trade. Later posts will deal with the added challenges. 

Comprehension of the border issue is not all about detail. We must also get to grips with broad concepts, such as the implications of acquiring third country status and the use the Single Market (EEA) has to us in terms of eradicating non-tariff barriers to trade and maintaining an efficient enforcement and surveillance strategy. We must also establish firstly that the British government has agreed to the Article 50 sequencing process, and secondly that the Irish border question framing part of the divorce settlement is in the interests of all sides. 

The United Kingdom, Ireland and the rest of the European Union all favour a soft border. This is in part to protect the maturation of the peace process and in part to maintain frictionless trade. There is no desire for punishment here on any side and no political will for a hard border. The question therefore becomes: how do we go about preventing such an outcome? 



The answer is to sort it out before leaving. On March 29th 2019, the UK becomes a third country to the European Union and Northern Ireland shares a border with the EU, a Customs Union and the Single Market. Without an island-specific arrangement embedded within the framework of the divorce settlement, Northern Ireland will simply be regarded as a third country on Brexit day. This comes with a huge shift in enforcement strategy, whereby checks and inspections move from the point of production to the border. Hence, a hard border.

Again, this is not done out of spite or predatory action commandeered in Brussels. The EU has no legal jurisdiction in the internal affairs of a third country and so must assess conformity to standards at the border. Leaving the EU before agreeing on a specific deal for Northern Ireland (which will probably have to involve special status as an EEA member and a possible replication of the Common External Tariff) will give us an Irish border bogged down by checks. This is unavoidable and will not be especially conducive for the preservation of the ongoing peace process. 

The volume of transportation at the Irish border and the intricacy of certain supply chains cannot be overstated. The Irish border is six times busier than the Norwegian-Swedish border and we also have to take what are called 'X-crossings' into account, where products cross back and forth as part of their respective supply line. Milk is as good an example as any of this, and a useful case study to use because it is a widely consumed good and as such will easily capture the public's interest. There is a milk cooperative, set up by Gabriel D'Arcy, called LacPatrick. It has processing facilities situated on either side of a border rendered non-existent by the Good Friday Agreement in 1998. 

Here we can paint a picture of the difficulties to some pockets of trade caused by a failure to come to a pre-Brexit arrangement and a subsequent hard border. Rigorous checks at this border, which are likely unless we prevent them beforehand, will cost producers hundreds of thousands every year. Delays and storage costs can provide business with quite punitive overheads, and this will compound any political friction induced by a hard border. It is imperative, therefore, for agreement to be reached during the Article 50 period. 

The island of Ireland will need specific protocols related particularly to the origin of goods, VAT and enforcement procedures. Keeping those checks and inspections at the point of production will require a stay in the EEA, whether this is done officially and bolted onto the EEA Agreement or by stealth: unofficially but with agreements to keep Northern Ireland within the jurisdiction of the EU's network of market surveillance agencies, will be up to negotiators. But either way, it must be agreed soon. 

1 comment:

  1. All of this is tendentious and theoretical and really deserves you never to leave the subjunctive.
    There is nothing special about the UK/Irish border, except 1000 years of intra-Irish violence. Touch wood the GFA has quieted that. So there are some chronic sensitivities but it has nothing exceptional to do with trade. What happens across the sea border of the Channel holds equally true for the land border across Armagh. All of the UK becomes a third country. The DUP, which holds the government in office, will see to that.

    Thus the UK, which must leave the customs union to enact its own trade deals and to retain its independence from the associated political and constitutional baggage of membership, has to negotiate a modus vivendi with the EU. This is largely in their gift and they have shown themselves keen to wound, like a spurned wife.
    But it is not wholly in their gift.
    We could (subj) have customs posts and barbed wire but, on our side of the border, we do not have to. We could use "congestion charge" technology and confirm that lorries crossing the border have paid the charge prior to crossing. We could pull off random lorries miles inside the border at motorway rest stations or even just at Holyhead and Liverpool and inspect cargoes on a sampling basis.
    It is entirely a political decision what level of smuggling we are prepared to tolerate. Given that we currently raise no excise from EU goods, any level will be a benefit to the Treasury.

    This would leave the full panoply of Gestapo control and Alsation dogs on the South side of the Border for we Britons to wonder at, whether at Calais or at Dundalk. A situation with which Britain has been too familiar. But, as before, that would (subj) be their choice not ours.

    ReplyDelete