The Problem of Brexit and the Irish Border
By Katie Davies, VP International Solution Development
What will happen to the UK-Ireland border after Brexit?
Answering that question involves making some of the toughest, most complex decisions involved in the separation, especially considering the area’s tumultuous history. The UK recently issued the first position paper in a planned series on Brexit. This one outlines several proposals for allowing trade to continue between Ireland and Northern Ireland without erecting physical borders, but many uncertainties remain.
Northern Ireland is the only part of the UK that will share a land border with an EU state — the Republic of Ireland — after Brexit. Currently, there are no border controls between the two countries.
According to a recent House of Lords report, there is 60 billion euros ($71.5 billion) in trade between the UK and Ireland each year, and 30,000 people cross somewhere along the 310-mile-long border every day. About 80 percent of cross-border trade comes from small businesses. In the next round of talks, the UK plans to ask for an exemption for small traders and farmers from customs, agricultural and food safety checks. Large businesses could be given “trusted trader arrangements” to reduce formalities, the position paper said.
The position paper makes it clear that Britain wants no physical border posts or immigration checks. It envisions a “frictionless border” and commits to upholding a Common Travel Area (CTA) agreement that predates the formation of the EU. The agreement gives Irish citizens “special status” under UK law and allows for free trade at the border.
Ireland doesn’t want a “hard” border, either, and says that in any case, it lacks the resources to implement controls.
The problem is that without border controls, immigrants could pass undetected through the border to the UK. Immigration control was a key impetus for Brexit. The position paper says that immigration could be regulated by “controlling access to the labor market and social security,” which does not have to be done at the border. It says border proposals should be viewed in the context of unspecified “wider plans for the future immigration system in the autumn.”
Another potential problem is that European businesses could use the border as a back door to export goods. Trade could also go the other way. “With no Irish border controls, US beef, Australian lamb, Chinese steel and Indian cars can be imported into Belfast, sent an hour down the road to Dundalk and exported tariff-free via Ireland to France, Germany or any other EU country,” Irish columnist Fintan O'Toole wrote in The Guardian.
“Frictionless trade is not possible outside the single market and customs union,” a European Commission spokesperson told The Financial Times.
The position paper suggests using an electronic tracking mechanism to trace goods to their destinations and a “regulatory equivalence” agreement in which the EU and the UK would agree to use “the same outcome and high standards, with scope for flexibility.” It also proposes a customs agreement that would exempt companies with fewer than 250 employees.
Details of the proposals have yet to be worked out. The Labour Party has asked for a two- to three-year transition period during which it would retain access to the EU customs union under some form of membership.
One reason for the UK’s insistence on not erecting physical border controls is its desire to maintain peace in Northern Ireland, which was racked by a 30-year period of violence known as "the Troubles," in which more than 3,000 people lost their lives, as Catholics who felt culturally aligned with Ireland fought Protestants who identified with Britain. The position paper repeatedly states the need to ensure that nothing is done to undermine the Belfast or "Good Friday" Agreement that was signed in 1998 and ushered in an era of peace. It calls for a continuation of funding for four “PEACE” programs that are partly supported by the EU under the Good Friday Agreement to help people in Northern Ireland border communities and across the border in Ireland.
For multinational businesses with operations in Ireland or Northern Ireland, it’s hard to know what to expect at this point. For employees, the CTA provides reciprocal rights to enter and work in either state without requesting permission, the position paper says. For goods and services, the paper calls for “finding flexible and imaginative solutions, while recognizing that the solution will need to go beyond any previous precedents.”
In other words, nobody knows yet.
It may be some time before border issues are resolved. As Brexit talks resume in Brussels, the EU has said it wants to settle separation aspects before working out post-Brexit ties. In the meantime, businesses should ensure they continue to comply with the domestic laws in each country where they operate and keep apprised of ongoing Brexit negotiations.