Dr Graham Gudgin is Policy Exchange’s Chief Economic Adviser. He is a visiting Professor at the University of Ulster and Chairman of the Advisory Board of the Ulster University Economic Policy Centre.
A new cold wind has been blowing from Dublin on the vexed issue of the Irish land border. The previous Irish position of preparing for a technological solution to minimise border disruption has been overturned. Enda Kenny, Taoiseach until June, had implicitly accepted that a border would be necessary, and had begun preparations, along with the UK Government, to minimise disruption. Quiet contacts had been taking place between officials north and south of the border. As the new Fine Gael government team led by Leo Varadkar has found its feet, all of that has begun to change.
First Simon Coveney, Ireland’s Foreign Minister, said that that no border is acceptable. Another government spokesman said that no technological solutions could make a border acceptable. Then in Brussels last week, Varadkar said that the border was Britain’s and not Ireland’s problem, and that Irish work on technological solutions would cease. Most strikingly, he also said that the border should be moved to the Irish Sea. What this implied was that no customs checks should be done at the land border, which would remain largely as invisible as it does today. Instead, customs checks would occur at seaports and airports.
This idea apparently came as a surprise to officials in Ireland’s Department of Foreign Affairs (DFA), and does not seem to have been based on much thought or analysis. Such ideas are incoherent and unhelpful. The EU27’s negotiating position on the border explicitly states that the integrity of the EU’s legal order must be maintained. This means a tightly managed border around the Single Market. The May Government’s position is that Northern Ireland, as part of the UK, will almost certainly be outside the Single Market. Border checks will thus have to take place at the land border, not at Belfast, Larne or Warrenpoint. Indeed, it is difficult to imagine what “a border at the Irish Sea” would actually mean.
If Northern Ireland remained within the Single Market but Great Britain did not, then tariffs would be imposed on Northern Ireland goods to Great Britain. Since there is not the slightest chance of either the DUP or the UK Government agreeing to such a scheme, Varadkar presumably had something else in mind. Assuming that Northern Ireland will be outside the Single Market with the rest of the UK, he nevertheless appeared to envisage that any goods moving between Northern Ireland and the Republic of Ireland would be free of tariffs or other checks (such as those for animal health).
Additionally, he perhaps envisaged that tariffs on goods moving from the Republic through Northern Ireland to GB, or vice versa, would be collected at Northern Ireland’s ports and airports. In this case, customs officials would need to distinguish goods originating in the Republic from those starting out from within Northern Ireland. Such outsourcing of EU customs checks would be unprecedented and probably impractical.
None of this appears to have been thought through, and the likelihood is that Ireland’s DFA officials have quietly buried the idea. When the Irish ambassador in London was pressed on Today, he firmly sidestepped the issue. Significantly, there was no mention of it in Varadkar’s major policy speech at Queens University Belfast last Friday.
What Varadkar proposed instead was a special customs union between the EU and the UK. He appeared to accept that the UK was likely to remain outside the Single Market and outside the Customs Union as currently constituted. He specifically mentioned Turkey, which is inside the EU Customs Union without being a member of either the EU or its Single Market, and also has a free trade agreement with the EU for industrial goods. Turkey is not subject to Single Market rules, including the free movement of labour, but is not permitted to organise trade agreements with third countries without EU permission. Turkey also must adhere to EU regulations and European Court of Justice rulings without being represented in the making of these regulations and judgements.
There is a glimmer of possibility in this suggestion. The UK might agree to a customs union with the EU, as long as it did not prevent the UK from concluding free trade agreements with non-EU countries including the USA. However, such a departure from the legal order is likely to be anathema to the EU. The usual reason for insisting on customs checks is to prevent a back door for goods from what the EU calls ‘third countries’ which do not have free trade with the EU. It is perhaps just possible to imagine a high-trust relationship between the EU and UK which would avoid such problems, but the EU’s current attitude of wishing to make it difficult to leave the EU almost certainly rules this out.
What is strange about the Irish approach to Brexit, under both Kenny and Varadkar, is their lack of overt support for a free-trade agreement between the UK and the EU. This would simultaneously avoid much of the damage that might otherwise occur to Irish exports and imports from the imposition of tariffs, while at the same time greatly easing the problems of an Irish land border. A free-trade agreement, rather like that between Canada and the EU but including agricultural goods, would mean no tariffs to be collected at the Irish border.
Some regulatory issues requiring border checks might remain, but since UK regulatory standards are currently the same as those in the EU, these issues should be amenable to negotiation. A UK-EU free trade agreement remains the most likely outcome of the current Brexit negotiations, albeit after a transition period, but with little thanks to the Irish Government. With an FTA in place, few border checks would be needed and these could largely be dealt with through technology.
At some stage, the Irish Government is likely to have to resume their planning for such technology. In a paper for Policy Exchange entitled After Brexit: Will Ireland be next to exit?, Ray Bassett, a former Irish Ambassador, has criticised Irish passivity on the border issue, so the latest moves at least represent some policy activism, but we wait to see whether Ireland can train its sights on Brussels, as it should, rather than its somewhat populist Brit-bashing over Brexit.
This article is a cross-post from Policy Exchange’s website.