Theresa Villiers is a former Northern Ireland Secretary, and is MP for Chipping Barnet.
The paper launched by the ERG yesterday sets out a workable solution to the Irish border question, one which does not require new physical checks or infrastructure at the border, and which does not damage the EU single market or bypass its rules.
It is in the interests of both sides of the Brexit negotiations to reach an agreement which maximises the opportunities for trade between us and facilitates continuing cooperation on a range of different areas. Nowhere does this matter more than in the Republic of Ireland. The Irish Government’s own forecasts suggest significant negative consequences for their economy if the EU insists on putting up new barriers to trade after we leave. The EU’s £95 billion trade surplus in goods with the UK means that many other Member States also have jobs and businesses that depend on maintaining a flourishing trading relationship with us.
Failing to secure an agreement would also see the EU lose their hoped for £38 billion ‘divorce payment’, leaving them with a big gap to fill in their finances. Any reduction in cooperation on crime or security would damage all sides, but it is the EU which benefits most from this cooperation. The UK’s commitment and capacity on security and intelligence gathering is unparalleled in Europe, as is our participation in the far-reaching Five Eyes intelligence network.
Achieving an agreement with the EU will inevitably involve compromise, but I am concerned that the Prime Minister’s Chequers proposals would not implement the referendum decision. Whilst aspects of the Chequers plan could potentially work well, for example on services, the commitment to a European rulebook for goods and food would leave us subject to many single market rules without having any say over them.
Our negotiating goal should instead be the kind of wide-ranging free trade agreement floated by Donald Tusk back in March. This would enable tariff-free trade to continue, but also ensure the vote to leave is respected.
So what is standing in the way of an agreement based on the approach Tusk set out? In short – the Irish border. The European Commission is asserting that the only way to maintain a free-flowing border between north and south is if Northern Ireland remains subject to the requirements of the Single Market and Customs Union. But they are wrong.
Take firstly the Common Travel Area between Ireland and the UK, which for nearly a hundred years has enabled citizens of our two countries to travel freely anywhere across these islands of which we are both part. Many scare stories circulated about this during the referendum, but now all sides agree that this arrangement can continue as it does now. Enforcement of new immigration rules needs to focus not on physical checks at the Irish border, but on ensuring those who do not have a right to live or work in the UK are unable to access benefits, housing, bank accounts or the labour market.
The key blockage in the Brexit negotiations comes down to this: the EU’s anxiety about goods or food getting into the single market area through the Irish border without being subject to EU rules or tariffs. If we left the EU tomorrow, the people worrying about whether to try to introduce new border checks would be the European Commission, not the UK Government. The question for the decision-makers in Brussels and capital cities across Europe is whether this supposed risk to the integrity of the Single Market is so serious that it should continue to jeopardise a free trade agreement with one of the EU’s biggest markets and closest partners.
Any new customs and compliance checks that might be necessary could be carried out away from the border. It is already a routine part of international practice around the world for many such checks to take place at the premises of the exporter, not at the border. Larger firms can use the trusted trader regime which operates to streamline customs formalities and enable electronic submission of paperwork. The VAT system could also be adapted to enable firms to submit customs and compliance declarations in parallel with VAT returns.
For the smallest businesses who are under the VAT threshold, the most sensible outcome would be to exempt them from new customs formalities (in the same way the EU currently exempts them from VAT). If the EU refuses to allow this, those small businesses operating in border areas who want to export to the Republic of Ireland could register for VAT voluntarily (many already do in order to claim back VAT) or seek help from customs specialists with completion of customs declarations.
Admittedly, arrangements of this kind would not wholly eliminate the risk of some goods being smuggled into the Single Market in breach of EU rules. But the way to deal with that is to ensure effective cooperation between authorities on the different sides of the border, founded on shared efforts to collect intelligence on smuggling and bring to justice the criminals responsible for it. Indeed this cooperation is already underway because of the smuggling which occurs in border counties in relation to cigarettes, fuel and other commodities.
So there are sensible solutions which would enable us to keep the Irish border flowing, but which don’t lock any part of our country into the rules and obligations of an organisation which we voted to leave. If the EU continue to reject those proposals, it looks more and more as if they are using the border question in a calculated, even cynical, way to try assert negotiating leverage. Our negotiators should stand firm in pursuit of a comprehensive free trade agreement which facilitates the trade and cooperation which both sides say that they want, but also leaves us with the freedom to take our own decisions on our laws, our borders, our money and our trade.