The much-touted myth that there was no alternative to the Prime Minister’s Chequers policy was exploded by the publication on ConservativeHome of the draft White Paper – coherent with the Government’s own stated goals – that had been prepared by DexEU but which was ditched in favour of the new proposals put together in the Cabinet Office. The myth persists in some quarters, presumably because some people prefer it to the truth, and others are genuinely unaware that it is out of date.
What’s interesting is that it is on the question of border management, and particularly the Northern Irish border, that critics of Brexit cling most tightly to the idea that there is no option even suggested other than that now touted by the Prime Minister – namely, the continued application of an EU ‘common rulebook’ to the whole of UK goods, and the continued authority of the European Court of Justice.
Others have written at some length about the emotional, political and cynical reasons why the border between Northern Ireland and the Republic of Ireland has become the central focus of Remainer argument, and there is little purpose in rehearsing those arguments over once more. Instead, let’s look specifically at this question which seems to animate some so much: what was the alternative answer to the border question proposed by the Government’s Brexiteers?
Is there a border at the moment?
To listen to some discussions of the topic, you might imagine there is currently no border between the North and the Republic. Not so – the UK and the Republic have different currencies, different tax rates, different laws and legal systems. Accordingly, as David Davis put it in his recent Sunday Times article:
‘What people…forget is that there is already a border there. VAT, excise duties and other taxes differ north and south of the border. The customs authorities manage this now by careful intelligence-led policing of goods movements, which is exactly how it will work in the future. Before the issue became heavily politicised, both the head of the UK customs and Irish customs said they could operate without any customs posts. And so they will.’
Panic about the idea of the creation of a border is evidently mis-founded, given that one exists already.
Ah, but is there currently a hard border?
Once upon a time, the words “hard” and “soft” had quite clear meanings – but that was before the EU referendum.
Since then, we’ve been treated to a good dozen or more redefinitions of both words in relation to Brexit – regulatory policy, institutional relations, and indeed border arrangements. Just as the term has slipped in meaning since June 2016 on other fronts (remember when “hard Brexit” used to mean “no deal” rather than simply “leaving the EU”?), so it has changed in time in relation to the border.
In the words of Dominic Lawson:
‘The PM agreed last December with the European Commission’s chief negotiator, Michel Barnier, that whatever else, there would be no “hard border” between Northern Ireland and the Republic of Ireland… But in the intervening months the British government’s negotiators have inexplicably allowed Barnier’s team to determine what “hard border” meant — and it duly determined that this did not just mean an absence of checkpoints, but absolutely no physical customs activity of any sort whatsoever, even remotely operated overhead cameras. Amazing, since such things are already in place close to the border.’
The Government’s position prior to Chequers has sometimes been described as committing to “no infrastructure” on or near the border. That’s misleading – there have been no proposals from the UK or the Republic of Ireland to get rid of what infrastructure already exists, which includes things like ANPR cameras. Rather, the British Government said that it would not introduce new infrastructure, ie no return to the customs checkpoints which existed between the 1920s and the 1990s.
In the meaningful sense of what you actually experience when crossing from the North into the Republic and back again, the border is practically invisible. It exists, because there are legal differences on each side, various of which are checked and monitored, including by unobtrusive technology and checks away from the border itself.
If everyone agrees that what is currently in place is not a “hard border” – which they seem to – then presumably a continuation of the same approach would not qualify as one if proposed for the future.
Is anyone proposing a hard border?
No. The current unobtrusive experience in terms of checks on goods or people is what everyone on all sides say they want to maintain – for practical and political reasons – and it’s the basis of what was the proposal put forward by DexEU. Here’s Davis again:
‘Under no circumstances will the UK install a hard border in Northern Ireland.’
Interestingly, it isn’t just the former Brexit Secretary and the British Government who say this. Leo Varadkar, the Taoiseach, also says there won’t be any introduction of a “hard border”. Olly Robbins did suggest to the Brexit Select Committee that the EU might insist on one – but the Irish Government say they have been assured by the EU that they will not do so.
In which case, as Davis asks, ‘People might be forgiven for wondering what the exact problem is.’ If nobody involved – even the most dogmatic institutions of Brussels – would carry out such a scenario, why are people panicking about it and posing in ‘border guard’ costumes for media stunts?
Indeed, might this offer a practical way forward? It was reported a few months ago that Jacob Rees-Mogg had put the idea to the Prime Minister that the arrangements could simply rub along on this informal basis – if no-one on either side puts up border posts, and the EU won’t force the Republic to do so, and couldn’t in practice even if it wanted to, why not just allow people to do what they do best and get on with life as things are? May allegedly slapped this “game of chicken” down as being insufficiently informal and failing to cleave to the rule of law.
It’s an interesting question as to what would happen if the big day came and there just wasn’t any physical border erected – but it will most likely remain hypothetical. As the DexEU planners acknowledged, there are practical and legal reasons why some formal arrangement would be preferable, not least the greater market confidence delivered by a system founded on legal certainty, and the fact that agreement would be helpful to the progress of the wider negotiations.
What would need to be checked?
This is highly variable across the different models of post-Brexit relationship that we might adopt. Customs processes don’t spring into being on their own, largely, they are symptoms of the type of border which they are designed to manage. What tariffs are there? What regulatory differences apply to the goods flowing back and forth? What are the concerns and suspicions of one or both sides, and on what are they willing to outsource matters by trusting one another?
This is why it was a bizarre error to attempt to insist that the Northern Irish border could somehow be resolved before the opening of trade talks. Without knowing the trade relationship, how on earth could a border system be drafted, still less agreed between the two sides?
Tariffs are – under the UK’s proposals – not intended to be a problem. The draft White Paper sought “zero tariffs across all goods” in order to maximise freedom of trade between the UK and the EU. That would make life somewhat easier, but even DexEU acknowledge that entirely tariff-free trade would be a step further than had been achieved in CETA, the FTA with Canada. However, Davis argued in last week’s Commons debate that even trading across tariffs is not the insuperable barrier to swift and efficient trade for joined-up manufacturing processes as some make out:
“What happens in Detroit, the centre of the American motor industry? In Ontario, across a very difficult and constrained border, tougher than Dover, there is an entire industry supplying parts, components and engines for that motor car industry. It operates across a border that has tariffs on it too….The simple truth is they operate even where there are tariffs, and we are proposing a non-tariff arrangement—there would be no tariffs here; the primary concerns will not be the collection money but other things.”
Rules of Origin
Do not imagine, however, that tariff-free trade is simply unobstructed. Indeed, even accurately ensuring that what is crossing the border is indeed not subject to tariffs requires the collection of information on what is being transported. There would still need to be processes to assure a variety of other things, too – is what is being traded compliant with the regulations of its destination market, be that the UK or the EU? Where is it coming from and where is it going to? Are elements of it – components or ingredients – from markets that do attract tariffs or that are subject to different rules?
The paperwork to do so can be individually simple, particularly when automated, but collectively complex – involving the collation of layers and layers of statements of origin when something with as many parts as a car has to be accurately described for customs purposes.
The draft White Paper proposed to design UK-EU Rules of Origin to allow existing supply chains within the Single Market to continue to operate without disruption – something the authors intended as a mutual benefit to both sides, ensuring limited disruption to exporters and manufacturers in each. Notably, in case that still wasn’t sufficient to allow smooth trade across the Northern Irish border the text adds that:
‘This arrangement would allow exemptions for small traders on the island of Ireland as well as trade where the risk of tariff circumvention is negligible.’
That is an interesting addendum. Effectively it is a proposal to simply allow the island of Ireland to operate as though it were a single area of origin in some cases – and “small traders” in that context most likely refers to farmers, an area of special interest that we’ll return to.
If tariff-free trade was indeed agreed, then aside from Rules of Origin regulatory compliance is the most obvious possible focus for bureaucracy around the border. A major benefit of Brexit, as many Leavers have stated, is the opportunity for the UK to vary its regulations as it might choose. While goods exported to the EU would of course have to obey the regulations of the destination market, like goods exporting to China or Brazil, the domestic UK market could gain from reducing costs, freeing up innovation and improving its competitiveness.
That would pose a challenge to the EU, which helps to explain why Brussels’ preference is to try to keep the UK in its entirety subject to the EU rulebook. DexEU was not willing to agree to the price of giving up such an opportunity, and instead the Government settled on proposing regulatory “alignment” rather than pledging “non-divergence” of regulations. Readers will recall that there was quite a row within Westminster about even this – the Prime Minister opted for the words “full alignment”, although her Brexit Secretary made clear at the time that:
“…alignment is not harmonisation. It is not having exactly the same rules; it is sometimes having mutually recognised rules, mutually recognised inspection and all that sort of thing. That is what we are aiming at.”
He restated that meaning last week:
“…we interpreted full alignment as outcome alignment and relating directly to the issues in the north-south strands—principally, agriculture, transport, and environment as it applies to the single electricity market.”
In short, what was being proposed in December of last year, and then in the DexEU draft white paper, was not a “common rulebook” but a principle of common regulatory outcomes, where needed to facilitate trade – allowing identical regulations if the UK chose, but also incorporating technical equivalence and outcome equivalence. That would be founded on the “comprehensive system of mutual recognition” committed to by the Prime Minister at Mansion House. That would work for all UK exports to the EU, of course, but its particular benefits to the only land border, in Northern Ireland, should be clear.
Where would the checks take place?
The idea of a mutual recognition system, allowing each side to accept that one another’s regulations produced sufficiently aligned outcomes, would certainly ease trade across the border. But even if such a system was extensive and able to proceed without disruption by regulatory disputes, there would still need to be some system of declaration and assurance. All goods being imported and exported would need an accompanying form or registration to state what they were, and some proportion would need to be checked either for random sampling or enforcement where problems were suspected.
Here again the debate tends to get bogged down in antiquated and overly simplistic ideas of how such a system would have to work. Instant images are summoned up of queues at the border with forms being submitted and stamped at checkpoints, but in law and practice there is little need for it to be that way. Already the norm is for the paperwork for import and export across EU borders to be done in advance, and far away from the border itself.
Nor does there appear to be any legal need to even stop vehicles at the border itself when it is deemed necessary to check them. The fact that the UK, EU and the Republic all say there will be no need for the infrastructure of checkpoints suggests pretty clearly that they are all agreed on that.
That means that just as the current border exists but is largely invisible, a new border could mostly exist elsewhere – technologically and geographically – too. Advocates of the original DexEU plan point to the example of a system used in Swiss monitoring, in which ANPR-style cameras record vehicles entering at the border and can then allocate them for checking further on in their journey, inside Swiss territory. The Swiss have other systems in place, too, but the legality and practicality of this approach has been tried and tested. As I mentioned above, such cameras are apparently already in place near the Northern Irish border, and of course there are already police and customs operations targeted at people smuggling to avoid duties, so this wouldn’t mean an intensification of the physical character of the border.
Tellingly, Sky News reported this week that the Joint Customs Consultative Committee – an industry body which liaises with HMRC, and which is not famously supportive of new Brexit legislation – has itself proposed the possibility of a system of checks on vehicles away from the border itself where necessary,
Rather like the degree of regulatory difference between the two sides of the border, the strictness of the regime and the proportion of checks required could vary widely depending on the policy this country (and the EU) wishes to introduce after Brexit. It won’t be zero, and it won’t be 100 per cent, obviously – where exactly the proportion falls depends on the attitudes of each side and the state of relations between the two. Policy Exchange reports that the standard rate of checks on consignments from outside the EU travelling into the Union is 0.5 per cent. Consider all the rhetoric about the importance of maintaining swift and interconnected supply chains, of reducing friction and so on, and the incentives for both align in favour of avoiding disruption caused by too much oversight.
Technologically, it could be done. The Irish Government was working with the UK on such practical solutions before Varadkar came to office and cancelled the work last summer.
Furthermore, in February Dr Graham Gudgin of Policy Exchange noted that the EU’s own study of border arrangements around the world found that such an approach was technologically feasible – and even offered an opportunity to develop “best practice” for other EU borders.
Juliet Samuel’s special investigation into borders and Brexit for the Daily Telegraph found that facilities and systems had already displayed the ability to adapt swiftly to changing circumstances, such as in the migrant crisis, and that while new IT systems might take up to two years, they were not the “magical” concepts that some in Brussels had attacked them as. Samuel’s sources argued that they were willing and able to prepare for change, but that they required the UK Government to bring some clarity about what that change would likely be.
In short, this means hard work on a pragmatic approach to designing and managing processes that other countries already deal with, rather than rushing into separating Northern Ireland legally from the rest of the UK (against the wishes of many of its people), or abandoning the right for the UK to democratically control its own laws (against the outcome of the referendum and the subsequent pledges of the Government).
As Davis put it:
“Simply put, the answers to the customs and the [Northern Ireland] issue are detailed and technical but rely on existing technology and sensible management, not on sweeping political solutions that imperil long-standing and sometimes delicate political arrangements.”
Can concerns about a ‘back door’ to the Single Market be allayed?
It’s fair to say that the EU has a deeper concern than the UK on this front. Brussels fears goods being snuck into the EU via the unstaffed Northern Irish border without paying the due tariffs, or without having to live up to EU regulatory standards (or both).
The scale of the actual issue may be more limited in practice than the rhetoric allows (though ultimately what matters is that our interlocutors in the negotiation want it resolved). For example, the Common Travel Area (CTA) between the UK and the Republic of Ireland has applied to each country’s citizens for almost a century, but the non-existence of border checks theoretically opens a ‘back door’ into the EU and the UK for people not actually granted free movement rights under that agreement. However, in practice such a flood of illegitimate migration North-South or vice versa does not seem to have occurred. It’s not unreasonable to wonder if goods are really going to move in serious quantities in that way if people don’t currently take advantage of the opportunity to do so.
One reason for that absence of a problem, of course, is that the other frontiers of both countries are more closely controlled, even though the North-South border itself is not. If you have come into the UK from outside the country, your passport will have been checked already, before you get to cross from Northern Ireland into the Republic. The same, the Brexiteers argue, could effectively apply to the trade in goods. Over to Davis once more:
‘EU concerns about Northern Ireland becoming a back door into the EU for third-country goods is easily manageable. Much is made of the nearly 300 crossing points on the border, but little of the fact that there are barely half a dozen ports. This means surveillance on goods from the rest of the world into Northern Ireland is comparatively easy…’
What does that mean in practice? Place a legal requirement, backed with accompanying penalties for false disclosure, on companies so that they must declare the end destination of their imports. Check these declarations at the far fewer points of entry into Northern Ireland from outside – the ports and airports – in order to ensure the right tariffs, regulations and so on are being abided by at that stage. Are there potential opportunities for people to lie on the forms? Yes, but such opportunities already exist across the customs systems that we and other countries already have – the normal thing to do is to combat such fraud by intelligence, criminal sanctions, and a small degree of spot checking.
How can very tight supply chains be sustained?
There are two distinct types of specialised supply chain that this question applies to. The first is ‘Just-In-Time’ supply chains – manufacturing and other businesses which seek to maximise their efficiency by ensuring components, ingredients, stock and so forth arrive when they are needed but not before.
In one sense, any new ‘friction’ – paperwork to submit, checks to pass – in cross-border trade would be a drag on a just-in-time supply chain. However, such supply chains are not designed to only function through instantaneous trade; their purpose is to co-ordinate production in order to work across whatever conditions present themselves: borders with tariffs, across physical distance, and through various customs regimes, with a variety of different types of product and modes of transport. The easier the process, the better, hence the proposal for mutual recognition of regulatory standards, and technological solutions to problems that once would have been much more onerous.
As John Redwood put it last week in the Commons:
“…many successful manufacturing businesses in Britain today have these just-in-time supply chains bringing in large quantities of raw material and component from outside the EU through a system of authorised economic operators, electronic manifests and the settlement of any bills not at the port. There are not people sitting in boxes in the port taking the money.”
To which Davis replied:
“…The presumption in all this is that we have a magical, frictionless system at the moment. Actually, we will have seen on our television screens that that is not true. This entire House will have watched Operation Stack in progress over various years. Operation Stack is what we do when one of the ports gets locked up for one reason or another—a strike in France or whatever. It has been operated 74 times in 20 years. In 2015, it took up 31 days of friction, and our businesses—the just-in-time businesses and the perishable goods businesses—all coped with it, so let us not frighten ourselves in doing this negotiation. Nobody wants it and nobody likes it, but they cope with it.”
That is the essence of the decision here. The alternative proposal would be low-friction, which is not the same as no-friction – but then a no-friction system does not exist, short of the UK and the EU becoming the same country, and there are costs, (regulatory, opportunity, protectionist, and democratic), in the sizeable subservience to EU law required in order to maintain the current system.
The second type of specialised supply chain relates specifically to trade within the island of Ireland: agricultural produce, and particularly milk and dairy. North-South trade is not vast, but much of what there is comes from this sector. It is also very tightly regulated – when you ship milk from the farm to a plant for pasteurising, then on to be processed into cheese or other products, EU regulations specify the conditions in which it must be kept at each stage, particularly in terms of temperature, and the timescales involved. That applies whether one is crossing an internal EU border or not, and it so happens that the sector transports produce back and forth across the border a lot.
This does pose a particular challenge for Northern Ireland and the Republic after Brexit. Effectively these are short export/import activities, repeatedly, involving the same perishable goods, and so like any other export they must be made in accordance with the destination market’s regulations. The practice of that trade is obviously more sensitive to delays and disruptions than, say, a car component which is not going to go off or be in breach of safety regulations if it gets a degree too hot.
The draft White Paper proposal I mentioned above to offer an exemption to Rules of Origin for “small traders on the island of Ireland” was an indication that DexEU felt it necessary and justified to offer a different arrangement to allow agricultural trade to continue without undue disruption. The same goes for regulatory alignment to allow the milk trade back and forth to operate. Dairy UK argued to the Northern Ireland Affairs Committee that:
‘If the NI dairy sector is to continue to grow and contribute to the NI economy when the UK leaves the EU, there must be continued free movement of raw milk and products to and from RoI for further processing’
The proposal was, in essence, to listen to that advice. Policy Exchange proposed ‘treating the island of Ireland as a regulatory unit for animal health and food safety issues’, and cited the precedent that ‘checks are already in place at the Irish Sea border for animal diseases such as rabies’. Sources close to DEXEU’s preparations, prior to Chequers, say that the department was also making reference to the decision to define the island of Ireland as a single epidemiological area during the BSE crisis.
Those legal precedents bolstered what would ultimately be a political argument to place Northern Ireland’s agriculture in a different regulatory position than the rest of the country in order to secure an economic benefit. There are obvious political sensitivities to any idea of legal or regulatory gaps between the rest of the Union and Northern Ireland, even only in one sector – particularly with the DUP’s role in a hung Parliament – but it is worth bearing in mind that a good chunk of the DUP’s core vote are farmers or live in agricultural communities. Like the rest of the plan, its architects believed it could fly in practice, as well as prove acceptable in principle.