{"id":1320,"date":"2017-12-07T13:34:29","date_gmt":"2017-12-07T13:34:29","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=1320"},"modified":"2017-12-12T16:47:04","modified_gmt":"2017-12-12T16:47:04","slug":"hard-brexit-soft-border","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2017\/12\/07\/hard-brexit-soft-border\/","title":{"rendered":"Hard Brexit, soft Border. Some trade implications of the intra-Irish border options."},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"Photo7 December 2017<\/em><\/p>\n

Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory.<\/em><\/p>\n

How can the UK uphold its commitment to leaving the EU Single Market and Customs Union while also preserving the invisible intra-Irish border? Leaving aside crucial questions of political feasibility, this post looks at some of the options and their trade and border implications. Notably, there are limits to \u2018flexible and creative\u2019<\/a> solutions that involve turning a blind eye to customs and regulatory checks solely on the intra-Irish border: trade rules leave little room for such ad hoc<\/em> approaches.<\/p>\n

Option 1: Regulatory divergence between Northern Ireland and the rest of the UK<\/strong><\/h3>\n

Northern Ireland could diverge from the rest of the UK, forming a customs union with the EU and continuing to harmonize its domestic regulation with EU regulation and standards for goods and services. Arguably, such full integration is a necessary condition for maintaining the open border (though note that Turkey, which has a customs union, and broad regulatory alignment with, the EU, still faces border checks<\/a>).<\/p>\n

There are models for Northern Ireland to maintain formal independence from the EU while gaining the benefits of an invisible border. Close to home, we can look to the Channel Islands. As \u2018Crown Dependencies\u2019 they are not EU Members nor strictly part of the UK; they have judicial independence and the right of self-government<\/a>. They voluntarily follow EU standards and legislation<\/a>, and are part of the EU Customs Union. Their Single Market participation is limited to free trade in goods, and does not extend to services or people.<\/p>\n

Yet the situation in Northern Ireland is more challenging than just maintaining formal independence: it requires preserving political unity with one country, the UK, whilst forming a customs territory and regulatory union with another, Ireland (and the EU). In theory, such a model could preserve an open intra-Irish border for goods – and services, if extended further \u2013 and allow Northern Ireland to maintain integration with the rest of the UK in some areas. But it is difficult to see how the United Kingdom could continue to function as a union. In order to preserve the integrity of the EU\u2019s Common External Tariff, the EU would likely require Northern Ireland to align all of its Free Trade Agreements with those of the EU \u2013 rather than the UK. Northern Ireland would also likely be bound by European Court of Justice rulings pertaining to EU regulations which it has incorporated, thus limiting its ability to have an independent judiciary.\u00a0 As has been well noted<\/a>, such divergences in customs and regulatory regimes would also necessitate border checks between Northern Ireland and the rest of the UK.<\/p>\n

Option 2: Regulatory \u2018alignment\u2019 between the UK and the rest of the EU<\/strong><\/h3>\n

David Davis MP, Secretary of State for Exiting the European Union, has \u2018clarified\u2019 the position that the UK as a whole \u2013 not just Northern Ireland \u2013 will align its regulation with the EU, stating that<\/a>: \u00a0\u201cAlignment \u2026 isn\u2019t having exactly the same rules. It is sometimes having mutually recognised rules, mutually recognised inspection \u2013 that is what we are aiming at.\u201d<\/p>\n

It\u2019s a curious word choice: in the recently-concluded EU-Ukraine Association Agreement, \u2018regulatory alignment<\/a>\u2019 means that Ukraine is expected to incorporate the EU acquis<\/em>, its body of law and regulation, in covered areas. Determining whether it has fulfilled this obligation is down to the EU.<\/p>\n

This is quite different from mutual recognition, which Davis then advocates. The Mutual Recognition Agreements the EU has concluded are limited in scope and application. They allow companies in a sub-set of sectors to certify that their products meet EU standards at the point of production (mutual recognition of conformity assessment<\/a>), thus obviating the need for checks to happen twice.<\/p>\n

This is a far cry from an invisible border. It does nothing to prevent border checks resulting from tariff barriers and rules of origin checks. Davis notes that mutual recognition would only happen \u2018sometimes\u2019 such that border infrastructure would need to be in place for non-covered sectors. Which leads us to\u2026.<\/p>\n

Option 3: Sectoral alignment<\/strong><\/h3>\n

Northern Ireland could identify sectors in which regulatory alignment was particularly useful\u2013 say, health care, transport, environmental regulation and agriculture. In these areas it could align with Ireland and the rest of the EU, departing from the rest of the UK.<\/p>\n

Indeed, Northern Ireland has some regulatory divergence from the rest of the UK now. Yet, for reasons noted above, this would not lead to the conditions necessary for an invisible border (see our recent briefing paper:<\/a>\u00a0Can A UK-EU Free Trade Area Preserve The Benefits Of The Single Market And The Customs Union In Some Sectors?<\/a>). A sectoral approach could even lead to two sets of border checks: between Northern Ireland and Republic of Ireland, and between Northern Ireland and the rest of the UK.<\/p>\n

\"\"<\/p>\n

Bonus section: Ad hoc<\/em> solutions to achieving frictionless trade<\/strong><\/h3>\n

But what if the UK, desperate for a solution, decided to simply look the other way \u2013 not worrying about lost tariff revenue or accepting goods that did not meet UK standards? Under any of the models considered above, turning a blind eye would facilitate frictionless trade. This would give goods coming in from Ireland \u2013 the UK\u2019s only land border \u2013 a de facto<\/em> special status. Aside from the other problems that this would create, the UK would run into problems with WTO rules.<\/p>\n

Turning a blind eye would necessitate admitting goods from Ireland tariff-free. The Most Favoured Nation (MFN) principle prohibits the UK from giving special tariff rates to one WTO Member that it does not extend to all of the others. There is an exception for Free Trade Areas, in which tariff barriers are eliminated for substantially all trade. Thus such an arrangement would only be possible as an extension of a zero-tariff UK-EU Free Trade Area; otherwise it would violate WTO MFN obligations.<\/p>\n

Another WTO obligation, GATT Article X, would also prove problematic. In the words of the WTO Appellate Body, it \u2018establishes certain minimum standards for transparency and procedural fairness in the administration of trade regulations\u2019<\/a>. It also requires that there \u2018uniformity\u2019 in the administration of trade-related regulation. In other words, countries should not treat some goods \u2013 or some countries \u2013 much differently than others in the administration of customs procedures. There are a dozen or so disputes focusing on this requirement. A light-touch approach applied only on one border could certainly prompt another.<\/p>\n

Article 7 of the Trade Facilitation Agreement, which recently entered into force<\/a>, also obligates each WTO Member to \u2018apply common customs procedures and uniform documentation requirements for release and clearance of goods throughout its territory.\u2019<\/p>\n

On the other hand, Article XXIV of the GATT Agreement<\/a>, which applies to Customs Unions and Free Trade areas as well as territorial application and frontier traffic, seems to provide some scope for differential treatment of goods coming through the land border. Article 3(a) states that:<\/p>\n

The provisions of this Agreement shall not be construed to prevent: <\/em><\/p>\n

Advantages accorded by any contracting party to adjacent countries in order to facilitate frontier traffic. <\/em><\/p>\n

There is no case law clarifying this provision and what is meant by \u2018frontier traffic\u2019. Yet even if there were no WTO complaints, such an approach could turn the intra-Irish border into a \u2018smuggler\u2019s paradise.\u2019<\/a> Nor would it eliminate border checks unless the EU participated as well \u2013 and it is notoriously protective of its internal market.<\/p>\n

In sum, leaving aside the political challenges associated with each of these flexible and creative options, they still fall short of re-creating the invisible intra-Irish border \u2013 and create a number of subsidiary challenges. However, if all Parties are willing to accept the introduction of a \u2018hard\u2019 intra-Irish border, there are some options that can help soften it \u2013 such as the UK aligning with EU regulation. The harder the Brexit, the harder the border.<\/p>\n

 <\/p>\n

Disclaimer:<\/em><\/p>\n

The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.<\/em><\/p>\n

\n

Republishing guidelines<\/p>\n

The UK Trade Policy Observatory\u00a0believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement.\u00a0For online use, this should be a link to he original resource on the our website. We do not however, publish under a Creative Commons\u00a0license. This means you CANNOT republish our articles online or in print for free.<\/p>\n<\/div>\n

<\/div>\n
<\/div>\n
<\/div>\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

Share this article: 7 December 2017 Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory. How can the UK uphold its commitment to leaving the EU Single Market and Customs Union while also preserving the invisible intra-Irish border? Leaving aside crucial questions of political feasibility, this post looks at some of the options and their trade and border implications. Notably, there are limits to \u2018flexible and creative\u2019 solutions that involve turning a blind eye to customs and regulatory checks solely on the intra-Irish border: trade rules leave little room for such ad hoc approaches.<\/p>\n","protected":false},"author":213,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[130195],"tags":[147855,131307,147854,123644,147858,147857,147856,123537,147852,133698],"_links":{"self":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/1320"}],"collection":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/users\/213"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/comments?post=1320"}],"version-history":[{"count":8,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/1320\/revisions"}],"predecessor-version":[{"id":1345,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/posts\/1320\/revisions\/1345"}],"wp:attachment":[{"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/media?parent=1320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/categories?post=1320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.sussex.ac.uk\/uktpo\/wp-json\/wp\/v2\/tags?post=1320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}