Why the Irish Border Has Hamstrung Brexit
October 13 2019 - 02:02PM
Dow Jones News
By Stephen Fidler
LONDON -- Britain's plans for Brexit have been bedeviled by the
U.K.'s only land border.
The border, which splits the Republic of Ireland from British
territory in the northeast of the island, was once the focus of
sectarian conflict and smuggling rackets that helped finance
terrorism.
Today, it is invisible except for subtle changes in road
markings and signage.
That is because both the U.K. and Ireland are members of the
European Union. Now the U.K. is leaving the bloc, both sides are
seeking a way to avoid a physical border.
The complexity of that task defeated former Prime Minister
Theresa May and is testing her successor, Boris Johnson. That
complexity is magnified by the EU's unique nature.
The bloc has been a customs union since 1968, before Britain and
Ireland joined, with members trading among each other without
tariffs and imposing a common schedule of duties on goods imported
from outside the bloc. That did away with customs bureaucracy on
trade within the bloc necessary even in conventional free-trade
agreements -- for example, to certify the origin of goods.
But it is more than a customs union. Even inside the customs
union, members found that they weren't free to export elsewhere in
the bloc because national regulations differed from product to
product. In a series of European court rulings and in legislation
that harmonized regulation, the bloc's governments swept away most
of those "behind-the-border" obstacles to trade in creating its
single market.
The single market came to fruition in 1993. It meant that a
company in Manchester could sell a product as easily to a customer
in Luxembourg as it could to one in Leeds. It led to a rapid
expansion of intra-EU trade but it also resulted in an increasing
level of regulation and oversight that fueled anti-EU sentiment
among some businesses and other groups.
Since the U.K. voted to leave the EU in 2016, both Mrs. May and
Mr. Johnson initially set out plans to leave the customs union and
the single market to allow the U.K. to follow its own rules and
standards, and set its own customs and trade policy.
But nowhere in the world is there a customs border without
checks and border controls. Trucks going from Norway -- which is
inside the EU's single market but not its customs union -- are
checked on their way into EU member Sweden. Goods from Turkey,
which is in a customs union with the EU, don't require tariffs to
enter the EU but are checked at the border with Bulgaria to make
sure they meet EU regulations and to ensure trucks and drivers are
fit to travel on EU roads.
Some of these checks can be streamlined but not abolished. Life
outside the EU creates challenges for all U.K. trade with the EU,
but nowhere more than on its sensitive land border with
Ireland.
The solution to the conundrum agreed to by Mrs. May was to keep
Northern Ireland in the single market for goods. That would require
new product checks in the Irish Sea between the British mainland
and Ireland. (Some already happen because the island of Ireland is
a separate agricultural territory to limit the spread, for example,
of animal diseases.)
She also postponed her plan for the U.K. to leave the EU's
customs union. Until alternative and as yet undefined arrangements
could be established to avoid a physical border -- using a
combination of a trade deal and new technologies -- the U.K. would
stay inside the bloc's customs area. That proposal -- the so-called
all-U.K. backstop -- meant the U.K. wouldn't be free to enter trade
deals with other countries. When Mrs. May's Brexit deal was
rejected by Parliament three times this year, the backstop received
much of the blame.
Mr. Johnson came to office in July and rejected Mrs. May's
agreement. After reassessing his initial proposals -- which would
have created a regulatory border in the Irish Sea and a separate
customs border between North and South in Ireland -- he outlined
new ideas last week to Leo Varadkar, his Irish counterpart, that
have led to intensified negotiations over the weekend.
Details are scant. Mr. Johnson has conceded the need for product
checks in the Irish Sea and officials say has proposed an
arrangement whereby Northern Ireland would stay notionally as part
of the U.K.'s customs union. But in practical terms, goods
traveling into Northern Ireland from the rest of the U.K. or
elsewhere would undergo EU customs checks before entering the
territory, and Northern Irish companies or retailers would then
claim tariff rebates where U.K. tariffs were below EU levels.
Mr. Johnson also appears to have shifted from his original
position that would have effectively given his allies in the
largely Protestant Democratic Unionist Party from Northern Ireland
a periodic veto over the arrangement. The people of Northern
Ireland would still be required to give consent -- but likely on
terms that gave both unionist and mainly Catholic nationalist
communities a say.
There are big questions over such an arrangement, which has
echoes of an original EU proposal in which Northern Ireland would
stay inside the EU's customs union and single market. The first is
whether the EU would believe it could be made legally and
practically watertight and not undermine the single market. The
second is how feasible it would be to have two customs arrangements
operating in Northern Ireland, requiring systems to be built to
quickly repay local businesses for tariffs they don't owe.
The third is whether it would pass muster in the House of
Commons, the U.K. Parliament's lower house, whose backing is
required for any deal. A growing number of British lawmakers
believe any exit arrangement should be put to a new referendum.
Even if those conditions are met, the challenge of writing it
all into a treaty by the Oct. 31 deadline and making it legally
operational in both the EU and U.K. may be too ambitious in such a
short space of time. A further delay to Brexit -- even if only for
practical reasons -- appears highly likely.
Write to Stephen Fidler at stephen.fidler@wsj.com
(END) Dow Jones Newswires
October 13, 2019 13:47 ET (17:47 GMT)
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