• Mutual Interest: How the UK and EU can resolve the Irish border issue after Brexit [PDF]
  • By Shanker Singham, August Morgen, Victoria Hewson & Alice Brooks
  • September 2017
  • Published by the Legatum Institute

 

In March 2019 we will embark upon a new era in the history of this great nation.

We should be optimistic about our prospects: we are the world’s fifth largest economy, supported by the world’s most dynamic, creative and resourceful population.

But there are real challenges, and so we must work together to maximise the opportunities and minimise the disruption caused by Brexit. This paper recommends a pathway to minimising potential disruptions at the Irish border, so that we can ensure a future for the UK and the Republic of Ireland that is open and inclusive, that creates growth and jobs, and encourages innovation and enterprise.

The Legatum Institute is not pro Leave or pro Remain. We are pro a prosperous future for this nation and we owe it to all the people of the UK – regardless of how they voted in the referendum - to achieve the best Brexit possible.

EXECUTIVE SUMMARY

MAXIMISING THE UK’s AND THE REPUBLIC OF IRELAND’S MUTUAL INTEREST IN TRADE OPPORTUNITIES AROUND THE WORLD

THE CONTEXT

Free trade and free and competitive markets have been the most powerful antidote to poverty since the Second World War.  As a wealth creating engine, trade has an unparalleled record.  Trade has changed lives and communities.  It has transformed villages and towns, and given hope and opportunity to billions.  As the UK leaves the EU, it is vital that we do everything in our power to increase trading opportunities for the people of the UK, including those in Northern Ireland, and for the people of the Republic of Ireland, the rest of Europe and the wider world.  

While some look at the particular issue of the Irish border as only a problem to be solved, we believe that it is also an opportunity. We do not seek to minimise the very real challenges that the people of Northern Ireland and the Republic face.  However, we believe it would be a mistake not to recognise the opportunity that the people of Northern Ireland in particular have if the UK is more open to the world and engaged in trade liberalising initiatives with many countries, as well as global institutions like the World Trade Organization (WTO).

THE CHALLENGE

Brexit will create a new border after March 2019, transforming the existing boundary between Northern Ireland (NI) and the Republic of Ireland (ROI) into one that separates the UK from the European Union (EU).

RESPONDING TO THE CHALLENGE

The UK’s Prime Minister, Theresa May noted in her Lancaster House speech that no one wants a return to the borders of the past. In her letter giving notice under Article 50, she said: “we must pay attention to the UK’s unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland … we want to avoid a return to a hard border between [the UK and the Republic of Ireland], to be able to maintain the common travel area between us, and to make sure the UK’s withdrawal from the EU does not harm the Republic of Ireland”. In its guidelines issued in response (the “Guidelines”), the European Council stated that it “welcomes and shares the UK’s desire to establish a close partnership between the [EU] and the UK after its departure”. It also reiterated the aim of avoiding a hard border (“while respecting the integrity of the Union legal order”) and noted that the EU should “recognise existing bilateral agreements and arrangements between the United Kingdom and Ireland which are compatible with EU law”. This was followed by the negotiation directives given by the Council to the Commission (the “Directives”), which state that “the unique circumstances and challenges on the island of Ireland will require flexible and imaginative solutions. Negotiations should in particular aim to avoid the creation of a hard border on the island of Ireland.”

Out of challenge comes opportunity; creating a prototype for ensuring smooth, low friction border between nations

The proposals in this document seek to provide those flexible and imaginative solutions. Creativity and ingenuity will be at a premium in devising these solutions, and we believe that the talents of the British, Irish and fellow European peoples are up to the task of finding the kinds of solutions that can not only solve this unique challenge but can serve as a prototype for ensuring smooth borders around the world.

The UK Government’s stated policy of leaving the EU Customs Union and the Single Market does not prevent the UK and the EU achieving a resolution to the Irish border issue. 

There is a spectrum of border arrangements, from the current situation to the kind of hard border that exists between most countries. Some allege that there is no border now and that inevitably leaving the EU Customs Union will mean the return of a border which could increase the likelihood of a return to violence. However, since the border does currently exist, our goal is to ensure that it does not harden significantly and that we can deliver a low friction, low visibility border.

While much has been made of potential special arrangements between ROI and NI, we believe that any settlement will be determined by the wider agreement between the UK and EU. This creates an opportunity to deploy the kinds of solutions in the Irish context that would also work in the UK-EU context. It also presents an opportunity in the UK-EU negotiations to seize the initiative and discuss the future trade relationship now, as we cannot discuss the issues between the ROI and NI without discussing the future relationship between the UK and the EU.

There is an opportunity for advanced customs clearance mechanisms to be deployed on the border, which can also be used to serve UK-EU trade more generally.

A resolution does not require special status for Northern Ireland, although special status for specific exporters through enhanced Authorised Economic Operator (AEO) and similar programmes may be necessary. 

Finding an inclusive solution to the Irish problem presents an important opportunity to build momentum towards a broader settlement between the UK and EU.

KEY RECOMMENDATIONS 

FACILITATING EASE OF MOVEMENT FOR PEOPLE AND GOODS

  1. Facilitating the free movement of people between NI, ROI and the UK mainland (GB) can be achieved by the indefinite continuation of the Common Travel Area (CTA).
  2. The process of delegated immigration controls should continue, with ROI authorities to administer EU citizens arriving in the ROI, including those wishing to travel onward into the UK.
  3. The most effective way to reduce border disruption for trade in goods between NI and the ROI is by the UK and EU agreeing a smooth customs arrangement, and using the best practice legal and technology tools. This is an opportunity to deploy the latest technology available in a limited area which could become a prototype for other regions – turning a challenge into an opportunity. 
  4. The UK should consider awarding a prize for technological solutions to incentivise the development of innovative solutions from the private sector, and universities.
  5. The Governments of the UK and ROI, as well as the EU, should focus on the appropriate mechanisms to minimise the disruption to relatively low-volume, high frequency trading across the border.
  6. The UK Government should not consider introducing a customs union or single market between NI and the ROI which would require a border between GB and NI.
  7. The UK Government should examine options including an enhanced AEO programme or other trusted trader scheme to minimise the disruption caused by customs checks at the border.
  8. The UK Government and the Government of the ROI should utilise existing bodies to create a joint committee responsible for ensuring proper implementation of the border agreements.
  9. The UK Government should consider the use of free zones, or free ports, in NI, and discuss their use in the ROI and at the border with the ROI and EU counterparts.

DELIVERING EFFECTIVE SECURITY FOR PEOPLE AND GOODS 

  1. The UK should remain a member of the Schengen Information System (SIS) 
  2. Agreeing a zero tariff deal between the UK and EU will eliminate a major incentive for cross-border smugglers between NI and the ROI.
  3. The Special EU Programmes Body (SEUPB) or other Belfast Agreement bodies should be used to monitor the border, conducting risk assessments and advising when border security should be tightened or relaxed.
  4. The UK should consider remaining in the European Anti-Fraud Office (OLAF) on an interim basis (and paying for such participation). 

DELIVERING EFFECTIVE ENERGY SECURITY 

  1. NI should remain within the Single Energy Market (SEM).
  2. The UK Government should examine options for integrating with the EU’s Integrated Single Electricity Market (I-SEM) from March 2019. 
  3. The UK Government should consider devolving to the NI Assembly additional legislative powers relating to the energy market.
  4. The UK Government must ensure that interconnection arrangements for energy are pro-competitive, and that the necessary infrastructure is in place to transport the required volume of electricity between networks.
  5. The Governments of the UK and the ROI should examine financing an additional North-South interconnector to generate savings for energy consumers.
  6. The UK should look at increasing the use of interconnectors from countries with energy surpluses including reviving the IceLink interconnector from Iceland.

Read the paper here

Read the technical note here.


About the Special Trade Commission

The Legatum Institute Special Trade Commission (STC) was created in the wake of the British vote to leave the European Union. At this critical historical juncture, the STC aims to present a roadmap for the many trade negotiations which the UK will need to undertake now. It seeks to re-focus the public discussion on Brexit to a positive conversation on opportunities, rather than challenges, while presenting empirical evidence of the dangers of not following an expansive trade negotiating path.

The STC will draw upon the talent of experienced former trade negotiators from the US, Canada, Mexico, Australia, New Zealand, and Singapore, among other nations.

In 2017, the STC will host a number of public briefings that offer advice to key stakeholders on EU negotiations.