Brexit and the Irish Border

By: Monika Rębała, Communications Officer at CASE

Let sleeping dogs lie, warns a famous British proverb. However, many a “sleeping dog” has been awakened by Brexit, with one of the most contentious ones being arguably the issue of the 499-kilometre (310-mile) border dividing Northern Ireland from the Irish Republic. After almost 30 years, the border has suddenly become a subject of intense negotiations again.

Photo: Reuters

Ireland is the only country that shares a land border with the UK, and Britain and Ireland have operated a common travel area since the 1920s. More importantly, their businesses and labor markets have been highly integrated since 1973, when both countries joined the European Economic Community (the EU’s precursor). Further integration was achieved with a single electricity market established in 2007.

With a long history of cross-border cooperation, re-imposition of a hard border will cause economic hardship for Ireland. The sharp fall in the pound against the euro after the Brexit referendum has already affected Irish companies, as exports to Britain have become less competitive, and imports cheaper. The UK is Ireland’s largest trading partner, with 34% of Irish exports of goods and services going to the EU (and almost half of those to Britain); moreover, approximately 40 % of total agri-food and over 60 % of prepared consumer food products were exported from Ireland to the UK in 2016. A “hard border” could be particularly devastating for Northern Ireland, with 57% of its exports heading to the EU, and the Republic of Ireland being the largest market for its goods.

An unpublished report by the Irish Revenue Commissioners indicates the enormous physical and economic impact Brexit will impose upon companies which trade with the UK. “This extra layer of formalities for movements that are currently intra-union movements will not only place a considerable administrative burden on traders, it will also have a negative impact on trade flows and delay the release of goods,” says the report. Ireland would have to transform its customs infrastructure, which will take both significant amounts of time and money. The border checks would also directly affect between 23,000 and 30,000 cross-border workers.

Taoiseach (Irish Prime Minister) Leo Varadkar has publicly threatened to veto moving EU talks with the UK on Brexit further unless London gives credible answers to Ireland’s concerns regarding this state of affairs. Britain, in turn, has been arguing that the issue cannot be resolved until a UK-EU trade and customs agreement is made, but, as with much of the Brexit negotiations, is sending contradictory signals. On the one hand, Downing Street vowed not to introduce any physical infrastructure on the border with the Irish Republic; on the other, it hinted that the UK will leave the single market and customs union. The problem, of course, is that these two positions are mutually exclusive.

It is therefore not surprising that politicians are looking for different solutions that will help to avoid introduction of any physical infrastructure at the border. The Irish foreign minister, Simon Coveney, and Pascal Lamy, former director of World Trade Organization (WTO), suggested that Northern Ireland should be given a special administrative status. They cited an example of Hong Kong (a former British colony) and China, which, despite being part of one country, operate different customs and trade regimes and maintain separate WTO-member statuses.

However, should this happen, Britain would be a beneficiary of the onward transfer of goods from Northern Ireland, so it seems unlikely that the EU would agree on this kind of deal. Moreover, the Democratic Unionist Party (DUP) in Norther Ireland is strongly against such a solution, arguing that it could be the first step towards incorporating Norther Ireland within the Irish Republic. As Ms. May’s minority government is propped up by the DUP’s 10 MPs in key votes, she cannot afford ignore their dissent.

Apart from stirring a political storm, re-imposing a hard border potentially could have even more explosive socio-political consequences as well. The Good Friday peace agreement of 1998, which ended the decades-long civil conflict in Northern Ireland, committed the British and Irish governments to removing border controls. Mr. Chris Hazzard, member of Sinn Fein (an Irish Republican party dedicated to the reunification of Ireland and the political wing of the IRA), has recently said that any attempts to increase security around the Irish border could lead to civil disobedience.

With the Brexit clock is ticking, the pressure to find a solution to the Irish border issue will keep on rising. If London does not close negotiations on trade by October 2018, Britain can exit the EU in March 2019 without any deal (Parliament needs around six months to implement the changes in law). Should this happen, trade between the EU and the UK would need to be conducted under the WTO rules. This means that all goods exchanged between the UK and the EU — including Ireland — would be subject to a default range of tariffs. Barring any change in Britain’s stance, the hard border would then become a fact, along with all of its deleterious consequences, meaning that the dog may still lie but will be fenced in another yard.

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