The Northern Ireland Protocol – The solution to Brexit?

roger-isaacs

By Roger Isaacs, Partner at Milsted Langdon

Following months of wrangling, Boris Johnson returned to the UK with his deal in October 2019 hopeful that he could get it through Parliament, thanks to his belief that the problem of the ‘Irish Backstop’ had been resolved.

However, his hopes were quickly dashed as Parliament rejected the deal forcing the Government’s hand to call a General Election.

Now that the General Election has given Boris a majority government, he has promised to “get Brexit done” by passing the Withdrawal Bill and removing the ability to extend the transition period from beyond the end of 2020.  It is therefore now a good time to consider the impact on trade of our departure from the EU by considering where similar border challenges exist and how they function elsewhere in the world.

The challenge

Northern and Southern Ireland have for decades enjoyed an open border as part of the UK’s membership of the European Union, of which the Republic of Ireland (Eire) is also a member.

This open border arrangement has allowed the free movement of people and goods across the border without the need for customs or passport checks.

The UK’s decision to leave the EU in 2016 instantly created an existential crisis for this border, in part due to commitments made during the drafting of the Good Friday Agreement, which would prevent the creation of a new hard border between the north and the south.

During the initial negotiations between Theresa May’s Government and the European Union, it was agreed that an Irish Backstop would be created. This acted as an insurance policy in UK-EU Brexit negotiations to ensure that the Irish border would remain open whatever the outcome of Brexit.

According to the terms of the original withdrawal agreement, the UK would enter a “transition period” after Brexit during which it would remain in the single market and customs union so that trade could continue unimpeded.

The Irish Backstop would only be used at the end of the transition period if the UK and EU failed to negotiate a future trade deal that kept the Irish border open.

It would have seen the UK enter a single customs territory with the EU so that there would be no tariffs on goods between the UK and the EU.

However, in this situation, Northern Ireland would have had to remain aligned to some EU rules, which would require checks on goods entering Northern Ireland from the rest of the UK – effectively creating a hard border with check points.

Many have said that this arrangement was doomed to fail from the outset.  It was certainly widely condemned by all the parties at the time, including many members of Mrs May’s own party. That was why it was repeatedly voted down.

Even assurances from the EU that the backstop would only be used as a last restore was not enough for MPs.

The new deal

In contrast to Theresa May, Boris Johnson was clear from the start that he was willing to leave the EU with no deal, but said he would try to arrange a better deal before the UK crashed out of the EU.

After months of negotiations, heated exchanges and uncertainty, the Government finally managed to reach a new withdrawal deal on 17 October 2019.

It creates a new “Irish Protocol” which would prevent the ‘backstop’ and instead creates ‘alternative arrangements’ that promise to deliver an invisible border in Ireland.

The impact of this is that there will need to be a complex system of custom declarations for goods travelling from Great Britain to Northern Ireland, which will create ‘red’ channels and ‘green’ channels depending on the type and final destination of the goods.

Importantly, the new deal confirms that Northern Ireland is “part of the customs territory of the United Kingdom” and that Northern Irish businesses will be able to export alongside GB businesses in any future UK trade deals.

Under these arrangements, goods going into Northern Ireland from Great Britain will not be subject to tariffs “unless that good is at risk of subsequently being moved into the [European] Union”.  Household goods will be exempt.

This means that instead of customs checks at the border between Northern Ireland and Eire, these will instead be conducted as goods travel between ports on either side of the Irish Sea. In doing so, the deal does not compromise the Good Friday Agreement and neither does it limit the movement of goods or people between the two countries.

Tariffs will only be applied where goods have the potential to be shipped to the European Union (including Eire). Decisions on whether goods are at risk will be decided by the Joint Committee that governs the Irish Protocol; effectively giving the EU the right to determine which goods must pay tariffs.

UK Government officials concede there will be a vast amount of work needed to implement the “two channels” system, but they are content that the UK will be able to administer the system itself, albeit with final approval on goods and tariffs by the EU.

This new deal, which will still be subject to a new vote in the House of Commons and ratification by the House of Lords in the coming weeks, is now likely to go ahead and will create a border that has many similarities to current arrangements but with significant differences.

For one it keeps Northern Ireland in an EU regulatory zone. The rules of that zone require a minimum amount of checks to be conducted.

Other pressures on this new border could be alleviated if a new Free Trade Deal is agreed to post-Brexit between the UK and EU, but for now, only time can tell how effective it will be.

Mexico and the US

When looking for comparisons around the world, where similar barriers exist, it would be easy to consider the infamous border between Mexico and the United States of America.

This border is also considered to be an open border, as it allows the movement of goods and people with minimal checks, particularly for US citizens entering Mexico.

However, rather than being completely open it is better described as “porous” because it is not protected in its entirety, which means that goods and people can enter the US freely without checks.

Of course, this is not for the lack of effort by US authorities and in particular the current President, Donald Trump’s, plan to build a wall along the entire border.

Internationally porous borders are rare and most countries insist on border controls being conducted at physical checkpoints.

The arrangements under the Northern Ireland Protocol will mean that while goods and people can travel freely between Northern Ireland and Eire, checks will still be conducted if the goods need to enter the rest of the UK, including the potential imposition of tariffs

In reality, then, the new border will only share a single comparison to the US and Mexico border in that they are both land-based and not subject to a physical hard border (in their entirety).

So, what nations have operated a border that is similar to the Irish Protocol? And have they been successful?

Denmark and Sweden

In 1958, Denmark along with Norway and Sweden introduced the Nordic Passport Union, which removed passport checks at the border.

This was a forward-thinking move at the time and was effectively a precursor to the freedom of movement that the Schengen Agreement would introduce in Europe.

However, while this allowed the movement of people, custom checks remained in force between Denmark and other Nordic countries until Schengen became a reality in 2001.

A year earlier Denmark and Sweden had opened the Øresund Bridge creating a ‘land border’. Despite happening a year before Schengen, it already enjoyed relaxed customs checks from the start.

Under the Schengen Agreement, free movement of people and goods was allowed throughout the so-called Schengen region.

From 2001 until 2015 Denmark and Sweden enjoyed completely open borders with no checks, as currently operates in Ireland.

However, Sweden re-introduced stricter border controls in November 2015 and from January 2016, it required carriers to perform identity checks on the Danish side of the Denmark–Sweden border.

This was implemented as a result of fears over the European immigration crisis at the time. Of course, the introduction of border controls was not achieved entirely smoothly and it led to disruption at the border.

In May 2017 the European Commission ruled that this type of arrangement was not lawful in the Schengen zone and so it was scrapped, although border controls for arrivals on the Swedish side did remain.

Since then Denmark introduced temporary border controls in November 2019 following a series of serious crimes perpetrated by Swedish residents.

This arrangement has been agreed between the two nations and can be extended by up to six months, after which member states must apply to the European Council for any further extension.

When it comes to goods, however, as both are members of the EU, trade continues to flow freely and without tariffs and so direct comparisons to the Northern Ireland Protocol are difficult, despite having similar geographic barriers and challenges with the free movement of people.

The US and Canada

The International Boundary between the USA and Canada is commonly referred to as the world’s longest undefended border, but this is true only in the military sense because it is illegal to cross the border outside border controls.

Everyone crossing the border must be checked albeit with a relatively low level of security measures in contrast to those of the United States – Mexico border which is far more actively patrolled.

Following the September 11, 2001, terrorist attacks in the United States, security along the border was dramatically tightened by both nations.  That said, it is notable that the border crossing where British Columbia Highway 37A ends at Hyder, Alaska, is unmanned by United States Customs, though Canadian Customs does maintain a presence in the area

At the border between Yukon and Alaska, in remote areas where staffed border crossings are not available, there are hidden sensors on roads and also scattered in wooded areas near crossing points and on many trails and railways, but there are not enough border personnel on either side to verify and stop coordinated incursions.  It would be a sad day if we were ever to see this type of border control in Ireland.

The porous nature of the Canadian border is not without its challenges.  In August 2017, the border between Quebec and New York saw an influx of up to 500 illegal crossings each day, by people seeking asylum in Canada.  Since the beginning of January 2017 and up until the end of March 2018, the Royal Canadian Mounted Police have intercepted 25,645 people crossing the border into Canada illegally.

Canadian officials also complain of drug, cigarette, and firearms smuggling from the United States, while U.S. officials have complained of drug smuggling from Canada.

The UK and Europe? 

What has emerged in Boris Johnson’s deal is unique. No other border currently operates in the way that it is proposed under the Northern Ireland Protocol and so much remains unknown.

The Government’s own analysis of trade post-Brexit via this arrangement, which was criticised by the Labour Party in the General Election, indicates that trade will be difficult and additional administration costs will be born that could increase the cost of goods for consumers. It also makes clear that tariffs for some goods could apply.

What is certain is that the government has a sufficient majority to implement its Northern Ireland Protocol without being beholden to the demands of the Democratic Unionist Party (DUP).  Ultimately it is logically impossible to have a border that is both open and closed but what will have to be seen is whether a truly porous border can ever be a practical reality.

 

 

Posted in Press Releases.