Martin Sandu: Here’s one way to fix Brexit’s Irish border problem
The idea of a customs partnership covering the North is worth revisiting
People take part in an anti-Brexit rally at the Irish border near Carrickcarnan, Co Louth, expressing their opposition to the imposition of a hard border between the Republic of Ireland and Northern Ireland. Brian Lawless/PA Wire
Amid the fallout from the UK Supreme Court’s landmark decision on the suspension of parliament, it is easy to forget that Boris Johnson’s first significant engagement with Brexit as prime minister was in a letter to Donald Tusk, president of the European Council.
In it, he reneged on the UK’s December 2017 commitment to keep Northern Ireland aligned with the EU regulations and customs rules until other ways to avoid border infrastructure and controls could be agreed. This was formalised as the “backstop” for Northern Ireland only, later extended to an all-UK version at Britain’s behest.
The commitment, undertaken in the so-called EU-UK Joint Report, had been the EU’s precondition for entering talks on long-term trade relations. By reneging, the UK went back on something the EU took in good faith. From Mr Johnson, such behaviour is hardly shocking, even if it should be. More importantly, it is counterproductive. When the UK has asked to sort out border issues after Brexit, Irish leaders are at pains to emphasise that they cannot replace a legal guarantee with a promise. Given what happened to the earlier promise, who can blame them?
While not couched in these terms, the EU now insists on recommitting the UK government to the Joint Report. That is how we should read the overture by Jean-Claude Juncker, the president of the European Commission, to alternatives to the backstop if “all” its objectives can be met by other means than aligning with EU rules.
No such means have been identified. This reality is the same as that faced by Theresa May. So Mr Johnson’s premiership started by reverting to his predecessor’s late-2016 position only to turn into a fast-forward replay of her evolution towards a softer Brexit. The question is whether he will move far and fast enough towards EU demands in the limited time left and be able to sell the concessions this entails better than she did.
By accepting the notion of a single regulatory area for agrifood, Mr Johnson and his Democratic Unionist partners have already conceded that some rules for Northern Ireland will be set by the EU. That makes extending regulatory alignment to industrial goods a simple question of scope. There is no deep reason why Britain should refuse to accept for industrial goods what it accepts for agrifood - regulatory checks on boats crossing the Irish Sea - and the prime minister now hints he may do just that.
There is a problem of democracy, in that Northern Ireland will be governed by rules decided elsewhere. But this is a problem the EU is willing to ameliorate. The Joint Report explicitly provided for an economic border in the Irish Sea if Northern Ireland’s elected institutions agree. Mrs May’s withdrawal agreement includes a Joint Committee to oversee the backstop, on which those institutions could have representatives. And models exist: non-EU countries in the single market, such as Norway, have a system for adopting EU rules that preserves formal sovereignty while protecting the single market’s integrity.
Mr Johnson was therefore right to spot a “landing zone”. In substance, it looks much like where Mrs May ended up landing. (Northern Ireland will also have to stay in the EU’s value-added tax rules, but this is so technical as to escape politics.) The thorniest problem remains: customs.
Mr Johnson, like Mrs May, will accept regulatory differentiation but insists on one trade regime for the whole UK. For her, this meant an all-UK tie-in with the EU customs union. For him, it means Northern Ireland out of it. The customs border this entails is why customs is shaping up to be the one outstanding obstacle to a deal. Even accepting alignment on all other things would create two borders rather than just one.
The UK will not convince anyone that technology can substitute for border controls. But another rejected alternative may be worth revisiting. The “customs partnership” where the UK would have its own trade deals but enforce EU tariffs on imports destined for the single market was only ridiculed because it was unrealistic to identify which goods were headed for the EU when entering the UK customs area. But it is not quite as unrealistic to identify which goods cross into Northern Ireland and end up there or return to Great Britain.
The UK could offer to enforce EU customs rules on all goods crossing the Irish Sea, but where its own future tariffs were lower, it would rebate the difference for Northern Irish consumers - on the model of VAT refunds for travellers - or for re-exports back to Great Britain. Such tariff rebates could be managed via the tax system for individuals, so only Northern Irish residents would benefit, and via VAT tracking for re-exports. Since named individuals and firms would have to claim the rebate, fraud attempts could be detected.
While convoluted, such a system is not unworkable, and it would tick a number of important boxes. It would secure the correct tariff revenue for the EU and enforce its commercial policy. It would allow the government to promise - honestly - that Northern Ireland would share the benefits of trade deals. It would keep the Irish land border open.
The question for the UK government is not whether to concede but how to defend its concessions. A politically sellable customs solution is at the crux of whether it delivers a broken Brexit or an orderly one.
Martin Sandu is a Financial Times columnist
Financial Times Service