Trump’s tariff tactics could make no-deal Brexit work for Ireland

Security exemption in WTO rules could enable tariff-free cross-Border trade

It is widely agreed, on both sides of the Irish Sea, that a no-deal Brexit would be bad for Ireland. The UK's Northern Ireland secretary, Karen Bradley, has even claimed that "no deal" would mean a hard border between the Republic and Northern Ireland, which in turn could end the Common Travel Area agreement between Ireland and the UK. But, surprisingly, when World Trade Organisation (WTO) rules are fully understood, there is reason to think that a no-deal Brexit would in fact be a good deal for Ireland.

This interpretation starts from the fact that the UK and the Republic have long offered one another unique privileges, independent of their relationship with the European Union. There is already, in effect, a passport union between the UK and Ireland, with freedom of movement for British and Irish citizens, no restrictions on employment, and immediate rights to vote in parliamentary as well as local elections. There is no check at the border to determine whether anyone crossing is British or Irish.

Accordingly, the question we should be asking is not: will these privileges disappear in the event of a no-deal Brexit? Rather, we should ask: can goods crossing the border be treated in the same way as people?

The usual view is that WTO rules would preclude such a special arrangement. As a customs union with its own membership in the WTO, the EU counts as a single entity – so the rules governing Irish trade are those for the EU as a whole. If Britain outside the EU wished to grant the kind of privileges to Irish goods that it does to Irish people, it is said, Britain would have to allow free trade for all EU goods as well – and, according to WTO rules, those of all other members of the WTO. Though some people in Britain have advocated such free trade with the whole world, it is politically difficult and may be undesirable.


Security exception

But there are exceptions to the scope of the WTO rules, including most importantly the “national security exception,” article 21 of the general agreement on tariffs and trade (Gatt): “Nothing in this agreement shall be construed . . . to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests . . . taken in time of war or other emergency in international relations.”

US president Donald Trump has been using this exception to introduce aggressive tariffs against a variety of countries – often without any justification. But Britain could use the same clause in a perfectly justifiable manner to lower tariffs in the name of security rather than raising them.

The security exception has been invoked in trade disputes since the beginning of the postwar Gatt without producing much by way of settled interpretation. The disagreement over its use concerns whether it is “self-justifying” – that is, whether a country can unilaterally declare a security risk and activate the exception. But this dispute is not relevant to the Irish border question, since all the governments concerned have already agreed that an open border is required for security purposes. The joint report of December 2017 which introduced the idea of the Irish backstop states: “Both parties affirm that the achievements, benefits and commitments of the peace process will remain of paramount importance to peace, stability and reconciliation.” Politicians on all sides of the issue are aware of the danger of renewed violence if a hard border reappears.

Accordingly, against the risk to its security presented by the imposition of a hard border, Britain could choose to privilege goods from the Republic by unilaterally opening its side of the Border, at least while further negotiations are conducted with the EU. It should be said that only opening the land border in this way would need to be justified under article 21; goods shipped from the Republic directly to the island of Britain could continue to fall under whatever tariff regime Britain has in place against the EU as a whole.

But it is the land border which has been the focus of attention in the Brexit negotiations, and which has threatened to abort the whole process. The British declaring free passage across it as part of its security policy would, we believe, resolve this issue.

What would be the practical implications of the UK opening the Border in this way? Obviously, some EU trade with the UK would be rerouted to the UK via Ireland – which would benefit both the Republic and Northern Ireland. It is unlikely, however, that enormous volumes of trade would be rerouted in the near future, as tariffs under the WTO are not particularly onerous (as many people have observed), and the extra cost and trouble of switching to an Irish land route into the UK would probably not be worth it for most shippers. The vast majority of goods crossing the land border would be likely still be Irish in origin, and these are precisely the goods which the UK would want to privilege.

Bargaining counter

If this state of affairs were to persist for some time, new businesses might open in the Republic in preference to the rest of the EU. The entire island of Ireland could become a kind of free port, along the lines suggested in The Irish Times by Prof Philip Pettit of Princeton, though he envisaged a formal agreement rather than unilateral action by Britain. Eventually this arrangement would probably be superseded by some more satisfactory deal with the EU than any of those currently on offer, but in the meantime the Republic would have possessed a useful bargaining counter in its own dealings with the EU, for example on corporation tax.

The Taoiseach has argued very reasonably that any measures concerning the Border should be hard for the UK to reverse unilaterally. Accordingly, unilateral British opening under article 21 could be supplemented by a bilateral accord setting up an intergovernmental British-Irish commission (along the lines of several such institutions established by the Belfast Agreement) to monitor the security implications of reimposing tariffs on the Border – and the UK could commit itself to abiding by that commission’s recommendations concerning Border security. This arrangement would offer the British the possibility of a genuine Brexit that does not hurt Ireland while giving the Republic the assurance it needs that it would not be compromised by any unilateral reversal of the policy.

How might the EU respond to such a unilateral opening of the land border by the UK? Brussels is also committed to keeping an open border in Ireland for security reasons, so a unilateral opening of the land border by the UK should prompt a reciprocal opening by the EU. Contrary to received opinion, WTO rules thus offer the basis of a bespoke solution to the Irish problem, rather than posing an obstacle that threatens to derail Brexit altogether.

David Singh Grewal is professor of law at Yale University, where he teaches international trade law. Richard Tuck is the Frank G Thomson professor of government at Harvard University, where he teaches political theory