IEA and Ireland.
Key elements on the Irish border issue.
One of the most pivotal issues with respect to progress is negotiating even the outline of the future UK-EU relationship is the Irish border. The way forward considers the existing trade patterns between Northern Ireland, Ireland and Great Britain and the systems and operations in place at present to operate current border operations in respect of VAT, excise duties and regulatory differences.
We, therefore make the following proposals. In order to progress matters in the negotiation of the Withdrawal Agreement from the current position, it will be necessary to agree binding commitments as to what measures will pertain in respect of the Irish border if no full free trade agreement is agreed at the end of the transitional period. It will be necessary to achieve a border with no physical infrastructure, respecting the position of the parties in the Joint Report in December 2017.
The solution must respect the sovereignty of Ireland and the EU’s control of its borders and the consequences of the UK being a third country. It must recognise that for some goods, border controls on imports from third countries are more sensitive than others in particular agriculture and animals. The UK should therefore commit to aligning trade relevant aspects of SPS regime in Northern Ireland with that of the EU, with suitable powers devolved to the government of Northern Ireland to enable them to fully cooperate and coordinate with the Irish authorities, in accordance with the Belfast Agreement. It is recognised that this may entail border inspection at designated posts at ports for imports of meat and animal products to Northern Ireland from mainland Great Britain, but also that this is already the case under existing arrangements as there is an all-island regime in operation at present, and that veterinary inspections are a key component of the EU’s protection of its internal market.
Other regulatory matters can be enforced away from the border and in the market, as they are at present in respect of goods which are regulated differently in member states (of which there are many, including for example medicines). Such oversight should also be part of the close coordination between authorities north and south of the border, and underpinned by arrangements both in the backstop and in an Ireland/Northern Ireland specific chapter of the final free trade agreement.
In respect of movement of people, both the UK and Ireland wish to retain the Common Travel Area, the well-established arrangement that allows British and Irish people to travel to, live in and work in each other’s territories. This will facilitate not just travel across the border with only the current levels of checks to control movement of people who do not have the right to be in either country, but also the continued provision of healthcare and education services and ability for Irish and Northern Irish people to work on either side of the border (third country immigration is a national competence so it will remain the right of Ireland to accord this preference to the UK, as are matters such as access to welfare, healthcare and education).
By using best practice and existing technologies, the customs and regulatory border can be managed without infrastructure or routine interventions at the land border. In general the solutions are measures that would be equally applicable for other UK/EU borders, with the exception of the establishment of a single zone for SP and animal health matters:
• Inland clearance should be made available to all traders. This would mean electronic export and import declarations being made and, if required, inspections by HMRC or the Irish Revenue Commissioners (as applicable) being made at the importer’s premises.
• Exports of goods between Northern Ireland and Ireland must already be shown in VAT returns, in order to qualify for the VAT exemption for exports. If a trader is not duly submitting an export declaration, matched on the other side of the border by an import declaration, they will not be able to support their VAT accounting. This means there is a strong incentive to compliance on the traders themselves. 84
• Smugglers would be breaking the law not just in respect of customs duties but also VAT. As duties are generally low, and items where higher duties apply (such as cars, and agriculture) are difficult to smuggle at any scale (and easily monitored in the market and in the supply chains, which are highly regulated), the incentive to evade duties and must declare or fail to declare trade will be very low
. • Intermediaries will pay a key role in facilitating this trade and taking the burden of compliance away from the traders. The sector needs clarity on the legal framework that will operate, to be able to design competitive, scalable solutions for small and medium sized businesses.
• Certification of origin is being simplified globally and by the EU with the introduction of self-certification by the exporter through the REX (registered exporter) system. It will not be necessary for traders to incur cost or inconvenience in having goods independently certified.
• The UK and Irish governments should both make self-assessment and periodic declarations available as widely as possible.
• All deliverable under UCC and UK’s mirroring version of UCC brought into domestic law through European Union (Withdrawal) Act if the UK had to manage with no other negotiated solutions.
These elements are summarised in the table below. On a negotiated basis, it would be possible to permit waivers from import and export declarations for originating goods where only VAT will need to be accounted for (as no import duties will be due – it can be reasonably expected, given trade patterns in Ireland and Northern Ireland, that this will be the great majority of transactions as few third country goods are traded across the Irish border).
Free zones or free ports could also be established, both for cross-border island trade and for global trade, to benefit Irish and Northern Irish businesses. 85 Fiscal Regulatory Backstop Zero tariffs – whole UK/EU; limited FTA to include standard provisions on state aid and competition UK to maintain same external tariff as EU for time limited period Intensive supervision of imports into UK of goods where EU quotas and trade remedies are in operation Maximum deployment of all facilitations under UCC to enable 100% inland clearance. Investment in systems, and resources for mobile inspections and audits, training for businesses and expansion of intermediary sectors (customs brokers, fiscal representatives). Continuation of VIES UK to pass law against knowingly exporting or carrying noncompliant goods into Irish market. SPS and animal health Northern Ireland to retain all existing SPS regulations and UK to commit to updating them, for Northern Ireland only in accordance with EU law.
Checks on consignments of meat and animal products from GB or rest of world (ex EU) to take place at Northern Irish ports, in accordance with current processes in line with all-island animal health regime.
Other goods Dispersed checks – ad hoc in border vicinity and in market, by Irish authorities/their agents in farms/processing facilities in NI Negotiating objectives Zero tariffs – whole UK; full FTA including regulatory coherence, services and investment. Move from transaction- to system-based approach to formalities Integrate information systems and waivers for originating goods where only VAT payable Special Economic Zones/Free Zones SPS and animal health Northern Ireland to assume autonomy over SPS and animal health and determine whether the remain harmonised to EU requirements or diverge if and when UK government changes regulations applicable in mainland GB. Agreements on equivalence and formalised certification/inspection regimes.
Other goods Dispersed checks – ad hoc in border vicinity and in market, by Irish authorities/their agents in farms/processing facilities in NI
97 For a full examination See Singham, Morgan, Hewson And Brooks, Legatum Institute Technical Note Mutual Interest - How The UK And EU Can Resolve The Irish Border For Brexit and Morgan and Hewson A Hard Question – managing the Irish border through Brexit, Irish Journal of European Law 2017
Ad hoc border vicinity is the a mile radius as put into the Counter Terrorism and Border Security Bill. But don't worry the IEA propose this gem -"UK to pass law against knowingly exporting or carrying noncompliant goods into Irish market". Well that's alright then as UK companies always follow the law.
And in case of no deal.
• Irish Border in the event of no Withdrawal Agreement In the event of no agreement, the UK (and the EU if it so chose) could choose not to impose any checks on goods trade at the Irish border, using legal and technical solutions to manage the trade away from the border. It would also be possible to seek a WTO waiver (allowed under Article IX:3), available when the precise application of WTO obligations would conflict with some other overarching principle of international law, or if there is an emergency situation in a WTO member. While waivers are narrowly drawn, the potential for conflict in Northern Ireland and a return to the troubles would appear to be fully justify any request for a WTO waiver. For example, the waiver process has been used with respect to the Kimberley Certification Scheme for Rough Diamonds, and for the TRIPs Access to Essential Medicines agreement. Under the WTO’s waiver power, a contracting party can request the General Council or the Ministerial Conference to waive a WTO obligation by consensus (the GATT rule required three quarters 125 of the membership to approve). The time period for a response from the General Council is ninety days.
Such a waiver could be granted until the next WTO Ministerial Conference at which it could be renewed depending on the circumstances. Additionally or in the alternative, a national security exemption under Article XXI would be possible on the basis that it is necessary to take this action in order to protect the UK’s national security interests in time of war or other emergency in international relations (Article XXI(b)(iii))or under Article XXI(c)’s provisions which allow parties to act to maintain United Nations Charter obligations to maintain international peace and security. It is extremely unlikely that any WTO member will complain, given the question of the security of Northern Ireland. It is open to the EU to do the same, and if it does not, it would need to explain this to the Republic of Ireland. The Waiver or National Security exemption could be for a limited (say two-year period) as the systems referred to above are brought online. In any event, the UK should activate the measures set out in this document, and should have started to prepare for them much in advance of the date of this plan".
The Counter Terrorism and Border Security Bill so designed to cover this eventually of resorting to WTO rules, their backstop. Emergency international relations - 'Putin did it' Skripal 'incident' springs to mind.
