One of the leading authorities on EU affairs Charles Grant, the director of the centre for European Reform has issued this warning:
When it comes to economic ties, the 27 will be much tougher than many Britons expect. European leaders have an interest in ensuring that the EU maintains a close economic relationship with the UK, for everyone’s benefit. But they will not compromise on fundamental principles, such as free movement of labour as the price for single market membership. And they will not want the exit talks to be pain-free, easy or pleasant for the British, since they wish to deter others from following the UK’s example. The opponents of Marine Le Pen and other populists want to be able to say; “Look at the mess the British are in, you don’t want that, do you?”
But free movement may be less of an issue on the Irish border after Brexit. Alasdair McDonnell’s approach to maintaining an open border deserves attention. In a Commons debate last week he said that immigration controls could apply to welfare and unemployment rather than to entry to the country. (To be fair, this was Theresa Villier’s line also). However trade was a different problem. The McDonnell themes were taken up by Jim Brunsden of the FT (£)
..,. a simpler solution would be for the UK to leave the EU while remaining part of the customs union, but this is unlikely to satisfy hardened Brexiters.
This is because the customs union is far from just an agreement about tariffs, it is also a body of EU rules that Britain would have to continue to comply with, such as product regulation standards.
Other options also come with strings attached. While a free trade deal between Britain and the EU could result in zero tariffs on many goods, there would still need to be customs checks, as duties could still apply on products, or even individual components, that had been imported into Britain.
Zsolt Darvas, a senior fellow at the Bruegel think-tank, said there is another way out, but it is not easy. Effectively, Northern Ireland would have to apply EU rules so completely that it could retain its status within the customs union while the other parts of the UK leave.
“If European single market regulations, such as product market standards, apply to Northern Ireland…then there may be no border between Northern Ireland and the Republic,” he said.
There is only one catch: the frontier of the customs union would then shift to the province’s air and maritime borders with mainland Britain, meaning “border checks in ports and airports” for travellers seeking to cross the Irish Sea. Ms May’s practical solution looks hard to find.
Brexit border choices
Option one Continue to operate common travel area
Advantages Has operated for 90 years since the creation of the Irish Free State. Would allow free movement across the border to continue. Key to the peace process.
Disadvantages Britain would cede part of its border controls to Ireland. EU citizens could fly into Dublin and travel to mainland Britain via Northern Ireland without having to show their passport again. To control illegal working, British authorities would have to identify EU citizens without work permits and deport them.
Option two Continue free trade in goods across border
Advantages Both countries are currently part of the EU customs union. Some 37 per cent of Northern Ireland’s exports go to Ireland, worth £3.6bn. Both Dublin and Belfast will be keen to ensure that the free flow of goods continues unhindered
Disadvantages If Britain leaves the EU customs union, the border would acquire a new significance. If customs checks did not apply, the border could become a hotbed of smuggling, a backdoor route from the UK into the EU (and vice versa) for those hoping to avoid tariffs.
Option three New controls between N Ireland and rest of UK
Advantages Would allow free movement of goods and people to continue across the Irish border.
Disadvantages Would be politically unsellable to unionists who would bridle at having to show their passports to travel to the mainland.
Arlene Foster, Northern Ireland’s first minister, said yesterday: “There must be no internal borders within the UK.”
She said that Mrs May agreed.
Option four Limited border controls between north and south
Advantages Theresa May has promised to seek a “practical solution” and “no return to the borders of the past”. Few would welcome a return to the hard border that existed during the Troubles, with army checkpoints and roads sealed off by barricades.
Disadvantages Even limited checks to people or goods flowing across the border could be a setback to the peace process. For almost 20 years both sides have tried to erase all evidence of the border, which is little more than a line on the map
Inevitably there would be fears that any checks on the border would become targets.
Liam Fox the International Trade Secretary is in the USA to begin drumming up support for a trade deal – but he’s been warned it won’t be easy. He said the UK probably won’t seek to have a closer customs union with the EU –( which makes tariffs between the UK and Ireland more likely).
In an interview with the Wall St Journal Mr. Fox argued that Britons would have the ability to negotiate closer trade and economic links with the U.S. and other countries after the Brexit process is complete. He said London would probably seek to enter a free-trade agreement with the EU rather than a closer “customs union” that could restrict its ability to negotiate lower tariffs with other trading partners.
The U.K can’t sign trade agreements with other countries while it is still part of the EU, and London hasn’t issued the formal notification to start negotiations on leaving—a process that could take two years. The timing is still being debated by the new Conservative government, but early next year could be best since the U.K. wants to figure out its new relationships before general elections in 2020, Mr. Fox said.
Completing a free-trade deal with the US would likely mean not only reducing or eliminating any tariffs on goods but also dismantling services barriers and regulatory impediments to trade, which can be daunting.
“It’s going to be much, much trickier to come to an agreement on that front,” said Sam Bowman, executive director of the Adam Smith Institute, a free-market think tank based in London.
As the bigger partner, the U.S. would probably have the upper hand in negotiations, said Stephen Booth, a co-director at think tank Open Europe.
Quite how no customs union fits into the pledges made by Theresa May and Enda Kenny in Downing St remains to be decided. But as the Irish Times reports:
The Taoiseach suggested on Tuesday, however, that such checks should not require physical border posts along the Border. “There are other ways of dealing with modern technology in terms of checking trade,” he said. “I think these are things that need to be looked at creatively and imaginatively but we are both agreed very firmly that there will be no return to a hard border as it used to be.”
Electronic pre-clearance customs systems operate on a number of international borders, including those between some Baltic states and Russia and between the US and Canada, minimising delays at border crossings and reducing the need for physical border checks.
At a joint news conference with the Prime Minister, the Taoiseach said: “I do not favour, and would not agree to, a hard border with a whole range of customs posts, and neither does the prime minister.
There will be no hard border from Dundalk to Derry in the context of it being a European border, and by that I mean customs posts every mile along the road.
“We are both agreed very firmly there will be no return to a hard border as existe
Mrs May said there was a “strong will” to preserve free travel across the border between Northern Ireland and the Republic after Britain leaves the EU, and suggested that this could involve a common approach to the use of data on passengers arriving from outside the British Isles.
“I recognise that one of the biggest concerns for people is the common travel area. We benefited from a common travel area between the UK and the Republic of Ireland for many years before either country was a member of the EU.