One of the most – if not the most – complex issues of Britain’s decision to leave the EU is the situation in Northern Ireland, which was thought to be settled when the Withdrawal Agreement was signed last year, but has since become a political issue again with the publication of the UK’s Internal Market Bill. This article explains why the situation is so complex and explores options on how to solve it.
As the type of Brexit being pursued by the UK government includes leaving both the EU Single Market and Customs Union, there is a need for new border controls where there previously were none. This is not just because both the EU and UK want to control the external borders of their respective markets, but also because the WTO requires its member states to do this – unless they are part of a single market or customs union. The problem with that is where these border controls should be…
Why can’t there be a border in Northern Ireland and the Irish Republic?
Northern Ireland is part of the United Kingdom, but it also has an open border with the Republic of Ireland. Keeping that border open and free of physical infrastructure is widely recognised as essential for maintaining the peace in Northern Ireland.
The absence of a border is part of the process of respecting the desire of both communities to be part of the country they choose. It reflects the fact that a significant part of the population thinks of itself as Irish, has Irish citizenship and wants to be able cross freely into the Irish Republic without being stopped by any officials, just as unionists are able cross over into Great Britain. The removal of the border successfully diffused the separatist IRA movement as it took away the sense of separation that those who considered themselves as Irish had previously felt.
While there is nothing specific in the Good Friday Agreement about not having a customs or regulatory border, the peace process did require the security at the border to be taken down, which is why people speak of avoiding the return of a hard border with any kind of infrastructure as that could lead to resurrecting that sense of separation.
This is not just a concern for the people of Northern Ireland, the Irish government and the EU, but also the United States.
Many prominent US politicians made it clear that there won’t be trade deal between the UK and the USA unless the Good Friday Agreement is respected. These statements don’t just come from Joe Biden and other leading Democrats, but also from Mick Mulvaney, who is a close ally of Donald Trump and his envoy to Northern Ireland.
The issue over avoiding a hard border is why the plan for the UK’s withdrawal from the EU agreed to keep Northern Ireland in the EU Customs Union and Single Market, creating a de facto border in the Irish Sea.
That plan has been ratified as an international treaty in the Northern Ireland Protocol by the British government, but it has major implications which have since caused unease among many UK politicians and members of the business community in Northern Ireland.
What’s the problem with having a border in the Irish Sea?
Many voices in Northern Ireland have expressed strong objections to the introduction of a border for goods in the Irish Sea, most loudly the MPs of the Brexit-supporting Democratic Unionist Party, but it’s important to note that this issue is not about Brexit or Ulster unionism. It goes beyond party politics and is a serious worry for many others who are concerned about the fragile peace, notably also the Northern Irish business community which does the bulk of its trade with the rest of the UK.
Firstly, there are concerns about how a border in the Irish Sea affects the integrity of the UK’s internal market. Business in Northern Ireland would like to continue to have unfettered access to the rest of the UK, but are now facing the introduction of new customs, tax and regulatory checks in the Irish Sea, which they see as a large barrier and burden. Most annoyingly, the EU is currently insisting that these checks have to be done both ways, which seems rather unfair as deciding what goods to let into the rest of the UK should not concern the EU.
Secondly, there is the complex problem of State Aid regulations which are about ensuring that no businesses get unfair advantage over others by getting help from the state. With Northern Ireland in the Single Market, it has to abide by the EU’s rules on fair competition. However, this doesn’t just affect Northern Ireland.
Some GB businesses have subsidiaries in Northern Ireland and many Northern Irish business use components from the rest of the UK, which means that if they get unfair business support elsewhere in the UK, it can still affect the market in Northern Ireland. For example, if the British government were to give them tax breaks, then they would enjoy unfair advantages over other businesses based in Northern Ireland.
State Aid in the Northern Ireland Protocol
The issue of state aid is covered by Article 10 of the Northern Ireland Protocol. This effectively means that the European Commission has the power and duty to investigate any concerns over unfair competition in the whole of the UK, and to order the UK Government and British courts to comply with its state aid rules if it finds any unfair competition. This is not what the British government wants as it runs counter to sovereignty, but it’s also a big burden for the EU commission as it will have to spend a lot of resources on this, which is why many experts have argued that it has to go.
Giving evidence to the EU Internal Market Sub-Committee, George Peretz QC said that the full implications of Article 10 were probably not understood when the treaty was ratified:
“When the UK Government signed up to that, they did not quite understand what they were signing up to … because it applies to any UK measure. It is not confined to things done by the Northern Ireland [Executive] or to Northern Irish measures; it potentially affects anything that the UK Government do. A UK measure is anything that any UK public authority does.” (George Peretz QC, Monckton Chambers)https://publications.parliament.uk/pa/ld5801/ldselect/ldeucom/66/6612.htm
State Aid and the Internal Market Bill
The British government has tried to resolve the issue over Article 10 of the Northern Ireland Protocol with the now infamous Internal Market Bill, clause Art 43 (2) (b) of which would grant the Secretary of State the power to disapply or modify Article 10.
This clause, among others, has, of course, caused a huge political storm, as Brandon Lewis, the Secretary of State for Northern Ireland stated that it means that the government seeks the power to break the treaty whenever it chooses to do so.
The outcome from the decision to seek the power to “break the law” is yet unclear, as the bill is now on its way into the House of Lords, where many peers argue that it damages the UK’s global reputation. It has certainly not helped the UK-EU negotiations as the EU side sees the clause as an act of bad faith, but it must also be added that some voices in the British government see the whole of Article 10 as an act of bad faith.
It’s unclear how the issue can be resolved unless the UK and EU come to some sort of an agreement on state aid that supersedes the need for Article 10. For that to happen, the UK has to become clear about its own plans for its future state aid regime. A group of the UK’s top state aid experts offered their support to the British government in September, but the government did not take the offer up.
Why can’t we just rip up the EU Withdrawal Agreement?
Some politicians have been very frustrated by the complications outlined above and have suggested that Britain should just rip up the EU Withdrawal Agreement and that the EU should give the UK the same deal it has with Canada. This does not work for quite a few reasons, some of which are complex. But there is also a very simple explanation…
Is there any alternative?
Protecting the Good Friday Agreement at the same time as protecting the integrity of the UK’s internal market clearly is a major conundrum.
In the past there were proposals for some alternative arrangements based on technology, but these do not currently exist and aren’t expected to ready for another 5 to 10 years. It was also unclear how they could be effectively implemented.
Others argue that because there can’t be a border on Ireland, the only way to make Brexit work is by keeping the whole of the UK in the EU’s Customs Union as well as the Single Market. This was often referred to as “Norway Plus” or “Common Market 2.0” – a bespoke association agreement that would allow the UK to have a EFTA-type deal (within the EEA), but unlike Norway itself, also being in the Customs Union. This model was criticsed for not giving the UK enough autonomy.
But there is another alternative which would give the UK more freedom – that the rest of the UK just opts for a purer Norway-type deal, by rejoining the Single Market only.
In the past, this option was criticised on the basis that it wouldn’t deal with the issue of avoiding a hard border, but that was before the revised Withdrawal Agreement and Northern Ireland Protocol placed the customs border in the Irish Sea.
Northern Ireland now is in both the Customs Union and Single Market. If the rest of the UK was in the Single Market too, a lot of the aforementioned problems would disappear.
The need for regulatory checks would disappear completely. The issue of state aid would be resolved. While the EU would require the continuation of customs and tax checks on goods coming into Northern Ireland, the decision of how much of a barrier to have in the other direction would be a sovereign matter for the British government – meaning checks could be minimised if there is political will for this in Westminster.
As the sea presents a natural border, with trucks being loaded onto ships in any case, it would be far easier, cheaper and less politically volatile than anything on the land border.
The logical move for the British government therefore should be to re-examine EFTA and EEA membership for its future relationship with the rest of the EU.