In the Brexit negotiations, one of the most intractable issues is turning out to be the 310-mile border that separates Northern Ireland and the Republic of Ireland — and the outcome could have major implications for businesses on both sides.
Towards A Hard Border?
At present, the border separating the UK from the Republic is barely detectable; people and goods move freely, with not a border post or customs officer to be seen. However, the Republic will soon find itself bordering a non-EU territory, and the nature of any trade deal agreed between the UK and the EU will dictate the amount of “friction” that could apply to trade and workers crossing the Irish border. For businesses, that “friction” will mean bureaucratic hurdles to trade, and potentially higher trading costs.
Therefore, for economic reasons, as well as for political and social ones, authorities in both Northern Ireland and the Republic are eager to avoid the reinstatement of a “hard” border. However, the UK Government’s insistence on a “hard” Brexit — UK withdrawal from the EU Single Market and the customs union — complicates matters. As the EU has said, it is unrealistic that the current border situation can be maintained under such a scenario.
The UK has suggested that technology could be used to track movement of goods and people across the border, but the EU is doubtful that such a seamless “e-border” is workable in practice.
Instead, the EU has put forward – and the UK has reluctantly agreed to – a “backstop” solution, which would involve Northern Ireland remaining part of the EU customs territory, even if the UK leaves it.
According to the draft withdrawal agreement published by the European Commission on 28 February 2018, there will be a "common regulatory area" between the EU and Northern Ireland. This, it states, would;
constitute an area without internal borders in which the free movement of goods is ensured and North-South cooperation protected
However, the backstop is an outcome that the UK Government is not particularly keen on, and so it has insisted that the door be left open for it to be able to offer other ideas to resolve the Irish border issue as the negotiations progress. So, nothing concrete has been agreed as yet.
What’s more, while the UK Government’s position on the customs union issue is seemingly rigid, the political situation is fluid. Legislative moves are afoot in the UK parliament to ensure that formal customs arrangements of some type remain in place with the EU, not least to avoid a hard border with Ireland. And, with a narrow majority in the Commons, the Government can’t easily dismiss parliamentary calls for a softening of its Brexit stance.
As matters stand, with little meaningful progress having been made in the Brexit trade talks, including in relation to the Irish border problem, businesses will have to prepare for every eventuality until a decision is taken