As the weeks pass, the ideas get sillier. One circulating among certain Brexiteers at the moment is that the UK could gain the upper hand over the Irish issue by simply leaving the Irish Border open after Brexit, charging no tariffs and making no inspections, and dare the EU to be the first to put up customs posts.
Would this actually work in the real world? No, for many reasons. At the most it is likely to be a crude blame-shifting exercise aimed at getting the British public to point the finger at the Irish when the border inevitably goes up.
For a post-Brexit UK to charge no tariffs on imports from the EU would be a massive breach of the rules of the World Trade Organisation, which operates on a “most-favoured nation” principle of equal treatment. This can be overridden if two or more members sign a formal bilateral or regional trade agreement among themselves. But it will take years for the UK to agree a trade deal with the EU: Britain cannot simply pre-empt it by holding tariffs at zero from the off.
If the UK discriminates in this way, it will be vulnerable to widespread litigation in the WTO. This will come at a time when the UK is attempting to regularise its position in the organisation, in which it has hitherto been represented by the EU. The UK is dependent on the goodwill of other WTO members in the tricky question of splitting the EU’s existing commitments on food import quotas. It must also establish its position in the WTO’s government procurement agreement, which gives its companies the right to bid for public tenders abroad. Arriving on the scene while creating one of the biggest breaches of WTO law in the organisation’s existence probably isn’t the way to get other countries on side.
Zero tariffs
Of course the UK could fulfil the most-favoured-nation principle by immediately offering zero tariffs to every WTO member. Domestically, that would be politically disastrous. British farmers shelter behind EU tariffs that can rise to more than 50 per cent for beef and lamb. Sweeping them away would lead to mass bankruptcies as cheaper Brazilian and Australian produce flooded in. Even in manufacturing, where tariffs are lower, accepting, say, cars at a zero rather than the current 10 per cent duty would have some serious repercussions.
Moreover, offering zero tariffs all round would risk Northern Ireland being turned into a backdoor export platform to the EU. Chinese exporters, for example, would land goods in Belfast at nil tariff and drive them across the Border. In principle, this would be controlled by “rules of origin” checks to assess where the goods came from, which can be administered electronically. In practice, Ireland and the EU are taking a huge risk if they leave a completely absent physical border with such huge opportunities for mislabelling and smuggling.
Even if they can work out the tariffs, other questions remain. Border controls are not simply a question of duties. They also function as inspection posts for product safety and food hygiene. So if the UK diverged from EU food and product quality regulations, Ireland would be forced to put in inspection posts to prevent substandard goods circulating in the UK economy leaking into the EU.
Matter of choice?
Brexiteers can argue that considerations about enforcing rules of origin and product regulations are still a matter of choice. In reality, they are not. They are legal obligations. If Ireland breaches the integrity of the single market by failing to control its border, it will be liable at the European Court of Justice. The decision to put up a border will in effect not be taken unilaterally by Dublin. If the UK is hoping to use this issue to drive a wedge between Ireland and the rest of the EU rather than to simply grandstand to a domestic British audience, it will very likely fail.
And the UK has its own obligations to think about. Even if the UK promised to comply with EU product and hygiene regulations in perpetuity, border controls also function as an enforcement agency for a wide variety of laws, including restricting counterfeits, ensuring environmental safety, deterring human trafficking, protecting industrial and commercial property and safeguarding national treasures. Some of these are obligations directly on the UK as a signatory to United Nations charters. Leaving the Border open would thus expose the UK as an eccentric, irresponsible global citizen, not a terrific way to launch boldly into the world as an independent trading nation.
I have run the idea of a one-way UK-Ireland open frontier past some border and tax experts in Brussels. The answer was a resounding thumbs down, for the reasons stated above.
If would be extraordinary if even this beleaguered government genuinely tried the crude and ignorant bluff of threatening to leave the Border open. To the extent that anyone should take it seriously, it is as an exercise in pre-emptive blame-shifting with regard to British public opinion rather than a coherent plan.
– Copyright The Financial Times Limited 2017
- Alan Beattie is the European leader writer for the Financial Times