The Irish border has so far been a dominant factor in Brexit negotiations, but businesses face some hard choices if it drops down the agenda, argues Ian Guider
This article was first published in the April 2018 Ireland edition of Accounting and Business magazine.
If you’ve driven across the Irish border in the last few years it’s hard to remember that at one stage it was an ordeal rather than completely seamless. Trucks and cars pass dozens of major and many more dozen smaller roads across the 300km border without a thought that one day it may not be so easy. What hammered it home to me was watching a Sky News report from a crossing point where in the space of minutes dozens of HGVs passed in both directions.
There was jubilation among Irish diplomats and political circles in December that Northern Ireland would not diverge away from European customs rules when the rest of the UK leaves the EU. That stance appeared to be strengthening when it was backed up in the draft legal agreement between the UK and EU released in March.
The prospect of a hard border with customs tariffs is not just about the politics of the past. This is about real trade for real companies facing potential disruption. According to Intertrade Ireland, trade from the North with the Republic could shrink by 11% if World Trade Organization rules are in force – in the event of a hard Brexit – and the Republic would see trade going north drop 8%.
A widespread view is that come what may the EU will stick to its guns and that draft legal text will result in Northern Ireland remaining in the customs union. But when I speak to companies I get the sense that they are planning for a much less benign outcome. I know several that have been working closely with advisory firms on how to prepare for border checks of some kind or another, either electronic or physical. This comes from a realisation that at some point the circle of frictionless trade or the status quo cannot be squared unless Britain or Europe compromise on pretty fundamental points.
For how much longer will 26 other countries stand shoulder to shoulder with Ireland? The border issue dominates Dublin, Belfast, London and Brussels; it is an afterthought in Prague, Riga, Tallinn and Warsaw. Will the ultimate pressure to bring the trade negotiations to a conclusion result in changes to the EU’s current stance of keeping Northern Ireland top of the agenda? Remember, it is helpful right now for Europe to use it to pressure the UK for a softer Brexit or a deal on its terms.
What I hear from many companies is that they would like a back-up plan. Preparations should be in place in case exporters need to prove origins of goods, pay tariffs or all sorts of other things that were barely imaginable a couple of years ago.
There are very few scenarios that see the existing arrangement stay in place. Former Taoiseach Bertie Ahern simply suggests that a blind eye be turned to whatever happens. It’s a typically pragmatic approach from a pragmatic negotiator. I’m not sure it’s a workable solution but at least he has an eye to creative outcomes. We need more of that and more planning to prevent real harm being done to trade and the easy movement of people on this island.
Ian Guider is markets editor of The Sunday Business Post
"The prospect of a hard border is not just about past politics, but real trade for real companies facing potential disruption"