In April, Prosperity UK, the politically-independent not-for-profit organisation, launched its Alternative Arrangement Commission, co-chaired by Nicky Morgan and Greg Hands. The cross-party Commission will seek to explore practical and detailed Alternative Arrangements relating to the Irish border, deliverable in a timely fashion and ultimately clear a path for the UK to leave the EU. The work builds on the Brady Amendment which commanded majority support in Parliament as it proposed to replace the Northern Ireland backstop with Alternative Arrangements.
I am pleased to be one of the Commissioners, taking evidence from border and trade experts. Last week, we heard from members of the Technical Panel: Frank Dunsmuir, a logistics and licensing expert; Lars Karlsson, one of the best-known customs leaders in the world and former Director of the World Customs Organisation; Hans Maessen, a customs and business advisor; and Shanker Singham, a leading trade and competition lawyer.
Whilst I was a Minister at the Department for Exiting the EU, I visited several of our ports and borders to see first-hand the challenges – and opportunities – presented by Brexit. Whilst, of course, Brexit will involve change at some level at many of our borders and ports, there is every reason to see how new systems can be implemented in a way so as to minimise friction. And this is the case at the Irish border.
No one wants a “hard” border – and rightly so. No-one on either side of the debate wants to violate the Belfast Agreement or upset the lives of those living near the border. Nobody is seeking to create a climate for violence. That is why the UK has guaranteed that it will not introduce border posts and checks, HMRC has said that it will not need physical infrastructure at the border “in any circumstances” and the Head of the Irish Revenue has said that he is “practically 100% certain” that there will be no need for new customs facilities along the border.
Much of the evidence has been well-documented already and it is clear that existing technology and administrative procedures can enable any customs formalities to be carried out electronically and physical checks to be carried out away from the border. There is, of course, presently a border between the two countries for tax, VAT, currency, excise and security; these are managed using technologies without infrastructure at the physical border.
Administrative procedures and existing technology will enable customs formalities to be carried out electronically and any physical checks (of which few would be needed) can be carried out elsewhere.
So far the Commission has taken a wide variety of new evidence. I was encouraged to hear how countries like Brazil, Australia and Dubai are using away-from-the-border arrangements such as sophisticated Authorised Economic Operator schemes. The UK already has AEO in place but with a very low take-up by businesses and traders. By incorporating a multi-tier Trusted Trader system with incentives and benefits for different types and size of business, both friction can be eliminated at the border and intelligence on contraband goods can be enhanced. Inland declarations can be made so that checks at the border are avoided.
With regards to sanitary and phytosanitary matters (SPS), whilst the Union Customs Code states that goods must be cleared at a border, there exist several precedents where away-from-the-border exceptions have been made to facilitate trade such as San Marino and Andorra (which are microstates outside of the EU, land-locked by EU Member States and enjoying special exemptions when it comes to EU customs rules).
Given that 4.9% of Northern Ireland sales are with the Republic (accounting for less than 0.2% of UK GDP) compared to 20.3% with Great Britain, we need to also keep this issue in perspective. The vast majority of sales is internal to Northern Ireland and, when combined with sales to Great Britain, Northern Ireland sales within the United Kingdom make up 85.3% of its economy.
Prosperity UK’s work on this matter will be invaluable in identifying solutions and I hope that the next Prime Minister will consider its conclusions seriously.
The post The solutions to the Northern Ireland border question are out there appeared first on BrexitCentral.
The wide-ranging Free Trade Agreement with zero tariffs proposed by Donald Tusk in March foundered on the supposed problems of the border between Northern Ireland and the Republic of Ireland. In response, the Prime Minister proposed in her Chequers document to bind the UK to a “common rulebook” – really the EU’s rulebook – for goods in order, she said, to ensure continued frictionless trade between the EU and the UK.
This attracted little political support in the EU because it was seen as “cherry-picking” and even less in the UK for leaving us as permanent, non-voting rule-takers. The proposals were rejected on a technical level by the professional customs body, CLECAT, whose 19,000 members handle 80% of European customs transactions. They found that Chequers “would require five to ten years before it can be applied in practice… new/non-existing systems and procedures will potentially lead to more complications.”
Reports this week suggest that the Prime Minister has now gone even further to secure a deal at any cost. Her new “backstop” proposal is for an open-ended customs union. She has ruled out customs union membership 21 times, so this would represent a humiliating defeat. The UK would have submitted to everything the EU demanded, paying them over £40bn for the pleasure and completely ceding our international trade policy to Brussels in clear breach of the Conservative Party’s manifesto commitments.
How has the Prime Minister got into this mess? Her motivation – a seamless border – is well founded, but her premise is that the only way to guarantee this is by some new, complicated customs arrangement. This is simply not true.
Firstly, only 4.9 per cent of Northern Ireland’s sales are with the Republic of Ireland, representing under 0.2 per cent of UK GDP. We should not, surely, give up our law-making capability over a wide area for the sake of that tiny fraction.
Secondly, there is already a border now – for tax, VAT, currency, excise duty and security – managed by technical and administrative procedures. These existing measures provide the foundation to maintain frictionless trade after Brexit. The Heads of HMRC and the Irish Revenue have confirmed this, saying that any additional requirements can be achieved without any new facilities at the border.
To see why, consider the range of simplifications to customs procedures and administrative obligations available under EU law. These are an ideal fit for much cross-border trade, characterised by regular, repetitive shipments – the same milk, from the same cows, from the same farm, in the same tankers, on the same roads, to the same destination. These obligations typically require only a one-off registration and, for regular trade, negligible costs of repetition. Companies already have to report all cross-border trade for VAT purposes, and the current system provides a framework for streamlining customs controls. Even small traders can – and currently do – take advantage of a voluntary registration to claim back VAT.
The agri-food sector accounts for just under half of all cross-border trade. Inspections can be necessary for these products but can, in practice, take place many miles from the physical border. I saw this myself when I visited Rotterdam, Europe’s largest port, this week. The Border Inspection Point is 40km from the docks and deals with 30,000 shipments annually from all over the world, including from outside the Single Market and Customs Union. There, 97-98 per cent of chilled or frozen meat and fish are cleared without physical inspection. Only 2-3 per cent are physically checked, based on intelligence, and 90 per cent of those shipments are cleared well within an hour.
The simplest way to avoid the need for animal checks between Northern Ireland and the Republic of Ireland is by maintaining an all-island biosecurity zone for disease prevention and public health. I visited the facility where inspections already take place for livestock shipments from Great Britain at the port of Larne. There are clear lessons from Rotterdam as to how such checks can be managed efficiently and how intelligence can minimise the need for lengthy inspections.
The Prime Minister’s convoluted customs proposals are unnecessary. Existing technical and administrative processes can ensure that a frictionless border is maintained after Brexit, not as a temporary, cobbled-together “backstop” but as a durable, long-term arrangement which allows for the wide-ranging, zero-tariff trade agreement which Donald Tusk proposed. That, surely, is the optimal solution for all sides.
The post The Prime Minister must not go for a deal at any cost appeared first on BrexitCentral.
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