Despite Brexit breakthrough, experts predict electronic border for Ireland

8 Dec 2017

Welcome to Northern Ireland. Image: Remizov/Shutterstock

A question mark remains over the type of border that will be put in place in Ireland.

The news that a Brexit deal was agreed ensuring no hard border between Northern Ireland and the Republic of Ireland has been widely welcomed, but confusion still reigns as to how it will work.

Earlier today (8 December), Britain and the EU agreed a deal on phase one of Brexit negotiations, which centred on an impasse over the status of the Irish border. The UK agreed to maintain “full alignment” with the EU internal market and customs union provisions that underpin north-south cooperation and protect the 1998 Good Friday Agreement.

‘We would expect a type of electronic border with technological solutions to be put in place, with a strong focus being placed on the internal controls of importers/exporters’

The news is a relief to businesses both sides of the border and has been broadly welcomed by business groups.

An Taoiseach Leo Varadkar, TD, said: “We want to build bridges and not borders.” Assuring Unionists of his motivations, Varadkar said: “There is no question of us trying to exploit Brexit to move toward Irish unity without consent.”

He told Nationalists: “I want to assure you that we have protected your interests throughout these negotiations and will continue to do so. Your birthright as Irish citizens, and therefore as Europeans, has been protected.”

The agreement means that the UK and EU can now proceed to phase two of the Brexit negotiations.

Bridges, not borders

However, what a soft border between the Republic and the North will look or feel like after Brexit, and how it will function, is still in the air.

“While there has been agreement on no hard border on the island of Ireland, the question remains as to the type of border which will be put in place,” said John O’Loughlin, PwC Ireland director for trade and customers.

“Why a border? With the UK reconfirming its intention to leave the Single Market and customs union, a border of some type will be required.”

O’Loughlin predicted that this border will have to be electronic.

“We would expect a type of electronic border with technological solutions to be put in place, with a strong focus being placed on the internal controls of importers/exporters, something which has been referred to as ‘trusted trader status’, or Authorised Economic Operator, which is an existing customs concept.

“Even with such a simplification and with businesses planning for life post-Brexit, we would be of the strong view that Irish-based companies need to take account of the practical issues of trading across international borders.”

O’Loughlin warned that there may still be a need to lodge customs declarations and manage other administrative and compliance matters, all of which will carry additional cost to business.

“Furthermore, with much focus on north-south trade, many Irish businesses trade with mainland UK and/or use the UK as a ‘land bridge’ to access other EU and non-EU markets. The application of customs duties and delays at the port should continue to be a high Brexit risk. In our recent experience, Irish businesses will rely on strong cooperation from their UK partners in order to reduce or eliminate both customs duty and administrative costs.”

O’Loughlin attended a meeting this week in Westminster that included representatives from industry, industry groups and practice, and was intended to provide UK parliamentarians with practical issues facing UK businesses as a result of Brexit.

“The issues discussed, all of which are reflective of issues facing Irish businesses, included: technological solutions required to be put in place on the border; resources and existing IT systems within customs authorities are a concern; significant increase in administrative burden and costs for industry; lack of suitably qualified customs and trade personnel within industry, particularly in SME sector; and cash flow issues as a result of the application of import VAT.”

Welcome to Northern Ireland. Image: Remizov/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years