It has been argued that the new withdrawal agreement will create a “border down the Irish Sea” with checks taking place on goods crossing into Northern Ireland from Great Britain.
It’s correct that goods checks will have to take place. This will kick in at the end of the transition period, unless or until the UK and EU sign a trade agreement superseding it. The transition period would last until December 2020 at the earliest, or at the latest December 2022.
How do the new trade proposals work?
Under the newly revised withdrawal agreement, the whole of the UK (including Northern Ireland) will apply the same tariffs on imports (in technical speak, they will be part of a single customs territory). This means that if the UK strikes future trade deals, Northern Irish businesses would be covered by those deals.
In addition, Northern Ireland alone will continue to be part of the EU’s customs rules for its trade with the Republic of Ireland. Practically speaking, that means no tariffs or restrictions on goods crossing the Irish border in either direction.
This is crucial to achieving the goal of keeping the Irish border open as it is today, which was the fundamental intention of the Irish backstop—the protocol in Theresa May’s original withdrawal agreement which this arrangement replaces.
The knock-on effect is that Northern Ireland alone will have no tariffs on trade with the Republic of Ireland, but the rest of the UK will. And that leaves a bit of a problem.
Let’s say you were trying to sell Welsh lamb to Ireland and, after the end of the transition period, the EU charged a tariff on British lamb imports. Under the rules detailed above, you could (instead of shipping directly to Dublin, incurring a tariff) ship your lamb from Wales to Belfast (with no tariff) and then over land to Dublin (with no tariff). In effect you’d have got your lamb into Dublin tariff-free, making a mockery of EU tariff rules.
So the UK government and the EU have come up with a fix—the border in the Irish sea.
EU tariffs will be applied to selected goods crossing from the rest of the UK into Northern Ireland. Any good which is deemed as “at risk” of moving into the EU after crossing into Northern Ireland will be subject to the EU tariff—a definition of an “at risk” good is yet to be decided.
Experts have said it’s likely that most UK exports to Northern Ireland won’t face a tariff.
But this means there will be customs checks and controls on goods crossing from the rest of the UK into Northern Ireland, in order to ensure the correct tariffs are applied. This also applies to goods entering Northern Ireland from other non-EU countries.
If the “at risk” good crossing into Northern Ireland doesn’t end up in the EU, traders will have paid the EU tariff rate, when they should have paid the UK tariff instead. In those cases, traders will be entitled to a refund from the UK government, provided the UK tariff is lower.
This new protocol replaces the previous Irish backstop in the former withdrawal agreement negotiated by Theresa May. Under the terms of the backstop, if the UK and EU had failed to agree a free trade agreement by the end of the transition period, then the whole of the UK would have entered a “single customs territory” with the EU.
That would have meant no tariffs on goods moving between Great Britain and Northern Ireland. However Northern Ireland alone would have remained aligned to some extra EU rules (to ensure the Irish border remained open), meaning there would have been some quality checks on goods entering Northern Ireland from the rest of the UK.