By Tom Healy
The UK can prepare to exit the single market and the customs union but a hard border cannot be avoided somewhere.
We either have a border running around Slieve Gullion in Co Armagh, or we have a hard border running down the Irish Sea between Cairnryan and Belfast.
No amount of loose talk about cameras, technological solutions, flexibility and random spot checks can get around this very awkward truth.
There is some talk abroad that somehow a customs union would sort out the hard border issue and that the single market could be sacrificed. While preservation of the customs union would mitigate some of the disruptive impacts of Brexit, the effects of leaving the single market would be huge.
Many forget that modern-day trade is as much about compliance and standards as it is about tariffs and duties.
With the single market, we have, more or less, freedom of movement of labour and harmonisation of many rules and standards, but with the customs union, we merely have no tariffs on trade among members of the union and a common external tariff on goods but not on services.
The recent intervention by the British Irish Chamber of Commerce for a Brexit partnership was an heroic attempt to limit the fallout from Brexit. The document offers interesting and possibly feasible ways to unlock some of the impasse over the next two years, and not only over the next two weeks.
It reads as a serious, considered, desperate, well-informed and well-meant effort to retain much of the substance of the customs union and the single market while the UK prepares to formally leave the EU.
If the UK (all of it or some of it) leaves the customs union and the single market, there will be a hard border somewhere. It is merely a question of how and where.
A special arrangement for the North might just be politically heroic but technically possible. Language is one thing and the realities of managing trade and movements of people is another.
The possibility of some form of special status incorporating Northern Ireland after Brexit into a European customs union and single market while it remains part of the UK should not be ruled out. However, it would only work if there was a sufficient level of shared understanding and consensus. This seems very unlikely in the immediate future.
It may be argued that a special carve-out deal would be possible for the agri-food sector ensuring some degree of harmonisation of standards and reciprocal inspections. However, such opt outs (or opt-ins) would be complex, difficult to enforce and politically problematic and, in any case, confined to just one sector.
We should not forget that the bulk of cross-border or cross-island trade is from east to west, affecting
exporters or enterprises on the entire island.
In other words, a hard border running down the Irish Sea would have potentially negative consequences at least in the short-run for producers and exporters in both parts of Ireland.
There are no good options. However, the least-worst option would be continuing UK membership of the single market and customs union for as long as possible.
Failing that, some sort of arrangement for the North would be the least worst in the medium-term.
Would it work politically and would it involve significant short-term upfront economic pain as Northern producers and exporters lose hassle-free and cost-free access to markets in Britain?
Civil servants will be mindful of the saying, “there is nothing that drafting cannot resolve”.
Tom Healy is director of the Nevin Economic Research Institute