Ireland Flexes Its Muscles

(MENAFN- Daily Forex) It is the sovereign right of the UK to decide to leave the European Union. No authority in the world has any power to force the UK to remain in the bloc against its wishes. However, the EU27, European Parliament and even regional governments within the EU do have a final say on any trading relationship that the UK wants to forge with the bloc as a third-party nation.

Just as it appears that the UK Prime Minister has obtained the blessing of her cabinet colleagues to try to 'unblock the trade discussions with the EU by (potentially) doubling the monies set aside for the 'divorce settlement, a new cloud has appeared on the horizon in the shape of the Irish Republic.

The EU came in for substantial criticism in many countries over its inability to stem the flow of refugees entering onto its territory and fleeing war and persecution in Afghanistan and Syria, and over economic migrants braving the Mediterranean Sea in search of a better life. There were vocal demands that the EU did a better job of securing its outer border the Schengen accord means that Europeans and visitors to the EU with the right visa can move between signatory countries without any border controls, but this is not the case at external borders between EU and non-EU states. The Leave campaign in the UK were particularly vocal critics of EU border control in the run-up to the referendum; indeed, a key demand was for the UK to 'take back control of its borders.

The UK government wants to end freedom of movement, membership of the single market and customs union, yet hopes to have 'frictionless trade with the EU. Nobody in the EU or Ireland itself wishes to see a hard border between the Republic of Ireland and the UK (Northern Ireland), but a reliance on WTO trading rules would make this inevitable. In a remarkable blog piece, the pro-Brexit Leave Alliance spelled out the negative consequences of the UK's reverting to WTO rules and its consequences for the Irish border.

The Irish government has threatened to veto any EU-UK trade deal unless the UK provide written assurances that there will be no hard border in the island of Ireland. Other EU states are likely to want to see trade uninhibited by WTO regulations, but the Irish border is the only land border that the UK shares with the EU. It becomes an external border when the UK leaves the bloc on 29th March 2019.

The UK is hopeful that electronic and digital means will be sufficient to permit 'frictionless trade with the EU, but its own experts and customs officials are openly sceptical about achieving this within the remaining time (and budgets). An obvious solution to the Irish problem would be for Northern Ireland to have special status and remain within both the single market and the customs union, but the UK has ruled this out. It falls on the UK to find a workable solution that satisfies both the EU and WTO states.


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