Brexit and the irish border: a political and economic debate

MÁSTER UNIVERSITARIO EN ESTUDOS INTERNACIONAIS CURSO 2019-2020 UNIVERSIDAD DE SANTIAGO DE COMPOSTELA FACULTAD DE DERECHO MÁSTER UNIVERSITARIO EN ESTUDIOS INTERNACIONALES TRABAJO DE FIN DE MÁSTER BREXIT AND THE IRISH BORDER: A POLITICAL AND ECONOMIC DEBATE Mateus Lopes Aquino Tutor: Dr. Francisco Ferreiro Seoane SANTIAGO DE COMPOSTELA Curso 2019 - 2020 "Irish nationhood springs from the Irish people, not from any comparison with any other nation, not from any equality—inherent or acquired—with any other nation" Michael Collins, 1922 ABSTRACT This paper discusses the debate over the Irish border during negotiations for the United Kingdom’s withdrawal from the European Union (“Brexit”). The free movement of goods, capitals and people between Northern Ireland and the Republic of Ireland is widely considered one of the key features to guarantee peace between both countries since the signing of the Belfast Agreement (1998), which ended nearly 30 years of armed violence between nationalist and unionist groups in the island. Therefore, transforming this into an external border supposes not only economical, but also political implications. In order to explain this issue, I have conducted a qualitative analysis of the various demands made by British, Irish and European groups of interest since the 2016 Referendum on EU Membership, as well as of how the peace process in Northern Ireland has contributed to this scenario. Moreover, I have discussed the solutions proposed to minimize negative impacts for the UK-Ireland relations after Brexit, as well as recent data on trade between both States. Keywords: Brexit, Ireland, border, United Kingdom, European Union, trade. RESUMEN Este trabajo analiza el debate sobre la frontera irlandesa durante las negociaciones para la salida del Reino Unido de la Unión Europea ("Brexit"). La libre circulación de bienes, capitales y personas entre Irlanda del Norte y la República de Irlanda es ampliamente considerada una de las características clave para garantizar la paz entre ambos países desde la firma del Acuerdo de Belfast (1998), que puso fin a casi 30 años de violencia armada entre grupos nacionalistas y unionistas en la isla. Por lo tanto, transformar esa en una frontera externa aporta no solo consecuencias económicas, sino que también políticas. Para explicar dicha problemática, he realizado un análisis cualitativo de las diversas demandas hechas por grupos de interés británicos, irlandeses y europeos desde el referéndum de 2016 sobre la membrecía de la UE, así como de cómo el proceso de paz en Irlanda del Norte contribuyó para este escenario. Además, he analizado a las soluciones propuestas para minimizar los impactos negativos para las relaciones entre el Reino Unido e Irlanda después del Brexit, así como los datos más recientes sobre el comercio entre ambos Estados. Palabras clave: Brexit, Irlanda, frontera, Reino Unido, Unión Europea, comercio. ACRONYMS LIST BBC British Broadcasting Corporation CETA Comprehensive Economic and Trade Agreement COSMO Core Structural Model DUP Democratic Unionist Party EEA European Economic Area EEC European Economic Community EFTA European Free Trade Area EU European Union EP European Parliament FDI Foreign Direct Investment GDP Gross Domestic Product GP Green Party GVA Gross Value Added IRA Irish Republican Army IVF Irish Volunteer Force MP Member of Parliament NISRA Northern Ireland Statistics and Research Agency UK United Kingdom UUP Ulster Unionist Party SD Social Democrats SDLP Social Democratic and Labor Party SPBP Solidarity-People Before Profit TEU Treaty of the European Union VTA Value Added Tax WTO World Trade Organization TABLE OF CONTENTS 1. Introduction .................................................................................................................. 1 2. Historical Background .................................................................................................. 6 2.1. The Anglo-Irish Treaty (1921) and the Republic of Ireland (1948) ...................... 6 2.2. The Troubles (1968-1998) and the Anglo-Irish Agreement (1985) ...................... 7 2.3. The Belfast Agreement (1998) .............................................................................. 9 3. The political impact of the Irish border ...................................................................... 14 3.1. Unionists vs. nationalists: a new armed conflict? ................................................ 15 3.2. The reunification debate ...................................................................................... 21 4. The Economics within the border debate ................................................................... 27 4.1. The possibilities presented: WTO, EEA, EFTA, CETA, customs union ............ 28 4.2. The backstop and the Northern Ireland Protocol ................................................. 33 4.3. Post-Referendum trade (2016-2019).................................................................... 37 5. Closing remarks .......................................................................................................... 43 6. References .................................................................................................................. 44 1 1. Introduction On June 23rd 2016, a referendum was held to determine if the United Kingdom (UK) should leave the European Union (EU) or remain a member of the bloc. The beginning of this process may be traced back to January 2013, when then Prime Minister David Cameron declared he was in favor of a popular consultation over the future of the UK within the EU (Walker, 2019, pp. 1-4). His declaration gave voice to an even older debate on British participation in European integration, which, previously to the Referendum, pointed to an increasingly lack of cultural affinity of average voters with the EU, as well as to economical concerns over the UK’s membership in issues such as migration and the Single Market. Popularly, the British withdrawal from the EU has been nicknamed “Brexit” (Henderson et al., 2016, p. 199). The Leave option received 51.9% of the vote, against 48.1% for the Remain option. This small difference reflects a significant division of the British electorate on the matter, which is confirmed when we look at the results in each of the UK’s constituent nations, as follows: Image 1 - EU Referendum Results Map Source: BBC (2016). 2 As observed in the map above, the Leave vote came mostly from electoral constituencies in England (53.4%) and Wales (52.5%). On the other hand, in Northern Ireland, 55.8% voted for remaining in the EU. In Scotland, a greater majority also chose Remain, accounting for 62% of the vote (British Broadcasting Corporation [BBC], 2016). These divisions would later lead to the greatest challenges within the crafting of a withdrawal agreement with the EU, after Prime Minister Theresa May, Cameron’s successor, triggered the article 50 of the Treaty of the European Union (TEU) 1 on March 29th 2017. After three failed attempts, two general elections and a change of government, the Withdrawal Agreement was approved by both houses of the UK Parliament and signed by Prime Minister Boris Johnson on January 23rd 2020. The act ended over three years of negotiations, which raised serious concerns over the effects of Brexit for the future of the UK, as well as reignited old animosities among its constituent countries (Fella, 2020). That being considered, this paper intends to discuss one of the key issues within the negotiations between London and Brussels: the debate over the border between Northern Ireland and the Republic of Ireland. In 1998, with the signing of the Belfast Agreement (also known as “Good Friday Agreement”, due to the day it was signed), 25 years of armed conflict between nationalists (who defend Ireland’s independence from the UK, under a republican regime) and unionists (who advocate for conserving the union with Great Britain) in the island came to an end. The maintenance of an open border is one of the fundamental pillars of this peace treaty, not only for allowing free movement of people, goods and services, but also for paving the way for greater cooperation between both sides of the island, aiding in overcoming grievances that previously divided the Irish society and prevented peace (Kirby, 2019). The Belfast Agreement, however, was conceived under the assumption that both sides would remain members of the EU, whose rules on trade and movement created the conditions for closer ties between Dublin and Belfast. After Brexit, the Irish border was set to become an external border, as it is the only land connection between the EU and 1 According to this article, a member State may leave the EU, in conformity with its own constitutional rules. In that case, the country in question must notify the European Council of its intentions, and then negotiate a withdrawal agreement with the Council of the EU (TEU, 2012). Theresa May triggered this mechanism by sending an official letter to Donald Tusk, President of the European Council, containing the UK’s intentions to drop its membership (Walker, 2019, p. 12). 3 the UK. Hence, a completely open and regulations-free boundary could no longer be allowed. At least, not without alternative mechanisms to prevent that scenario (Kirby, 2019). This assumption has immediately generated political and economic concerns over the future of Ireland as a whole. Political, firstly, because of the effects the imposition of a hard border could have on the endurance of peace in the island. Since the Belfast Agreement, the virtual lack of physical barriers presented to both Irish unionists and nationalists with a series of advantages, due to EU subsidies and the possibility to use the bloc as a new foreign policy platform, more independent from the UK. In this political atmosphere, the previously disputed border became a less relevant proxy for national and cultural identity (Stevenson, 2017, p. 113). Therefore, reemploying regulations on the border could be seen by both political groups as a betrayal of the promises made in 1998, and consequently, pave the way to a new armed conflict (Kirby, 2019). Secondly, it raises questions on the future status of Northern Ireland. According to the Belfast Agreement, if it is its population’s desire, expressed through a border poll, it could be reunited to the Republic of Ireland. Both the Irish and British governments would be bound by article 1 of the Belfast Agreement to make it so. Irish nationalists have frequently pointed this as the solution to the border issue, since it means the entire island would remain in the EU, and officials in Dublin have raised the possibility of holding the consultation in the aftermath of the Brexit process. However, it would also affect the integrity of the UK as it currently is, something Irish unionists and the British government are keen to avoid (Ferguson, 2019). Economically, the gains experienced by the lack of a physical border were significantly trade-related. The Republic of Ireland has benefited from its participation in the Single Market, and has grown to be the Northern Irish exports’ main destination after the island of Great Britain, according to the Northern Ireland Statistics and Research Agency (NISRA, 2019). Similarly, the UK received in 2019 16.4% of the Irish exports, and was responsible for 18.8% of the country’s imports (Sullivan, 2019). Different outcomes have been considered to minimize the economic impact of Brexit, ranging from the crafting of a comprehensive cooperation agreement (similar to Norway or Switzerland), to the more extreme scenario of regulation under the rules of the World Trade Organization (WTO). That is the option the Withdrawal Agreement seeks to 10 Hopes for an agreement would only rise again in May 1997, when Labour Party’s Tony Blair became Prime Minister of the UK with more room of maneuver than the previous government, due to his victory with a massive parliamentary majority 6 . With Sinn Féin also winning seats for Northern Ireland in Westminster, the new administration moved quickly in drawing the party into the political process. The focus moved from decommissioning to more comprehensive issues (police reform, equality, employment), and confidence-building measures were implemented. At the same time, Blair worked on reassuring loyalists of his commitment to the Union, and that there was no possibility of changing Northern Ireland’s constitutional status without the consent of the majority of its people (MacGinty & Darby, 2002, pp. 36-37). Round table talks, therefore, were again viable. In January 1998, a broad outline of an agreement was published, and political parties were once again urged to engage in substantial negotiations. The UUP and Ireland’s Social Democratic and Labour Party (SDLP), despite of having different views on the sharing of power between communities, took the lead on the final stage of negotiations. Three days before the April 9th deadline, Blair and his Irish counterpart, Taoiseach Bertie Ahern, arrived in Northern Ireland to mediate the accord. Two days later, the agreement was reached. It was signed in Belfast on April 10th 1998 (MacGinty & Darby, 2002, pp. 39-40). With 10 thousand words, the Belfast Agreement had five main provisions. First, Northern Ireland’s status was solely in the hands of its citizens. Second, a united Ireland would be possible if both its Southern and Northern populations voted for it. Third, for that moment, Northern Ireland would remain as part of the UK. Nevertheless, its citizens would have the right to identify themselves as British, Irish or both. The Republic of Ireland would drop its territorial claim on the North, defining the Irish nation in terms of people, and not land. The consent principle would also be included in the Irish Constitution (MacGinty & Darby, 2002, p. 41). Regarding the devolution of powers, the Agreement reinstated the 108-member Northern Ireland Assembly, with attributions in numerous areas, such as finance, health, education and agriculture. The legislature would be led by a First Minister and a Deputy First Minister, with a power-sharing balance between unionist and nationalist parties. In 6 The Labour Party won the 1997 general election with 43.2% of the vote, thus occupying 418 of the 650seat House of Commons. The Conservative Party, its main opponent, came second with 30.7% of the vote, converted into 168 seats (Morgan, 2001, p. 6). 11 addition, a North/South Ministerial Council was established, to bring together members of the Assembly and of the Oireachtas to discuss matters of mutual interest. The border, however, had few mentions in the Agreement’s text. The main commitment assumed by the UK and Ireland was to normalize security arrangements and practices, which included the removal of security installations. In practice, it created an “invisible” border, which satisfied nationalists, who wished for a united Ireland, and unionists, who demanded that the North remained British (France 24, 2019). It is valid to reiterate that, although these results came mainly from a joint effort of London and Dublin to push negotiations forward, external agents also played an important part for the conclusion of the process, such as the United States government (especially Bill Clinton’s administration 7 ) and the EU itself. In 1984, the Haagerup Report, commissioned by the European Parliament (EP), was the then European Economic Community’s (EEC) first major initiative to tackle the situation in Northern Ireland. It conceptualized the case as a conflict between two national identities (British and Irish), defined in relation to the Irish border, which gained political, economic and symbolic significance since the island’s partition (Hayward, 2006, pp. 261-264). Moreover, in its 1981 resolution on the matter, the EP had already recognized its limited competence for proposing substantive changes, but recommended power sharing and stronger British-Irish cooperation in order to allow free expression and political participation to both identities (Hayward, 2006, pp. 267268). Years later, this nation-based approach became an important foundation of the Belfast Agreement (Hayward, 2006, p. 261). Furthermore, through the Special Support Programme for Peace and Reconciliation in Northern Ireland, the EU invested over €1 billion in decentralized interventions in the civil society, aiming to end the ethno-national conflict in the island. It complemented official negotiations, as it reinforced the sustainability of the Agreement by integrating citizens into the efforts of elite-level politicians and paramilitary groups towards peace (Racioppi & O’Sullivan See, 2007, p. 361). 7 The most relevant acts of the Clinton administration towards peace in Northern Ireland include the removal of the IRA from the State Department’s list of terrorist organizations, the granting of an US visa to Gerry Adams (then, one of the most prominent Irish nationalist leaders) and the appointment of Senator George Mitchell as a special envoy for the negotiations (Stevenson, 2017, p. 124). 12 Although a success, the Belfast Agreement still faced obstacles during its implementation. Firstly, through delays in the effective devolution of powers to Northern Ireland, since unionists and nationalists still did not fully agree on how to establish the new power-sharing Executive. Secondly, through the IRA’s resistance in decommissioning before the establishment of an inclusive government, which also prevented full confidence from both sides, and allowed residual violent demonstrations from loyalist and republican dissidents. In June 1999, Prime Minister Blair and Taoiseach Ahern met once again in Belfast to mediate an agreement in time for that year’s European elections. On November 29th, the Assembly finally approved an Executive, with ministers from the DUP, UUP, SDLP and Sinn Féin. At the same day, the IRA appointed a representative for the newly-created Decommissioning Commission. With the new Cabinet in place, power was devolved to Northern Ireland after 27 years (MacGinty & Darby, 2002, pp. 47-51). This outcome had one of its most visible effects over the Irish border, previously highly militarized, with over 200 cross-border roads barricaded by the British Army and large-scale military posts on the main 'official' crossing points, which served as targets for attacks from nationalist groups. Since 1998, security installations were gradually removed and closed roads reopened, leading the border to virtually disappear over the years, while conserving a significant symbolic condition (Connolly & Doyle, 2019, p. 157). Nevertheless, direct rule in Northern Ireland has been reemployed in numerous occasions after that. In 2000, it was reinstated due to the fear that the IRA was not decommissioning its arms as promised. In 2002, the Northern Ireland Assembly was suspended after a breakdown of the alliances between local parties. Power would only be devolved in 2007, through the St. Andrews Agreement. During May’s administration, the prospect of suspending the Assembly was once again raised, in the case of a no-deal Brexit (Sargeant, 2019). In 2017, the Deputy First Minister Martin McGuinness’ resignation (motivated by disputes between Sinn Féin and the DUP) collapsed the legislature, which faced a three year-suspension, before reopening in January 2020 (McDonald, 2020). The Belfast Agreement was vital to institutionalize cross-border cooperation and to bring an end to a long-term armed conflict in Ireland. However, its outcomes were 13 not free from contradictions, since they faced ongoing resistance from unionists and nationalists. That not only imposed challenges to the establishment of a Northern Irish devolved administration, but also extended the conflict, since dissident loyalists and republicans still caused episodes of public disturbance (MacGinty & Darby, 2002, p. 180-181). However, there is no great objection to the assumption that both the UK and Ireland’s participation in the EEC, and later the EU, contributed to make the peace process successful, due to the new perceptions it brought to the borders’ role for the national identities of member States of the bloc (Stevenson, 2017, p. 113). 14 3. The political impact of the Irish border The UK-EU relationship has often been perceived as turbulent. London has developed a history of preference for Atlanticist options over Europeans and an adversarial approach to communitarian diplomacy, besides failing to come to terms with regional integration as a political project. Internally, divisions between and within political parties regarding the EU were an enduring feature in Westminster, with appeals to maintain national and parliamentary sovereignty being recurrent themes in British politics. In other words, European integration has been a constant source of controversy in the UK, and rarely considered universally beneficial by all interest groups (Bulmer & Quaglia, 2018, pp. 1090-1091). As a result, the average of British voters was not able to develop a cultural affinity with the EU as strong as the citizens of other member States. Especially among the English, it led to the belief that their particular national identity was incompatible with the bloc’s membership (Henderson et al., 2016, p. 198). When we look at the Referendum results, we see this was the group that most supported the Leave option. However, the numbers varied in other national groups, with voters claiming a solely British identity (or one combined with a Welsh, Scottish or Irish identity) making up for the strongest support for EU membership (Richards & Heath, 2019). Chart 1 - National identities and vote in the 2016 Referendum Source: Richards & Heath (2019). The varying perceptions on the EU also reflect on the different treatment given to Brexit in each constituent nation. During the 2016 Referendum campaign, the border issue was not extensively discussed outside of Ireland. Nevertheless, after negotiations with Brussels started, it grew to become one of the most prominent and problematic 15 points of the discussion, since its unique status goes beyond UK-Ireland relations, having also a strong EU dimension (Connolly & Doyle, 2019, pp. 153-154). That being considered, this chapter attempts to measure the impacts of this debate in two politically relevant points for the future of the British Isles: the possibility of new armed hostilities in Ireland, and recent discussions on reunifying the island as a final solution to avoid reigniting violence. 3.1. Unionists vs. nationalists: a new armed conflict? Nationalism is a recurrent topic in Irish politics, and the parties present in both Irish and Northern Irish legislatures have been led at some point to adopt a position on the subject. It constitutes the roots of the rivalry between loyalists and republicans, and the consequent lack of trust among them imposed the hardest challenges to reach a consensus. Over the peace process, the eventual reinterpretations of the ideas of “consent”, “self-determination” and “unity” paved the way to an agreement that worked for both sides, since Northern Ireland would remain officially British, while its people would be free to also claim their rights as Irish citizens, or even choose reunification, through a judicially bound agreement with London and Dublin. EU membership would aid in securing this outcome (Ivory, 2007, pp. 93-94). Consequently, the Irish nationalist discourse was significantly revised, since there was a compromise to pursue it through exclusively peaceful means. As a response, unionists were not required to abandon their agenda, but compromised in respecting the island’s unity if that was the majority’s desire (Connolly & Doyle, 2019, p. 159). That being considered, the possible outcomes of Brexit were recognized by both parts from an early stage of the 2016 Referendum’s campaign. While Great Britain debated mainly immigration and the regulatory aspects of EU membership, discussions in Northern Ireland focused on peace maintenance and impacts on the local economy. As a result, the Remain campaign was endorsed by both nationalist (Sinn Féin, SDLP) and unionist (UUP, Alliance Party) parties. Nevertheless, other loyalist groups (DUP, Traditional Unionist Voice) supported the Leave option, claiming that withdrawing from the EU would not lead to significant impacts on peace or the economy (Connolly & Doyle, 2019, pp. 160-161). It should be noted that the compromises made in the Belfast Agreement were not questioned by neither of the parties involved, with only the need of EU membership for that mean being subject of debate. 16 Image 2 - 2016 Referendum results in Northern Ireland Source: BBC (2016b). As previously stressed, the Remain campaign won in Northern Ireland with nearly 56% of the vote. The 5% advantage defines clearly the preference of the electorate for remaining in the EU. However, the Referendum, the Leave campaign in Great Britain and the whole Brexit initiative have not considered one of the main features of peace in Ireland: it depends on a fragile balance of concessions. Although European integration has diminished the importance of borders for cooperation, the Northern Irish cross-community situation is still flammable. It was evident even in the years leading up to the Referendum, with episodes such as the December 2012 protests over the removal of the Union Jack from Belfast City Hall, disturbances during the April-to-August “marching season” 8 , and a persistent division between the Catholic and Protestant communities. Northern Ireland, therefore, was not a completely solved problem by the time Prime Minister May triggered the withdrawal process (Stevenson, 2017, p. 115). The prospect of reemploying a physical border, or even of rearranging the conditions that allowed greater cooperation between both Irelands since 1998, has been persistently pointed as capable of reigniting an armed conflict in the island. Gerry Adams, leader of Northern Ireland’s Sinn Féin, stated in July 2016 that Brexit would sabotage the Belfast Agreement, since it would involve reestablishing security 8 The annual “marching season” parades run over the summer months in Northern Ireland. They celebrate the victory of the Protestant Dutch King William III over the Catholic English King James II at the Battle of the Boyne, in July 1690. The parades are organized by the Orange Order and Ulster loyalist marching bands, culminating on July 12th, when streets are bedecked with British flags and bunting (The Irish Post, 2016). 17 checkpoints, military bases and customs stations over the Irish border. The fluidly of goods, services and workers would also be affected, damaging even more Northern Ireland’s fragile economy, which would no longer count on EU funding mechanisms (Stevenson, 2017, pp. 119-120). Indeed, physical demarcations could be interpreted as acute provocations, and become prime targets for a revived republican movement, that never fully disappeared from the island. Attacks on border outposts were a staple of the IRA’s tactics during The Troubles, and although its large-scale decommissioning of weapons was completed in 2005, dissident groups of the republican community have retained some military capacity and know-how. Hence, restoring its arsenal would not be impossible, especially in a political scenario were old grievances are once again gaining force. The imposition of new checkpoints could easily turn the Irish border into a target for armed confrontations. Prime Minister May’s inflamed rhetoric when the article 50 of the TEU was invoked, which repudiated any possibility of a “soft” Brexit, also contributed for the rising tensions against Irish republicans (Stevenson, 2017, p. 121-123). As a result, the physical border is not the only concern for North-South relations, since Ireland must also deal with the reestablishment of what Gormley-Heenan and Aughey (2017) call a “border of the mind”. It means that, without the EU to establish a common “European” identity among the different communities of Northern Ireland, the old British vs. Irish choice has returned to a central position in the frame of political reference (Gormley-Heenan and Aughey, 2017, p. 6). Aditionally, Brexit contributed to diminish confidence in the Belfast Agreement, which was previously considered “the only game in town”. This lack of trust is also fuelled by the prospect of the return of direct rule in Northern Ireland to ensure stability (which is supported by many unionists) and the new surge of Irish nationalism (as expressed by Sinn Féin’s latest electoral results, to be discussed below), which are bringing back into local politics radical ideas that were considered to be marginalized. Consequently, the results achieved in 1998 may not be enough to ensure a peaceful future for post-Brexit Ireland (Gormley-Heenan and Aughey, 2017, p. 10). Over the negotiations with Brussels, the DUP and Sinn Féin became increasingly important in voicing unionist and nationalist demands, respectively. This must be taken into consideration when discussing resurging animosities in the island 18 and their possible development into an armed conflict, since the most recent electoral outcomes both in the UK and Ireland contributed to legitimize these ideas through the popular vote, and provided a new force to political groups with more dissonant demands regarding the border. In the 2017 general elections in the UK (called by May in an attempt to gain a more substantive parliamentary majority ahead of Brexit negotiations), the Prime Minister’s Conservative Party lost a significant amount of seats in the House of Commons, going from 331 to 318. In Northern Ireland, the DUP managed to occupy 10 of its 18 seats. Failing to form any other alliances that would secure her a majority, May closed a deal with the party, which provided the parliamentary support necessary to form a new government. However, the pro-Brexit group demanded in return that Northern Ireland should not me treated in any way differently from Great Britain in the Withdrawal Agreement, opposing any proposals of moving trade regulations away from the physical border with the Republic of Ireland (Hunt, 2017). Consequently, the need for the DUP’s support to secure a government imposed barriers to negotiations whilst also strengthening the Irish unionists’ position in Westminster (McCormack, 2019a). On the other side of the border, Sinn Féin has gained a protagonist role in negotiations for the nationalist interest. Going against the DUP’s instance, it defends that Northern Ireland must acquire a special status, so the whole island remains within EU regulations. Naturally, that goes against Brexit’s most radical supporters, who wish for a complete separation from the bloc (Sinn Féin, n.d.). Since the 2016 Referendum, Sinn Féin has grown substantially in electoral support, especially in the Republic, at the expense of support for Fine Gael (Christian democrat) and Fianna Fáil (moderate republican), Ireland’s main political parties. Comparing the 2016 and 2020 Irish elections, these were the overall results, and the share of seats awarded to each party in the 160-seat Dáil: 19 Table 1 - Electoral results in Ireland (2016 and 2020 general elections) Party Vote (2016) Seats (2016) Vote (2020) Seats (2020) Sinn Féin 13.85% 23 24.53% 37 Fine Gael 25.52% 50 20.86% 35 Fianna Fáil 24.35% 44 22.18% 38 Independents 20.01% 23 1 15.39% 21 Labour Party 6.61% 7 1 4.38% 6 SolidarityPeople Before Profit (SPBP) 3.95% 6 1 2.63% 5 Green Party (GP) 2.72% 2 7.13% 12 Social Democrats (SD) 3.01% 3 1 2.90% 6 Source: The Irish Times (2016) (2020). Comparing both results, the 2020 performance represents a 10.7% rise in votes for Sinn Féin, and although it was not enough to secure an absolute majority, it ended the traditional dominance of Fine Gael and Fianna Fáil in local politics, and increased pressures for its participation in the government. In April, incumbent Taoiseach Leo Varadkar (Fine Gael) and Michéal Martin, Fianna Fáil’s leader, agreed to form an unprecedented coalition for five years, in which both parties would rotate in heading the Cabinet. The accord is set to avoid the inclusion of less moderate leftwing parties in the government, among them Sinn Féin. But the hung Parliament elected in February provides these groups with more room of maneuver to introduce their demands in the political debate, since the lack of an absolute majority from either of the main parties prevents them from having full control of the Dáil’s agenda (Carroll, 2020c). The most immediate explanation for this result does not involve a nationalist feeling, but a wave of popular anger over homelessness, soaring rents, hospital waiting lists and fraying public services. All these issues were included in the party’s manifesto for the 2020 election, which proposed people-oriented solutions, such as an ambitious public housing building program, which enthused voters, especially those under 50 (Carroll, 2020a). Nevertheless, Sinn Féin’s members also point to an influence of the 26 share its resources. To its defenders, consequently, reunification is the answer for economic struggles and to avoid a new armed conflict (Pow, 2019). Sinn Féin’s electoral results in the aftermath of Brexit, which suggest a growing popular support for a border poll, may push this debate even farther, and make a referendum more likely within the coming years (McCurry, 2020). There are, however, actors that may pose obstacles for that, encompassing unionist paramilitary groups, the British government, the most traditional Irish political parties, and the very financial capacities of the Republic of Ireland to handle an expansion of its territory and population. Northern Ireland’s recent diminishing on the importance of traditional political groups is also a sign that a common national identity may not be as certain as many nationalists would have expected (O’Loughlin, 2019). Therefore, Brexit has played a significant role in reshaping the Irish political debate, and reunification must be regarded as a possibility. Its coming into effect, however, depends on a series of more complex factors. 27 4. The Economics within the border debate Apart from politics, the other major concern regarding the Irish border has an economic character. Since the “Celtic Tiger” 11 years (1993-2001), high degrees of trade and financial openness have allowed Ireland to experience socioeconomic prosperity. As a consequence, local employment levels and income are sensitive to external factors, which explain Dublin’s concerns with the UK’s departure from the EU. Both countries possess a close relationship in terms of trade, financial flows and labor markets, which means that any disruption of these arrangements could negatively impact the Irish economy, since it is more fragile than the British (Arriola et al., 2018, pp. 6-7). The Northern Irish case is even more sensible, since it constitutes a magnified version of the UK’s macroeconomic deficiencies. In 2015, the country presented 73.5% of the average British Gross Value Added (GVA) 12 , and persistent lower levels of investments, wages and skills, which are reinforced by its dependency on the primary sector (Brownlow & Budd, 2019, p. 4). Due to the Belfast Agreement and the virtual disappearance of the border with the South, reinforced by EU membership, Northern Ireland has turned to foreign direct investment (FDI) to strengthen its economy, in a supplementary way to the economic strategies of the South. As a result, both Irelands developed a high degree of cross-border flows and cooperation, and created what is effectively an all-Irish Single Market (Brownlow & Budd, 2019, pp. 6-7). With the prospect of reemploying a physical border after Brexit, this scenario would quickly no longer be possible, which generated immediate concerns from Dublin and Belfast, and led to some of the most challenging points of discussion for the Withdrawal Agreement. There was a consensus between both Irelands that the status quo should be maintained as much as possible, which went against the desire of proBrexit groups to completely disassociate British and EU regulations. Consequently, several solutions were proposed, mostly involving some kind of special treatment of the UK regarding trade rules, similar to the ones developed by other non-EU neighboring countries, or even by nations in other continents, with Canada being frequently regarded 11 The “Celtic Tiger” years refer to a period of high socioeconomic growth in the Republic of Ireland, which allowed it to catch up on the living standards of its EU neighbors. The increase in labor productivity and the spread of high-tech industries throughout the country are generally considered the main factors responsible for these results (FitzGerald, 2007). 12 The GVA is an economic productivity metric, which measures the contribution of a corporate subsidiary, company or municipality to an economy, producer, sector or region. It provides a value for the amount of goods and services produced in a country, minus the cost of all inputs and raw materials applied directly in the production (Kenton, 2019). 28 as the model to be pursued, through the crafting of a comprehensive trade deal (Doherty et al., 2017, p. 1). That being considered, this chapter describes these different solutions, and ultimately address the Northern Ireland Protocol adopted by the 2020 Withdrawal Agreement. Moreover, UK-Ireland trade since the 2016 referendum is evaluated, in an attempt to understand the strength of the negotiations impact over these economies, and estimate if the proposals made would be effective in preventing new financial issues. 4.1. The possibilities presented: WTO, EEA, EFTA, CETA, customs union As mentioned in the introduction of this paper, solutions for a post-Brexit trade in Northern Ireland varied from a strictly “hard Brexit”, with no special treatment and the adoption of WTO rules, to different levels of closer cooperation, including even the maintenance of the whole island of Ireland within the European Economic Area (EEA) (Doherty et al., 2017, p. 6). Table 3 – Proposals made for the post-Brexit EU-UK trade Proposal Main features World Trade Organization (WTO) Regulates international trade when there are no agreements with different provisions. Its main rules include: rein in antiimport tariffs; ease customs procedures; discourage domestic laws and taxes that may be classified as protection; and reduce quotas and subsidies. European Economic Area (EEA) Encompasses the EU, Norway, Iceland and Liechtenstein. Unites these countries under a single internal market, which guarantees the free movement of goods, services, people and capital, besides covering cooperation in a number of other areas. Does not include common agriculture, fisheries or security policies, a customs union, common trade, or a monetary union. European Free Trade Association (EFTA) Encompasses Norway, Iceland, Liechtenstein and Switzerland. Seeks to liberalize trade among its members, as well as the negotiation of bilateral free trade agreements with partner countries worldwide. Does not envisage political integration, issue legislation or include a customs union. 29 Customs Union As a stage of regional integration, keeps its members under the same tariffs system, which means none are paid for internal trade. A common tariff is applied for trade with third countries. Comprehensive Economic and Trade Agreement (CETA) The agreement signed between the EU and Canada in 2016, which came provisionally into force in 2017. A deal under the same principles was suggested by UK authorities. It covers an ambitious cut in tariffs, rules for products of origin, customs and trade facilitation, regulatory cooperation, labor mobility and government procurement opportunities. Sources: EFTA (n.d.a.) (n.d.b.); Government of Canada (n.d.); Lynch (n.d.); Yengisu (2019). The WTO option is the most radical one, and was considered in the case of a Brexit with no deal. In this international organization, each of its 164 member States has a list of tariffs and quotas that they are allowed to apply towards other countries. The average EU tariff is quite low, about 2.8% for non-agricultural products, but the numbers are higher for other sectors. Under the WTO rules, a significant increase of tariffs for the EU-UK trade would take place, with an average of 35% taxation for dairy products. When preparing for a possible no-deal Brexit, the British government released a temporary schedule for tariffs, with 87% of imports being free of taxation, compared to 80% before the withdrawal (Morris, 2019). The opposition to this option has pointed that relying solely on the WTO rules would be risky for the British economy, since its access to the EU market (which accounted in 2018 for 46% of the UK exports) would be significantly more complicated. The nearly 70 free trade deals signed by the country as a member of the bloc would no longer be applicable, so facilitation mechanisms for British products would not be an option. On the other hand, supporters of a hard Brexit defended it would allow the pursuing of an independent trade policy immediately, with no need to comply with external regulations during a transition period. The EU and most local British businesses, however, were not willing to take the risk. For Northern Ireland, it would mean the immediate imposition of regulations on the border, which local leaderships were keen to avoid (Morris, 2019). Hence, this option was not effectively pursued during the withdrawal negotiations. 30 As for the EEA option, it was originally established in 1994 to extend the Single Market to Austria, Finland, Sweden, Iceland, Liechtenstein and Norway. Out of these countries, the first three eventually became full members of the EU 13 , while the others settled for the first arrangement. Consequently, it became a way for EFTA countries to participate in the EU market. The British government denied the possibility of keeping the UK as a whole in the EEA, which did not mean part of the territory could not remain under its regulations. Scotland, for instance, made a strong case to stay in the EEA, even though its geographical attachment to England could impose practical challenges to the flow of products (Doherty et al., 2017, p. 6). In the Northern Irish case, in an EEA-continuity scenario for its territory, it would withdraw from the EU with the rest of the UK, and therefore, have no access to the customs union or to the jurisdiction of the EU Court of Justice. Nevertheless, the EEA could provide more certainty and clarity towards the special status of the border, since the trade dynamics with the Republic of Ireland would remain substantially unchanged. The movement of goods, services, capital and labor would not be affected, and neither would the market integration of the island. The status quo, therefore, would not be altered. The EEA Agreement, however, does not entail the maintenance of EU citizenship for UK nationals, which does not protect movement for reasons other than economic (Doherty et al., 2017, pp. 6-8). Two main obstacles were presented regarding the EEA option. First, even if part of its territory adhered to this arrangement, the UK would have to comply at a certain level with the EU rulebook for the movement of production factors (including people, one of the red lines presented by the May administration), as well as for competition and public aid. Consequently, if faced opposition from harder Brexiters, since it would prevent the UK from terminating all regulatory ties with Brussels. Keeping only Northern Ireland in the EEA would also mean a different treatment in relation to Great Britain, an outcome that the DUP would not accept (Rankin, 2018). A similar model presented is the EFTA, which does not require EEA membership. It would essentially mean remaining in the Single Market and allowing freedom of movement, but without joining a customs union, which would leave the UK 13 Austria, Finland and Sweden joined the EU in 1995, being its first expansion since the signing of the Maastricht Treaty, which came into force in 1993 (Missiroli, 1995, p. 13). 31 free to pursue an independent trade policy. Under this scenario, authorities would also be able to pursue new protocols for the Irish border and agrifood trade (Randerson & Cokelaere, 2019). It would also not be a strange outcome for the UK, since it was one of the founding States of the EFTA in 1960 14 , leaving it along Denmark in 1972 to join the EEC (EFTA, n.d.c). Once again, the idea of rejoining the EFTA faced resistance from those willing to avoid future ties with the EU. Greg Hands (2018), a Conservative Member of Parliament (MP), pointed that its participants only have access to the bloc’s market by signing the EEA Agreement, which would keep the UK in the Single Market. It would also mean recognizing the competence of the EFTA Court, which was created by EEA arrangements and, consequently, is closely connected to the European Court of Justice. In other words, this solution would mean still submitting to EU legislation, even if in a different level when compared to full membership. Therefore, for the most europhobic British authorities, the EFTA and the EEA would fail to “deliver Brexit”, with the UK acting as a “rule-taker” instead of a “rule-maker” (Hands, 2018). As a solution to these controversies, softer Brexiters proposed keeping the UK solely in a customs union with the EU. Under the same tariff system, goods that are sent back a forth to the Continent would hardly be affected, protecting manufacturers (particularly automobile companies) and smaller businesses. It was also proposed with the Irish border in mind, since the flow of products would suffer a lighter regulation from customs checks (Yengisu, 2019). However, a customs union does not provide frictionless trade among its members. The goods coming in and out of the UK would still need to meet the standards applied by the EU, and consequently, border checks would be necessary. An example of this arrangement is the customs union with Turkey. Trucks carrying Turkish products are often held up for hours before being allowed to enter the EU. In Northern Ireland’s case, with a smaller geographical border, that scenario could prove to be even more chaotic. Moreover, a customs union does not cover trade in services, which are the largest sector of the British economy. Once again, a member of this kind of arrangement 14 Founding members of the EFTA: Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the UK (EFTA, n.d.c). 32 is prohibited from pursuing trade deals independently, which is seen by hard Brexiters as another way for Brussels to retain influence over London (Yengisu, 2019). The solution that has been more enthusiastically pursued by British authorities is that of a comprehensive trade agreement with the EU, similar to the one signed with Canada in 2016 (CETA). Since it removes 98% of duties for products traded between both territories, it translates into nearly no obstacles for Canadian exports to enter the bloc, with no need to comply with the Single Market, the customs union, the free movement of people or to contribute to the EU’s budget. Commitments towards crossborder regulation and services would be necessary, but in a lower level than other trade models proposed (Botta, 2017). When the Withdrawal Agreement was approved, Boris Johnson announced its administration would be pursuing this model, by negotiating a new trade deal with the EU by the end of the transition period, in December 2020. Although neither London nor Brussels wish for tariffs and quotas to be introduced for the products exchanged, agreeing on the rules and regulations to be applied is still a significant challenge, since the document outlining the UK’s aims in negotiations expressed it had no intentions of aligning its laws and obligations with those of the EU. Sticking to these rules is Brussels’ main condition, so that British businesses do not get a significant advantage (Edgington, 2020). Nevertheless, both sides agree that trading under the WTO regulations, which will be the outcome without a deal, would harm the UK and many of the EU member States, since Poland, Germany, Ireland and Spain were among its top 10 importers in 2019 (Workman, 2020). It will be a challenging task, considering that conflicting interests dragged negotiations for the CETA for nearly 10 years, and there are no signs that a deal with the UK would be less challenging to craft. After the CETA’s completion, opposition to its ratification was still raised by the Belgian region of Wallonia, by complaints presented before the German Federal Constitutional Court, and by the Italian government elected in 2018, which feared for the protection of the country’s regional products when competing against the Canadians (EU Learning, n.d.). As a result, the 33 CETA has been provisionally applied 15 since 2017, while still missing the ratification of all EU member States to come fully into force (European Council, n.d.). When comparing the proposals made throughout the negotiation process for the future UK-EU trade relations, it becomes clear that London seeks to maintain preferences of access to the EU’s market, with the consequences for the Irish border as one of its main motivations. However, that is pursued in a way that does not connect British and EU regulations, and that does not allow the free movement of people between territories. Hence, opposition to the EEA/EFTA solution, or even for remaining in the customs union, was too great for them to be pursued. Currently, a trade deal is the option that remains. Nevertheless, it is still not clear if the Johnson administration will be able to negotiate it before the end of the transition period, since disagreements with Brussels may prevent discussions from effectively advancing (Edgington, 2020). 4.2. The backstop and the Northern Ireland Protocol Although reaching a consensus on a post-Brexit trade model proved challenging, it was universally agreed that a hard border in Ireland should be avoided at all costs, considering its possible political and economical implications. As a “legally-binding insurance policy”, the May administration designed the backstop option to prevent this outcome, by maintaining a close relationship with the EU for an indefinite period. Brussels insisted this provision should be included in any Brexit deal presented by the UK (Meredith, 2019). Originally, the EU proposed a backstop model that would keep solely Northern Ireland in the Single Market and the customs union, leaving Great Britain free to negotiate new trade deals. Not surprisingly, the DUP opposed to the idea. Subsequently, May proposed a UK-wide backstop, with its whole territory remaining in the customs union for an indefinite period, while Northern Ireland retained closer ties with the rules of the Single Market. This arrangement would apply until both sides considered it was no longer necessary (Campbell, 2019). 15 The provisional application of an international treaty occurs in cases where its legal effects are necessary before the internal procedures of States parties to ratify the document are completed. Many treaties provide for their provisional application, pending final ratification by all the signatories. The Vienna Convention on the Law of Treaties (1969) codifies this practice through its article 25 (Arsanjani, n.d.). 34 The backstop plan was agreed by UK and EU negotiators and included in May’s Withdrawal Agreement in November 2018. However, it sparkled a backlash from many Conservative and DUP MPs, leading even to the resignation of Cabinet members as a form of protest. They feared the backstop was a “trap” from Brussels to prevent the country from striking its own trade deals. Despite of the Prime Minister’s insistence, her plan was voted down in Parliament three times, which ultimately led to her own resignation in May 2019 (Campbell, 2019). After taking office, Boris Johnson compromised to “get rid” of the backstop option, and proposed a “single regulatory zone” for the island of Ireland (Campbell, 2019). Therefore, Northern Ireland would still follow EU regulations for animal health, food safety and manufactured goods, removing the regulatory border from the physical. The DUP said the party could accept this solution, as long as the Northern Ireland Assembly had a role in consenting to these arrangements. Moreover, the nation would leave the customs union with the rest of the UK (Campbell, 2019). Ultimately, the results of the final stage of negotiations were codified in the Northern Ireland Protocol, included in the 2020 Withdrawal Agreement. First, it determined that the Common Travel Area (CTA) between the UK and Ireland 16 , which exists independently from the EU, will not be altered. Recognizing the need to respect the Belfast Agreement and the unique status of the island, it states that Northern Ireland will remain part of the UK customs territory, which implies its inclusion in any future trade deals signed by the British government. Nevertheless, for North-South trade in Ireland, the EU’s Union Customs Code will still apply, in order to avoid tariffs and restrictions. In practice, goods moving from Great Britain will not be subject of taxation unless there is a “risk” of subsequently entering the EU through Ireland. Likewise, goods from third countries will be subject to the UK tariff, unless there is such a risk. In case there is a chance of entering the Union, these products will be subject to the EU tariff. If there are subsequent proofs that they remained in Northern Ireland, the UK will reimburse traders (Stojanovic, 2020). 16 First established in 1922, the CTA allows Irish and British citizens to move freely between both territories, reside in either jurisdiction, and enjoy associated rights and entitlements including access to employment, healthcare, education, social benefits, and the right to vote in certain elections. Since it precedes both countries’ EU membership, it functions independently from the bloc (Government of Ireland, n.d.). 35 For this arrangement to work, Northern Ireland compromises to commit to specific EU rules, especially those of the Single Market, in areas such as technical regulation of goods, agricultural and environmental production and regulation, public aid and other areas of North–South cooperation with the Republic of Ireland. Belfast must automatically adopt any changes to these regulations made by the EU, and new areas could be added to the Protocol through an agreement with the Joint Committee, responsible for coordinating its implementation. The European Commission and the European Court of Justice will be responsible for overseeing the Northern Irish compliance with these rules. Furthermore, also to avoid regulations on the border, Northern Ireland will remain in the UK value added tax (VAT) area, but in full compliance with the EU’s, and with full access to its IT system. British authorities will be responsible for its implementation, but subject to the regulation of the European Court of Justice (Stojanovic, 2020). The Protocol also creates a new consent mechanism for the Northern Ireland Assembly. Four years after the end of the transition period, the UK compromises to allow this legislature to periodically evaluate and vote on its trade elements, determining unilaterally the exact process for that. If a decision to maintain the Protocol is made under a simple-majority system, the Assembly will wait another four years to discuss the matter again. If this decision is made on a cross-community basis – both a majority of Assembly members and a majority of nationalist and unionist communities, or 60% of representatives and 40% of each group – then it will wait eight years to vote again. If consent is withheld at any point, the Protocol’s arrangements will cease to apply after two years. The Joint Committee would use this time to make new recommendations to protect the Belfast Agreement (Stojanovic, 2020). By creating this consent mechanism, negotiators guaranteed that the Protocol would operate during the transition period, and that it could be maintained afterwards, since its inclusion is expected in the new UK-EU trade deal. Also, it prevented checks and regulations on the physical Irish border, by moving them to posts in other parts of the UK. The DUP, as the main opposition to a different treatment for Northern Ireland, was also satisfied in its demand of giving the Northern Ireland Assembly a consultative role on the Protocol (European Commission, n.d.). Therefore, one of the most persistent obstacles in negotiations was removed, and with a larger parliamentary support after the 42 final outcome (Bergin et al., 2017). The financial consequences of these new dynamics are to join the political ones, which will influence in the Northern Irish debate, determining its future constitutional status and if peace will endure in the island. 43 5. Closing remarks After discussing both the economic and political characters of this debate, it becomes clear why the Irish border was such a key topic in negotiations for the UK’s withdrawal from the EU, since it transcends the domestic outreach of most of the issues initially discussed during the Brexit campaign in 2016. The first conclusion to be drawn is that the Brexit initiative was, in its essence, a clash between nationalist sentiments coexisting in the British Isles, which differ in its perceptions of European integration as a threat or an ally for its endurance (Henderson et al., 2016, p. 198). In the 2016 Referendum, the significantly eurosceptic English nationalism prevailed, and consequently, the article 50 of the TEU was triggered without properly taking into consideration the consequences for the constituent nations of the UK who voted to remain in the bloc. In other words, the Brexit process and the British government’s subsequent actions (especially during May’s administration) have minimized Northern Ireland’s perpetual constitutional question, since the mechanisms of the Belfast Agreement, although important, were unable to completely dismantle animosities between nationalists and unionists (Stevenson, 2017, p. 122). The second conclusion is that the debate over the Irish border results from the unforeseen challenge of preserving the Belfast Agreement in a scenario without the EU’s participation as a possible conflict-resolution actor, generating uncertainties that strengthened the persistent Catholic/nationalist vs. Protestant/unionist grievance. The border, more than a physical demarcation, reclaimed a symbolic character that resembles the years of armed violence in the island, which pushed negotiators into seeking a viable solution that avoided not only economic, but also political catastrophes (Gormley-Heenan & Aughey, 2017, p. 10) As of 2020, the Withdrawal Agreement and the Northern Ireland Protocol provide a much stronger ground upon which analysts can evaluate post-Brexit developments, since previous speculations were replaced by the defined solutions of pursuing a new trade agreement with the EU and keeping regulatory instruments away from the physical border. Although conciliatory, this implementation will take time to deliver either positive or negative results, which are directly related to the British government and the EU’s efforts to maintain their initial compromise, established through the Northern Ireland Protocol (Polley, 2020). 44 Therefore, the final EU-UK trade agreement is to determine the conditions upon which its post-Brexit economic and political relations are to develop. In Northern Ireland, the apparent compromise of both nationalists and unionists to protect the Belfast Agreement, recognizing it as the most effective instrument to prevent a new armed conflict and to protect the island’s external trade, is set to act as the main guide in the Assembly’s future evaluation of the functionality of the Protocol. Not only because there is a new agreement that judicially bounds Westminster to ensure Belfast’s participation on the matter, but because the trauma of The Troubles persists among the Irish society, especially in the North, were former members of paramilitary groups and non-fatal victims still live and remember the years of armed violence (Geoghegan, 2018). Considering the Brexit experience and historical factors, we may conclude that any solution for this new external border will only be successful when acting accordingly to previous agreements on the subject and to the specific North-South dynamics developed in the island since 1998. On February 1st 2020, shortly after the British departure from the bloc, French president Emmanuel Macron stated that, although the UK was leaving the EU, it was not leaving Europe, neither giving up on the friendship and cooperation developed with its neighbors in the Continent (Élysée, 2020). 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