Right on Track: No Deal works for the Irish Border and the WTO!
Friday 15th March 2019: As the WTO considers the UK’s ‘no deal’ scheme to keep the Irish border soft, Professor David Collins* explains the proposals are compliant with Art XXI of GATT. It will be welcomed as a working system while we prepare for a ‘smart border’ on the lines pioneered by the French for Calais.
The UK government’s recently announced no-deal trade preparations which include the plan for the Irish border. Goods imported from the Republic of Ireland to Northern Ireland will be exempted from all duties. There will be no new checks or controls, including no requirement of customs declarations for almost all goods crossing the border from Ireland to Northern Ireland in the event the UK leaves the EU without a deal. This is to fulfil the UK’s promise to prevent a hard border on the island of Ireland after Brexit. The UK government has further stated that there will be no checks on goods transported from Northern Ireland to Great Britain, so no customs border in the Irish Sea in keeping its promise that Northern Ireland would not be separated economically from the rest of the UK.
Under the no deal tariff schedule, for agricultural tariffs that remain in place where the UK applies a lower rate than the EU’s common external tariff, there would ordinarily need to be checks for Rules of Origin (verification as to where the good originated for the purposes of entitlement to the lower tariff). But since the UK will not require such checks, at least temporarily, technically products from Ireland could be shipped to Great Britain via Northern Ireland without any customs verifications. This means that any products can enter Ireland from other countries (paying the EU’s common external tariff) and then avoid paying the UK tariff once they are exported into Great Britain via Northern Ireland.
This arrangement would appear to be in violation of the MFN principle under Article I of the GATT which provides that goods from all WTO members must be treated the same in terms of tariffs and duties (no preferential treatment for EU goods outside a free trade agreement or customs union).
The UK government’s statements on no deal preparations did not outline how the government has or will attempt to address the concern of WTO violation. But there is some suggestion that this may be on the basis of GATT Article XX a) ‘public morals’, referring to the possibility that any kind of checks on the Irish border could lead to civil unrest or even war. The problem with this defence is that it has traditionally been very hard to sustain in the WTO courts, in part due to the requirement that any measures so justified must demonstrate that they are no more trade restrictive than necessary or a disguised restriction on international trade. Proving this might require the UK to take additional steps to mitigate any adverse trade effects from its no-check policy between Ireland and Northern Ireland, for example by imposing checks on goods passing from Northern Ireland to the UK. As noted above, customs barriers were a major sticking point for the DUP, who have been justifiably concerned that Northern Ireland would be cut off from the rest of the UK in such a situation.
But there is a solution to the problem of WTO non-compliance regarding the no deal plan to avoid Irish border checks: It is the national security exception found in GATT Article XXI, which appears to have attracted little attention from commentators (nor has it been directly referenced by the UK government itself).
Under Article XXI, a WTO member can breach any GATT obligation, including MFN, if it considers this necessary ‘for the protection of its essential security interests … taken in time of war or other emergency in international relations.’ This provision was intended for exceptional circumstances and has only rarely been used as a justification for trade barriers. But during Brexit discussions many experts have given evidence in relation to the risk of border hostilities or civil war resulting from a ‘hard border’ between the Republic of Ireland and Northern Ireland. Indeed this was one consideration in the run up to the Backstop arrangement. The potentially tense situation of Northern Ireland is precisely the kind of circumstances that would justify the use of the national security exception. This is all the more so given that the quantity of goods crossing the Irish border is of relatively low volume and further that the UK will be able to monitor the situation to minimize the use of this crossing as a back door to the UK. The small number of planned checks to protect animal and public health at designated entry points on the border between Northern Ireland and Great Britain under a no-deal Brexit could serve this function.
It is worth noting that France has recently launched its Smart Border technological initiative at Calais involving the early completion of customs procedures before arriving at the border through bar codes and customs declarations as well as the automatic sending of crossing notifications to the customs declarant to avoid stopping vehicles. All of this suggests that the no-check arrangement for the Irish border is indeed a temporary one, in place until a full but still soft smart border is in place. This should further ensure the legitimacy of the existing arrangement under WTO law as one which does not have a protectionist aim but which is designed to fulfil a particular social purpose in relation to a serious issue of national security for the people of Northern Ireland and Great Britain.
*David Collins is Professor of International Economic Law at City, University of London. He previously practised commercial litigation in Toronto and was a prosecutor for the Attorney General in Ontario. His publications include An Introduction to International Investment Law (Cambridge, 2016) and The World Trade Organization Beginner’s Guide (London, 2015). For Politeia he has written Negotiating Brexit: The Legal Basis for EU & Global Trade (4th edition, July 2018).