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Would Mutual Enforcement Work?

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Written by David Collins

Professor of International Economic Law, David Collins, submits the idea of ‘mutual enforcement’ on cross-border Irish trade to rigorous scrutiny. He concludes that ‘Mutual Recognition has not been convincingly disproven as a feasible alternative to a border in the Irish Sea or a hard land border on the island of Ireland’.

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The essence of the Northern Ireland Protocol is based on UK officials implementing EU border checks in the Irish Sea. While this might have worked had the EU been willing to take a less strict approach to these checks, it appears now that this is unlikely, with the EU taking the hardest line possible across a range of products. Northern Ireland has effectively been cut off from the UK, an affront to UK territorial sovereignty, possibly as the EU wished all along – the “price of Brexit” as it were. For American interventionists, such as President Biden, the ongoing frustrations with the Protocol have been seized upon as backhanded way to achieve a united Ireland, which many in the US have wanted for some time.

Critics of the UK’s threat to terminate the Protocol rightly point out that an alternative solution is needed which will prevent a hard border on the island of Ireland. One of the most prominent such solutions is Mutual Enforcement, proposed back in February by the Centre for Brexit Policy. But would it really work?

Mutual Enforcement entails that the UK and the EU each make a reciprocal legal commitment to enforce the rules of the other with respect to trade across the Irish border, removing all checks from Great Britain to Northern Ireland. Each side maintains autonomy but commits to the enforcement of whatever rules the other seeks to impose in respect of goods crossing the border. In that sense it works by inverting the usual approach to customs enforcement. Crucially Mutual Enforcement does not remove customs duties, nor does it harmonise or require mutual recognition or alignment of standards. The obligation to comply with the importing territory’s rules and pay duties is placed on the exporter as a matter of law of the exporting territory. Consequently any border checks become redundant. No border on sea or land.

So, what’s not to like? Many observers, especially of the anti-Brexit pedigree, have voiced loud objections to Mutual Enforcement, mostly on the grounds of it being unworkable in practice, noting that there are no equivalents elsewhere in the world. Others, also typically ardent Remainers, seem to reject it on principle – the very idea of compromise to the sanctity of the EU’s single market is unthinkable. The latter kind of arguments are not worth addressing. The former variety of arguments are weak. Let’s consider some of them in turn.

Starting with the most legally technical, some critics have intimated that a Mutual Enforcement arrangement would breach World Trade Organization (WTO) law, namely the Most Favoured Nation (MFN) principle of GATT Article I. This is because it would grant special treatment to products originating from one member (the UK or the EU) which are not available to other WTO members, effectively allowing goods to cross an international border without checks. But, given the historic and ongoing sensitivities in Ireland, such notional breach of MFN would almost certainly be justified by the GATT essential security exception (Article XXI). Some still contend that Article XXI would not work to insulate Mutual Enforcement from WTO scrutiny – but it is hard to justify this scepticism. Note for example the President Biden’s repeated statements on the importance of maintaining peace on the island of Ireland.

One interesting and related challenge to Mutual Enforcement is the idea that it would mean that neither the UK nor the EU are managing their external borders properly. This appears to be predicated on the idea of “leakage” – that improperly checked goods will slip through and compromise the relevant market with sub-standard goods. A corollary to this point is that a porous border will undermine the UK (or the EU’s) chances of securing Free Trade Agreements (FTAs) with other countries. Often framed in terms of a mockery of the ‘Global Britain’ strategy, some analysts believe that Mutual Enforcement makes the UK look unreliable as a trading partner because the other party won’t know exactly what kind of market they are signing up to. But this assessment makes little sense when viewed in the context of the small volume of trade across the Northern Ireland / Ireland border. Furthermore, a special arrangement like Mutual Enforcement is precisely the type of thing provided for in side letters to instruments such as the Comprehensive and Progressive Trans Pacific Partnership (CPTPP), where many idiosyncratic trading arrangements are explained and accepted by the group. It is hard to picture one of the CPTPP parties rejecting the UK’s accession on the basis of leakage of EU goods into the UK. It is doubtful that future FTA parties such as Australia or Canada would see much in Mutual Enforcement that would trouble them either.

Those who oppose Mutual Enforcement tend to point to the practical difficulties of implementing it on the ground. It has been suggested that it would amount to a “smugglers’ charter” because it will enable traders to bypass border controls by removing customs enforcement and replacing it with a system of fines – again the spectre of “leakage”. But this critique appears to assume that UK authorities (or EU ones for that matter) would fail to enforce the rules rigorously. More importantly, there is no significant market or distribution network for non-compliant goods and therefore no real profit in it for criminals to smuggle, not when compared to more lucrative contraband such as tobacco, alcohol, fuel, drugs and migrants. The real risk of leakage across the Irish border is rather small.

Some believe that Mutual Enforcement would be unworkable because it would require businesses to become customs experts for their exports across the Irish border, which could be problematic for businesses which purchase thousands of components globally. But, while the red tape associated with assessing exports could be onerous initially, eventually businesses would learn to adapt, much as Great Britain / EU traders across the Channel have done in the first months after Brexit. Any difficulties could be mitigated by the UK and the EU providing temporary support / funding for smaller traders coping with the new scheme.

The most credible objection to a Mutual Enforcement solution to the Irish border is that because it requires a high degree mutual trust between the UK and the EU, it is bound to fail as a matter of realpolitik. The ongoing acrimony between the two sides over Northern Ireland as well as fishing reflects deep-seated disagreement between the parties which is not a solid foundation for a relationship based on faith. Add to this the fact that the EU is resentful that the UK chose to leave and may end up prospering from it, risking departures of more Member states watching the UK have its cake and eat it. The EU is also evidently keen on expanding its reach as a regulatory superpower. Forcing the UK into accepting dynamic alignment would help achieve this goal.

Flowing from this unfortunate state of affairs, it is admittedly difficult to envision that the UK would be able to convince the EU that it would fully and enthusiastically enforce EU standards as Mutual Enforcement would require. The UK’s unilateral extension of the Northern Ireland Protocol’s grace periods as well as threats to terminate the Withdrawal Agreement have not helped.

Fundamental mistrust of the UK is the most likely reason why the EU appears to have rejected Mutual Enforcement without seriously considering it. A plausible solution to this dilemma would be regular inspections / audits from each side coupled with enforcement of the Mutual Enforcement obligations through arbitration. More creatively, the parties might consider posting a bond to back up their commitment – if the UK put a hundred million euros in escrow from which the EU could extract compensation in the event of demonstrable smuggling, it might show that it intends to approach Mutual Enforcement in good faith. Of course the EU would need to reciprocate, offering a cash bond of its own.

Mutual Enforcement has not been convincingly disproven as a feasible alternative to a border in the Irish Sea or a hard land border on the island of Ireland. Claims that full regulatory alignment is the only solution are similarly narrow-minded and unambitious. During the G7 last weekend, Prime Minister Johnson declared that compromises must be undertaken on both sides to resolve the impasse of Northern Ireland. Mutual Enforcement may be one such compromise. We cannot be certain that it will work (or not work) until it is tried. It’s worth giving it a go.

David Collins

Professor of International Economic Law

City, University of London

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David Collins