Artillery Row

EU, mind your own business!

Does the EU genuinely fear a backdoor into its single market?

Tensions between the EU and the UK continue even after Brexit, as the EU continues to insist on post-Brexit checks on products entering Northern Ireland from Britain. The UK wants to delay the introduction of a lot of these checks until January 1st, something the EU seems to now have grudgingly accepted. 

What the EU fears is that products that do not comply with EU standards, such as British sausages, would somehow end up in the EU’s single market via the Northern Irish “backdoor”, as goods would be exported from Northern Ireland into the Republic into one of the EU member states in mainland Europe. 

The EU’s leaky borders

The EU’s concern makes sense at first glance, but its rigid insistence on firm checks does not at all, certainly not given the tense situation in Northern Ireland. The main entry gates into the EU single market are the EU’s big ports, notably Rotterdam, Antwerp and Hamburg. According to the Mayor of Antwerp, these are “leaking like a sieve, as only about a tiny percentage of the containers shipped into the EU face checks. Hyperventilating about how some kind of Northern Irish “backdoor” would allow goods to slip into the EU unchecked is therefore not exactly appropriate. 

Earlier this month, however, the EU’s own auditing body, the “European Court of Auditors”, slammed the EU’s border agency, Frontex, for failing to properly protect the EU’s border, not only when it comes to human smuggling but also when it comes to goods smuggling. According to lead auditor Leo Brincat, the support Frontex provides to EU member states in this area is “not adequate to combat illegal immigration and cross-border crime”. In particular, it complains about gaps in information exchange between Frontex and national border agencies. It further accuses Frontex of insufficient transparency on the real cost of joint operations.

Goods smuggling has increased during the pandemic

The European Monitoring Centre for Drugs and Drug Addiction, another EU agency, has pointed out that the problem of a leaky external EU border has become greater, not smaller, as during the Covid crisis, there was an increase in maritime seizures of illegal narcotics. According to the agency, organised crime has proven “remarkably resilient” in the face of Covid border closures, as they simply changed smuggling routes.

Also tobacco smuggling increased during the pandemic. As the shaky border checks on the EU’s external border made illicit tobacco products cheaper, it made more people switch to them, in turn helping organised crime groups gain market share.

The problem of a leaky external EU border has become greater, not smaller, as during the Covid crisis

On top of that came tax hikes in some countries, which made the illegal market even more attractive. Nowadays, illegal tobacco trade is estimated to contribute to up to 50 billion euro in annual lost global tax revenue. In countries with stronger external border enforcement, the share of illegal tobacco is lower. Average illegal trade is estimated to grow by 7 per cent when cigarettes become 10 per cent more expensive. This is all also very important for public health, as illegal products aren’t subject to the same kind of quality controls and may according to some contribute to underage smoking. Last but not least, it is also an important funding source for organised crime and terrorism.  

In the past, the damage of border fraud to EU treasuries has been estimated to amount to 100 billion euro per year, much of it being VAT fraud. This of course does not include health damage or damage to legitimate businesses resulting from smuggling of fuel, tobacco, alcohol, or any other lucrative product.

How to solve the EU-UK dispute?

One would think that those obsessing over a backdoor via Northern Ireland into the EU single market ought to have other priorities, for example minding the report by the European Court of Auditors where Frontex is being criticized for doing a poor job to counter these kinds of illicit trade flows. Still, the UK did sign up to Irish Sea checks, so a fudge of some kind will be needed.

To be fair, there are different approaches among the EU great and good on whether to be flexible over Irish Sea checks. While French President Emmanuel Macron and EU Commission President Ursula von der Leyen are on the hawkish side, EU Trade Commissioner Valdis Dombrovskis is more pragmatic, for example pushing for flexibility on EU rules such as medicines approval. One can only wonder why von der Leyen does not completely leave this issue to her trade Commissioner, after her office appeared to be responsible for providing to trigger article 16 of the Northern Irish protocol earlier this year. This article allows the erection of a hard border in Ireland, and the EU activated this in the context of its vaccine control mechanism – supposedly fearing that vaccines may otherwise be exported without checks from Ireland to Northern Ireland. When caught out, von der Leyen unfairly blamed her trade Commissioner. She hasn’t exactly left a good impression so far. 

According to the 2019 Brexit deal, Northern Ireland remains in the EU single market for goods, which means checks will be needed, as the UK’s regulations are diverging. To have Northern Ireland aligning with EU regulations and to concede checks in the Irish Sea were really quite generous concessions by the UK government. The least the EU can do, is not to be too stringent in its demands. The fact that Labour leader Keir Starmer– not exactly a hard core brexiteer – now seems to oppose Irish Sea checks, as he calls those “absolutely not the way forward” should make the EU reflect. 

At the moment, there are already checks between Great Britain and Northern Ireland. This because Northern Ireland and Ireland are treated as an all-island unit when it comes to animal health and veterinary checks, since the BSE and foot-and-mouth outbreaks. Surely, it should be able to find a compromise where checks are expanded, but only limited to supermarkets, or something along those lines, whereby the EU also recognises some or all of the UK’s regulations as trustworthy, perhaps with an annual review possibility. If tweaks to the Northern Irish protocol are needed for that, as also some moderates argue, so be it. Starting lawsuits against the UK for “non-compliance”, which the EU has threatened to do, is in any case not the way forward.  

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