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Ireland and the UK share an open-border area just like the Schengen countries, but unlike the Schengen area they lack a common short-term immigration policy. As a result, pretty much anyone can obtain an Irish visa and cross to the UK unhindered (and vice versa) but doing so is technically illegal.

Why can't the two countries agree on a common list of visa-free nationalities and issue a single visa for both countries?

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TL;DR: Because, at the moment,

it's a nonproblem.

There are plenty of things you can do that are illegal. You can start most cars despite having a high BAC, and drive until you get caught. You can carry a knife in your bag through downtown London, and get away with it until you're nicked. The same thing applies through most of the legal code.

You're apparently confused because, apart from Latin American entrance into the United States, crossing international borders is not usually one of those things in the 1st World. It's usually just completely impossible to get an international airline ticket, go through security, fly, and get out of security without fairly valid paperwork.

When Irish terrorism was a problem, this wasn't possible. With most of it dealt with, the borders opened again. In fact, demilitarizing the border and removing checkpoints were a major part of the Good Friday Accord. Most political leaders were—before Brexit—doubtless expecting that travel around all the countries of Europe would become freer and freer with the fulness of time.

You still can't just go to Heathrow and walk onto a London bus with an Irish visa. You'd have to travel to Ireland, cross the border on land, and travel from there to Britain by some means lacking a visa check (read: ferry). To be safe, you'd need to go the same way to head home. Now, that system is very weak w/r/t determined terrorism (especially since Ireland isn't one of the Five Eyes & the UK can't trust its passport control) and there have been efforts to introduce visa checks between Northern Ireland and Britain. It's a nonstarter for Northern Irish politicians, who've been coalition partners with the ruling Tories for years. Control could be quickly imposed on ferries and other methods of travel but the inconvenience to the locals far outweighs the current perceived need to police the visitors, particularly with the Northern Irish punching above their weight in Parliament.

On the other hand, Brexit was a specific repudiation of greater openness and less native control over borders and immigration. It was a very close-run thing nationally but the rank-and-file British conservatives were strongly in favor overall. There's no strong push to make it marginally easier for Irish visitors to cross over, when

  • the local Northern Irish have it fine;

  • plenty of people easily apply (and pay) for British visas;

  • no, really, plenty of people: Britain welcomes 5* the Irish population as visitors every year versus Ireland getting about a fourth of that, with many visiting because they happened to be nearby in Britain anyway; it's Ireland fighting for a share of the UK's market and tourism revenue, not the other way around;

  • there haven't been any hordes of foreign poor spilling across from Ireland;

  • there haven't been major terrorist attacks allowed by the current system; and

  • the British public would read the changes necessary for a full visa union between the UK and Ireland right now as a further attempt by Whitehall & co. to undo Brexit.

You might see movement on this one way if Corbyn really pulls the British government hard left, since Labor always hated Brexit and illegal immigrants can be expected to vote for someone other than the Tories; you will see movement on this hard the other way if the Tories hold power and it becomes public knowledge that a major terrorist attack or several were permitted by the open Irish border; but for the near future it looks like things will continue to muddle on as they are now until the Brexit negotiations force a decision.

  • But Brexit only came around two years ago. The open border with Ireland existed at least since the Good Friday agreement, which is 20 years ago. – JonathanReez Jul 12 '18 at 14:49
  • @JonathanReez I don't see your point. The border was open but not completely. Your question was why they can't finish the deal; Brexit is currently a huge part of that, but go back and reread the answer. There were other issues before that as well. – lly Jul 12 '18 at 16:37
  • Your basic question could be rephrased "Why do some visitors have to pay extra for a British visa?" Britain's basic answer to that could be rephrased "What part of lining my pockets is confusing to you? Also terrorism. Also politics." – lly Jul 12 '18 at 16:42
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The Common Travel Area is rather different from Schengen area. It has a different history and a different purpose.

In the 1980s and before there was a very hard border between the Republic of Ireland and Northern Ireland, with military guards and barbed wire. While the UK and Ireland were both members of the EU and could travel freely to each other's countries, actually crossing the border would mean going through a lot of security checks. It was one of the principal requirements of the Good Friday process that all such checks would be removed at the UK/Ireland border.

The UK and Ireland have different immigration policies as they have different immigration needs. Irish workers have often seen emigration as a solution, resulting in skills shortages in construction and other areas. source. Ireland has roughly neutral migration numbers source. The UK has different requirements, and has had net immigration for many years now.

So, there are different interests and requirements. It would not be politically acceptable for the UK or Irish government to converge on a single immigration policy. This does leave seeming paradoxes, such as requiring a visa to enter the UK, but no infrastructure at the border to check visas.

That said, there have been steps to rationalise this situation, with Indian and Chinese visitors able to get a single visa for both countries, under the British Irish Visa Scheme.

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    @xuq01: Definitely. I edited to fix it. – chirlu Jun 27 '18 at 8:43
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    But labour shortages have nothing to do with short term tourist visas. – JonathanReez Jun 27 '18 at 14:08
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    I have to downvote because the events of the 1980s have nothing to do with the development of the common travel area, which was established de facto in 1920s, although the name was not used until 1953. The lack of immigration controls for the two countries' citizens has nothing to do with the EU (en.wikipedia.org/wiki/Common_Travel_Area#1923_agreement). Irish citizens have more rights in the UK than do other EU citizens (en.wikipedia.org/wiki/…). Brexit concerns have to do with customs, not immigration. – phoog Jul 9 '18 at 17:06
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    Furthermore, Schengen countries have different immigration needs, and that has not been a particular problem. Schengen's unified visa scheme concerns short-term visits. Immigration is still controlled by individual member states. – phoog Jul 9 '18 at 17:08
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    @lly to say that the UK populated those countries is a huge stretch. Wikipedia says that the 1790 population was around 45% British (85% of the rest, or 38% of the total, were Africans or their descendants). Much of the 19th and early 20th century immigration was from other northern European countries. – phoog Jul 12 '18 at 14:14
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One major reason why they can't agree is that Ireland is very pro EU (>90% support) and the UK is heavily divided on the issue to say the least.

Being pro-EU means accepting freedom of movement of labour, something that many in the UK oppose. Therefore the UK would be reluctant to adopt Irish/EU immigration rules, and Ireland would be unable to opt out of them unless it also left the EU which clearly isn't very likely.

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    Ireland already has an opt-out from EU visa rules for short-term visitors (because they view the open border with the UK as more important). And freedom of movement of labour is irrelevant as the question is about tourist visas for non-EU nationals. – Hedgehog Jul 12 '18 at 18:06

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