No-deal Brexit and Irish border; can third countries transit through Republic of Ireland?

Question

In case the United Kingdom (UK) leaves the European Union (EU) without any deal, World Trade Organisation (WTO) rules would apply for trade between the UK and any other country or trade bloc. Some British politicians have declared that under those circumstances, they would state that the UK will not perform checks at the Irish border. Under WTO rules, the UK must then also perform no checks on goods coming in from anywhere else. If the UK ignores those rules and imposes checks on other borders, they'll probablycertainly get into trouble with WTO dispute settlement, which will take a while.

But more immediately, before the results of any dispute settlement, would under those circumstances third countries (non-UK, non-EU) be able to export to the UK by transiting goods through the Republic of Ireland and Northern Ireland — without importing those products to the EU?

The GATT, article V, provides for freedom of transit, but also states via the routes most convenient for international transit. If the UK were to check imports at some borders but not others (which appears to be what is being suggested), importers may wish to import via the Republic of Ireland (ROI)/NI border not because it is geographically most convenient, but because this border is not checked.

From the GATT:

1. Goods (including baggage), and also vessels and other means of transport, shall be deemed to be in transit across the territory of a contracting party when the passage across such territory, with or without trans-shipment, warehousing, breaking bulk, or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes. Traffic of this nature is termed in this Article " traffic in transit ".

2. There shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit, for traffic in transit to or from the territory of other contracting parties. No distinction shall be made which is based on the flag of vessels, the place of origin, departure, entry, exit or destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport.

3. Any contracting party may require that traffic in transit through its territory be entered at the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.

Answer 1

There's an important distinction to make between where the goods are arriving from and the 'origin' of the goods under so-called rules of origin.

Tariffs, quotas, etc, are applied based on the origin of the goods, not where it physically arrives from. These can be very complicated and vary based on the trade agreements in use. For example, a car could be assembled in Ireland but not count as an EU product under a future UK trade regime because less than 40% of it by value came from the EU or UK. For textiles it might instead be a requirement to complete two processing steps in Ireland. In an agreement covering multiple countries/blocs like the Euromed agreement, something processed in Morocco, processed more in the US, assembled in Ireland and exported to the UK might count under the agreement because the sum of the Moroccan and Irish content is enough....or it might not, depending on the kind of cumulation used and the product involved.

In short: the origin for tariffs is complicated and can be completely divorced from its immediate physical origin. The question of 'transiting through' Ireland is wider than just driving through it without doing anything to the product.

The legal requirement to pay the correct tariff based on this isn't going to go away just because you manage to avoid border posts when you import something.

You can claim back tariffs if you process and then re-export what you imported (although this seems to be very complicated and I can't say I really understand how widely this can be used). So you don't even necessarily need to transit in sealed containers, as in TIR, to avoid the EU tariffs.

So, yes third-country goods can transit or be lightly processed in Ireland on the way to the UK, they can be re-exported to the UK and they can avoid or mostly avoid EU tariffs. However they're still going to be legally subject to UK tariffs on arrival whether they're checked or not. Maybe you can avoid paying them, but you'd be a smuggler (and most likely evading VAT, too). As an aside, I believe that smuggling used to be a substantial source of funding for the IRA.

The WTO requirement to impose equal tariffs on goods from all countries unless there is a comprehensive free trade agreement applies to the origin, not the country they're arriving from. If there are effective measures to ensure that tariffs are collected then I can't see why there should be a legitimate dispute just because it's not at the border (but trade is highly political and subject to being used as bargaining chips or for domestic political reasons, so less-than-legitimate claims or retaliation might be made). However, no-one will be fooled if the UK turns a blind eye to imports from Ireland in a way that clearly favours certain exporters over others.

Answer 2

It doesn't necessarily follow that, if there are no checks at the ROI/NI border, then there can't be any checks at any border. The WTO rules, essentially, require no discrimination between trading partners (with some caveats) not that there's only one way of doing anything.

So as long as a border procedure was devised whereby no individual nation was disadvantaged compared to others, one can envisage a case where WTO's most favoured nation rules were adhered to sufficiently.

That being the case, there's no specific issue with non-EU, non-UK goods transiting via the ROI/NI border as long as all countries are treated similarly (again, with possible caveats).

Having said that, whether or not you can realistically manage the relevant duty requirements etc. without a border is another matter.