Home Flexcit Impact Assessments Monographs Contact

EU Referendum: bordering on the ridiculous

2016-04-05 06:54:07

It really is quite extraordinary how Mr Cameron's government seeks to mislead the public in making its claims about Northern Ireland.

As we remarked in our earlier piece, we find the government claiming that, "outside the EU's Customs Union, it would be necessary to impose customs checks on the movement of goods across the border", a claim so off the wall that we haven't even begun to do justice to its absurdity.

The clue to the thinking behind this claim is the reference to the "customs union" as if its external borders still require the imposition of physical customs checks. This may have been the case in 1834 when the German Zollverein came into being, and European borders were guarded by uniformed officials and stripy poles became the norm. But it is no longer so, and hasn't been for many years. 

What Mr Cameron's government doesn't seem to have allowed for is that technologies are now available that were undreamed of when men in tricorn hats extracted ducats from passing traders. Using these technologies, nations throughout the world (even the European Union – a surviving example of a Customs Union) are doing their level best to get rid of physical border checks, even where there is no intention of dismantling borders.

And therein lies the crucial difference. In 1834, the way the Germans decided to get rid of customs checks at the borders was to get rid of borders. This set a precedent for Mr Monnet's EEC, which coincidentally promoted the integration agenda – the real reason for eliminating borders.

Many years later, we are confronting a different situation. Trading nations, faced with an explosion in the volume in international trade, need in the interests of speed and efficiency to eliminate physical border checks. But at the same time they want to protect border integrity and revenue streams.

Fortunately, there is no longer any need to opt for the stratagem of eliminating borders. This would be throwing the baby out with the bathwater. Now, with a variety of administrative systems and increasingly sophisticated technology, it is possible to regulate trade without disrupting it. 

A graphic illustration of this comes from the European Union itself, with the flow of traffic across the Finnish-Russian border. In 2013, it was announced that there was to be a major upgrade of facilities with a €40 million investment programme. Cross border traffic in 2012 had increased by 25 percent compared with 2011 and hit the 10 million mark at the beginning of December 2012. In 2011, goods travelling through Finland were valued at €20.7 billion and 8.4 million travellers crossed the border.

With that, truck queues waiting to cross the border to Russia occasionally stretched ten miles. Around two days of the total transport time (six days to Moscow and back) was spent on waiting to cross the border.

What is especially interesting about the upgrade though was that it provided the opportunity to launch a trial e-Clearance Vehicle Reservation Border Pass (VRBP). This has trucks equipped with radio frequency ID (RFID), dedicated short-range communication transponders (DSRCs), unique number container tags and unique e-Seals. 

Russia-bound vehicles will thus be able to undergo a series of pre-clearance automated inspections and a final automatic-reader drivers' passport check, without the drivers having to leave their cabs.

From two days, waiting times are expected to drop to 30-60 minutes and, with 85-90 percent of goods vehicles using the TIR-Carnet, most will be able to pass through customs with no physical checks whatsoever. Savings of at least €300 per truck are expected, shaving more than €6 million a month off operators' costs.

An interesting and important side-effect of this is also the reduced opportunities for bribery and extortion within the value chain. For example, the value of total exports of the 25 EU countries to Russia in 2005 was €56.4 billion, whereas the Russian customs reported it to be €35 billion. Much of the difference is attributed to the activities of corrupt customs officials.

Furthermore, this process of administrative clearance backed by automation is by no means confined to the periphery of the EU. Early pioneers of automated border clearance systems were the United States and Canada. In 1997, they were testing a system known as the "North American Trade Automation Prototype" (NTAP).

The system simplified cross-border shipping by combining all data into one standardized set of documents, then allowing exporters to send data via the web to Customs officials in both countries and their corresponding importers. And, with 10,500 trucks crossing daily at Detroit and half that number in Buffalo, that speed was important.

The system is now set to be replaced by a new International Trade Data System known as the "automated commercial environment", or ACE. This is a "single, electronic portal" which will allow importers and exporters to share trade documents with government agencies. Carriers have the option of equipping their trucks with a designated transponder technology that transmits RFID signals directly to Customs Officials.

Very much in the news at the moment because of roll-out delays, it is nevertheless expected to be fully operational by the end of this year. Currently, though, what are known as "e-manifest capabilities" are available at all 99 US land border ports of entry.

Almost on the other side of the world, similar developments are afoot, with UNECE and the IRU (International Road Transport Union) signing an MoU on the computerisation of the TIR procedure (eTIR) in support of a pilot project between Iran and Turkey. This was followed by developments reported by Pete, which included creating eTIR links between Georgia and Turkey and the enlistment of Pakistan in the TIR system.

For Pakistan, this provides a legal framework for traffic in transit of goods across borders among the contracting parties without involving payment of customs duties and taxes. It will facilitate trade with Economic Cooperation Organisation (ECO) countries and China through land routes, avoiding having to pay transit fees to countries such as Afghanistan, which had been demanding guarantees of 101 percent.

Thus, with the spread of such systems world-wide, it is inconceivable - even if the worst came to the worst and the UK was unable to agree a comprehensive trade deal with the EU (and chose not to participate in the EEA) – that there would be routine physical checks at the Irish border. Any monitoring of goods can be done electronically. 

The assertion in these two governments would go against the global trend is, therefore, quite ridiculous – which does make one wonder what the UK government is playing at, creating fears of such an unlikely event. One might even think they were seeking deliberately to scare people away from voting to leave the EU.