At first glance, there is little in common between Büsingen, a small town on the Rhine, and Belfast. But the German municipality, and particularly its customs status, is now being cited as a model for how to prevent border checks between Northern Ireland and the Republic after Brexit.
The town, which is entirely surrounded by Swiss territory and is part of that country’s customs union, was mentioned in parliament last week by Alasdair McDonnell, Social Democrat MP for Belfast South.
He said it offers some hope that a solution can be found for what to do once the Republic's northern border becomes an external frontier of the EU.
A low-key holiday destination, Büsingen (pop 1,450) is an historical and geographical oddity. While it belongs to the German district of Konstanz, it is separated from Germany by a narrow strip of land and surrounded on all sides by Swiss cantons.
It belongs to the Swiss customs territory, so EU tariffs do not apply. The euro is legal tender, but most people pay with Swiss francs. Italy has a similar exclave in Switzerland, Campione d’Italia.
This spirit of flexibility could offer answers for Northern Ireland, Mr McDonnell said.
“All sorts of options are available, with other places having various arrangements, but that is one example,” he said. “It is essential, for our small businesses trading across the Irish border, that we remain within the [EU] customs union.”
The fact that politicians are reaching for such esoteric case studies shows there is no precedent for what Britain will try to achieve: leaving the EU, while avoiding the ramifications that come with a new EU external border. As with much concerning Brexit, easy solutions are elusive.
A practical solution?
Theresa May’s pledge in Belfast on Monday to find a “practical solution” clashes with her own claim before the referendum that more controls were inevitable in the event of a vote to leave the EU. John Major and Tony Blair made similar warnings, citing customs as a particular problem.
The EU customs union includes the Channel Islands, Monaco and San Marino. Turkey and Andorra also participate for some classes of goods. It is an area that allows the free movement of goods, with no internal tariffs. However, at the bloc’s external borders, be they harbours, airports, or land frontiers, it is a different story, with customs controls, mandatory paperwork and – depending on the goods and their origin – duties to pay.
The Büsingen example, when looked at closely, offers only limited hope. Most obviously, it concerns membership of the Swiss customs area and not the EU one. Also, in practice, there are still spot checks by customs officials of cars coming and going, with limits on what can be taken across the frontier.
Equally, what works for a small border town might well be politically out of the question for a province that forms part of the world's sixth largest economy.
Stay in customs union?
Philippe De Baere, a trade and customs lawyer with Van Bael & Bellis in Brussels, says: “You can have [certain rules for] small spots on the map, but I don't think the UK is such a small spot.”
In his view, a simpler solution would be for the UK to leave the EU while remaining part of the customs union, but this is unlikely to satisfy hardened Brexiteers.
This is because the customs union is far from just an agreement about tariffs, it is also a body of EU rules that Britain would have to continue to comply with, such as product regulation standards.
Other options also come with strings attached. While a free trade deal between Britain and the EU could result in zero tariffs on many goods, there would still need to be customs checks, as duties could still apply on products, or even individual components, that had been imported into Britain.
Zsolt Darvas, a senior fellow at the Bruegel think-tank, said there is another way out, but it is not easy. Effectively, Northern Ireland would have to apply EU rules so completely that it could retain its status within the customs union while the other parts of the UK leave.
“If European single market regulations, such as product market standards, apply to Northern Ireland...then there may be no border between Northern Ireland and the Republic,” he said.
There is only one catch: the frontier of the customs union would then shift to the province's air and maritime borders with mainland Britain, meaning “border checks in ports and airports” for travellers seeking to cross the Irish Sea. Ms May’s practical solution looks hard to find.
Option one: Continue to operate common travel area
Advantages: Has operated for 90 years since the creation of the Irish Free State. Would allow free movement across the border to continue. Key to the peace process.
Disadvantages: Britain would cede part of its border controls to Ireland. EU citizens could fly into Dublin and travel to mainland Britain via Northern Ireland without having to show their passport again. To control illegal working, British authorities would have to identify EU citizens without work permits and deport them.
Option two: Continue free trade in goods across border
Advantages: Both countries are currently part of the EU customs union. Some 37% of Northern Ireland's exports go to Ireland, worth £3.6 billion (CHF4.6 billion). Both Dublin and Belfast will be keen to ensure that the free flow of goods continues unhindered.
Disadvantages: If Britain leaves the EU customs union, the border would acquire a new significance. If customs checks did not apply, the border could become a hotbed of smuggling, a backdoor route from the UK into the EU (and vice versa) for those hoping to avoid tariffs.
Option three: New controls between N Ireland and rest of UK
Advantages: Would allow free movement of goods and people to continue across the Irish border.
Disadvantages: Would be politically unsellable to unionists who would bridle at having to show their passports to travel to the mainland.
Arlene Foster, Northern Ireland’s first minister, said yesterday: “There must be no internal borders within the UK.”
She said that Ms May agreed.
Option four: Limited border controls between north and south
Advantages: Theresa May has promised to seek a “practical solution” and “no return to the borders of the past”. Few would welcome a return to the hard border that existed during the Troubles, with army checkpoints and roads sealed off by barricades.
Disadvantages: Even limited checks to people or goods flowing across the border could be a setback to the peace process. For almost 20 years both sides have tried to erase all evidence of the border, which is little more than a line on the map.
Copyright The Financial Times Limited 2016