A European Union (EU) flag, top, flies alongside the Irish national flag in Dublin, Ireland (Photographer: Aidan Crawley/Bloomberg)  

Why Not Treat N. Ireland Like Hong Kong, EU Suggests to U.K.

(Bloomberg) -- The search for an answer to Brexit’s most intractable problem -- what to do about the Irish border -- has thrown up a radical idea.

That the U.K. should think of Northern Ireland as a separate customs area, similar to Hong Kong. European Union officials have made the comparison during discussions in Brussels, according to people familiar with the matter speaking on condition of anonymity.

It is potentially a provocative idea to the U.K. because just over 20 years ago the British handed their former colony back to China.

When the Hong Kong parallel is raised, U.K. officials tell their EU counterparts that losing British sovereignty is not the aim of Brexit, one of the people said. Regaining control of the U.K.’s borders and lawmaking, and restoring the sovereignty of the British Parliament, were the key arguments of the pro-Brexit campaign in the run up to the 2016 referendum.

Officials from both sides are grappling with the question of how to avoid a hard land border between the Republic of Ireland, which is an EU member state, and Northern Ireland, which, as part of the U.K. will be leaving the bloc.

The serious point behind the Hong Kong comparison is to push the U.K. side to engage with the EU’s preferred option for resolving the Irish border issue. The EU has put forward an idea which would keep Northern Ireland in the bloc’s customs territory, while the rest of the U.K. leaves. This would mean there’s no need for checks on goods crossing the border between Northern Ireland and the Irish Republic.

Theresa May’s government says this will never be acceptable to any British prime minister because it would compromise the constitutional integrity of the U.K. Separating the British mainland from Northern Ireland in this way would be impossible for the Democratic Unionist Party -- which props up May’s minority government -- to sign up to.

But -- the counter argument goes -- even China doesn’t think a bespoke customs deal undermines a country’s constitution. Beijing agreed to allow Hong Kong to operate by its own economic and customs rules even after Britain handed over power after 156 years in 1997. And this was in a deal negotiated by the famously tough “Iron Lady” of British politics: Margaret Thatcher.

EU officials are keen for the U.K. to engage seriously with their “backstop” option for the Irish border in order to allow wider trade talks to make progress at the summit of EU leaders in June.

©2018 Bloomberg L.P.