‘A lot of bad people will make money from Brexit’
A poor Brexit deal threatens to make smuggling a growth industry in Ireland, Anna Isaac reports
When, in the Seventies, the European Union introduced payments for the export of livestock, transporting pigs over the Irish border became valuable business. So valuable in fact, that it became a wheeze; the same pigs would be wheeled round repeatedly in what became known as the “pig carousel”.
From trying to circumvent the rationing regime in Northern Ireland in the aftermath of the Second World War – by smuggling everything from butter to stockings from the South – to contemporary efforts to shift heating oil and tobacco, in order to undercut the Republic’s higher kerosene prices, the black market of goods moving cooks,” says Jason Sullivan, an immigration lawyer in Portsmouth, New Hampshire, who has seen the impact the labour shortages have had on local businesses. “The economy is starting to pick up, people are more optimistic and are able to go out, but restaurants can’t find the people to serve them. If they crack down on the seasonal workers’ visas, some will go out of business.”
Norman Dufour, chef and manager of MC Perkins Cove, an upmarket restaurant in the idyllic Maine resort of Ogunquit, has seen the problem first hand. “We have been understaffed since we opened and we are still understaffed,” he says. “We have placed ads but nobody responds. Everyone I speak to is in the same boat.”
Maine, a state heavily dependent on tourism, asked for 2,877 H2B visas, but only 700 were approved.
Such is the desperation for these visas that the administration was across the Irish border has always enjoyed brisk trade.
And it could soon get brisker still. Mark Daly, a senator with Irish party Fianna Fáil, believes a poorly executed Brexit could act as a “smugglers’ charter”. He adds: “A lot of bad people are going to make a lot of money out of Brexit.” Daly points out that there were only 20 border crossings open during the Troubles; now there are more than 275 routes across the border.
“During the Troubles people made a fortune on smuggling, especially with diesel,” says Daly. “It’s foreseeable that if restrictions on food change you could have the same problem with Argentinian beef.”
Since the Good Friday Agreement in 1998, the battle against smuggling has been fought collaboratively by the Police Service of Northern Ireland, the Garda (the Irish police) and the tax collecting authorities on both sides.
In a joint report on organised crime, the Northern and Southern Irish authorities revealed that fuel fraud remained one of the biggest smuggling rackets. Illicit diesel was estimated to make up 8pc of the market share in reportedly prepared to offer more if Maine’s Republican senator Susan Collins backed moves to repeal Obamacare. She declined the offer, as did Lisa Murkowski from equally tourist-dependent Alaska.
The extent of the problem is difficult to gauge. “You have to take a regional Northern Ireland in the 2013-14 financial year, resulting in £50m of lost taxes. The UK’S vote to leave the EU has raised the prospect of a harder border in order to police the movement of people and goods. Benny Gilsenan, a Dublin shopkeeper and member of the Retailers Against Smuggling association in Ireland, is deeply concerned about how such changes could hurt his business: “[A perspective,” says John Quelch, dean of Miami Business School. “There is a significant grey economy in the US which is barely spoken about.” While the grey economy may be plugging some of the gaps, industries such as agriculture are struggling badly, especially in California.
Despite Trump’s insistence that the US needs a wall to keep Mexican immigrants out, figures from the Pew Research Centre show that the number leaving and going home is higher than the number arriving to take their place. Farmers in California are finding that they are having to compete for workers with the burgeoning manufacturing industries back in Mexico. It has left the agriculture industry struggling to find enough immigrants to help fill around half a million jobs.
“The farm labour concerns here in California have been rising mostly because, as the economy improves, potential farm workers have other
‘We are not raising this because people find it difficult to come, but because the US economy will find it hard to cope’
disparity in customs duties] will open up a market again for the smuggler.” He already suffers from existing smuggling activities: “I sell a packet of cigarettes at €12 (£10.68). [Smugglers] sell it at a third of the price,” he says.
Chris Smyth, an Ulster Unionist Party councillor in Fermanagh, is also concerned. “Smuggling will become our biggest industry if [Brexit] goes badly. But we live in the 21st century. We’ve put men on the moon. I’m confident that HMRC can use technology to come up with a solution,” he says.
In its Northern Ireland Brexit position paper, the Department for Exiting the European Union was clear that it believed goods and people must be allowed to flow seamlessly over the border.
Neil Gibson, the chief economist at EY Ireland, believes fears about the potential for friction and smuggling between the UK and Ireland postbrexit risk being overblown. Solutions will be found and common sense is required, he argues. “Keep scale in mind,” he says. “Think of a border infrastructure that’s appropriate to what non-compliance costs.”
Robust legislation and on-the-spot checks, with a clear set of penalties, could be simple and effective ways to ensure compliance with any new tariffs, Gibson argues. However, he’s clear that this would require significant investment in policing.
Should the UK leave the customs union, it will require a big adjustment at all its borders just as HMRC is replacing its creaking CHIEF (Customs Handling of Import and Export Freight) import system.
David Davis, Brexit Secretary, has claimed that everything is on track for the new computer system to go live in January 2019. That does not quite tally with warnings from the National Audit Office this summer, that “the timeline for completing the Customs Declaration Security programme … allows very little flexibility should the programme overrun or unexpected problems occur.”
The stakes of failure are high. The 2001 foot and mouth outbreak, which devastated swathes of farms, was likely caused by contaminated meat being illegally imported in pigswill. The cost of that outbreak has been estimated at some £8bn, according to a National Audit Office report.
Headline costs on smuggling fail to illustrate the full damage on an economy it can wreak. Keeping a functional border with Ireland, which allows for the safe and proper movement of people, livestock and goods, following Brexit is a challenge that must be addressed.
Wages are on the up as Donald Trump’s restrictions on work visas are affecting all sectors of the economy fighting to fill jobs
Demonstrators dressed as custom officials set up a mock customs checkpoint at the border crossing in Killeen, near Dundalk to protest against the potential introduction of border checks