Insight Header-3

This is a proposal to help overcome the Irish border impasse that has become a surprisingly daunting obstacle to Brexit.

Our idea is to turn Northern Ireland (NI) into a special economic zone (SEZ), modelled after the ones in China. The SEZs in China do not entail any compromises on China’s sovereignty, while at the same time offering the economic agents in the SEZs economic, financial, and legal terms that are preferential to those in the rest of China.

As an SEZ, NI could remain an integral part of the United Kingdom while enjoying all of the economic terms of the EU, as well as possibly other concessions and preferential terms relative to other parts of the UK.

  1. Sooner or later, with Brexit, there will need to be a permanent solution to the Irish border issue. Rather than presuming that the future terms of trade between the UK and the EU would obviate the need for such a permanent solution, tackling the Irish border issue now would give both the UK and the EU more negotiating space for their future trade arrangement.
  1. Turning NI into an SEZ would simultaneously satisfy two seemingly inconsistent objectives: (i) the EU extending the same terms of trade to both Ireland and NI and (ii) observing the sovereign integrity of the UK. The Good Friday Agreement would be honoured in such an arrangement, and NI would no longer be a ‘zero-sum game’ whereby either EU or the UK wins, and the other party loses.
  1. Since SEZs are not permanent designations, such a structure would offer built-in flexibility over the long-run, allowing advancing technology for border/customs checks, the relative economic prosperity of the rest of the UK, and changing political opinions in NI and Ireland to determine whether NI should continue to be an SEZ within the UK. Giving NI the option to one day abandon its SEZ designation would be an added incentive to NI agreeing to this arrangement in the first place.
  1. The Irish border issue is important but should not absorb a disproportionate amount of attention from the British and the European policy makers. An added benefit of finding a more structured (though by no means inflexible) arrangement for NI, attention could finally be turned to designing future trade arrangements between the UK and the EU, and with the rest of the world.

Whilst I made this proposal a month ago, ahead of the prorogation of Parliament and the subsequent Supreme Court ruling, I continue to believe that the only solution now is to make Northern Ireland into a Special Economic Zone.

The above article is an extract from our research paper “A Proposal to turn Northern Ireland into a Special Economic Zone” published on August 28, 2019.

Further information on our research commentaries and a trial of this service can be obtained by emailing research@eurizonslj.com

Disclosure

This communication is issued by Eurizon SLJ Capital Limited (“ESLJ”), a private limited company registered in England (company number: 09775525) having its registered office at 90 Queen Street, London EC4N 1SA, United Kingdom. ESLJ is authorised and regulated by the Financial Conduct Authority (FRN: 736926). This communication is treated as a marketing communication intended for professional investors only and is provided only for information purposes. It has not been prepared in accordance with legal and regulatory requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not constitute research on investment matters and should not be construed as containing any recommendation, advice or suggestion, implicit or explicit, with respect to any investment strategy or financial instruments, or the issuers of any financial instruments, or a solicitation, offer or financial promotion relating to any securities or investments. ESLJ and its affiliates do not assume any liability whatsoever for the contents of this communication, save to the extent agreed in any written contract entered into between ESLJ and the recipient, and do not make any representation or warranty as to the accuracy or completeness of any information contained in this communication. Views are accurate as at the time of publication. Opinions expressed by individuals are their own and do not necessarily reflect those of ESLJ or any of its affiliates. The value of any investment may change and an investor may not get back the original amount invested. Past performance is not an indicator of future performance. This communication may not be reproduced, redistributed or copied in whole or in part for any purpose. It may not be distributed in any jurisdiction where its distribution may be restricted by law and persons into whose possession this communication comes should inform themselves about, and observe, any such restrictions.

ESLJ-281020-I9

Our Research

Our written research products aim to provide unique and orthogonal insights on key global economic and policy issues in a timely fashion.

research page photo