Brexit and the EU borders: can technology help solve the problem?

In Britain, there are concerns that post-Brexit customs systems at EU borders will lead to traffic queues at ports, bottlenecks on approaching roads and companies losing contracts or even relocating to the continent. Also that security infrastructure on the UK’s only post-Brexit land border, between Northern Ireland and the Republic of Ireland, will cripple many businesses, so reliant are they on crossing that border without hindrance. Not to mention the memories of a troubled past that border crossings and uniformed staff might evoke.

Irish leaders have said there must be no physical border with Northern Ireland. The Democratic Unionist Party insists that Northern Ireland must leave the EU on the same terms as the rest of the UK. In January 2018, French customs advertised 95 jobs for border officials, bringing to 250 the number of UK-focused staff it will recruit this year.

The British government wants to use technology to help minimise post-Brexit disruption to trade with Europe and create soft borders with minimal extra infrastructure. Yet is this possible when the government can’t agree with politicians in neighbouring countries about what the borders should look like?

European governments know from history that too much border security can inflame tensions between neighbours and is bad for international trade.  

Yet on the EU border to the north, a right-wing Norwegian government started checking ferries from Denmark, Germany and Sweden not long after large numbers of migrants started coming to Norway in 2015. In the south, another right-wing government in Hungary – also keen to keep migrants out – built an electrified smart fence along the border with Serbia. In the east, Ukraine’s government has introduced biometric customs technology along the Russian border this year.

“If neighbouring countries are friendly and cooperative, then a border that relies more on technology than physical infrastructure, is possible,” says Tony Smith, former deputy director of the UK Border Force. “If the neighbouring country is seen as hostile or as a rival, then border arrangements will reflect the need for greater physical security measures.”

‘If neighbouring countries are friendly and cooperative, then a border that relies more on technology than physical infrastructure, is possible.’

The official UK government plan for its post-Brexit borders is to replace its current IT system, CHIEF (Customs Handling of Import and Export Freight) with a new Customs Declaration Service (CDS).This will operate in all the UK’s sea ports and airports and on the Irish border.

HM Revenue and Customs (HMRC) says the CDS will enable the right duties and taxes to be collected and goods to be released through inter-operation with port and airport inventory systems. It will also, officials claim, allow frontier and inland freight controls within the UK to be used by the nominated agency or authority, and enable officials to process all required customs declarations electronically and record trade and transport statistics.

However, there are a few problems with the proposed system. HMRC estimates that the CDS may have to accommodate five times as many customs declarations after March 2019. Should Britain leave the EU without a deal, HMRC says it would need an extra 3,000 to 5,000 customs staff and another £450m on top of the £78m already provided to install and run the new system.

Also, according to the National Audit Office, the CDS won’t be ready until January 2019, just two months before Brexit day. That’s assuming everything is completed on time, tested and working – which Smith thinks is unlikely because no one yet knows what the post-Brexit trading situation between Britain and the EU will look like. “For instance, the UK government has talked about possible exemptions for small traders but we need to know what the exemptions are and who they apply to,” he says.

According to Stephen Adams, senior director at strategic business consultancy Global Counsel, the UK will need more than just the CDS to meet post-Brexit border challenges in Ireland. “CDS was designed for a situation where most goods come in by sea or air, so there’s plenty of time to deal with the paperwork during transit,” he says. Adams believes the Irish border will also require new infrastructure on the ground and a processing superstructure for documentation, trucks and drivers.

In a report published for the EU in November 2017, ‘Smart Border 2.0’, Swedish customs expert Lars Karlsson looked at technology that is already used around the world to help border trade run smoothly, explaining that because goods carry different risks, they can be managed differently. He’d like to see the UK make more use of Authorised Economic Operator (AEO) programmes, where companies that meet compliance and security standards receive trading benefits across borders. There are currently 604 AEOs in UK compared to 6,000 in Germany. Karlsson points out that the EU already has AEOs with Norway, Switzerland, Andorra, Japan, the USA and China.

The report suggests that enhanced driving licences with radio frequency identification (RFID) tags could be automatically scanned to identify if the driver has the correct licence. Also, that information required to import and export electronically can be submitted through a single portal. Electronic submission and receipt of documents would provide customs officials with information about a vehicle before it arrives at the border. Mobile phone apps could scan barcodes with RFID tags to pass on relevant information, short of physically checking vehicles. Reusing export data speeds up border processing and imports throughout a supply chain. Karlsson concludes that all this reduces paperwork and saves time.

Adams says systems should also enable officials to monitor traffic as it approaches the border.

Some of this already happens on the EU’s northernmost border. Sweden, which is in the EU customs union, shares a 1,630km border with Norway, which is not. On either side there’s a 15km control zone where customs controls can be carried out by officials from and within either country. “Customs areas for physical checks are about a mile behind the border,” Adams says.

There are 14 manned customs posts along the Norway-Sweden border, but goods vehicles also cross unmanned points. Norway uses automatic number plate recognition (ANPR) camera linked to the national motor registry database along unmanned routes. On both sides, IT systems enable goods to be declared in warehouses, and vehicles picked out for inspection go through giant X-ray scanners. Norway plans to incorporate ANPR into customs procedures to allow cleared trucks to pass through the border without stopping.

On the Swiss-German border, only two per cent of consignments are subject to physical checks and there are no border posts on many rural roads. Again, customs checks take place far inside the border to help the flow of cross-border traffic.

In January this year, IBM and Danish transport and logistics company Moller Maersk announced that they intend to use blockchain technology to make international supply chains more efficient, safer and cheaper.

Blockchain was invented by Satoshi Nakamoto as the public transaction ledger for bitcoin, but IBM and Moller Maersk think it could also be used to create an unchangeable record of transactions along individual supply chains, which would be accessible to authorised parties only.

Moller Maersk estimates that one fifth of the cost of transporting goods is spent on documents and administration. During a pilot scheme last year, the company used blockchain technology to track a shipment of flowers from Mombasa to Rotterdam, putting all documents and communications between farmers, transporters, customs, ports, carriers and governments into their single system.

James Canham, MD border services at Accenture, the global management consulting and professional services company, thinks blockchain technology could be the biggest advance in border services since computers. “It replaces the need for trust,” he says. “Once something is written on a ledger in one place, it is visible to all others in the chain. The moment the declaration is submitted, all those on the import side can see what’s in the consignment and whether the finance is legitimate.”

Canham adds that sensitive goods can be identified early and handled appropriately, as can fraudulent or suspicious practices, while the internet of things will let consignments be traced along the supply lane to check for possible interference.

A group of Japanese companies including shipping heavyweight Mitsui OSK Lines are working with IBM to test blockchain systems for cross-border trade. An advisory committee to US Customs and Border Protection is also considering blockchain’s application on trade processing. Moller Maersk and IBM expect their commercial platform to be up and running in six months. They say that General Motors and Procter & Gamble have already shown interest.

There are concerns, however. Blockchain technology is secure, but applications might be vulnerable and it is yet to be proven whether the technology can handle such large quantities of data.

Adams thinks that although larger firms will have the expertise and the wherewithal to operate systems that might be installed at a new look border, smaller family-run businesses will need training. Mark Daly, the Irish Fianna Fail party’s Senate deputy leader, thinks many smaller concerns will just turn to smuggling. At Norway’s soft border with Sweden, Norwegian authorities confiscated 40 per cent more beer and 100 per cent more spirits between January and July 2017 than in the whole of 2016.

This sort of technology works best on borders where neighbouring countries have a history of collaboration and an economic need to cooperate. Sweden and Norway have a border agreement that predates the EU – since 1959 – and a long history of cooperation. Norway is also part of the European Economic Area and has regulatory convergence with the EU single market. Switzerland is also part of the European single market. Russia has ‘green corridor’ agreements with Finland and Turkey, but not with Ukraine.

In spite of all this, there are still queues at the Sweden-Norway border. The Swedish National Board of Trade report  for 2017 surveyed 2,000 Swedish companies and found that customs was the main problem hampering trade with Norway. Complaints included paperwork and bureaucratic rules. Tony Smith says the German-Swiss border is often clogged up too. “You can do most of it electronically, but there also needs to be a way for a customs official to intervene if necessary,” he says.

Adams argues that in Ireland, even a world-class customs system with average delays of less than an hour will be seen as disruptive by people and businesses who are used to crossing the border freely.

In January, Britain agreed to pay £44.5m for extra CCTV, detection technology and fencing measures in Calais, which is more akin to Hungary’s smart fence than the soft border that Brexit Secretary David Davies has been talking up in recent times.

So although technology can help authorities run borders more efficiently and make borders more secure in theory, what tech can’t do is force politicians to make up their minds about what sort of border they actually want. Whether that’s a closed one which protects national interest, or a more open border that supports international trade.