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  • Colin Ng
    Colin Ng

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    Brexit, Blockchain and borders: Fantasy or Reality?

    In the run up to a pivotal moment in our country’s history, it’s only to be expected there will be a growing sense of urgency, political drama and blanket media and social media coverage. Brexit, with it’s all encompassing remit, is definitely living up to this.

     

    Time is running out
    Political jousting from all parties, including the now defunct UKIP, has been the norm since negotiations began last year, with new revelations taking the spotlight every week. Currently it’s Irish border backstop an issue which has been there from the beginning.  With less than six months to go before Brexit, the fact that it remains unresolved speaks volumes about the enduring complexity of this situation in itself.

     

    How do you solve a problem like the Irish border?

    The Irish border has become controversial. Both the UK and the EU do not want a ‘hard border’ dividing the island of Ireland for obvious reasons – peace, freedom of movement and a lucrative trading relationship.

     

    The Financial Times reported that Ireland has €65bn of annual trade with Britain. According to Parliament research papers, in 2016, the UK had a trade surplus of £12bn with Ireland – having a ‘hard border’ post Brexit may put a lot of this at stake.

     

    Theresa May’s Chequers plan proposes a new all-UK customs union with the EU to take effect if no other solution can be found. Michel Barnier, the EU negotiator rejected this proposal on the basis it undermines the principles of the existing EU Customs Union.

     

    To avoid a hard border, both sides need to agree a backstop in the event that an alternative longer term solution cannot be found. 

     

    The longer term solution

    The complexities of border trading have come into sharp focus. Both sides have put forward numerous proposals ranging. From staying in the Customs Union, to performing the customs checks away from the border, to technological solutions as suggested by the Chancellor of the Exchequer.

     

    Technology 
    Is Blockchain the way to solve this complex issue? This emerging technology underpins cryptocurrency transactions and offers a transparent and immutable record of the movement of goods from start to finish. This has great potential to enable an easy and objective way of applying checks and taxes for goods between the UK and the EU and removing/minimising the need for custom checks at or away from the border.

     

    Throwing in some ‘Smart Contracts’ into the mix (which are essentially codes in the Blockchain that executes an action when pre-defined conditions are met), we may have the future of an invisible customs border. But how far into the future are we talking about?

     

    Too much too soon?
    In an ideal world, this technology will be easily and readily accessible and maintained by all parties and businesses on either side. But in reality, we are more than an 18-month transition period away from widespread understanding and application of Blockchain.  

     

    The flaws in the ability of Blockchain to solve the border issue have been argued by many.  It’s an incredibly uneven playing field too. Small to medium sized businesses may find it less accessible than larger firms, and as it is not yet a globally accepted and trusted technology there will be resistance due to a lack of understanding and the necessary regulations required to ensure it is robust.

     

    While Blockchain does not address some of the key political questions of whose Rule Book will be applied in Northern Ireland and to what extent it applies to the rest of the UK, there is potential but not in the short term.

    So, how do you solve a problem like the Irish border? 


    While all bets are off right now, and that may change in the immediate future, the race is on.

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    Luuk Jacobs

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    I think it is definitely not reality yet i.e. I can see the benefits of blockchain for data as they form one record of for example a trade of a security. With goods you can create also the associated data stream of the good (where it was produced, how it was shipped and any other step within the value chain till it reaches consumer. The big difference with goods is as I understand that this blockchain of data needs in some way to be associated with the unique good/product. Yes you can add small and cheap electronic devices to a good and create the link withers blackchin data. the challenge will be that this device remains connected to the unique good and is not prone to fraud .... Or am I missing something

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