Brexit and Northern Ireland Term Paper

1. Introduction
The UK has been instrumental in shaping the structure of the European Union. Its imminent exit from the EU will have a huge impact on the stability of the region for a very long time. Should the relevant countries reach a no-deal situation; various countries will be negatively affected by the disintegration of the EU. Northern Ireland. Britain’s desire to leave the common European market is not a new concept as it began way back in the 1990s. However, in 2015, the call for Brexit started under Prime Minister Cameron’s leadership. Bexit’s impacts in the Irish and the Northern-Irish energy market in a no-deal scenario will affect the rest of Europe negatively. For the first time, the UK has reconciled with the state of affairs, which means that a no-deal outcome in the North will have consequences including relocation of businesses to Ireland, increase in commodity prices, financial slowdown, and failure of the Northern Ireland economic structure. Additionally, no-deal will increase energy costs because of the disintegration of the intertwined supply chains. Due to the freedom enjoyed by Northern Ireland and the UK, the possibility of violating the environmental law is equally high given that the rest of the world knows the record set by the EU in protecting nature. With the no-deal, consequences of Brexit in the North will be cumulative, more severe, and long-term because of the physical or land boundary existing between Britain and Northern Ireland. In such scenarios, the WTO Law will apply and the EU business will be affected internationally and domestically should the UK leave soon.

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1.1. Study Concept
1.1.1. Statement of the Problem
For a long period, the relationship between Ireland and Britain has been exceptionally great. After the 1990s fallout, the two realized the significance of being under the protection of the WTO Law and the EU. Most businesses in Northern Ireland were affected negatively. Ireland and the UK have been depending on each other not only politically, but also economically. In the no-deal scenario, markets will be disrupted, and the possibility of losing energy consumers from Northern Ireland is high. Arguably, Brexit’s immediate outcomes will be felt more in Northern Ireland, but disruption of the Irish market will have dire consequences on the UK. This explains why the UK is confident and prepared for the huge change. One of the greatest problems is that Ireland is unprepared for the change, and this will have a significant impact on businesses because failure is impending. Also, several people are likely to relocate to Northern Ireland and unemployment rates will increase. In a no-deal scenario, most researchers primarily concentrate on the immediate consequences it has on Northern Ireland. Sources reveal that Brexit will affect SEM, security, cross-border trade, cross-border cooperation/relations, and the possibility of heightening tension and crime across the region is high. With such concerns raised, it is vital to find long-term solutions to the Brexit problem. Before the UK decides to exit, it must weigh the merits and demerits of its action on the energy market in Northern Ireland.

1.1.2. Study Objectives
The research shall pursue the following research objectives.
i. To establish the effects of Brexit on Ireland and Northern Ireland energy sector.
ii. To examine the economic and legal options that Ireland and Northern Ireland have in case the United Kingdom exited the EU without a deal.
iii. Identify the benefits and challenges of the multilateral trade relations among the three nations after the Brexit with no-deal.

1.1.3. Study Purpose
The Brexit decision has left economic analysts and lawyers speculating on the options that the Irish governments have in case of a no-deal exit. Firstly, the study shall explore the effects that are likely to befall the Irish energy sector after Brexit. The examination shall focus on the legal and economic implications of this decision by the United Kingdom. In doing so the paper shall be contributing to the body of knowledge that has already been created by other scholars. Secondly, the research shall enumerate other possible legal and economic solutions that are available for Ireland and the United Kingdom as far as the energy sector is concerned.

2.0. Literature Review
2.1. The no-deal Brexit Impact on the energy sector
Northern Ireland and the UK have been dependent on each other economically, politically, and socially. The UK’s prominence has been instrumental in opening doors for other countries in the EU including Northern Ireland. If Brexit pushes through and there is no deal, the UK will suffer long-term consequences, but Northern Ireland Will start experiencing immediate effects. In assessing the general impact on Northern Ireland Britain has observed that Ireland may face different forms of disruptions. These include a total breakdown in the chains of supply that rely on the UK-Irish Border. First, Northern Ireland produces 22.7% of electricity that is consumed in a greater part of the EU. The country is known for the production of green energy using wind and solar power. The Eurozone is known for the overwhelming interest in the protection of nature. If Brexit pushes through, the UK will have more pressure to produce green energy that would reduce the consumption of non-renewable sources of energy, which produce greenhouse gasses. Even though Ireland produces green energy, it depends on oil from other parts of the EU, and this accounts for over 77% of imports. Sources explain that oil imports to Ireland cost over €4 billion annually. Since the country uses 49% of the imported oil locally, the UK is an excellent exporter of the same product. Therefore, Ireland will suffer because its green energy will no longer earn it the much needed profits. Secondly, even the green energy cannot sustain the economy if Ireland does not import energy. Thirdly, the UK will lose one of its biggest consumers of oil exports. Energy runs economies and its insufficiency affects different areas of a country.

Besides the issue of SEM, the Northern Ireland agrifood sector will be affected negatively. With no deal, electricity supply will be cut short in Ireland, and this means that farms cannot run irrigation systems. Food shortage will take place and several people will lose jobs. Furthermore, the no deal scenario’s effect on the agribusiness sector will influence the performance of other industries. First, job loss is imminent in the energy and food sector as well as the construction industry. Construction is highly dependent on electricity supply. With closed borders and the implementation of WTO Laws, both Ireland and the UK are expected to enjoy their spaces without interfering with the stability of each other. However, this will come with dire consequences of unemployment first in Ireland and later the UK because excellent trade relations create wealth for both countries. Therefore, the production and supply sectors will also be affected by Brexit and no deal scenario. In essence, no country will engage in cross-border trade because they must respect their physical boundaries and the standards set by the WTO Law. The differences between Northern Ireland and the UK will affect the locals largely because they are the employees of industries that will be affected by Brexit and no deal.

As far as energy ties are concerned Brexit with or without a deal is ruffling the feathers of the UK-Ireland relationship in a negative way. It is likely to leave investors speculating on the direction that the energy sector will take as soon as Brexit is initiated. The target model, however, requires member states (Ireland and Northern Ireland) to initiate greater energy integration policies that would see stable through the turbulence of the Brexit process. In fact, stakeholders are already speculating on a scenario that would divide the already integrated SEM market. Resultantly, consumers from the two nations would then have to bear the costs of failed models especially on the pricing of energy products as the prices fluctuate.

However, international trade observers still believe that all is not lost and that Northern Ireland can still redeem its situation, especially in its energy sectors. For instance, Clegg et al. point out that Northern Ireland and the Republic of Ireland can continue operating independently though within the European Union framework guided by the EU laws. Clegg further insists that Northern Ireland should not continue subjecting its citizens to the undemocratic rules formulated without their consent. In fact, he suggests that the nation should start focusing on protecting ISEM by opening up independently to other outside markets that are not within the EU.

Feng et al see a situation where the border between Northern Ireland and the Republic of Ireland being converted to a border separating the United Kingdom and the European Union. Unfortunately, none of the countries would like to slip back to the strains of checkpoints, border surveillance and the customs posts that once existed before the Good Friday agreement. Such setback would thus derail the initial trade flow that has been enjoyed for the past few decades. However, the situation may be contained by the “Backstop” strategy that seeks to eliminate the hard border rules between the United Kingdom and the European Union. This strategy is to be instituted irrespective of the outcome of the negotiations between the EU and the United Kingdom.

If the “Backstop” strategy works, Northern Ireland and the republic island might find themselves aligned to some of the rules that govern production standards. Otherwise, any other product from the UK would be subjected to the cross border checks. Additionally, the Backstop would mean that the United Kingdom adheres to the European Union’s customs union and the agreement would only be nullified when the EU and the UK agree. Such rules are the ones that could be causing ripples in the UK parliament with members of parliament fearing that if they exist through an agreement then the European Union might hold them hostage for an infinite time watering down their initial idea of being independent.

Additionally, the UK has already observed that a no-deal exit may affect other areas such as cross border security, and crime, issues that economic and political analysts feel that might re-ignite the tension that once existed between United Kingdom and Ireland. The other component that is vital for this research is the disruption the supply of electricity that is shared between the republic of Ireland and the Northern Ireland. Despite these speculations, the British government has attempted to reassure the Irish government and its citizens of a fair transition period as it shall ensure that the EU considers Ireland’s plight even after UK’s exits. The UK insists that its transition is better because it is prepared for change, but the country does not believe that Northern Ireland needs more time to transition. If not, the unemployed people will resort to crime and illegal business activities to survive. According to Ryan, SEM is an employer of several Irish nationals living in Northern Ireland, the Republic of Ireland and the UK. Thus, Brexit’s effect on cross-border cooperation will definitely promotes crimes and insecurity. With Brexit and no deal, other economies including Scotland, Wales, and Northeast England will be affected, and this means that the Northern Irish residents will still experience shortages in within the supply chain. Also, unemployment rates are likely to surge even higher.

2.1.1. Impacts on SEM
The Republic of Ireland and Northern Ireland have been operating a Single Electricity Market from 2007 but was later changed to the integrated Single Electricity Market. Backed by Commission of Energy regulation in Ireland, the law governing their operations is as stipulated by the European Union energy law. The European Union has been on the forefront in promoting environmental policies as well as energy convergence among its member states. Such alignments have been beneficial to Ireland and the United Kingdom. Such policies have thus enhanced investment in the energy sector while at the same time enhancing competition in the energy sector. The set policies have also ensured that there increased the supply of that gives these nations the security and reliance on the gas and oil that they receive from the other member countries. In fact, the Ireland-UK electricity, gas and oil market form part of the larger Europe market in the European Union.

Another, important fact about the Ireland-UK relationship is the fact that the convergence of energy policies within the European Union has created some interdependence especially in regards to investments in elements such as electricity connections as well as the importation of coal, oil, and gas. The interdependency is brought about by the closely linked supply infrastructure that comes from the United Kingdom. Thus, Lawless and Edgar envision destabilisation in the energy sector in case Brexit succeed when on a softer front or with no deal. Ideally, they postulate a case of short-term disequilibrium in demand and supply of energy which could, in turn, lead to delayed or postponed investment. These challenges in demand and supply will eventually affect the prices of gas and oil not only in the short term period but also in the medium term and eventually in the long run in the UK. Eventually, the ripple effects are likely to penetrate to Ireland and its island causing a major crisis in the supply of energy especially if the Ireland government does not re-examine its trade ties. With the ongoing debates in the UK parliament to exit the European Union scholars such as Lea foresee a change in the trade policies and trading rules that were once governed by the European Union. As such, the United Kingdom will have to establish its own bilateral and multilateral agreements with its trading partners. For instance, the gas that the United Kingdom receives from Russia is received under the bilateral agreement between the two nations.

Wolff, however, shows a case where non-member states trade comfortably since electricity is a secondary source of energy. Switzerland a country that is not a member of the European Union simply developed legislation that is in tandem with the regulations governing electricity markets within the European Union. Eventually, they were allowed to purchase electricity from the EU markets. However, the “Repeal Bill” is supposed to ensure that the European Union rules become only English law unless adopted by the United Kingdom through amendments. Therefore, any propositions on what will befall the electricity sector in the United Kingdom are just a speculation and the negotiations are over.

As far as Ireland and Northern Ireland are concerned, their “Single Electricity Market “shall be directly affected by changes in the policies that govern the UK’s markets for power. In fact, the 2007 agreement between the UK and Ireland was supposed to ensure that all the power that is generated from the Irelands and its Islands were sold through a common electricity pool. Similar policies were also developed to guide the natural gas market. The main worry from Ireland and Northern Ireland is whether the integrated Single Electricity Market will still survive after the Brexit. Ideally, the two nations have tried to establish the Integrated SEM policies so as to liberalize the energy market an even promote cross border trade with other nations, especially in the European Union. Unfortunately, these strategies seem to be headed for doom pending the United Kingdom’s decision to exit the EU.
2.2. Economic and legal options that Ireland and Northern Ireland have in case the United Kingdom exited the EU without a deal

The EU environmental law and the WTO Laws are the most important legal agreements tying the UK and Northern Ireland. According to Kramer, the UK is preparing for an exercise that might affect its economy over the long-term because it must adhere more to the EU environmental law. First, the country cannot continue offshoring in Northern Ireland, which has a record of producing green energy for a long period. Kramer argues that the consequences on the UK will stretch from human rights to peace agreements and environmental issues because its survival in the EU is mostly motivated by the contributions made by other member states. The EU Law will set standards for every country and the limelight will shift from the collective view of the member states to the independent assessment of the UK and NI. This discussion further paves way to discuss the energy situation in NI because the country adheres to the EU environmental law, but it has not been producing sufficient energy to run the economy. As to whether the Republic of Ireland and Northern Ireland should cut their ties with the UK as a result of the Brexit is a matter of debate among several scholars. However, there are some facts that reveal that Northern Ireland is not unstable as far as its energy is concerned. Additionally, the United Kingdom is not just blindly disconnecting its relationship with the European Union. What the United Kingdom is trying is simply reclaiming its sovereignty in making trade policies and trade agreement.

Firstly the country only imports between five and ten percent of the power that it uses. The United Kingdom has direct interconnectors to other European nations such as Norway, Denmark, and the Netherlands. Currently, there are no import charges on electricity and the tariff on natural gas are only at 0.7% under the EU’s provisions. Despite the fact that the direct interconnections and lack of tariffs on energy supply may not interrupt the flow of energy in Ireland and its islands, Hantzsche et al still believe that there are likely to be some destabilisations caused by the new bilateral and multilateral agreements. The Northern operators of oil and gas in preparation of the market upsets have begun purchasing equipment that will help them mine the natural gas. Northern Ireland is well aware that once the UK succeeds in its request then it will have to revert to the WTO regulations. Therefore they have to import equipment that will help them prepare for the short run and subsequent long-run deficits in the supply of natural gas. Therefore, more restrictions might be placed on the UK, but Kramer also analyzes the impact of Brexit and no deal on the sustainability of NI, especially, because of shortages in energy supply.

Another area of legal concern is possible violation of human rights when cross-border trade principles affect only one side of the divide. This is mostly addressed using the EU Law, the Human Rights Act, and the Bill of Rights in NI. Kramer argues that already, efforts are underway to reduce the diminution of rights in NI by the UK. Protection of human rights is enshrines in the EU Law, and discrimination is prohibited by all means. If Brexit and no deal occur, the violation of human rights will occur. The EU (withdrawal) bill and the Human Rights Act offer the only reprieve for the issuance justice for the UK and NI in case Brexit occurs even though the withdrawal bill’s objective is to initiate the deal. Human rights violations are likely to occur when the physical border between the UK and NI become a source of contention during trade. As aforementioned, interference with trade because of the declining energy sector will give rise to crime. This means that the UK nationals will block most NI residents from accessing its territories. Protection by the Human Rights Act under Amendment 4 is vital in addressing the violation of privileges.

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