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Friday 22 June 2018

Britain's 'backstop' plans could open a backdoor for fraudsters

The border in the village of Bridgend, Co Donegal (Brian Lawless/PA)
The border in the village of Bridgend, Co Donegal (Brian Lawless/PA)
Tanaiste Simon Coveney. Photo: PA

Sarah Collins

It was a big week for Brexit as the UK finally came forward with its "backstop" solution for the Ireland/Northern Ireland border.

The reaction in the EU was muted, with diplomats welcoming the gesture but not necessarily the content.

Foreign minister Simon Coveney said that "a great deal of work remains to be done" on it ahead of a crunch summit in June.

There is considerable concern about the text in the rest of the EU, particularly among the UK's closest trading partners in northern Europe, as well as France and Germany.

There is a deep-seated fear the proposal will open a back door into the single market, allowing the UK to shirk EU product standards and undercut European producers.

EU governments, particularly France and Germany, are also nervous that the deal could lead to a porous Northern Irish border and increased smuggling and fraud.

The bulk of customs duties collected by national authorities go directly into the EU budget, so increased fraud could mean additional revenue losses for the bloc at a time when it's losing one of its major contributors to Brexit.

And continental European fears are not entirely unfounded.

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The EU's anti-fraud office, Olaf, said last week in its annual report that there are several "complex" fraud schemes already operating across Europe, including the "orchestrated evasion" of customs duties at import, allowing counterfeit or low-quality goods to flood into the bloc.

"Fraudsters are good at identifying those administrations where they perceive the controls to be more lax," Olaf said in its report.

Criminal networks

"Organised criminal networks target these weaker links and fraudulently bring goods in the EU through these points," the report added, name checking Germany, the UK, Slovakia, the Czech Republic, France and Malta.

The UK is attracting the bulk of fraudulent clothes and shoes from China, Olaf said, with fraudsters actually shifting operations there following a clampdown elsewhere in Europe.

Around 50pc of clothes and shoes imported via the UK from China were found to be ­undervalued in 2016, with losses of up to €1.9bn in customs duties to the EU, Olaf said in its report.

And a further €3.2bn was lost to VAT avoidance, via the UK, over the three years to 2016.

Olaf said Ireland was among the countries targeted by fraudsters trying to smuggle illegal pesticides into the EU.

And the Olaf report found Italian Mafia involvement in up to €30m of fraudulently granted farm subsidies - with ­applications for funding largely based on false information about land ownership.

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