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The remaining small firm and private individual trade can be safely ignored. It is insignificant in EU terms and will represent some compensation for the loss of trade and inconvenience Brexit will create in other areas. In practice, if not in theory, the customs border will be moved into the Irish sea.
Customs controls at Irish ports/airports will have to ensure that any Irish imports/exports are not destined for or originate from the UK using existing Certificate of Origin and end customer invoicing systems. This will result in a lot of additional work for Irish customs, but the additional cost of routing goods for the UK market through Ireland should limit such trade in any case.
The UK will be free to implement its own customs and immigration controls wherever it wants within it's own territory, and will quickly find that this is most practically done at N. Ireland air and sea ports - whatever the DUP might say.
The EU response to the UK proposals should therefore be to propose that N. Ireland, which didn't vote for Brexit, and which under the Good Friday Agreement is required to obtain a majority within Northern Ireland for major constitutional change, should remain within the Customs Union and Single Market thus moving the customs border (but not sovereign border) into the Irish sea..
The DUP will freak out, but will be sold down the river once its votes in Westminster are no longer required. It cannot be otherwise, if Ireland is not to veto any post Brexit deal. If that means waiting until after the next Westminster elections, then so be it. The EU can afford to wait. The UK less so.
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