The UK is the second biggest customer for Irish goods, while Ireland, an EU member state, is the only country to share a land border with Britain.
The border between the Republic of Ireland and Northern Ireland, which is a part of the UK, will become the frontier between the EU and an external country after Britain's scheduled departure from the bloc on March 29, 2019.
At that frontier, EU rules on trade standards, products and free movement of people will end.
Why is Ireland so important to Brexit negotiations?
Ever since the UK voted to leave the bloc in June 2016, the Irish border has been a key issue in the Brexit negotiations. The freedom to move across was a key pillar of the peace negotiations that ended in 1998 The Troubles, a 30-year conflict in Northern Ireland between mainly Catholic Irish nationalists and pro-British Protestants.
Currently, joint EU membership means goods and people can travel across the border freely, but there are fears Britain's withdrawal will result in customs checkpoints going up along the border.
That would provoke anger from Irish nationalists and there have been warnings that it could potentially result in a violent backlash - Irish nationalist party Sinn Fein has warned of "civil disobedience" over any hard post-Brexit border, while Northern Ireland's police service has also issued a warning that customs posts would be an "obvious target" for dissident Irish republican groups.
The Irish government has two key priorities in any Brexit negotiations. The first is to make sure the border between the Republic of Ireland and Northern Ireland is as seamless as possible. The second is to ensure there are as few barriers to trade between itself and the UK as possible.
Because of the political sensitivity of the Irish border issue, the EU insisted on guarantees from the British government before entering negotiations on a future trading relationship. That granted the Irish government an effective veto over the Brexit negotiations.
What has the UK government said about the Irish border?
The British government published several so-called "position papers" on the Irish border during the early stages of Brexit negotiations. These stated that Britain would refuse to put any "physical infrastructure", such as customs checkpoints, on the border. They suggested major volumes of trade could be policed through technology - screening goods before shipping them and avoiding any product standards' checks at the border.
However, as the negotiations continued, the Irish government made clear the proposals did not go far enough. Dublin threatened to veto any progress in the talks unless London pledged to maintain similar or identical trading standards between Northern Ireland and the Republic of Ireland that would render customs checks unnecessary.
On December 8, Britain's government gave in to that demand with a pledge to maintain "regulatory alignment" between the UK and the EU. The last-minute initial agreement with the EU was reached to allow Brexit talks to move to a second phase.
|Supporters of Ireland's republican Sinn Fein party hold an anti-Brexit rally in Belfast, Northern Ireland [Charles McQuillan/Getty Images]|
Why is the British government in such a difficult position?
Britain's Prime Minister Theresa May is performing a very difficult balancing act between many different factions in British politics. The ruling Conservative Party has split down the middle over what kind of Brexit Britain should opt for - a "soft Brexit" involves staying in the EU customs union and single market, or a "hard Brexit" that involves leaving both.
Not only that, but her poor performance in this year's general election means the Conservatives do not have a majority and rely on a Northern Irish party to pass legislation. The Democratic Unionist Party (DUP) believes Northern Ireland should remain part of the UK.
Early last week, May thought she had reached a deal to solve the Irish border issue by pledging to maintain "regulatory alignment" only between Northern Ireland and the Republic of Ireland, as Dublin demanded. But the agreement was torpedoed at the last minute by the DUP, which threatened to stop supporting May's Conservatives.
The fear for the DUP was that the agreement would result in Northern Ireland adopting different trade regulations to the rest of the UK, which would move it economically and symbolically closer to breaking away from Britain altogether.
But the episode exposed May's weakness, according to Irish commentator Eamonn Mallie, who called it "shambolic in the extreme". May, he told Al Jazeera, has been "held up to ridicule in Europe" by the DUP.
|Britain's Secretary of State for Exiting the European Union David Davis (L), and the EU's chief Brexit negotiator Michel Barnier (R) meet at the European Commission in Brussels, Belgium December 8, 2017 [Eric Vidal/Reuters]|
What have the EU and British government agreed about Ireland?
In order to get around the DUP's objections, May has essentially pledged to keep all of the UK in "regulatory alignment" with the EU.
That means, as well as maintaining an open border between Ireland north and south, the region of Northern Ireland will not be treated any differently from the rest of the UK.
This, however, angered Brexit supporters who saw withdrawal from the bloc as a way to devise unique trade rules for Britain.
Some critics say the deal will bar Britain from signing trade deals with other countries around the world. Others argue it means the UK has to mimic rules made in the EU without getting any say in creating them.
Who are the winners and losers?
The Irish government says it could not have gained a better result than the EU deal agreed by May. Leo Varadkar, Ireland's prime minister, said Dublin had "achieved all we had set out to achieve".
Not only will a hard border be avoided, but the British government's pledge to mimic EU rules means any trade barriers between the Republic of Ireland and the UK will be kept to a minimum.
"The most compelling aspect of the Irish government's position is that it is coherent and it is unambiguous," Sam McBride, political editor at the Northern Irish News Letter newspaper, told Al Jazeera.
"They state that they have essentially got everything they wanted, that is in stark contrast to how the DUP are presenting the deal, which has ranged between claiming it as an outright victory to the DUP leader, saying it was imperfect and they essentially ran out of time," he said.
Arguably, those in Britain who wanted a "soft Brexit" will also be happy with the deal. The promise to maintain "regulatory alignment" is the closest possible thing to staying in the bloc's single market and customs union, and will increase the chances of Britain retaining good access to its marketplace.
But for those who say Britain must leave the single market and customs union, the deal might be a disappointment - many of them have already accused May of capitulating to EU demands.
Nigel Farage, the former leader of the UK Independence Party and prominent pro-Brexit campaigner, branded the prime minister "Theresa the Appeaser". Members of her party also called for an assurance that Britain will have "regulatory autonomy".
The worry for these critics is that the arrangement outlined in the deal will bar Britain from coming up with its own trade regulations and signing free trade deals with other countries.
As Fearghal McKinney, a former legislator in Northern Ireland who runs the Brexit Border Blog, put it: "It looks like a defeat for the wilder Brexiteers and an indication that Britain will put most or all of its eggs in the basket of its economic relationship with the EU."