In 1985, five member states of the then European Economic Community signed the Schengen Agreement on the gradual dropping of border controls. This treaty and its implementation convention of 1990 paved the way for the creation of the Schengen Area.

Implemented in 1995, by 1997 all European Union member states except the United Kingdom and Ireland had signed the Agreement. The Amsterdam Treaty, which was drafted that year, incorporated Schengen into EU law, while giving Ireland and the UK an opt-out permitting them to maintain systematic passport and immigration controls at their frontiers.

If the UK or Ireland were to join Schengen the CTA would come to an end. If one were to join without the other, the joining country would have to exercise border controls vis-à-vis the other thus ending the zone; if both were to join, all the functions of the CTA would be subsumed into the Schengen provisions and the CTA would cease to have any separate existence.

The British government has always refused to lower its border controls as it believes that the island status of the CTA puts the UK in a better position to enforce immigration controls than mainland European countries with "extensive and permeable land borders".

While not signing the Schengen Treaty, Ireland has always looked more favourably on joining but has not done so to maintain the CTA and its open border with Northern Ireland, though in 1997 Ireland imposed selective identity and immigration controls on arrivals from the United Kingdom, measures that would not have been permitted if both countries were part of the Schengen Area. The Irish position is reflected in the Schengen opt-out secured by the UK and Ireland from the Amsterdam Treaty: while the protocol applies unconditionally to the UK, it applies to Ireland only while the CTA is maintained.