NI Protocol Bill creates further uncertainty
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Whilst a negotiated settlement is a much-preferred solution, the Northern Ireland Grain Trade Association (NIGTA) share the frustration felt over the delays in resolving the outstanding matters, which is driving the UK’s position.
However, it is essential that UK solutions strike a very delicate balance to ensure that the part of the NI Protocol Bill which could allow goods banned in the EU to be used for livestock production in NI does not result in the loss of our ability to trade across the border.
Whilst the Protocol is by no means perfect and there are undoubtedly outstanding issues which need to be resolved, it has allowed NI access to the European market in a way that is not available to any other part of the UK. Goods crossing the border or going into mainland Europe are not subject to any customs, tariffs or physical checks and it is vital that this can continue. As such, it is essential to ensure that measures intended to resolve East-West trade issues do not end up compromising North-South trade freedoms.
Proposals on ‘green and red channels’ were put forward in the NI Protocol Bill to reduce administrative bureaucracy for businesses trading with the UK, whilst ensuring checks are carried out on goods entering the EU. This may work in the context of goods for final consumption in NI, helping to alleviate pressures on retailers. However, a major question mark hangs over intermediate goods, which relates to goods sold in NI through the green lane channel that are eventually subject to further processing and onward sale into the EU. This also includes products that could use raw materials that would be taxed elsewhere in the EU but not on arrival in NI. As such, how would the EU respond to such “backdooring” of goods through NI into the EU? Would they require goods manufactured in NI to make full customs declarations before being sold across the border? It is as yet unclear how UK policy may avoid this possible outcome.
In addition, the potential ramifications of operating a dual regulatory regime in NI needs to be very carefully considered, particularly in the context of increasing regulatory divergence between the UK and EU. For instance, for livestock vaccinated, or fed with products approved in the UK but not in the EU, what safeguards will be required to ensure that milk or meat does not end up in the Irish or mainland EU market? Would such scenarios result in the need for export health declarations across the agri-food supply chain before agricultural goods from NI could cross the border? The need for customs declarations, testing or physical checks effectively removes the unfettered access that we currently cherish.
Over 2.5 million tonnes of animal feed are produced in NI annually and around 150,000 tonnes are sold into the Republic of Ireland. We feed enough dairy cows to produce around 2.5 billion litres of milk, one third of which moves south for processing, with many of those products then exported worldwide. As such, it is important to understand the potential risks of devising solutions that could undermine what is currently working well for NI in terms of all-island trade. The mere risk of losing unfettered access to markets creates significant uncertainty, which in turn may deter customers in the EU today from entering into long term supply contracts with NI processors, unsure whether in a year or two export health certificates and customs paperwork might be required with each delivery to their factories.
It is clear that neither side has all the answers to the challenges of NI trade yet. But as a member of the NI Business Brexit Working Group, NIGTA is continuing to engage with UK and EU officials to highlight the practicalities and impacts of proposed measures in the hope that informed policy will lead to a resolution that, in solving one problem, does not simply create another equally damaging problem. Both the UK and EU must urgently re-engage to find solutions and remove the uncertainty that exists, which is damaging local businesses and wider society. Whether it be the EU express lanes or the UK green lanes, it is the underpinning mechanics, or the policies produced, that need to be carefully considered and “road tested,” which is where NIGTA intends to focus its efforts in the months to come.