‘No Deal’ will bring more border checks

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An independent report, commissioned by the Department for the Economy (DfE), points to the almost certain need for additional cross border inspections of agri food products by the Irish authorities in the event of a No Deal Brexit.

The report was compiled by Eric Pickett and Michael Lux, both of whom are lawyers specialising in EU customs and international trade law.

Commenting on their conclusions, Ulster Farmers’ Union president Ivor Ferguson said:

“The report is further proof that a no deal situation is the worst possible outcome for Northern Ireland’s family-run farm businesses. The added time, complexity, paperwork and cost, combined with steep export tariffs, will pose a logistical nightmare and cause major disruptions to trade. More importantly however, the report highlights that customs facilitations for the agri-food sector are more restrictive than in others.

“Agricultural goods will face much higher regulatory hurdles, including health and welfare requirements, and thorough inspections at the border. Food and live animal trade with ROI is worth £1bn to the Northern Ireland economy and these are long-standing, integrated trading relationships that have existed long before the UK joined the EEC.”

“From the outset of the Brexit process, the UFU has urged politicians to agree a solution that allows trade between Northern Ireland and the Republic of Ireland to continue with minimal disruption. However, it is imperative Northern Ireland is still be able to trade freely with GB as this is, and will remain, our main market for selling food.

“The report makes for sobering reading and further underlines the critical importance of agreeing a Brexit deal that preserves trading relationships and allows the UK to leave the EU in an orderly fashion.”

A DfE spokesperson said:

“The research on customs facilitations published was commissioned as part of the Department for Economy’s no-deal planning.

“The aims of the research were twofold. In a no-deal scenario to identify: the facilitations available to businesses trading across the land border; and any assistance the Department or its arm’s-length bodies could offer businesses.

Overall, the report highlights the limited room for manoeuvre for businesses and government in a no-deal context.

“In particular, it confirms the Northern Ireland Civil Service’s concern about the impact of EU tariffs on food exports to Ireland and the ability of micro and small businesses with no experience of customs processes to continue to export to Ireland.

“The Department for the Economy will use the report as part of its ongoing EU Exit Planning and, by publishing it, share it with interested stakeholders to assist in their planning.”

According to DfE sources, the report is a sobering reflection of the limited room for manoeuvre for businesses and government in a no deal context. In particular, it confirms the Northern Ireland Civil Service’s concern about the impact of EU tariffs on food exports to Ireland, and the ability of micro- and small enterprises with no experience in customs procedures and operations to continue to export to Ireland.

Cross border trade is significant to the Northern Ireland (NI) economy. In 2017, over 90% of local businesses that exported to the EU were trading across the land border. The total value of this trade was £3.9bn, which represented 38% of all exports and 18% of external sales (which include sales to GB). In 2016, imports from Ireland totalled £2.3bn which represented 34% of all imports and 11% of external purchases.

This trade flow is also very important to small business in the NI economy. Over 80% of micro-enterprises (enterprises employing fewer than 10 people) in NI who export, only export on a cross border basis.

In 2018, Northern Irish exports of ‘Food and Live Animals’ to Ireland was valued at £1bn and represented 32% of all goods exported from NI to Ireland in that year. Customs facilitations for this sector are more restrictive than in others.

As such, while customs procedures such as inward processing can be considered, applications generally take several months and so could not be used immediately in a no-deal scenario. Furthermore, businesses trading in agri-food products face higher regulatory hurdles than those in other sectors, e.g. sanitary and phytosanitary requirements and border inspections.