Posted on Tuesday 11 December 2018 by Ulster Business

Trade

 

As the UK edges to some form of Brexit deal, John Mulgrew examines the challenges facing the Northern Ireland companies which count cross-border trade as a key part of their business

The issue of cross-border arrangements after Brexit, if dealt with poorly, lacking a holistic approach and in the event of a ‘no deal’ could leave Northern Ireland’s carefully tailored economy in tatters.

Seamus Leheny is just one voice in the increasingly tumultuous debate around the main concerns and issues that still exist around the border, following the UK’s exit from the EU.

We currently sit on the precipice, a Schrodinger’s cat scenario, where we on one hand have some form of early agreement on ensuring no return to a hard border, and at the same time, don’t, while waiting to see whether the Prime Minister can sell it. We then establish what will be done to avoid any severe impact to cross-border trade here.

The BBC’s Chris Mason garnered attention with an honest abstract on Brexit progress a couple of weeks ago - ‘I haven’t for the foggiest idea’ he told his colleagues back in the studio.

“When we turn our attention to commercial goods vehicles crossing the border between Northern Ireland and the Republic of Ireland, it’s a very different story,” Seamus Leheny says.

More than 4.6 million goods vehicles crossed the border in 2016, according to official stats. And of those 4.6 million movements, the majority was recorded on the A1 Belfast to Dublin road.

“When we break down the figures on cross border traffic, this equates to an average of 13,000 goods vehicles crossing the border daily, which is 541 per hour – or to illustrate it in comparison to cross channel movements, it’s a large freight ferry fully laden every 15 minutes, 24/7, 365 days a year,” Seamus says.

For Dale Farm for example, and other food processors, its concern is over the certification process, following Brexit. “It’s basically an export certificate for dairy products. You are not allowed to export without this certificate,” Nick says.

“For example, we have signed a quite public announcement with Lidl. We are supplying Lidl all over the world. If Lidl were to ask me in the morning, can you guarantee that you can supply my countries outside the UK on April 1? I actually can’t.

“It’s nothing to do with tariffs or costs. If I don’t have animal health export certificates approved well-ahead of Brexit – these things take about six months to negotiate.

“I’m screaming at DEFRA (Department for Environment, Food and Rural Affairs) and DAERA (Department of Agriculture, Environment and Rural Affairs) here to get this done now.

“Why don’t you agree the wording, and have the work done, so when the agreement is or isn’t made… now you can start.

“It’s a huge risk for this industry here, if we can’t get stuff off the island.”

Around 37% of Northern Ireland’s dairy, as an example, is sold elsewhere.

A study by InterTrade Ireland said a significant share of cross-border trade is accounted for by firms that trade “simultaneously in both directions”.

“These two-way traders make up around 18% of firms, but accounted for over 60% of exports and over 70% of imports,” according to Seamus.

With transport, Translink boss Chris Conway says it remains unclear if the company will be able to run cross-border bus services, if no deal on Brexit is secured.

During an evidence session in Westminster, he said that the organisation runs around 70 cross-border services – some which, he said, “meander” between Northern Ireland and the Republic during a journey.

There’s also the issue of whether drivers will be able to operate between jurisdictions following the UK’s exit. That’s due to a question mark floating over the head of licences for drivers in the EU.

Elsewhere, the Road Haulage Association has said with around three months left to go it is not prepared for what’s around the corner.

It’s a two-way street, of course, for both firms from Northern Ireland selling south, and those from the Republic selling north.

Figures from the ONS show Northern Irish business with the Republic of Ireland accounted for around 27% of exports and 23% of imports.

“The share of intermediate products in imports from Northern Ireland to Ireland is higher in almost all sectors than trade in the same sectors from the rest of the UK,” Seamus said in a piece examining the impact of a ‘no deal’ scenario.

“So for example, a company could transport ingredients or components across the border several times before the finished product is completed in Northern Ireland, and is then ready for export to consumers in Great Britain.

“Naturally the intermediate products will be of lesser value compared to the completed product, hence the disparity in value of goods crossing the Irish Sea compared to the land border.

“In recent Brexit discussions the significance of the value of trade between Northern Ireland and Great Britain has been highlighted.

“This is quite right and we must ensure this hugely important market for us is not jeopardised or impeded in any way as a result of Brexit.

“What has often been overlooked is our reliance on being able to move goods quickly, cheaply and without tariffs across the Irish border, in order to assemble those valuable goods we end up shipping to Great Britain.

“If the all-island supply chains are impeded with subsequent increased costs and subject to tariffs, then those exports we champion and put on those ferries to Great Britain will suddenly become less competitive in price – or, in the worst case scenario, won’t exist anymore.”

Seamus says a “holistic approach is required when trade from Northern Ireland is discussed and used as a bargaining chip due to the fact it’s a unique economic region that is finely interwoven with that of another EU member state”.

“To pursue, or indeed to sleep walk into, a no deal Brexit would unravel the carefully tailored economy of Northern Ireland and potentially leave it in tatters.”

Search ulsterbusiness.com

Follow us

Subscribe to Ulster Business Magazine

View Our Digital Library

A&L Goodbody Ulster Business Top 100 Banner