Posted on Wednesday 11 December 2019 by Ulster Business
Boris Johnson’s withdrawal agreement might appear to have solved the problem of the Irish border – at least on paper and in the short-term – but has it added paperwork, bureaucracy and costs for businesses which trade across the Irish Sea, asks Pavel Barter
When it comes to transport and shipping, Alan Lowry knows the high price behind the slightest delay. The managing director of Environmental Street Furniture, a business based in Newtownabbey, was recently shipping products to the US for an exhibition when he encountered a problem with the paperwork. Customs refused to load it onto the boat.
“We ended up having to air freight the goods at the cost of a couple of thousand pounds, rather than a couple of hundred pounds,” Alan said. “I could see that happening between Belfast and Liverpool, with this new Brexit deal, just because the paperwork isn’t in place.”
It started so well. Boris Johnson and Leo Varadkar had struck a deal that finally made everyone happy, including Northern Irish businesses. There was going to be “unfettered access” between Belfast and Britain, and the 310-mile Irish border would remain open and unrestricted for frictionless cross border trade.
Alan is content that frictionless cross-border trade will continue under the current proposed deal. “I think the deal for business north-south is good,” he said. “It’s certainly better than a no deal situation, which could end up with checks.”
Patrick Derry is in agreement. As the boss of Portadown-based Derry Transport, he runs a fleet of 82 lorries and 242 staff, shipping products for companies such as Avondale Foods and Kerry Foods across the border on a daily basis. Patrick was one of 50 business representatives who travelled to Downing Street to meet Theresa May during her tenure, when the PM was trying to solicit goodwill for her withdrawal bill.
“The first deal was better for trade,” he said. “The backstop was better than what we have at the moment. But the deal we have now is better than no deal.”
Eamonn Connolly, business improvement district manager for the Newry area, represents hundreds of businesses engaging in cross-border trade. He describes the region as ground zero for Brexit. “We have a massive dependence on cross-border shoppers.
“There’s a huge movement of white van men who cross over to the south. Thirty years ago, when we had a closed border due to different circumstances, we had 30% unemployment. Now we have an open border, and inward investment from our returning immigrants and graduates, we have less than 2% unemployment. A large element of our market and spend comes cross border.”
But when businesses read between the lines, the new deal may not be the golden chalice it was sold as, according to Aodhán Connolly director of the NI Retail Consortium.
“The deal gives some amount of certainty and prevents a disastrous ‘no deal’,” he said. “It also gives us unfettered access north and south. “But, the business community in Northern Ireland was clear it wanted unfettered access east and west, as well as north and south.
Unfortunately, this deal puts in place barriers that were not there before.”
Aodhán Connolly uses the analogy of a cottage pie when describing trade between the island of Ireland and Great Britain. Around 40% of Northern Irish milk goes south to make cheese for the pie. As for the minced beef, a cow can originate from the Republic, be reared in NI, slaughtered in the south, then travel to England for second cuts. The beef returns through the Republic, and ends up north where a foodservice business puts it into the pie.
“Even the olive oil comes in through the EU, travel across the land-bridge in GB, then goes through the Republic into the north, to be used in that cooking,” Aodhán said. “That one simple cottage pie can have eight or nine border movements.”
Shortly after the 110-page withdrawal agreement was published, an impact assessment discovered that firms will have to complete at least two customs forms for goods traded across the Irish Sea: not welcome news for Alan Lowry.
“We currently export goods to a lot of countries outside the EU,” he said. “The paperwork that goes along with that is onerous. The current deal implements a lot of that into what should be a more simple transaction.”
Studies into the agreement suggest there may be additional costs on goods moving from east to west – estimated at around £15 to £56 per customs declaration. NI businesses fear this could make them uncompetitive. “We don’t wish to see any encumbrance or imposition on business,” Eamonn Connolly said. “Brexit ultimately impacts negatively on our nearest markets.”
The Newry business representative has hosted overseas diplomats and politicians who were surprised by Warrenpoint’s proximity, of a few hundred feet, to the border.
“There’s all sorts of issues there. Particularly, as a large element of goods passing through the port come and go to the Republic of Ireland. All these things are intertwined. We’re a small economy – heavily dependent on small business.”
Delays could be an inevitable repercussion of increased paperwork for businesses exporting product back and forth across the Irish Sea, says Aodhán Connolly.
“Take the journey of one lorry. It would leave a depot in Great Britain, heading to Northern Ireland. It will have hundreds of different products, each with tariff codes that require (individual) declarations. If there are different products of animal origin, they will need an export health certificate. Filling in those forms will take time and man hours. When it gets to the port, everything needs to be exact. If there is one thing wrong on the export declaration, or export health certificate, then that whole load has to be checked.”
So, a product might literally miss the boat? “Exactly. So it’s not a case of being 20 minutes late, it could be six hours and 20 minutes late,” Aodhán says. “We already have 12 hours less shelf life than Birmingham or Bolton because of the travel. This will add to it.”
Northern Ireland’s Federation of Small Businesses (FSB) initially pursued the notion of an enhanced economic zone that would have seen Northern Ireland operate like a Hong Kong, or Singapore, of the west, where goods could move in and out freely without taxation.
“That would have given us the best of both worlds,” Alan Lowry says. “We got a lot of favourable response from politicians locally and nationally, and from businesses as well. I think it would have been hard to sell to Scotland and Wales, who might have seen Northern Ireland getting a very unfair advantage, and taking a lot of their business away, though.”
Alan, who recently completed an order worth £100,000 with one of Dubai’s leading tourist attractions, is also aware of the potential benefits of the UK’s departure from the EU. “I think the UK could be more competitive outside the EU and outside some of those regulations that are imposed on us,” he said.
For now, everything is up in the air. Approval for Mr Johnson’s deal is subject to the passing of his withdrawal agreement bill through parliament. There is a General Election on the way, and an EU deadline of January 31. Businesses now wonder if the UK can strike a free-trade agreement signed by December 31, 2020, the end of the transition period.
No deal, and the imposition of border control on the island of Ireland, is still a risk. “There’s still a possibility, even with the best will in the world, that it could happen,” Patrick Derry said. “Things have a habit of falling off the table at times.”
The priority for Northern Irish businesses must be frictionless trade within the island of Ireland and GB, according to Aodhán Connolly.
“We always said we need frictionless trade north, south, east west,” he said. “It’s not good enough to have it only on one of those routes, due to the integrated nature of our supply chains across these islands. Some people talk about an all-island economy. It’s all-islands.”