Aiken PR

The Briefing

EU Exit: Avoiding a hard border in Northern Ireland in a no deal scenario

by Aiken PR

13/03/2019

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The government has this morning set out its approach to avoiding a hard border between Northern Ireland and Ireland if the UK leaves the EU without a deal on 29 March.

The proposals have been roundly criticised by business organisations from NI and ROI within the last hour. The NI Retail Consortium has responded stating, ‘people who will suffer most are legitimate businesses and farmers in Northern Ireland’, the NI Freight Transport Association has described the announcement as ‘shambolic’, and the Irish Farmers’ Association have said that proposals would ‘expose Irish food to competition from countries with much lower food standards’

The key component of the UK government approach means that Irish goods entering the Northern Ireland market will not face tariffs in a no deal Brexit, however, Irish products entering the rest of the UK would face high tariffs on a range of food products.

The full implications remain unclear – as it stands in this scenario there is no reciprocation for goods going from Northern Ireland to ROI, with the EU yet to formally clarify their position in this regard.

In a no deal, UK Government has stated it is committed to entering discussions urgently with the EU and Irish Government to agree long–term measures.  The government has stated the rationale for publishing this approach ahead of the vote in Parliament on No Deal is to ensure MPs are fully informed.

The details are contained in a new no deal Brexit plan published by the government.

 

Summary of plan:

·         The UK government would not introduce any new checks or controls on goods at the land border between Ireland and Northern Ireland, including no customs requirements for nearly all goods.

·         The UK temporary import tariff announced today would therefore not apply to goods crossing from Ireland into Northern Ireland.

·         The government will only apply a small number of measures strictly necessary to comply with international legal obligations.

·         As these are unilateral measures, they only mitigate the impacts from exit that are within the UK government’s control.

·         These measures do not set out the position in respect of tariffs or processes to be applied to goods moving from Northern Ireland to Ireland.

Compliance with international legal obligations:

·         To fulfil essential international obligations, there would be new requirements for importers and exporters to declare trade with the EU on a very limited set of goods

·         UK government claim these are the only new processes which would be introduced in order to meet the UK’s international legal obligations. There are no other products that would require new checks or processes

Avoiding the highest risks to Northern Ireland businesses:

·         In an attempt to prevent unfair treatment of Northern Ireland businesses, goods arriving from Ireland would still be subject to the appropriate VAT and Excise duty as today and the UK government would continue to collect these taxes on Irish goods in future. VAT registered businesses would continue to account for VAT on their normal VAT returns

·         Small businesses trading across the border, not currently VAT registered, would be able to report VAT online periodically, without any new processes at the border

·         Irish businesses sending parcels to Northern Ireland would need to register with HMRC in order to ensure VAT was paid on these goods – but anyone in Northern Ireland receiving a gift sent from Ireland would not pay VAT

·         As in Great Britain, businesses currently registered on the EU Excise system would register on a UK equivalent. These measures would not require checks at the land border.

·         Dependent on the outcome of the votes this week, the government may then bring forward a package of secondary legislation to implement these arrangements which Parliament must approve for these temporary arrangements to come into force.

 

Analysis and response 

·         There will be no checks or controls on the Irish border, according to the plan.

·         It is possible that while Irish products would enter Northern Ireland tariff free, products moving in the other direction would face tariffs.

·         The government said it recognises that Northern Ireland’s businesses and farmers will have concerns about the impact that the government’s approach will have on their competitiveness.

·         It added that there will be no checks or controls on goods moving from Ireland to NI.

·         The government is understood to be confident that the arrangement will not conflict with World Trade Organisation rules.

·         Typically, the WTO expects all members to be treated equally, so if zero tariffs are applied to one member they should be applied to all members. The special arrangement for Northern Ireland would appear to conflict with that.

·         The government said the measures would be “strictly temporary” and that its priority would be to enter into discussions urgently with the European Commission and the Irish government to jointly agree long–term measures to avoid a hard border.

·         It said it would only apply a small number of measures necessary to comply with international legal obligations, protect the biosecurity of the island of Ireland, or to avoid the highest risks to Northern Ireland businesses – which will not require land border checks.

·         It is understood the government acknowledges there will be a risk of Irish smugglers using Northern Ireland as a backdoor to get goods into GB tariff free.

·         There is no plan to have routine checks or controls on Northern Ireland goods crossing the Irish Sea.

Response

John Campbell BBC: You would have a scenario where if you’re a food exporter in the Republic of Ireland and send stuff to Holyhead you will face tariffs, if you send it over the border to Newry you will not face tariffs. However, you could have the situation where farmers and food producers in Northern Ireland trying to send their stuff in the other direction will face tariffs. This will seriously undermine the competitiveness of Northern Ireland farmers.

Joe Healy, Irish Farmers’ Association president

Speaking to the Irish Farmers’ Journal, he said: “We export over 50% of our beef to the UK. If this is subject to tariffs, it will be a ‘direct hit’ of almost 800m euros (£686m) on the sector.

“If the UK decide to apply zero tariffs on food imports from all countries that would expose Irish food to competition from countries with much lower food standards.”

 

Aodhán Connolly, Northern Ireland Retail Consortium director

“This will affect Northern Ireland’s reputation as a serious trading area, effectively turning us into the wild west of the UK. This proves yet again we need a deal.

“The people who will suffer most are legitimate businesses and farmers in Northern Ireland who will not be able to move their goods to the Republic of Ireland without tariffs, whereas Republic of Ireland goods will have free rein and it will be a goldmine for criminals.”

Seamus Leheny, Freight Transport Association

“The no deal plan for Northern Ireland is shambolic and as I’ve said before, in a no deal scenario Northern Ireland will be the biggest loser.

“Any MPs who back a no deal Brexit in the vote clearly don’t really care about Northern Ireland or are playing a dangerous game.”

 

Roger Pollen, Federation of Small Businesses

“Our concern is there is no reciprocation for Northern Ireland firms going into the Republic of Ireland… that distortion is unacceptable.

“The proposals are deeply unwelcome.

 

Secretary of State Karen Bradley:

“The government has been clear that a deal with the European Union is the best outcome for Northern Ireland.

“But we will do all we can to support people and businesses across Northern Ireland in the event that we leave without a deal.

“The measures announced today recognise the unique circumstances of Northern Ireland. These arrangements can only be temporary and short–term.”

Helen McEntee Irish junior minister with responsibility for European affairs described the proposed tariffs as ‘a lose–lose situation for both parts of the island’. Speaking on RTÉ radio Helen McEntee said that while Dublin will need more time to digest what is envisaged by the UK it would be a disaster for Irish farmers.

Nigel Dodds MP said the Republic of Ireland and the EU must reciprocate.

“This is an offer by the government to try to avoid problems,” he said. “But if it’s not reciprocated, either in terms of hard border infrastructure or in tariffs for Northern Ireland going into the south, then clearly the government will have to look at that.”

 

What next

MPs will vote on whether or not to take a ‘no deal’ off the table in the Commons tonight.