Industry groups unconvinced by UK border proposals

The Irish Farmers Association (IFA) has said it is difficult to see how realistic the lack of a physical border with Northern Ireland might be given UK plans to operate its own customs and trade policies.

Following the release of UK proposals on Wednesday, the IFA said the idea of avoiding physical border infrastructure was “positive” but raised significant questions.

"Cross border trade in agricultural produce encompasses crucial issues such as food safety and animal health," its president Joe Healy said in a statement.

“If the UK insists on pursuing its own free trade agreements, two divergent regimes would have to operate on the island and it is impossible to see how border checks could be avoided.

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“The UK will have to compromise on their future trade ambitions with third countries in the area of agricultural and food products.”

Mr Healy repeated that the UK’s insistence on leaving the customs union and pursuing an independent trade policy, as detailed in a separate position paper on Tuesday, amounted to a hard Brexit and “would be very negative for Irish agriculture and the value of our agri-food exports”.

The IFA has repeatedly said Ireland would be most affected by such a hard Brexit, with farming and agri-food in line for the biggest hit. The sector exports 40 per cent of produce to the UK market.

“The UK government has proposed two options - either the reinstatement of a ‘highly streamlined customs arrangement’, or a ‘customs partnership’ which they suggest would not require a customs border between the EU and UK,” Mr Healy said.

“The first option would see the reinstatement of a customs border between the EU and UK. This is a very retrograde development for trade on the island of Ireland and between Ireland and Britain, after forty-five years of EEC/EU integration.

“The second option, of a ‘customs partnership’ between the EU and UK is simply not an acceptable outcome for the agriculture and food sector, as even under this arrangement, the UK would still be committed to pursuing their own trade policy for imports into the UK.”

In order to safeguard the future of Irish and EU farming, the IFA said, the EU must negotiate a balanced free trade agreement with the UK.

This ought to include tariff-free trade for agricultural products and food, the maintenance of equivalent safety standards as well as those governing animal health and the environment, and application of the Common External Tariff for agricultural and food imports to both the EU and UK.

The Irish Creamery Milk Suppliers Association (ICMSA) said the prospect of tariff-free trade between Ireland and the UK was the “holy grail”.

President John Comer said the stumbling block to this, however, would likely be political.

“While Ireland must stand squarely with the EU, it’s very important to keep our eyes on a national interest as well and our chief national interests are the lack of a physical border between our two jurisdictions and the maintenance of our food trade with Britain that goes back centuries and on which we are still hugely reliant,” he said.

Retail

Elsewhere, Retail Excellence, the group representing about 1,700 companies in the Irish market, said any form of hard border stood the potential of “decimating” towns.

“It is vital we have a clear and open border. Every other option is unreasonable and unworkable,” said Lorraine Higgins, deputy chief executive.

“The delays that will be incurred by all traversing a hard border will come at a substantial cost to businesses along the area and will decimate the vitality of towns.”

The Small Firms Association (SFA) said it welcomed the prospect of there being no physical infrastructure at the border, and of the majority of firms avoiding any future tariffs, but cautioned much would still depend on negotiations with the EU.

“It’s still unclear to us how this can work,” said Linda Barry, SFA acting director, referencing the UK’s desire to control both trade movement and immigration through a porous border.

Ms Barry said questions also remained around how things might play out if the UK left the customs union - while there may be no border in Northern Ireland some form of change in the export environment could have an impact on traders.

“There are still huge implications for small businesses and if [the outcome] creates additional costs they are not going to be fully absorbed by the importers,” she said. “They may be pushed further down the supply chain.”

Fundamental rethink

There was a similar response from Ibec, the business representative body, which welcomed the concept of avoiding customs checks but warned such an ambition would be undermined should the UK depart the customs union.

Businesses could end up paying the price through additional customs and regulatory requirements at various points in the supply chain, it said.

It warned of the potential for higher business costs arising from complex customs procedures and divergent tariffs, and from import duties emerging between the UK and the EU.

Chief executive Danny McCoy said the recognition of unique problems posed by the Brexit process was welcome “but we’re a very long way from resolving the issues”.

“These are complex problems that require detailed, workable solutions. These could well be elusive if the UK continues to stick to its current hard Brexit trajectory,” he said, adding that the UK must maintain single market rules if goods and services were to continue to trade freely during the transitional period.

“UK Brexit policy continues to be dictated by domestic party political concerns, not rational economic considerations,” he said.

“We all stand to lose out as a result. A fundamental rethink of the UK position is needed if we are to avoid a significant economic hit to key sectors of the economy.”

Chambers of commerce along the border are now worried about what conditions might await up to 30,000 people who cross back and forth daily for both work and education.

“It’s not just about business,” said Ian Talbot, chief executive of Chambers Ireland, who believes the negotiations raise countless logistical headaches within a timeframe fast becoming unrealistic.

“We just don’t see that [border proposal] as being practical in that the European Union won’t see it as acceptable, hence the need for negotiations [to begin quickly],” he said.

“I don’t see how you can have an absolutely open border without the consequences being passed onto us.”

Mr Talbot said there were legal problems for the border proposal should it include tariff and non-tariff barriers.

Untested position

The Irish Small and Medium Enterprises Association (Isme) said while the reaction to the UK proposals had been negative, they did not reflect what the British government thought to be “seriously deliverable” in the final agreement.

“The UK Government acknowledges its position on Customs is ‘innovative and untested,” said chief executive Neil McDonnell.

“This is rather an understatement since the proposed arrangements would not merely affect the other 27 member states, but would almost certainly affect the trading arrangements underpinning the EEA, EFTA, the Customs Union, and possibly the Comprehensive Economic and Trade Agreement with Canada (CETA).

“Whether the UK position is that (micro, small and medium sized business) trade should simply be ignored for customs purposes is unclear.”

Mr McDonnell added that, whether intentionally or not, the priority of maintaining a soft border appears entirely dependent upon the UK getting agreement on customs measures.