Brexit has accelerated trade between the Republic and Northern Ireland as more firms use the North to bypass customs checks.
The latest trade figures from the Central Statistics Office (CSO) show the value of goods imported from Northern Ireland to the Republic increased by 60 per cent to €1.05 billion during the first four months of 2021.
The value of exports from the Republic to the North was up by 40 per cent to €977 million over the same period.
Under the Northern Ireland protocol, trade in goods with Britain is subject to customs checks. However, while Northern Ireland remains within the customs territory of the UK, it is simultaneously within the EU single market for the movement of goods. This means goods moving between Northern Ireland and the Republic are not subject to customs checks.
“It appears some British-based traders have established bases in NI, so that it is easier for them to trade with Ireland, by moving the goods from GB to NI, and then to the Republic, so there is an element of substitution from GB to NI, which explains in part the increase in imports from NI over the first four months of the year,” a CSO spokesman said.
“It’s important to note, though, that this does not entirely make up the difference in the total reduction in imports from GB over this period, as there are a range of factors which have an impact on this,” he added.
According to the figures, the value of goods imports from Britain fell by almost 40 per cent or €3.2 billion during the first four months of 2021 compared with the same period last year. The biggest reductions were in food and live animals, and chemicals and related products.
The reduction in imports was attributed to a combination of factors, including the challenges of complying with customs requirements.
The stockpiling of goods in the final quarter of 2020 in preparation for Brexit, the substitution with goods from other countries and a reduction in trade volumes due to Covid-19, were also cited as possible reasons.
Exports to Britain, which were down in the earlier part of the year, were up 7 per cent to €4.1 billion in April on foot of a pick-up in trade of chemicals, machinery and transport equipment.
The overall figures for April show the seasonally adjusted goods exports decreased by 5 per cent to €12.7 billion compared with the previous month.
Goods imports increased marginally (1 per cent) to €8 billion, leading to a decrease of 14 per cent in the State’s trade surplus, which was put at €4.6 billion.
The EU accounted for €5.1 billion (41 per cent) of total exports in April, of which €1.3 billion went to Germany and €1 billion went to Belgium. The figures show exports to EU countries in April increased by 25 per cent compared with April last year.
The US was the main non-EU destination, accounting for €3.6 million (29 per cent ) of total exports in April.
The reduction in imports from Britain “has been triggered by a notable weakening in the food and drink trade from Great Britain to Ireland since the start of the year, given the increased customs controls, checks and costs on bringing such products into Ireland”, said Jarlath O’Keefe, partner in indirect taxes at Grant Thornton Ireland.
“Notwithstanding the decline in imports, the UK market remains an important player for Ireland’s exports and this is evidenced by the fact that exports to Great Britain increased by 42 per cent in April 2021 over April 2020,” he said.
“However, the previous overreliance on the British market is no longer the case, given that exports to Great Britain accounted for 8 per cent of overall exports from Ireland which demonstrates that the Irish market is continually sourcing new markets for its products, which has been made possible due to the recent surge in e-commerce related business transactions,” he said.