Businesses in Northern Ireland would face massive difficulties in the event of a no-deal Brexit, according to an expert report carried out for the Northern Ireland civil service, with the burden falling most heavily on small and medium enterprises.
The findings of the report by two lawyers specialising in EU and international customs law present a “sobering reflection of the limited room for manoeuvre for businesses and government in a no-deal context”, according to an accompanying note from the North’s Department for the Economy.
“It confirms the Northern Ireland Civil Service’s concern about the impact of EU tariffs on food exports to Ireland, and the ability of micro and small enterprises with no experience in customs procedures and operations to continue to export to Ireland,” the department’s summary of the report says.
The report, written by Eric Pickett and Michael Lux, warns that schemes to avoid trade barriers and Border checks – so-called "facilitation" – would have a limited application, especially for smaller businesses who may not have the ability, scope or expertise to use schemes to minimise trade barriers.
Agriculture worst affected
Trade between the Republic and the North would be hugely affected, the report warns, with agricultural trade worst affected. It lays out in great detail an array of checks, inspections and declarations which could be required.
Trade across the Border is especially important to very small businesses in the North. “Over 80 per cent of microenterprises (employing fewer than 10 people) in Northern Ireland who export, only export to the Republic of Ireland,” the accompanying note says.
The report finds that there are several “facilitations” that could be employed to ease the trade restrictions that would automatically occur in the event of a no-deal. However, many of these would require an agreement with the EU, and therefore would not come into operation automatically.
The department’s summary says the report “provides further evidence of the difficulties that would arise . . . in a no-deal context and of the consequent risk to the Northern Ireland economy”.
The report says the EU and the UK could seek an exemption from World Trade Organization rules which would require tariffs and Border checks on security grounds. However, it says this is likely to be temporary and the EU is “unlikely to agree to sweeping exceptions from Border controls”.
The report is cool on the suggestion that electronic monitoring of the Border could be a substitute for checks.
“Although the Border does not have any customs posts, there is some surveillance of vehicle movements. The authorities are thus able to track cars, trucks, etc in their journey along and across the Border. However, this surveillance is for security purposes,” it says.
“In practice, effective implementation of the objectives articulated in the customs authority’s mission can only be achieved by conducting inspections based on risk-analysis methods, which includes random checks.
“Furthermore, the existing security-based surveillance infrastructure would have to be repurposed for customs. Aside from the issue of whether such repurposing is technically feasible in the light of the situation under a no-deal scenario, there is the issue of whether it would be politically acceptable, including amongst the population living along the Border,” it says.
It also says that the Republic will have to establish inspection posts that are closer to the Border.
Meanwhile, Taoiseach Leo Varadkar has warned it would be a "terrible political miscalculation" for anyone in London to think they will automatically get a better Brexit deal after Westminster's failure to ratify the withdrawal agreement.
“That is really to misunderstand how the European Union works,” he said.
He said outgoing British prime minister Theresa May “wasn’t a bad negotiator. She had a good team. I believe they got the best deal they could have got, given the limited leverage that a country leaving the EU has.”