IMPORTS TO NORTHERN Ireland may be made more expensive after 31 December, due to the ‘goods at risk’ provisions of the Northern Ireland Protocol.
As part of the Withdrawal Agreement struck last year, Northern Ireland remains in the UK’s custom territory, but aligned to the European Union’s Custom Union.
This means that goods sent from Great Britain to Northern Ireland will avoid tariffs if they remain in the region, but if they are deemed ‘at risk’ of being sent to the European Union, ie across the NI border to Ireland, they will have to pay a tariff.
It’s not yet certain how a product will be deemed ‘at-risk’ of leaving Northern Ireland, which is part of the problem for Northern Irish businesses.
The way this will work in practice is that Northern Ireland businesses receiving goods from Great Britain will pay the tariffs upfront, and will be rebated the cost of tariffs if they can prove they are not at risk of going to the EU.
If the goods are consumed or used in Northern Ireland, they will receive a rebate on that tariff; but if they are sent on from Northern Ireland to Ireland to be processed, they automatically pay a charge (though it is possible that this may be rebated).
If a product is likely to be sent from Northern Ireland to Ireland, then a tariff will apply that isn’t in place now.
Declan Billington, former chair of the Confederation of British Industry Northern Ireland and board member of Northern Ireland’s Food & Drink Association, gave an example of how imports to Northern Ireland could be adversely impacted.
He told TheJournal.ie that his animal-feed business imports hundreds of thousands of tonnes of maize in from the Ukraine and Canada each year.
“We make feed and we sell that feed in Northern Ireland and across the border to farmers in Donegal, farmers in Meath, and all sorts of places.
“The EU has a Free Trade Agreement [FTA] with Canada, currently there’s a duty on maize of about €5 a tonne. But the EU FTA with Canada means Canadian maize imported into Dublin will be tariff-free under the European FTA, and Canadian maize imported into Liverpool will be free under the UK rolling over the Canadian FTA.
But maize coming into Northern Ireland can’t come in under the European FTA – we don’t have access to it. It comes in under the UK one but then, it fails the test of an ‘at risk good’ – as it will be exported to farmers in the Republic of Ireland.
“You have the same problem with maize from Ukraine.”
“So when it comes to Northern Ireland: is it coming in under a European tariff quota – no,” he said. “Has the European customs tariff schedule got a tax on it? Yeah, it’s a fiver. So effectively you’re paying a fiver even though you don’t pay a fiver on it in Dublin.”
The committee
A Specialised Committee on the Implementation of the Protocol on Ireland / Northern Ireland is one of six committees set up to oversee how the Withdrawal Agreement can be implemented (it had its third meeting in October).
It focuses on how customs procedures, health, regulatory and other checks will be implemented on goods going from Great Britain to Northern Ireland.
A crucial part of checks on trade from GB to NI has centred on what goods will be ‘at risk’ of entering the EU’s Single Market from Northern Ireland.
The emphasis placed on GB to NI procedures is to ensure that the EU’s Single Market is protected, without the need for a border on the island of Ireland. The UK has said that it would apply “light-touch” checks on goods going in the opposite direction.
“Common sense would say if it’s not taxed in Dublin, it can be trade distorting so shouldn’t be taxed in Belfast,” Billington said.
‘Trade distorting’ is where trade is changed from how it should normally be – smuggling is one consequence of a trade distortion.
“While we’re waiting for those decisions, where do we buy our maize from?” said Billington.
The committee may eventually agree not to tax maize, but other goods from third countries that should be taxed under EU rules may not be exempt even if both the UK and EU have a trade agreement, or ‘no tariff quota’ agreement, with that country.
In short: from 1 January 2021, Northern Ireland will have access to UK free trade agreements, but not EU ones, and the EU’s customs schedule will still apply in Northern Ireland.
“We have access to Europe in the way the rest of the UK don’t, that’s great. But we don’t have access, directly or indirectly, to those export agreements and therefore, that is something different, a lesser outcome, than where we are today,” said Billington.
Because we don’t have access to European trade agreements – and nobody’s really thinking about this – we don’t have access to European free trade agreements on imports. We fall between two stools.
Meanwhile. negotiators will meet today to continue to hash out the Brexit deal.
Von der Leyen and UK Prime Minister Boris Johnson spoke yesterday after talks were paused on Friday night when negotiators for the EU and UK said that the conditions for reaching an agreement had not been met.
The three key issues which remain to be solved between the negotiating teams – fishing, governance, and the level playing field – have been the focus on post-Brexit talks in recent days.
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