FOR IRISH BUSINESSES, the last few years could be summed up with one word: uncertainty. Since the Brexit referendum, Irish businesses have been unsure to what extent they will be affected.
Four years later, the global Covid-19 pandemic has shaken businesses to their core and changed the world as we know it. As the UK and EU negotiate a future relationship including a trade agreement to come into place in January, there is no guarantee of success.
With pessimistic notes coming from the negotiations, once again Irish businesses are looking towards the possibility of a no-deal Brexit.
If no trade agreement is reached, EU-UK trade will be governed by the terms of the World Trade Organisation. This would see tariffs rise sharply and would have a sizeable impact on both the economies of the UK and the EU.
Too close to call
Due to our exposure to the British market and our proximity to the UK, the Irish economy is incredibly vulnerable to any changes in the tariff rate. Over the past years, a huge amount of no-deal Brexit preparatory work was completed by Irish businesses to shelter them from any potential harm.
What no one expected, however, was that a global pandemic would strike and leaving Irish businesses even more vulnerable. With businesses seriously harmed by closures and reduced capacity, a no-deal Brexit would be nothing short of a disaster for Ireland.
In a potential no-deal Brexit scenario, any goods exported from the UK to the EU would be charged the EU’s least preferential tariff rate under the WTO’s most favoured nation rule.
The average tariff rate in the EU is 3.2%, although it varies dramatically. In agriculture, tariffs are on average 8.7%, though one in ten agricultural products have duties of over 25%. With the EU remaining the UK’s main trading partner, this scenario would do serious damage to both British businesses and the EU.
Food tariffs
Ireland’s beef sector relies heavily on the British market, with over half of Irish beef exported to Britain. Under current proposals published this month by the British government, tariffs on food imports will be very high with the aim of safeguarding the British agricultural sector.
This will lead to an estimated €1 billion in tariffs on the Irish agri-food sector and undermine the root to market for many of our farmers.
One option for the UK in a no-deal scenario would be to stop quality checks on imported EU goods. In order to do this, they would have to stop checking goods from every country.
This could lead to a serious drop in the quality of food, animals and electrical products and a favouring of cheap, potentially dangerous goods. In Ireland, we produce high quality, high-value food and products, any change in the valuing of this would be hugely detrimental to our economy.
Extend the talks
A no-deal Brexit and a global pandemic in the same year could be catastrophic for businesses in Ireland and Britain alike. An extension to the talks would give all businesses more time to get their finances in order following this crisis and allow them to prepare for the next.
It would crucially also allow for negotiators to engage properly in the matters at hand. Negotiating a deep trade deal in a short period was always going to be an uphill battle, doing so in an even shorter period of time, via video conference amidst the fall out of a pandemic is an even greater challenge.
The past few weeks have shown us the resilience of the Irish people and businesses in a crisis. We have been quick to adapt to our new normal. This will serve us well as we move forward.
Irish and British businesses are once again facing an uncertain future, one that can be averted should the British Government do the right thing and request an extension to these talks.
Neale Richmond is a Fine Gael TD for Dublin Rathdown and is former Seanad spokesperson on EU affairs for the party.
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