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If Brexit goes ahead in any form, there is no realistic chance that trade barriers between the Republic of Ireland and Britain can be avoided. There could be a reversal of Brexit, through a fresh referendum and a decision to forget the whole thing, but that looks increasingly unlikely. Once Theresa May chose to remove the UK from the single market, that meant trade barriers - even without tariffs. Removal from the customs union, the Johnson government’s latest version of a ‘deal’, means there will also be tariffs on agricultural produce and possibly some non-food items. The external frontier of the EU may be at the Northern Ireland border or it may be in the Irish Sea, depending on the eventual resolution of the North-South aspect. But there will be a trade frontier with the island of Great Britain in any Brexit scenario and the Republic’s trade with Northern Ireland is dwarfed by trade with Britain. Most of Ireland’s trade with the UK, and its transit traffic, will be affected and there should be no misunderstanding that an open border with Northern Ireland materially reduces the economic damage from Brexit.
No deal and Northern Ireland
If the withdrawal agreement and the subsequent long-term free trade deal keeps the agri-food industry integrated on the island of Ireland, there will be immediate relief for the 3,000 dairy farmers north of the border. Monday’s report from the Dairy Council of Northern Ireland highlighted the specific risks to farmers and processors from a no-deal crash-out. Mike Johnston, chief executive of the Council, concluded; “If we crash out on 31 October, we do not have the capacity to process all the milk that will be produced and we will not be able to afford to pay EU tariffs nor navigate the EU certification requirements such that we can process that milk in the Republic of Ireland. Put simply, dairy processors and their farmers will not survive unless there is a deal.” Johnston reckons that 35% of Northern Ireland’s milk is processed south of the border and that no alternative capacity is available either in Northern Ireland or in Great Britain. There will be an immediate physical problem in disposing of milk and tariffs would mean an exit from the industry for many.
But there will be problems for the dairy industry, even if the risks to Northern Irish farmers are ameliorated through keeping Northern Ireland in a single regulatory regime for agri-food and crash-out is avoided. There would be tariffs on export to the Republic under the terms of the most recent Johnston ‘offer’, even if the regulatory checks were avoided.
Tariffs
Mainland Britain is likely on its way out of the single market, the customs union and the CAP after a transition period which could be as short as fifteen months, even if there is a deal along the lines of the recent UK proposal. That means tariffs for dairy exports from the Republic and a squeeze on suppliers, including suppliers from Northern Ireland.
Even if the UK had chosen to quit the EU and stay in the single market, the so-called Norway model, there would have been trade barriers, as there are between Sweden and Norway. With the UK out of both the single market (meaning non-tariff barriers) and out of the customs union (meaning tariffs plus rules of origin checks) the frontier with Britain, or with the whole of the UK, will resemble the existing frontiers between the EU and its third-country neighbours. The border between Latvia and Ukraine, an external EU land border, is a typical example. It is shorter than the Republic’s border with Northern Ireland, but has just seven authorised crossing points.
Regulatory border
Should an open regulatory border with Northern Ireland be achieved, there will be relief in Ireland North and South, but there should be no illusions about the scale of the economic damage from any form of hard Brexit, including damage to Northern Ireland’s farmers. The latest iteration of the UK position is no salvation. For the Republic, there will also be damage to the broader economy through the UK’s planned exit from the customs union, although tariffs on industrial goods may turn out to be much lower than on food and could well be zero. Even if tariffs are avoided, there will be checks on imports, delays and increased logistics costs, as well as interruption to the land-bridge routes to and from continental Europe. Dublin port has just completed a €30m project to construct inspection posts, money down the drain. All other ports trading with the UK in France, Belgium, the Netherlands and elsewhere have had to incur expenditure on the same scale, necessitated because any form of hard Brexit, not just a no-deal crash-out, means hard borders. Regulatory alignment for agri-food on the island of Ireland is desirable, but is a small relief from hard Brexit.
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