The Chief Executive of Manufacturing NI says that unique new arrangements could allow post-Brexit Northern Ireland to have its cake and eat it
Phase 1 of the Brexit negotiations are coming to a December crunch, or a crash. It’s big politics and high stakes but never before has Northern Ireland been in such sharp focus for leaders in London, Dublin, Brussels and capitals throughout Europe. With such attention, we really should be making the most of it.
What happens now defines our economic fortunes for the next generation. Get this right, and there is a huge opportunity to reindustrialise Northern Ireland, but if it goes wrong and there will be a border on or between these islands with all the associated economic, political and community damage.
Brexit is complex and so too is international trade but the debate has been over-simplified as being a choice between a border in Ireland or a border in the Irish Sea.
It is clear that the UK’s departure from the Customs Union could have enormous consequences for the island of Ireland. Without question, it will result in increased transaction costs, delays, administrative burdens and disruption to complex supply chains and logistics. In a wide range of areas, business will face additional burdens and challenges that will prove costly, making them uncompetitive and at risk.
Individual citizens will also be subject to controls to ensure that duty free rules and allowances are adhered to with anyone crossing the border potentially subject to controls and their mode of transport checked.
A border in Ireland would put barriers in the way of natural trading hinterlands, undermine all-island supply chains and add significant cost and complexity to our most important export market, which in Derry’s case is half a mile from the city boundary.
An Irish Sea border could put barriers in the way of a market representing almost 60% of our external trade and over 70% of our imports.
Both of those options would harm the economy and relationships so it should not be accepted that a solution should be a choice of either. It is essential to focus on ways which ensure there will be no delays, hindrances, costs or over-burdening complexity which will threaten the future of businesses and jobs.
A third way is needed. A way in which the North is a full participant in the EU and the UK Markets. An agreement which positions Northern Ireland as the bridge rather than the border between the UK and the EU post-Brexit. This could, if the UK asked for it, be transformative for the local economy positioning Northern Ireland as one of the most attractive regions in the world in which to invest and create thousands of jobs.
The Irish (and EU) are now overtly saying what the UK should ask for. They are offering to allow Northern Ireland to effectively remain in the EU’s Single Market and Customs Union. The UK won’t be allowed to have its cake and eat it, but the North could.
So, how could this ‘bridge’ work? The first thing to consider is that whilst Northern Ireland is a massive problem in the Brexit negotiations, our population and economy is less than 2% of the UK and a tiny fraction of the EU.
Precedent is also in our favour. The EU has unique arrangements for other territories, demonstrating flexibility in how it applies its rules is demonstrated elsewhere.
Indeed, the UK’s Brexit position paper on Northern Ireland also suggests an exemption from customs for all firms with less than 250 employees – that’s 99% of our manufacturers.
There are accepted border arrangements between Northern Ireland and Britain in travel, trade, animal health and energy. For instance, the island of Ireland is treated as a single veterinary area meaning that all farm livestock imports from GB to the North must only arrive at Larne Port to undergo checks and we have manifests on ferries and freight and ID and vehicle checks when booking and travelling to GB Ports and Airports. Certification, auditing and taxation rules (which are the responsibility of business) are used to monitor trade between North and South and between Northern Ireland and Britain.
There is no need for any additional barriers to be created.
Business have dual identity
The EU’s Single Market is governed by product standards and Rules of Origin meaning firms in Derry can trade freely in Dundalk, Derby or Dusseldorf. Our businesses will opt to maintain these EU standards as it reduces complexity and won’t require a shift in already well-established processes. Provided firms adopt EU standards as a minimum, then access can be permitted to the EU market. Should the UK adopt lower standards to achieve free trade agreements, our firms won’t be able to compete so will maintain higher standards, achieving higher prices in the more value-added part of the UK market.
The Good Friday Agreement allow individuals to take a British, Irish or indeed dual identity. Businesses naturally do this too. For many, the same factory, machinery and workforce produce goods which are sold in some markets as British and in others as Irish. Mutual recognition of a Northern Ireland Origin status in both the UK’s internal and the EU’s single markets would allow goods to be freely traded. Administered and audited at the point of production, this would be a minimal burden on business.
Finally, any ‘bridging’ agreement could be written into the UK’s Exit Agreement with the EU and should include a chapter locking down both customs arrangements and indeed the constitutional settlements written in the Good Friday Agreement to provide certainty and comfort.
Many see an Irish or an Irish Sea border as an existential threat. But for many businesses, choosing between those options would be an existential crisis. Being a bridge between the UK and the EU need not undermine sincerely held views on identity and would not require any additional barriers to trade. Instead, it would present an extraordinary opportunity to create more wealth and work.
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