Northern Ireland news

Brexit: UK's no-deal trade plan – and what it means for Ireland north and south

Traffic outside Newry near the border between Northern Ireland and the Republic. Picture by Liam McBurney/PA
Brendan Hughes

:: What has been announced?

The British government has revealed its temporary plans for trade if the UK leaves the European Union without a deal on March 29, otherwise known as a 'no-deal Brexit'.

It comes after MPs on Tuesday night rejected British prime minister Theresa May's withdrawal agreement negotiated with the EU.

The plans detail the UK's proposed changes to tariffs – the taxes applied to goods that are traded on international markets.

:: How will the new system work?

Under the plans, most imports into the UK would not attract a tariff. Imports eligible for zero-tariff access would increase from the 80 per cent to 87 per cent.

Tariffs would be maintained in some industries – such as beef, lamb, pork, poultry and some dairy products – to protect them from cheap imports.

But the new regime would mark a shift in favour of products from non-EU countries.

While 82 per cent of imports from the EU would be tariff-free (down from 100 per cent now), 92 per cent of imports from the rest of the world would pay no border duty (up from 56 per cent).

:: Are there any special arrangements for Northern Ireland?

Yes, the north would be treated differently to Britain for goods originating in the Republic. In special arrangements for Northern Ireland, the UK's temporary import tariffs would not apply to EU goods crossing the border from the Republic.

The decision is designed to avoid a hard border in Ireland.

However, tariffs will be payable on goods passing from the EU to Britain via Northern Ireland under a schedule of rates.

The British government insists this will not create an Irish Sea border, as there will be no checks on goods moving between the north and Britain.

Customs officials will instead rely on intelligence and normal compliance work to impose the levies.

To fulfil international obligations, there would be document checks and registration on some goods such as endangered species and hazardous chemicals.

Other arrangements include animals and animal products from outside the EU being required to enter Northern Ireland through a designated entry point to protect human, animal and plant health.

Goods arriving into Northern Ireland from the south would still be subject to the same VAT and excise duty obligations as at present.

:: What about trade passing from Northern Ireland to the Republic?

This plan only represents the UK side of what a post-Brexit border in Ireland would look like in the event of no deal.

It will be for the EU and Irish government to set out what tariff regime would apply to goods travelling from Northern Ireland to the Republic, and how this will be enforced.

Therefore it's possible that while products from the south would enter Northern Ireland tariff-free, products moving in the other direction would face tariffs.

This would undermine the competitiveness of Northern Ireland businesses and farmers.

:: Are there any other issues with the Northern Ireland arrangements?

There are also concerns Northern Ireland would be used by smugglers as a 'back door' to get goods into Britain tariff-free.

But the British government says the arrangements are the only steps that could be taken to deliver on its commitment of avoiding a hard border in the case of no deal.

To tackle potential smuggling, there would be new laws introduced to crack down on anyone trying to exploit the system.

:: Could these arrangements for Ireland breach international trade rules?

In a no-deal Brexit, the UK would automatically fall back on World Trade Organization (WTO) rules.

Typically the WTO expects all members to be treated equally, so the special arrangement for Ireland would appear to conflict with that.

British government lawyers appear confident the approach will not conflict with WTO rules, and that they could invoke an exemption.

But Prof Alan Winters, director of the UK Trade Policy Observatory at the University of Sussex, told the BBC it "almost certainly" violates WTO rules.

However, he said it would likely go unchallenged for some time "on the grounds that it was an emergency measure".

:: Does this guarantee no hard border in Ireland?

While waiving tariffs appears to avoid the need for border trade infrastructure, the British government says these measures would be "strictly temporary".

It would plan to enter talks with the European Commission and Irish government to agree long-term measures to avoid a hard border.

These plans also only account for the British government's arrangements.

The EU and Irish government would set out what tariffs would apply to goods travelling from Northern Ireland to the Republic.

:: What does all this mean for the Republic?

It is intended that the south's businesses which currently use Northern Ireland as an established route to enter the market in Britain would not be hit by the new tariffs.

Tariffs would be payable on goods passing from the EU to Britain via Northern Ireland for those that pro-actively change the way they do business to exploit the potential loophole.

Goods passing from the Republic to Britain also face tariffs, including high tariffs on a range of food products.

There are fears the UK's tariffs would seriously damage the south's agriculture industry.

Politically, the UK's no-deal plans may also put pressure on the Irish government and the EU to abandon the backstop – the disputed mechanism aimed at guaranteeing no hard border in Ireland, which was a key reason why MPs rejected Theresa May's withdrawal deal.

:: What has been the reaction?

Angela McGowan, director of CBI in Northern Ireland, described the UK's plans as "desperate" and said they leave the north "highly exposed both economically and politically".

The agri-food alliance, representing the main food organisations in Northern Ireland, said the no-deal plans would be a "fatal blow" to indigenous food production.

In the Republic, the Irish Cattle and Sheep Farmers Association said the impact of the tariffs on the Irish beef sector "would be catastrophic".

In Britain, CBI director-general Carolyn Fairbairn said there has been "no consultation with business, no time to prepare" and the tariffs would be a "sledgehammer" to the UK economy.

But the British government's trade policy minister George Hollingbery said the plans will "avoid disruption to our global trading relationships" and represent a "modest liberalisation of tariffs".

Secretary of State Karen Bradley said the measures "recognise the unique circumstances of Northern Ireland" but "can only be temporary and short-term".

:: How long will these no-deal arrangements last?

If the UK leaves the EU without a deal on March 29, the temporary schedules would potentially apply for up to 12 months while a full consultation and review of a permanent approach is undertaken.

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