Business

Zara Duffy: Rewriting the boundaries around trading

At the moment the paperwork and processes to move certain goods from GB to Northern Ireland are causing headaches for traders
Zara Duffy

BREXIT has shown us that obstacles arise when countries’ boundaries are rewritten. Change and challenge have been the experience of many businesses in Northern Ireland over the past few weeks as traders adjust to the new regulatory environment introduced as a result of the Northern Ireland Protocol.

But there have been chinks of light too. Reports of businesses beginning to adapt to the new environment, many of the unknowns becoming knowns and trading patterns beginning to develop as supply chains are reworked and bed down.

Amidst all this change, it would be easy to forget that the protocol designates Northern Ireland as a uniquely privileged trading zone. As a member of both the EU customs area and the British customs area, trade between the EU and Northern Ireland and Northern Ireland to Great Britain can continue largely as it did before with no customs duties or paperwork.

Given the difficulties being experienced with the paperwork required on goods moving from Great Britain to Northern Ireland in particular, the advantages of this cannot be underestimated.

Looking beyond the immediate impact of Brexit, this dual status also gives an advantage to the region in terms of attracting foreign direct investment, particularly in the manufacturing and distribution sectors.

Behind Great Britain, the latest available trade statistics available from NISRA show that the Republic of Ireland is Northern Ireland’s single largest export market. And exports to the EU have increased substantially in recent years.

Northern Ireland traders have unfettered access to both these markets and there is a great opportunity to capitalise on this. The capacity of GB to act as a distribution hub for the Republic of Ireland in particular has been questioned in recent weeks. The opportunities for Northern Ireland should not be underestimated.

The reality at the moment however is that the paperwork and processes to move certain goods from GB to Northern Ireland are causing headaches for traders. And without effort, these problems won’t disappear when the current grace periods for food imports into Northern Ireland expire.

The terms of the protocol require non-prohibited agri-food goods arriving from Great Britain to be accompanied by an EU export health certificate, illustrating that the product poses no risk when entering Northern Ireland.

Given the cost and complexities involved in getting the certification and to avoid supply shortages, the EU and UK agreed last December to exempt supermarkets and trusted suppliers of agri-food products into Northern Ireland from the requirement to produce such certificates for shipments of animal products until April 1, while the ban on mince, sausages and chilled meats would not be in place until July 1.

The UK has now unilaterally decided to extend these grace periods until October 1 with the certification requirements introduced thereafter in phases in tandem with the roll out of a Digital Assistance Scheme, described by the UK government as an “end-to-end digital systems that enable streamlined movement of agri-food goods in accordance with the Protocol.”

Beyond the agri-food sector, many businesses have had difficulties in getting suppliers in Great Britain to send goods to Northern Ireland given the increased administration burden of completing and filing customs declarations.

To overcome these difficulties, Northern Ireland companies are resorting to agreeing Ex-Works terms meaning the company in Northern Ireland takes responsibility for import declarations. This has the effect of increasing costs for businesses in Northern Ireland and may not be a sustainable model for many businesses.

For many businesses, these early problems are not insurmountable and trading patterns will adjust and adapt.

For others, supply chains will be reconfigured permanently, and new markets will need to be explored.

Businesses thrive on processes and to adapt to the new trading environment, many new practices need to be embedded. The opportunities afforded by the protocol, while not immediately obvious, are likely for many to become apparent in the months ahead.

:: Zara Duffy is head of Northern Ireland for Chartered Accountants Ireland

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