The Irish border has been a major sticking point in the Brexit negotiations, and going forward there are still plenty of questions that need to be answered. The UK and the EU have agreed that any new arrangement should not hamper goods crossing the border and to that end, there should be no additional checks and controls. To make this happen, Northern Ireland will continue to adhere to EU rules on agricultural and manufactured goods and Northern Ireland will continue to enforce the EU customs code at its ports. This means customs declarations will have to be made for shipments of commercial goods from Great Britain to Northern Ireland in the future.
Will there be “unfettered” access to Northern Ireland?
This promise from the PM has been repeated often, but the EU are insisting that checks will be required in some instances. Such issues will form part of the negotiation that will happen in 2020 as part of the transition period and a specialist Northern Ireland committee will be formed to focus on the issue. For now, everything will work exactly as it has before, but once the transition period comes to an end, it’s likely that there will be some changes.
What does this mean for businesses on mainland UK?
If your business trades with Northern Ireland, there will be some new checks and processes for sending goods. The nature of those checks is still to be agreed, but it’s likely that any preparations for trading elsewhere in the EU will be similar because Northern Ireland will be adhering to EU rules. Similarly, NI businesses trading with mainland UK will also face additional administration in the form of an exit declaration when sending goods to mainland UK, although it may smooth the process for exporting to Éire.
Will Northern Ireland become a shortcut to wider Irish markets?
This is a question for the negotiators but the short answer is, no. While Northern Ireland will remain part of the UK’s customs territory while adhering to aspects of the EU rules, there will be a close watch on any goods entering Northern Ireland from Great Britain which may be deemed at risk of being moved on to the Republic of Ireland. These goods will be subject to EU tariffs unless it can be proven that the goods remain in NI. The list of goods considered “at risk” is yet to be agreed.
What about zero-tariff trade?
Many believe that zero-tariff trade between the UK and the EU is the ideal outcome, but it remains to be seen if this can be negotiated. Even if this does come to pass, this will only apply to goods moving between the UK and the EU, or Northern Ireland as an EU customs territory. Any deals and tariffs with other countries may vary. In addition, a zero-tariff deal would not be an exact substitute for the current EU customs union.
What happens if the UK and the EU can’t agree a deal?
The negotiators may be focussed on making trade as frictionless as possible, but success isn’t guaranteed. If no trade deal is agreed with the EU, England, Scotland and Wales will face new barriers to trade that do not impact businesses in Northern Ireland. This is because the withdrawal deal guarantees frictionless trade with the Republic of Ireland and by extension the EU. This ensures that there is no hard border in Ireland to secure the terms of the Good Friday Agreement – but it does mean that there will be trade barriers in place between NI and the rest of the UK.
There is clearly still a lot to be discussed about the 310-mile Irish border and trade with the EU. Businesses may have to wait a bit longer for certainty, but in the meantime, any preparations for trading with the wider EU are likely to prove helpful if and when the rules do change.
Evaluating your foreign exchange risk and the corporate FX solutions available to you and your business can be an invaluable step in planning for Brexit.