The Brexit tumult radically reshapes trade on the island of Ireland
The UK government’s recently announced bill to override aspects of the Northern Ireland Protocol casts a shadow over the state of the trade.
Paul Faith | AFP | Getty Images
DUBLIN – Amid acute political uncertainty and Brexit-related upheaval, the movement of goods across the island of Ireland has transformed and experienced a significant acceleration.
Since the UK officially left the EU in January 2020, companies have changed their posture, rethinking the routes they take and the ports they use.
This was prompted by the Northern Ireland Protocol, an arrangement which allows the British province to remain in the EU’s single market but requires checks on goods from the rest of the country (England, Scotland and of Wales). The EU’s single market aims to ensure the free movement of goods, capital, services and labor within the bloc.
The recent change can be seen in the state of trade between the Republic of Ireland, which is part of the EU, and Northern Ireland.
According to figures from Ireland’s Central Statistics Office, in the first quarter of 2022, imports from Northern Ireland were up 34% year-on-year to €294 million ($310 million) and exports to the north increased by 49% to reach 368 million euros.
“What was clearly happening was that Irish buyers were moving away from Britain [English, Scottish and Welsh] suppliers and continuing to trade with the UK by buying from Belfast rather than Birmingham,” Stephen Kelly, managing director of Manufacturing NI, which represents the industry in the region, told CNBC.
This has resulted in the movement of goods such as food, pharmaceuticals and manufacturing supplies across the land border of the two jurisdictions, across road networks as well as to ports for further travel.
Ian Talbot, chief executive of trade group Chambers Ireland, told CNBC the trade moves are the result of a great deal of adaptation by Irish and Northern Irish businesses after the Brexit tumult.
“There is no catastrophic failure anywhere. There is no idle port, there is no unused road. Trade is happening and in great numbers,” he added, making reference to the current arrangement facilitated by the protocol.
However, he said there was still a caveat to variations in trade and the movement of goods on the island of Ireland, as much of this change has occurred amid the disruption of Covid-19 in 2020 and 2021.
“With the impact of Covid and the lockdowns, it’s very difficult to sort this all out when comparing. What year are you comparing it to?”
Since early 2021, there has been a rapid increase in the number of cargo ships leaving Irish ports, such as Dublin and Rosslare in the south east of the country, for ports in France and Spain to avoid the bureaucracy of the crossed by Great Britain.
This marks another change in the profile of freight transport on the island of Ireland, with businesses avoiding the traditional UK ‘land bridge’, where trucks crossed the Irish Sea into the UK and traveled across the country to the port of Dover and beyond. to France for continental deliveries.
“Northern Irish businesses can also easily access these routes without having to travel to the east coast of Britain,” Talbot said.
But the port of Belfast has also felt the repercussions. The Port of Belfast saw its operating profits for 2021 increase by 13% to £34m, with over 25m metric tonnes of cargo passing through the port.
In its annual report, the port cited the grace period for implementing the Northern Ireland Protocol as a factor in the increased level of trade. But he acknowledged that “risks and uncertainties” remain with the end of the grace period. Britain has yet to impose controls on goods from Northern Ireland.
“The ultimate effects of derived demand on overall economic activity from Brexit and the NI Protocol, and their concomitant impact on trade, remain difficult to predict,” the report said.
The recently announced UK government bill to override aspects of the Northern Ireland Protocol casts a shadow over the state of trade and the movement of freight to and from the island of Ireland. The EU has taken legal action against plans to scrap parts of the deal, and the imminent departure of British Prime Minister Boris Johnson has also added more uncertainty – although potential successors Rishi Sunak and Liz Truss are likely to proceed with the plans.
The bill, as proposed, would create green lanes and red lanes for goods moving to Northern Ireland or beyond. The green lane would apply to goods destined only for Northern Ireland and would not be subject to controls, while the red lane would apply controls to goods ultimately destined for the Republic of Ireland or elsewhere in the EU.
Kelly said some elements of the bill, such as the green lane, are “not offensive,” but there are still doubts about its practical implementation.
This doubt will reintroduce concerns for trade in Northern Ireland similar to those felt when a no-deal Brexit was a possibility.
“We are potentially in a worse position than a no-deal if the UK and the EU don’t reach an agreement in the weeks and months to come, it’s not just a no-deal but it’s is a no deal plus a trade war,” he said.
“It will be hugely damaging not just to Northern Ireland, but to the whole of the UK and the EU, which will be a double whammy for us.”
This is on top of the rising rate of inflation and the war in Ukraine, which has crippled supply chains in the wider European context.
Kelly said there were a lot of moving parts in the trade, but Northern Ireland’s unique situation would not change.
“Northern Ireland will not physically leave its UK-EU border,” he said. “Our geography will not change.”