Brexit turmoil is radically reshaping trade on the island of Ireland
The UK government’s recently announced bill to override certain aspects of the Northern Ireland protocol is casting a shadow over the status of transactions.
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DUBLIN – Amid severe political uncertainty and Brexit volatility, the movement of goods on the island of Ireland has been transforming and seeing a significant boost.
Since the UK officially left the EU in January 2020, companies have changed their posture, rethinking the roads they take and the ports they use.
This is spurred by the Northern Ireland Protocol, an agreement that allows the UK province to remain in the EU’s single market but requires inspection of goods coming from the rest of the country (England, Scotland and Wales). The EU’s single market seeks to ensure the free movement of goods, capital, services and labor within the bloc.
The recent change can be seen in the status of trade between the Republic of Ireland, part of the EU, and Northern Ireland.
In the first quarter of 2022, imports from Northern Ireland increased 34% year-on-year to 294 million euros ($310 million) and exports to the North increased, according to data from the Central Statistics Office of Ireland. 49% to 368 million euros.
“What is clearly happening is that Irish buyers are leaving the GB [English, Scottish and Welsh] Stephen Kelly, chief executive officer of Manufacturing NI, which represents the industry in the region, told CNBC.
This has happened in the movement of goods such as food, pharmaceuticals and manufactured supplies across the land borders of the two jurisdictions, across road networks as well as to ports for further travel. .
Ian Talbot, chief executive officer of business group Chambers Ireland, told CNBC that the moves in trade are the result of Irish and Northern Irish businesses adapting much in the wake of the Brexit turmoil.
“There are no catastrophic failures anywhere. There are no idle ports, no inactive lines. Transactions are happening and in bulk,” he added, referring to the current deal. facilitated by the protocol.
However, he said there was still a caveat to changes in trade and movement of goods on the island of Ireland as much of this shift has occurred amid the Covid-19 disruption in 2020. and 2021.
“Given the impact of Covid and the lockdown, it’s hard to unravel all of that when you’re comparing. What year are you comparing it to?”
From the beginning of 2021, there has been a rapid increase on the number of cargo ships leaving Irish ports, such as Dublin and Rosslare in the south-east of the country, to ports in France and Spain to avoid red tape passing through Britain.
This marks another shift in the Irish island’s freight profile with companies moving away from the UK’s traditional “land bridge”, where lorries would cross the Irish Sea to reach their destination. UK and across the country to the port of Dover and onward. to France for intra-continental delivery.
“Companies in Northern Ireland can also easily access those routes without having to drive to the UK’s east coast,” said Talbot.
But Belfast’s port also has a buzz. The Port of Belfast saw operating profit for 2021 rise 13% to £34 million, with more than 25 million tonnes of cargo moving through the port.
In its annual report, the port cited the extension of implementation of the Northern Ireland Protocol as a factor in increasing trade levels. But it acknowledges that “risks and uncertainties” remain at the end of the grace period. The UK has yet to inspect goods arriving from Northern Ireland.
The final effects of demand on overall economic activity from Brexit and the NI Protocol, and their concurrent impact on trade, remain difficult to predict, the report said.
UK Government recently published invoice to override certain aspects of the Northern Ireland protocol that are casting a shadow over the status of trade and the movement of goods in and out of the island of Ireland. EU has launched legal action on plans to scrap parts of the dealand the departure of British Prime Minister Boris Johnson also leaves many more uncertain – although potential successors Rishi Sunak and Liz Truss are likely to continue working on the plans.
The bill, as proposed, would create a green lane and a red lane for goods traveling to Northern Ireland or beyond. The green lane will only be for cargo destined for Northern Ireland and will not be subject to inspection while the red lane will apply the inspection to cargo ultimately destined for the Republic of Ireland or elsewhere in the country. EU.
Kelly said some elements of the bill, such as green lanes, were “not offensive” but remained in doubt about how practical it would be.
That doubt will fuel worries for trade in Northern Ireland, similar to those felt when a no-deal Brexit is a possibility.
“We are likely to be in a worse position than no deal if the UK and EU fail to find a deal in the coming weeks and months, which is not just no deal but no deal,” he said. deal plus a trade war.”
“That would be hugely damaging not only for Northern Ireland but for the UK and EU as a whole, which would be a double blow for us.”
This, coupled with rising inflation rates and the war in Ukraine, has already hampered supply chains in the broader European landscape.
Kelly says there are a lot of moving parts in the trade but Northern Ireland’s particular situation will not change.
“Northern Ireland will not move physically as the border between the UK and the EU,” he said. “Our geographic location will not change.”