Customs delays could ‘eliminate’ border food trade
More than six months ago we warned of the lack of hard, practical information north and south on the potential consequences of Brexit. There were no useful official sources and the standard of media analysis was such that it was frankly useless for decision-makers in business or the public sector. A new survey of 80 businesses by Chartered Accountants Ireland (CAI) shows that little has changed. Its findings are closely in line with the conclusions of our own Frontline Project, a narrative survey of 35 companies and organisations completed in February.
The survey identifies the main area of threat, which is in agri-food in general and processed food in particular. Exports from the Republic to Northern Ireland make up 13 percent of total exports to the UK, while imports from Northern Ireland to Ireland account for 6 percent of the UK total. But the real threat comes from the highly integrated nature of our agri-food industry, with some foodstuffs crossing the border several times in the course of processing. Tariffs would not just be an extra cost, they would be devastating.
“There were suggestions, particularly from businesses involved in the food processing industry, that delays in clearing customs would for practical purposes eliminate cross-border trade between the north and the south of Ireland.”
In our first issue we warned: “There will be tariffs”. Nothing has happened since then to cast doubt on this analysis. Unfortunately, much political comment and media coverage constantly conflated this issue into a confused ‘hard/soft border’ debate and ignored the clear statements from the EU that its external borders would be controlled. The consequences of this confusion can be seen in the survey responses.
“Relatively few understood that the enforcement of border controls for the Customs Union, however implemented, needed to be separated from political promises of future trade agreements between the UK and the EU, and between the UK and the rest of the world.”
CAI notes that many are still focused on the more measurable impact of sterling volatility, which “might signal a lack of awareness of customs obligations.” Indeed it does – so we found in our Frontline Project. We also got a very clear message that people did not know where to turn for information on tariffs. Like us, CAI doubts that the private sector can fill the gap.
“There is some evidence that it will be difficult for businesses to obtain reliable advice on the customs obligations. Many consulting firms in Ireland, including firms of chartered accountants, lost or downgraded their customs expertise post-1992 as a result of shrinking market demand.”
There is an understandable reluctance to face up to the cost implications, identified by CAI as the tariffs themselves, administration costs (including the cost of engaging additional staff or customs agents), commercial costs associated with freight delays, and the funding costs of tariffs and value-added tax on imports.