No Deal nightmare announced for Northern Ireland to keep the border open

The No Deal scenario announced unilaterally by the UK this morning keeps the Irish border open but at a cost to Northern Ireland business and sets up a border in the Irish Sea for the Republic but not Northern Ireland.  And while it’s intended to keep the border open, the Republic would be obliged to levy tariffs on some goods heading from the north to the south. Northern ports would be a back door from the EU including Ireland but some tariffs would apply from Dublin and Rosslare to Holyhead, it seems. Crazy stuff – but “temporary,” and a contingency thank goodness. It should  frighten Brexiteer MPs off No Deal, but most won’t be deterred

As the Guardian reports

The measures also raised immediate concerns about Northern Ireland being turned into a smugglers’ paradise after it was revealed that tariffs would not apply to goods crossing from the Republic of Ireland into Northern Ireland.

The Irish European affairs minister, Helen McEntee, said the prospect of tariffs on beef and dairy exports to the UK from the republic would be “absolutely disastrous for Irish agriculture”.

This is one good reason why Nigel Dodds and the rest of the DUP are backing the Steve Baker amendment (below) urging a standstill on Brexit up to the end of 2021, having rejected the Theresa May’s amended withdrawal agreement last night. This is really a form of No Deal which appeals to many Brexiteers. However this idea covered in my last post is unlikely to fly, as the EU has repeated its commitment to the withdrawal agreement with the backstop. The Commons will hold a free vote on No Deal today and an extension to Article 50 tomorrow. Both are expected to pass to give more time – probably around three months – to agree a new withdrawal agreement.  Brexiteers will resist taking No deal off the table as in their opinion it removes the UK’s last bit of leverage with the EU and turns us into supplicants.

As the Irish Times reports, Britain’s decision to unilaterally allow tariff-free access to Northern Ireland for goods crossing the Border in the event of a no-deal Brexit is a gift to businesses in the South and a potential nightmare for their counterparts in the North.

If Britain leaves the EU without a deal, Dublin will be obliged to apply EU tariffs to all goods coming from the UK ( not the EU as the  Irish Times story says – this must be a typo),  putting Northern business at a disadvantage if they trade across the Border.

 

This may mean no hard border but not no border at all.

The British government acknowledges that the regime will hurt Northern Ireland’s businesses but says the need to keep the Border open trumps economic concerns. It is good news for Irish beef and dairy producers sending products to the North, who will be able to export their products across the Border tariff-free, while Britain imposes high tariffs on similar imports from elsewhere. Irish beef exports destined for the rest of the United Kingdom will be subject to tariffs but there will be no checks on goods crossing from Northern Ireland into Great Britain.

The FT spells it out

The no-deal Brexit plan would see 87 per cent of total imports to the UK by value eligible for tariff-free access. That system would only apply for 12 months while the government consulted on a new, permanent approach to tariffs. Products with zero tariffs would include: aluminium, steel, machinery, arms and ammunition, footwear, paper and wood products. Tariffs would apply to products including beef, lamb, pork, poultry, some dairy, finished vehicles, ceramics, fertiliser and fuel.

At the same time the government announced there would be no checks or customs declarations at the Irish border in the event of no-deal Brexit. However, there would be new checks away from the border to protect the biosecurity of the island of Ireland. That will involve the setting up of a new “designated entry point” in Northern Ireland where animals and animal products from outside the EU would require certification and pre-notification before arriving in the UK. Whitehall officials concede that this would have a potentially negative impact on the competitiveness of industry and agriculture in Northern Ireland. “

However these are the only steps the UK government can unilaterally take to deliver on our absolute commitment to avoid a hard border in the event of no-deal,” the government said.

And RTE News

Under a unilateral temporary scheme, 87% of all imports to the UK by value would be eligible for zero-tariff access – up from 80% at present – while many other goods will be subject to a lower rate than currently applied under EU rules.

In special arrangements for Northern Ireland, the UK’s temporary import tariffs will not apply to EU goods crossing the border from the Republic.

Among the 13% of imports by value that will be subject to tariffs will be:

  •  Beef, lamb, pork and poultry and some dairy products, in order to protect UK farmers and producers from cheap imports;

  •  A number of tariffs on finished vehicles to support the automotive sector, which will not apply to car parts imported from the EU to prevent disruption to supply chains;

  •  Products including certain ceramics, fertiliser and fuel, where tariffs protect UK producers against unfair practices like dumping and state subsidies;

  •  Goods including bananas, raw cane sugar and certain kinds of fish, where tariffs are used to permit preferential access to the UK market for developing countries.

BBC NI’s economics and business editor John Campbell comments:   

What is being proposed here is quite extraordinary… You would have a scenario where if you’re a food exporter in the Republic of Ireland and send stuff to Holyhead you will face tariffs, if you send it over the border to Newry you will not face tariffs.

However, you could have the situation where farmers and food producers in Northern Ireland trying to send their stuff in the other direction will face tariffs.

That will be up to the Irish government and the EU to decide. So it will seriously undermine the competiveness of Northern Ireland farmers.

 

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