Manufacturing & Supply Chain

Ibec has welcomed the aim of the UK government to avoid customs checks on the island of Ireland and develop streamlined or new customs arrangements with the EU in two new Brexit position papers. However, the group cautioned that a UK departure from the EU customs union would present very serious challenges to achieving these aims. The group expressed concern that business would ultimately end up paying the bill in the form of additional customs and regulatory requirements at various points in the supply chain.

Ibec welcomed the reiteration of the UK position in favour of maintaining the Ireland-UK Common Travel Area, but said business remained deeply concerned at the impact of Brexit on North-South trade and business relations, the all-island economy, and on the need to safeguard the Good Friday Agreement.

On the economically more significant East-West trade, Ibec expressed concerns about higher costs for business arising from complex customs procedures and divergent tariffs and import duties emerging between the UK and the EU. Streamlined customs arrangements will be critical in keeping costs to a minimum. A lot of work remains to be done to ensure that proposals are feasible and work for business. An important factor in working out a new customs system will be a transition period of several years.

Ibec CEO Danny McCoy said: “The recognition of the many unique problems that Brexit presents to Ireland is welcome, but we’re a very long way from resolving the issues. These are complex problems that require detailed, workable solutions. These could well be elusive if the UK continues to stick to its current hard Brexit trajectory.

“Any new customs border on the island of Ireland, and between Ireland and Britain, presents major economic and logistical challenges and risks imposing significant additional costs on business. There is no simple solution that will satisfy the needs of all parties to the negotiations. A detailed, costed impact assessment is needed to weigh up the options available and properly inform the debate.”

On UK proposals for transitional customs arrangements, Mr McCoy said: “The belated recognition that the UK needs a transitional customs union is welcome. The UK will, however, also need to adhere to single market rules if goods and services are to continue to trade freely during this period.

“UK Brexit policy continues to be dictated by domestic party political concerns, not rational economic considerations. We all stand to lose out as a result. A fundamental rethink of the UK position is needed if we are to avoid a significant economic hit to key sectors of the economy.”