The clock is ticking very loudly
Brexit may have taken a backseat over the last few months whilst governments and businesses have responded to the impact of Covid-19, but as the final deadline to request an extension to the transition deadline has now passed, Brexit is back fighting for top spot on the agenda. We get an insight from the British Retail Consortium (BRC) on key issues for the retail sector.
One of the most difficult parts of negotiating our exit from the EU was how to deal with the border between Northern Ireland and the Republic of Ireland. The solution was to accept measures which ensure no checks at that border by, in effect, installing a border post in the Irish Sea for goods travelling from Great Britain to Northern Ireland.
To ensure no border on the island of Ireland, the UK has accepted to reduce the risk of non-compliant goods ‘leaking’ into the EU across the non-existent border, as the UK will have a different tariff and regulatory policy to the EU that requires checks on goods going from GB. This was the problem the Government accepted on 20 May, now it needs to find solutions in the next six months to avoid additional delays and costs for Northern Irish consumers.
This is a particularly acute problem in food as much of that sold in Northern Irish supermarkets is made and transported from Great Britain. Currently that moves seamlessly as part of the supply chain, but new checks would add delays and cost, pushing up prices in store.
There are two key problems, firstly the UK, including Northern Ireland will be a separate customs territory to the EU and secondly that Northern Ireland will continue to align its regulations on food production and safety with the EU, not the rest of the UK.
On the first point, businesses will need to demonstrate goods from Great Britain are only destined for Northern Ireland. This is because the UK tariff schedule may be different to the EU and this prevents the risk of cheaper goods leaking across the EU border into the Republic of Ireland undermining EU producers.
The second point is perhaps more difficult to solve. The EU is particularly protective of its food industry and checks on imports to ensure they are safe and pose no risk are stringent. Whilst it might seem strange to think about this today as we share the same regulatory structures, what if the UK were, for example, to allow imports of chlorinated chicken or GM products not authorised in the EU? Checks on food imports are particularly complex and bureaucratic and certainly not something a supermarket sending multiple, composite food products wants to consider.
The one bit of good news is both sides are aware of the potential impact on Northern Irish supermarkets and recognised that in recent statements. There is also the possibility of a more flexible approach to imports than the EU is likely to take for exports to EU Member States. The hope is the UK will work with businesses to find solutions which both satisfy the EU but are not bureaucratic and unworkable. There are certainly IT solutions out there and if backed by a trusted trader approach we could solve this problem without impacting too greatly on Northern Irish consumers.
What is clear is the clock is ticking very loudly and businesses still don’t know what they need to do from 1 January 2021. Any businesses whose supply chain runs across the UK, particularly GB to Northern Ireland should be paying close attention to developments to ensure they are as prepared as they can be. We at least have recognised the problem, it’s just the solution we need now.
This article was written by Andrew Opie, Director of Food & Sustainability, BRC as part of RPC's Retail Compass Summer edition 2020.