Northern Ireland trade deals could differ to UK's under new Brexit plan

21 October 2019 12:35

Northern Ireland could lose out on parts of future UK trade deals, including a planned agreement with the US, should Prime Minister Boris Johnson’s Brexit deal win approval from lawmakers.

The deal would align Northern Ireland’s standards with those of the EU. That means certain foreign goods will be blocked from entering Northern Ireland under UK trade deals if they don’t live up to EU criteria — unless Britain agrees also to be bound by those EU requirements when negotiating trade pacts.

The Brexit deal could also make it hard to prove the origin of parts of products sold in Northern Ireland, causing headaches for UK trade negotiators.

Johnson and the EU found common ground for the UK leaving the bloc while also writing in provisions in an attempt to avoid a hard border between Ireland and Northern Ireland. The outcome is for Northern Ireland to be part of the UK customs union, but to remain in the EU’s single market so that goods can flow freely to Ireland.

For this to happen, Northern Ireland will remain attached to the EU’s standards on goods, for example on health and safety standards. The rest of the UK — Great Britain — will be free to write its own rules on goods.

Should the UK strike deals with another country that has standards unacceptable to the EU, Northern Ireland could find itself out in the cold in certain aspects of the deal.

Imagine, for example, that the UK decided to allow chlorinated chicken or hormone-fed beef into its market as part of a bilateral deal with the US. These are two products that the EU has said would not be accepted in the single market, in its own US trade talks.

Because Belfast has to follow EU regulation, according to Johnson’s deal, this would most likely mean that it would not be allowed to trade these particular goods with the US, while the rest of the UK would.

That means companies and consumers in Northern Ireland may end up with a different choice, or different duty rate, to Great Britain on certain products.

EU deals

But while it might have limits on some UK deals, Northern Ireland will also have a unique relationship with the EU’s trade pacts.

Officially, Northern Ireland will not be able to directly benefit from the EU trade agreements under the new Brexit deal.

In reality, though, it’s likely that goods imported to Ireland under preferential tariffs set in the EU trade deals with countries such as South Korea, Canada or Japan would end up in Northern Ireland. No customs checks are foreseen under the new Brexit deal between Ireland and Northern Ireland, allowing for a free flow of goods between them.

This may create additional competitive pressure on some companies in Northern Ireland while expanding supply options for others.

Rules of origin

The dual customs arrangement set in the latest version of the Brexit deal may also complicate the UK’s negotiations on future trade talks.

According to trade experts, it would be very difficult to trace and distinguish the origin of components used by manufacturers in Northern Ireland. This is important for countries to determine which tariff level should apply to a product, depending on the trading relationship it has with the nation from which the product originates. There might be also a high risk of fraud, including attempts to relabel the Irish content as local.

The UK’s negotiating partners may therefore try to exempt Northern Ireland from their preferential tariff treatment to address the problem of potentially high EU content in products manufactured there.

The new Brexit deal is conditional on approval by UK lawmakers and by a European Parliament resolution.

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