Change in trade with the Republic of Ireland
According to the respected Economic and Social Research Institute (ERSI), it is estimated that Brexit has led to a 45% reduction in goods coming from the UK to Ireland. Before Brexit, UK trade represented 33% of Irish imports but that is now down to 12%. Conversely, the ERSI consider that “very little reduction [has been] observed over the past year” in Irish exports to the UK, despite certain sectors such as food and beverage exports to UK falling as much as 40%. The ERSI also reports a significant increase in trade between Northern Ireland and the Republic.
Brexit has also prompted changing trading patterns to and from Ireland. The UK landbridge was a preferred route for freight, from Dublin or Rosslare through Wales and then across the Channel to France. However, Brexit has incentivised a substantial increase in direct freight sailings from Ireland to the continent. For example, Dublin Port reports that container and trailer traffic to/from Great Britain is down 21.2%, whilst the same traffic directly to/from continental ports has increased by 36.3%. Containers and trailers in Dublin Port to/from Britain has dropped from 64% before Brexit to just over 50% now.
Making a move: what next?
Despite the myriad of misunderstandings, for many businesses of Northern Ireland, the protocol is seen as an opportunity to continue trade with both the EU and UK, providing Northern Ireland with a unique economic opportunity. The danger though is that the ongoing disagreement will lead to political instability and continuing uncertainty for businesses on both sides of the border – a situation that is compounded by the governance of Northern Ireland being a highly emotive issue.
Should Article 16 be triggered by the UK Government, a long process would commence as outlined in Annex 7 of the protocol. Oversight of the Article 16 process is held by the Joint Committee. As such, alternative options could be put forward that include a suspension of surveillance measures or the freezing of the memorandum of understanding on financial services.
For now though, the talks between the UK and EU remain unresolved, which is reminiscent of the intensive discussions leading up to the Withdrawal Agreement in December last year. And, as stated above, the extent of the EU’s reaction depends on what steps the UK Government takes. If, say, the UK seeks to extend grace periods for importing foods to Northern Ireland, we may see little more than lengthy court proceedings. If, however, the UK seeks to override the provisions on the single market and cut out the ECJ, a more forceful response form the EU can be expected. As we now know, when it comes to Brexit, finding a way through a scenario to a satisfactory outcome is often protracted and highly political.