Brexit turmoil is radically reshaping commerce on the island of Ireland

A bill recently announced by the UK government to scrap some aspects of the Northern Ireland Protocol casts a long shadow over the state of trade.

Paul Faith | Afp | Getty Images

Dublin – Amidst acute political uncertainty and the turmoil of Britain’s exit from the European Union, the movement of goods on the island of Ireland has shifted and seen a significant boost.

Since the UK formally left the European Union in January 2020, companies have changed their stance, rethinking the routes they take and the ports they use.

This was prompted by the Northern Ireland Protocol, an arrangement that allows the UK boycott to remain in the EU’s single market but requires checks on goods coming from the rest of the country (England, Scotland and Wales). The European Union’s single market seeks to ensure the free movement of goods, capital, services and labor within the bloc.

The recent shift can be seen in the state of trade between the Republic of Ireland, which is part of the European Union, and Northern Ireland.

According to figures from the Irish Central Bureau of Statistics, imports from Northern Ireland in the first quarter of 2022 grew 34% year-on-year to 294 million euros ($310 million) and exports to the north increased 49% to 368 million euros.

“Obviously what was happening was that Irish buyers were turning away from Britain [English, Scottish and Welsh] suppliers and continue their trade with the UK by purchasing from Belfast rather than Birmingham,” Stephen Kelly, CEO of NI Manufacturing, which represents the industry in the region, told CNBC.

This has been reflected in the movement of goods such as food, medicine and manufacturing supplies across the land borders of the two jurisdictions, transiting road networks as well as to ports for further travel.

Ian Talbot, chief executive of business group Chambers Ireland, told CNBC that the moves in trade are the result of a lot of adjustment by Irish and Northern Irish companies after the Brexit turmoil.

He added, “There are no catastrophic failures anywhere. There is no idle port, no idle road. Trade is happening and in great numbers,” referring to the current arrangement facilitated by the protocol.

However, he said there was still a caveat about differences in the trade and movement of goods on the island of Ireland as much of that change occurred amid the Covid-19 disruptions in 2020 and 2021.

“With the impact of Covid and the lockdowns, it’s very difficult to unravel all of that when comparing. What year are you comparing it to?”

Animated directions

Since early 2021, There was a rapid increase In the number of cargo ships leaving Irish ports, such as Dublin and Rosslare in the southeast, heading for ports in France and Spain to avoid the red tape associated with transiting through Britain.

This represents another shift in the profile of Ireland’s shipping traffic as companies eschew the UK’s traditional ‘land bridge’, with trucks crossing the Irish Sea to the UK and traveling across the country to the port of Dover and onwards to France for continental delivery.

“Northern Irish companies are easily able to get to those roads without having to drive to the east coast of Great Britain,” Talbot said.

But Belfast Harbor also resonated. The Port of Belfast saw its 2021 operating profit rise 13% to £34 million, with more than 25 million metric tons of cargo moved through the port.

In its annual report, the port cited the grace period for the implementation of the Northern Ireland Protocol as a factor in increasing the level of trade. But it acknowledged that “risks and uncertainties” remain as the grace period expires. Britain has not yet imposed checks on goods from Northern Ireland.

“The final derived demand effects on macroeconomic activity from Brexit and the NI protocol, and their associated impact on trade, remain difficult to predict,” the report said.

Protocol Bill

UK government A bill was announced recently Bypassing certain aspects of the Northern Ireland Protocol casts a shadow over the state of trade and shipping in and out of the island of Ireland. The European Union has begun legal action over plans to cancel parts of the dealThe departure of British Prime Minister Boris Johnson has also added more uncertainty – although potential successors Rishi Sunak and Liz Truss are likely to go ahead with the plans.

The bill, as proposed, would create green lanes and red lanes for goods moving into Northern Ireland or beyond. The green corridor will only be for goods destined for Northern Ireland and will not be subject to screening while the red corridor will apply checks to goods eventually destined for the Republic of Ireland or elsewhere in the EU.

Kelly said some elements of the bill, such as the green corridor, were “not offensive” but that there was still doubt about the extent to which it could be implemented.

This doubt will rekindle concerns about trade in Northern Ireland that are similar to those felt when a no-deal Brexit was possible.

“We could potentially be in a worse situation than no deal if the UK and the EU don’t reach a deal in the coming weeks and months, it’s not just a deal but it’s not a deal as well as a trade war,” he said.

“This would greatly hurt not only Northern Ireland but the whole of the UK and the EU, which would be a double whammy for us.”

This is coupled with high inflation and the war in Ukraine, which has disrupted supply chains in the broader European context.

Kelly said there are a lot of moving parts in the trade but that Northern Ireland’s unique situation will not change.

“Northern Ireland will not actually move from being the border between the UK and the EU,” he said. Our geography will not change.