Britain's decision to unilaterally allow tariff-free access to Northern Ireland for goods crossing the Border in the event of a no-deal Brexit is a gift to businesses in the South selling into the North – and a potential nightmare for their counterparts in the North.
If Britain leaves the EU without a deal, Dublin will be obliged to apply EU tariffs to all goods coming from the UK, putting Northern business at a disadvantage if they trade across the Border.
It is good news for Irish beef and dairy producers selling into the North, who will be able to export their products across the Border tariff-free, while Britain imposes high tariffs on similar imports from elsewhere. However Irish beef exports destined for the rest of the United Kingdom will be subject to tariffs, posing a significant threat to the sector as the volume of sales to the British market is much greater than what is sold in the North.
There will be no checks on goods crossing from Northern Ireland into Great Britain though the UK says it will have an anti-avoidance regime to try to ensure the correct tariffs are paid on goods entering the British market.
The British government acknowledges that the regime will hurt Northern Ireland’s businesses but says the need to keep the Border open trumps economic concerns. The announcement comes hours after the DUP’s 10 MPs voted against British prime minister Theresa May’s Brexit deal and ahead of a vote this evening when they are expected to reject a proposal to rule out a no-deal Brexit.
The British government says it will seek to agree permanent measures with the European Commission and the Irish Government. But no ameliorating measures following a no-deal Brexit will protect Northern Ireland from paying the price for an outcome most of its MPs at Westminster view with equanimity.
In the event of a no-deal exit, the Irish Government has said it has no plans to establish physical border checks. However it will be obliged by the EU to impose tariffs, or customs duties, on goods entering the Irish – and thus EU – market from anywhere in the UK.
The UK’s decision to allow tariff free access from the Republic and have no checks will also increase fears of smuggling across the Irish Border, which could be used as an illegal back door by smugglers into the UK market. The UK says the new regime will be temporary.
