By John Whelan
Regardless of a good, bad, or no deal, three out of four manufacturing companies in the North believe they will be worse off after Brexit.
This was the stark message delivered by Stephen Kelly, chief executive of lobby group Manufacturing NI, at a recent special conference on Brexit and the North’s manufacturing industry held in Belfast’s Titanic Hotel.
Industry speakers saw the burden of non-tariff barriers and increased regulatory requirements as a likely consequence of Brexit and considered them of more concern than the possibility of direct tariffs being introduced.
An example is the requirement for a certificate of origin document which is considered the minimum to prove goods were made in the region once Brexit kicks in.
The full cost of producing this cert has been calculated by Manufacturing NI at €544.
It said no commitment has been given on non–tariff barriers to trade. Added complexity in trading and consequent added costs were inevitable and it warned “there will be casualties”.
A survey by Manufacturing NI reported that 38% of manufacturers were planning on moving facilities out of the North due to Brexit.
All were being hampered by the slow progress in Brexit negotiations.
The December Joint Agreement with the European Union, followed by the March 19 statement was considered by the manufacturing industry as a fudge.
Little credence is given to Theresa May’s December commitment to an agreed solution, specific to the North, which would create a new customs partnership with the EU in a way that removes the need for a UK–EU customs border, facilitated by new technological systems.
The House of Commons Committee on Northern Ireland Affairs is very much at one with manufacturers in the North and stated in its latest review report: “We have, however, had no visibility of any technical solution anywhere in the world, beyond aspirational, that would remove the need for a physical infrastructure at the border.”
One of the more intractable issues at customs border crossings internationally are what are called sanitary and phyto-sanitary checks.
Importing countries require a certificate from the exporter’s agricultural offices for fresh fruits, vegetables, fish, live animal and other products.
How these sanitary and phytosanitary matters will be dealt with, as well as imports of other regulated goods such as pharmaceutical and medical devices, will be at the heart of the detailed proposals that are being called for.
However, in a recent BBC interview, the UK’s Brexit secretary David Davis said solutions will be found to the border issue and a trade deal with Brussels is now “incredibly probable”.
The EU withdrawal deal includes a fall-back option of the North effectively continuing to remain in the customs union, but Mr Davis said either the UK-EU trade deal or new technology could prevent that.
When challenged that there were no other borders of that kind in the world, Mr Davis said: “We have got a whole load of new technology now.”
Businesses in the North see this as more bluster than substance.
Manufacturing jobs are concentrated in areas with high levels of exports that predominantly flow to other EU countries. Therefore, a disruption to EU trade could lead to a significant reduction in jobs in that sector.
There have been many analyses of the economic impact of Brexit on the North, all showing a negative outcome for the economy.
Perhaps the most worrying was the UK Treasury report which shows the North’s economy contracting 12%.
This worst case scenario would push it into recession and it is this very worrying picture that Manufacturing NI’s Stephen Kelly focuses in on, saying: “We continue to be used by both sides to either blunt Brexit or achieve the impossible deal. Both sides are keen to appear concerned but are our interests really that important to either side?”
John Whelan is a leading trade consultant