British manufacturers could rush to establish bases in the North to avoid customs tariffs after Brexit, a lobby group for the industry has claimed.
The UK government has proposed smaller firms involved in localised cross-border trade with the Republic should be exempted from the responsibilities.
Representative body Manufacturing Northern Ireland said that 99% of the businesses it represents were small or medium-sized but they had been given no idea how the suggested arrangements after March 2019 could work.
The group said: “Essentially it means that Northern Ireland firms would be within the customs union whilst also being outside of the customs union as part of the UK. Is that possible or acceptable? It could lead to a rush of Great Britain manufacturers wanting to come and set up in Northern Ireland to avoid customs requirements but equally, it could see Irish firms using Northern Ireland as a back-door to the UK market, so trade could be distorted.”
Large manufacturers in the North, around 60 or so, accounted for half of all employment and turnover from the sector, the group said.
“They’ll be subject of currently complex and costly red tape and delay being outside the customs union.
“Manufacturers constantly work to remove complexity and cost so this will be difficult for such strategically important employers and exporters. It is business which will be most impacted and which will be asked to make Brexit work. Efforts need to be stepped up to engage and get ideas about how these and other proposals are made workable.
“Given all this, it’s difficult to understand how any guarantees can be provided about the absence of physical borders or customs checkpoints, regardless of any proposed exemptions, unless a comprehensive customs agreement and single market access is delivered,” said Manufacturing Northern Ireland .
The UK government has dismissed any suggestion a customs border could be shifted to the Irish Sea, with checks and tariffs only in operation at entry and exit points between the island of Ireland and Britain.
If the EU signed off the UK’s ultimate customs objective, a partnership deal with the UK mirroring Europe’s tariff system, then no Irish companies would be subject to new checks as a consequence of Brexit.
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