It will all change for Irish exporters at 11pm on Thursday

Exactly 27 years after the single market was put in place, barriers are going up again between the EU and UK

Lorries queue to enter the port of Dover in Kent. Christmas stockpiling and Brexit uncertainty have again caused huge queues of lorries to stack up in Kent. The latest delays came as the UK marked less than two weeks until 2021 and the end of the Brexit transition period.

Between 1992 and 2006, the EU single market generated 2.75m jobs and 2.15% of extra growth for the economy, worth €518 extra for every person.

However, Brexit means that a good chunk of Ireland’s share of those benefits will end at 11pm tomorrow night.

Exactly 27 years after the single market was put in place, sweeping away technical, regulatory, legal, and bureaucratic barriers that stifled free trade and free movement, those barriers are going up again between the EU and UK.

Hence the somewhat muted response to the EU-UK agreement on future relationship.

Charlie McConalogue, the agriculture minister, welcomed the agreement, saying tariffs of up to €2.5bn on the agri-food trade from Ireland to Britain were avoided.

He also welcomed the recent agreement on the Northern Ireland protocol for operation of the all-island economy, allowing cross-border trading to be unaffected by Brexit.

Irish Farmers’ Association (IFA) president, Tim Cullinan, said the agreement came as a relief, but IFA has real concerns about how non-tariff barriers will affect trade flows.

For him, as for many others, scenes at Dover before Christmas, with hundreds of trucks backed up and freight delayed, brought home the Brexit difficulties.

Irish Creamery Milk Suppliers Association president, Pat McCormack, welcomed the deal as averting potential disaster for Ireland’s agri-food sector. He said that with over 50% of Irish beef and 30% of dairy exports going to British markets, tariffs and quotas would have been hugely damaging. He was confident the December 24 deal brings a workable platform from which to address any EU-UK trade issues.

Also keeping the bright side out was the Irish Co-operative Organisation Society (ICOS), which welcomed the deal, albeit it has costly and burdensome new administrative and sanitary trade barriers.

ICOS hoped the new relationship with the UK would be defined by co-operation, stability, and accommodation of frictionless trade.

More hard-headed were the business community, represented by Food Drink Ireland, which said it was still very much a hard Brexit, because of the substantial non-tariff barriers, the costs of which must be absorbed by the food-supply chain and by consumers, and it tagged on a long list of government measures it wants to help Irish companies maintain their valuable UK market positions and diversify into new markets.

Dairy Industry Ireland (DII) said the Christmas Eve agreement was the least-worst option, but agri-food in Ireland still faces huge new barriers, from tomorrow, that will make consumers, farmers, and companies poorer.

DII has estimated that non-tariff barriers will add the equivalent of 1.58c per litre of extra cost to the 2bn litres of Irish milk used to make cheddar cheese, a product particularly exposed to the UK market. DII also has a long list of measures the Irish Government and the EU must put in place to simplify procedures and reduce costs to Irish exporters.

The recent, two-day French ban on accompanied freight crossing the Channel (because of fears over a new strain of coronavirus in the UK) led to thousands of lorries being held up in Kent and may have raised fears over how well ports will cope, from tomorrow, with Brexit. Those dealing in fresh food that has a limited shelf life, such as beef, could be badly affected by delays.

And further down the road, they fear the UK market may be tougher, if London does trade deals with big agricultural exporter nations, such as Brazil, the US, Australia, New Zealand, etc. That could leave Irish agri-food exporters facing a declining share of a lower-value market.

Obviously, they were not encouraged by Boris Johnson, Britain’s prime minister, saying, on Christmas Eve, that the UK will be the EU’s friend, ally, supporter, and No 1 market, after their Brexit deal.

Still, a look at the plight for the fishing industry illustrates how Brexit could have gone pear-shaped, and why the agri-food sector can count its blessings. Even with the agreement, there’s a 25% cut in the share of fish caught by EU vessels in UK waters. The EU initially wanted to maintain its current access; the UK wanted a 60% cut.

That’s the situation to June 2026, from when there will be annual negotiations on how much fish each side can catch in the other’s waters.

The €5bn Brexit adjustment reserve, for those worst-affected in the EU, will, therefore, be aimed primarily at the fishing sector — and at Ireland, because it is the EU state most exposed to Brexit.

It will also support businesses and employment in affected sectors, regions, and local communities, and can assist public administrations for the proper functioning of border, customs, sanitary, and phytosanitary controls, and to ensure essential services to the citizens and companies affected.

The reserve will rapidly, and flexibly, cover expenditure in EU states over a 30-month period, distributed mostly as pre-financing in 2021, calculated on the basis of the expected impact in each state’s economy, taking into account their degree of economic integration with the UK, especially in fisheries.

A smaller tranche of support in 2024 can be claimed by EU states.

The €5bn fund will be used to “counter unforeseen and adverse consequences”, as barriers (to trade in goods and services and to cross-border mobility and exchanges) that have not existed for decades are re-erected in both directions.

Meanwhile, look for a strengthening of the sterling currency to also help ease the Brexit blow.

Another positive is the increase in direct cargo routes to the Continent, for goods that are normally transported via the UK. Going direct may take longer, but it will avoid Brexit documentation and checks in the UK.

Delays are likely for goods entering the ports and Eurotunnel in Kent, before travelling to France. Access to key roads in Kent will be prohibited to drivers unless they have a Kent access permit for each HGV.

Faced with such obstacles, our exporters need all the help the EU and the Government can provide, as they are thrown in at the deep end of the bureaucracy in the largest bilateral trade pact in history, which is also the first modern such deal to demolish an existing trading partnership and erect new barriers, in a trade worth about €740bn per year.

Exporters face an estimated 13-fold increase in customs declarations, and up to one third of goods in and out will be inspected.