WTO status for Irish goods ‘feasible’ for Brexit

By Eamon Quinn

The issues of trading unprocessed milk and other key products that trade exclusively between the two parts of Ireland under Brexit could be solved by seeking special status under existing international trade rules, an expert at the Economic and Social Research Institute has said.

Associate professor Edgar Morgenroth said “a feasible way” around the political logjam between Dublin and London and the objections of the Democratic Unionist Party over the status of trade across the island after Brexit could be struck if key items of trade between the North and the Republic were designated special status under World Trade Organisation (WTO) rules.

Goods traded exclusively within the island could be designated tariff-free under the WTO, he said.

The optimum outcome of Brexit talks would nonetheless be if the UK were to stay in the EU, with the second-best solution being agreeing some sort of special status for the North in the EU’s single market, he said. Failing those outcomes, new agreements for products traded solely within the island could be agreed, he said.

“There could be product-by-product arrangement arrived at for the Irish border where for some products trade is open while it is not for others,” he said.

This would still leave the North products having separate status from the rest of the UK and could be blocked by the DUP, but there were undoubtedly huge benefits for the North under such arrangements, short of the UK staying in the EU, Mr Morgenroth said.

“Having differences can be of advantage [to businesses] in Northern Ireland,” he said.

Trade in unprocessed milk between the two parts of Ireland has long been identified as a key industry that would face the worst disruption, and cause the greatest economic fallout across large parts of the North and the Republic under a soft or hard Brexit.

An ESRI study by Martina Lawless and Zuzanna Studnicka for InterTradeIreland last year found the “most striking” effect of Brexit in cross-border trade was from milk. It said restrictions in trade in unprocessed milk and cream between the Republic and the North could account for about half the estimated drop in trade between the two parts of the island under a hard Brexit outcome.

“Milk and cream, which accounts for 15% of Northern Ireland’s exports, effectively drives the overall estimated effect and explains why the total trade reductions estimated for Northern Ireland are so much larger than for the rest of the UK,” the cross-border report found.

“Other affected products from Northern Ireland explain no more than 5% o f the total estimated fall, emphasising strongly the importance of milk exports,” it said.

Based on 2016 figures, South to North trade in goods is worth €1.65bn a year, and North to South trade was valued at €1.05bn, according to the report.

The researchers last year also found that exports from the Republic to the North and Britain were “also relatively concentrated in terms of their exposure to the introduction of tariffs or trade restrictions, with around 40% of the overall effect being accounted for by just four products”.

Mr Morgenroth said it was of key importance to strike agreement for Irish trade before the UK exits the European Union.

The issues of trading unprocessed milk and other key products that trade exclusively between the two parts of Ireland under Brexit could be solved by seeking special status under existing international trade rules, an expert at the Economic and Social Research Institute has said.

 

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