Irish Agriculture, Food Companies Brace for Brexit Tariffs

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By David R. Jones

Accountants in Ireland stand ready to work with domestic businesses and policy makers to meet customs obligations in Ireland likely created by Brexit.

Companies in Ireland’s food and drink industry, which is the nation’s largest indigenous business sector, that export to the U.K—such as Kerry Group, Glanbia plc, and Total Produce plc—could be hit hard by tariffs.

In testimony to the Parliamentary Joint Committee on Finance, Public Expenditure and Reform, Chartered Accountants Ireland (CAI) staffer Brian Keegan said that the reintroduction of customs controls between Ireland and the U.K. appears unavoidable after the U.K. concludes negotiations by 2019 to leave the EU—a process known Brexit.

If the U.K. departs the EU Customs Union as well, many Irish companies will face new tariffs and reporting requirements in importing from and exporting to the U.K., Keegan said in testimony posted on CAI’s web site May 29.

Ireland imported about $21 billion in goods from the U.K. in 2015 and imported about $19 billion worth, the Observatory of Economic Complexity at the Massachusetts Institute of Technology said.

“The agriculture, food and drink sectors, while exporting across the world, are more dependent on the UK and so the impact of a Brexit on these sectors would be severe,” the Irish Business and Employers Confederation (Ibec) said in a pre-Brexit analysis.

Brexit would especially affect exports by Ireland’s wood and wood products companies—aside from furniture—and paper and paper products companies, Ibec also said.

The EU customs union and its single market have operated in Ireland since the 1990s, with Irish businesses and consumers reaping the benefits of tariff-free trade that many now take for granted, according to Keegan’s written testimony.

In-House Customs Knowledge Gone

As a result, most Irish companies have reduced or eliminated their in-house knowledge about customs.

“Citizens and businesses alike have forgotten about the constraints of tariffs and Customs obligations between this country and the UK; indeed many of our citizens have never known them,” Keegan said.

CAI is prepared to work with these businesses and with Irish revenue authorities in meeting customs obligations, he told committee members.

This assumes that the U.K. Conservative Party remains in power following national elections on June 8, Keegan said, as the party has indicated it will collaborate with the World Trade Organization to set tariffs post-Brexit.

CAI has surveyed its members in the Republic of Ireland and in Northern Ireland. Many voiced concerns that tariffs would generate higher prices for Irish goods and services.

“But we also found that Irish business was concerned about other aspects of the reintroduction of tariffs—their paperwork, their payment and their policing,” Keegan said.

10-Fold Administrative Burden

Keegan cited recent testimony to the committee by Irish tax commissioner Liam Irwin, who warned that Brexit would produce 10 times the current volume of administrative paperwork for customs in Ireland.

“The real challenge is to facilitate Customs administration for the many businesses exclusively importing from or exporting to the UK which have to deal with Customs obligations for the first time,” Keegan said.

These first-time burdens for administering customs, he said, will have the same effect on some Irish companies as imposing a new tax.

In addition, many Irish companies remain uncertain about how tariffs would operate after Brexit takes effect.

“Relatively few understood that the enforcement of border controls for the Customs Union, however implemented, needed to be separated from political promises of future trade agreements between the UK and the EU, and between the UK and the rest of the world,” he said.

Transitional Customs Deal Doubtful

Though Ireland and the U.K. might hammer out transitional arrangements on customs, Keegan said, this appears doubtful given that the EU has set higher priorities, including citizens’ rights, for the Brexit talks.

As the only EU nation sharing a land border with the U.K., Ireland’s policies will face intense scrutiny from the EU as it establishes customs controls along its boundary with Northern Ireland.

“The Europeans will watch us like hawks to make sure we get Brexit right,” Keegan said.

To contact the reporter on this story: David R. Jones in London at correspondents@bna.com

To contact the editor responsible for this story: S. Ali Sartipzadeh at asartipzadeh@bna.com

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