Brexit Backstop – What It means for Northern…

Thanks to the United Kingdom’s leave vote, for the first time since 1973, the UK and Ireland will be in different trade and legal arrangements (both nations joined the then-European Community on the same day).

What is the Brexit backstop?

The draft withdrawal deal between the EU and UK contains a 'backstop' which would mean Northern Ireland will continue to follow many rules of the EU's single market and remain within the EU’s regulatory and customs arrangements indefinitely to prevent the emergence of a hard border.

It also means Northern Ireland would align with the EU single market on goods standards, agricultural production and veterinary controls.

The whole of UK would form a single customs territory with the EU, but Northern Ireland alone would follow the full EU customs code.

What does this mean for trade?

The UK would form a single customs territory with the EU, but Northern Ireland alone would follow the full EU customs code. Essentially drawing a customs border down the middle of the Irish Sea, meaning Northern Ireland businesses would face no new customs barriers on EU trade.

Compared to the rest of the UK, Northern Ireland businesses would have a competitive edge in trade with the rest of the EU. They could get their goods into the single market in basically the same way they already do, whilst UK businesses would face new barriers.

Businesses in the rest of the UK would not face tariffs but would face additional administrative burdens.
Northern Ireland will have to stay aligned to EU VAT rules regarding goods. Meaning, imports from the UK could be liable for VAT at the point of entry whilst imports from Northern Ireland would not.

What are the issues?

The backstop will result in new regulatory checks between the UK and Northern Ireland, effectively creating an Irish Sea border. There will need to be checks on any food products at ports of entry, though the EU has said that these will be minimised to avoid disruption to trade. Goods transported across other parts of the UK will not be subjected to these checks.

Businesses in Northern Ireland will also have to adhere to EU rules and regulations with little ability to influence them. There will be no government to work the EU system on behalf of Northern Ireland, unless the Irish government helps out.

What are the advantages?

The customs, regulatory and VAT issues mean it will be easier for businesses in Northern Ireland to sell into the EU, compared to GB rivals.

What's more, the UK government has said it will not impose any new barriers to trade on goods moving from Northern Ireland into GB.

That could potentially make Northern Ireland an attractive location for investment from businesses who want to serve both the UK and the EU.

If you want to know more about setting up business or trade route with Northern Ireland, get in touch with one of the team on the form below. 

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