Supply chain fears as UK looks at renegotiating NI trade agreement

Dave Howorth, executive director at supply chain and logistics consultancy, SCALA, has commented on the calls by Brexit Minister, Lord Frost, to overhaul to the Northern Ireland trade agreement, as well as the potential fallout for businesses, saying:

“Ever since the Protocol came into place on 1st January there has been significant disruption to supply chains between mainland UK and Northern Ireland. Whilst businesses and hauliers have come to terms with some of the onerous administrative requirements there are fundamental obstacles associated with some products, most notably sausages and chilled meats due to the UK leaving the EU and its food regulatory standards.

“At the crux of this issue, and the other challenges associated with the supply of products from UK mainland to Northern Ireland, is the fact that in order to avoid a hard border between Northern Ireland and ROI Northern Ireland effectively remains part of the EU single market as it stands.

“Beyond a potential “Sausage War” it is clear that the Northern Ireland Protocol is forcing businesses to rethink their supply chains. Retailers in Northern Ireland have already switched to more local sourcing. They are experiencing additional cost of supply from the UK mainland and therefore, ultimately, prices to consumers have increased. One wonders whether at some point retailers such as Sainsbury and M&S will ultimately consider the difficulty of supplying to and trading in Northern Ireland too high an effort to sustain, with today’s news that M&S will be cutting its Christmas range unless a resolution could be found a potential harbinger of events to come.

“In terms of resolution the stakes are high. If the UK Government was to press the “nuclear button” and independently refuse to comply, the EU may take punitive action and suspend parts of the wider UK-EU Trade Agreement, which would send a shudder down the spine of Supply Chain Directors across the UK and Europe.”

Brexit minister Lord Frost warned the “burdens” created by the Northern Ireland Protocol will “worsen, not improve over time…we cannot go on as we are.”

The European Commission has said it “will not agree to a renegotiation” of the Northern Ireland Protocol after the UK government demanded that “significant changes” be made.

Lord Frost today unveiled UK government proposals that he said are meant to bring a “new balance” to the protocol that will ensure “goods circulate much more freely within the UK customs territory while ensuring that full processes are applied to goods destined for the EU”.

According to the government’s command paper, the plan includes:

Returning to a normaly treaty framework in line with all other international agreements.

Looking at ‘exceptional agreements’ around data sharing and cooperation.

The introduction of penalties to deter people who might seek to move non-compliant products from Northern Ireland to the Republic of Ireland.

Avoiding controls at Northern Ireland’s ports and airports.

Agreeing a standstill period including the suspension of all legal action by the EU that will allow goods such as chilled and processed meats to move freely between parts of the UK.

Ensuring that the relationship between the UK and the EU is not politicised by EU institutions such as the European Court of Justice which might seek to pressurise Britain in a post-Brexit world.

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