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John Simpson

Getting post-Brexit trading policy right is vital for Northern Ireland

John Simpson


Farewell: Brexit supporters bid goodbye to the EU

Farewell: Brexit supporters bid goodbye to the EU

AFP via Getty Images

Farewell: Brexit supporters bid goodbye to the EU

Legally, the departure from the EU has happened. Initially, in a period of transition, revised operational decisions must be made. In the next year government and business managers will be busy adjusting to the new environment.

For Northern Ireland, during the transition period, the adjustment processes will be more intensive than has yet been appreciated.

The UK-EU Withdrawal Protocol will be critical for unique decisions affecting NI businesses.

The UK Government acknowledges that there is a large agenda of steps to anticipate the new policy freedoms.

There is a developing focus on policy towards trade deals with the EU, USA and other countries.

There is a range of questions related to international financial transactions.

Additionally there are decisions to be made on regulating the flow of people wishing to migrate to the UK.

As Northern Ireland prepares to adjust, to the best possible advantage, to the EU Withdrawal Agreement, the special provisions of the Protocol on Northern Ireland must be delivered alongside the range of actions determined by Westminster for GB.

The special trading concessions, whilst acknowledging the constitutional position of NI within the UK, allow for the avoidance of a customs border between NI and the Republic which, in turn, means that goods originating in NI can have continuing duty free trading access to the EU.

The concession agreed for NI must be delivered with the best advantage of the two differing trading situations: NI as part of the UK now trading as a separate country and NI remaining linked to the EU market through the deal avoiding an Irish border. Undoubtedly, the possible overlap between the differing jurisdictions will call for ingenuity but, pragmatically, it must be made to work.

There would be no trading problems if two features remained unchanged: the UK would agree an extensive free trade deal with the EU, and the UK and EU could agree that the inherited regulatory alignment for trade in goods should be maintained.

Unhappily for ease of administration, there is no promise that these two features will be maintained.

If there is no free trade deal between the UK and EU, then there may be customs duties, both ways, for businesses to pay.

Critically, if there are, however selectively, duties to be paid between UK and EU then trade from GB coming into Ireland via NI ports will need to be documented to assess liability to duty.

Similarly, goods from Ireland/EU passing through NI to reach GB will need to be documented.

Without an effective free trade treaty or when regulatory alignment between UK and EU diverges, the NI arrangement to document trade (and possibly impose duties) becomes a necessary supervisory process.

This may partially erode the advantage to NI of having the special protocol.

It may mean at least additional paper form filling costs.

Faced with the need to have documentary evidence of trade flows between GB, NI and RoI, the various customs authorities should now be devising a simplified paper trail to minimise any extra costs.

One option would be for the customs authorities, by agreement, to avoid unnecessary paperwork for businesses which register as an 'authorised economic operator' and which have permission to move goods, which would not attract duty, on an open basis - in other words, there would be an honest trader assumption, subject only to occasional unplanned inspections at the ports.

There is a concern that the maintenance of regulatory alignment between the UK and EU will be challenged because of emerging differences.

The EU may insist on strict technical alignment whilst the UK is expected to suggest that, with a degree of flexibility, any trade deal should rely on 'mutual recognition' clauses. During 2020, the differences in language usage are set to create a new dimension for the post-Brexit scene.

With goodwill, Northern Ireland should be able to argue for special arrangements giving the best of both worlds.

Company report: Andor Technology

Andor Technology, based in west Belfast, has been owned by parent company Oxford Instruments since 2014. It is a successful local company with expertise in the global markets for advanced scientific imaging and photographic equipment.

The latest trading results show a large increase in annual turnover, recovering from a reduction a year earlier, to reach over £75m. The turnover change is reflected in the operating profit which reached a new high of £11.6m.

Pre-tax profits have been supported each year by income from shares in subsidiaries owned by this company. This addition to profits has varied from year to year bringing an addition of £3.1m in the latest year, compared to £1.8m a year earlier.

The subsidiaries or branches based in Japan and America closed in March 2019 with the trade and assets transferred to newly created subsidiaries in exchange for the issue of shares in these businesses.

Operating profit together with the supplementary income from shares in subsidiaries has been at higher levels in recent years than was recorded prior to its purchase by Oxford Instruments.

Until the end of March 2018 the company has retained post-tax profits within the business. However, in the most recent year, a dividend of £24m was paid to the parent company shareholder. As a result, the balance sheet value of shareholders’ funds fell by £11m.

The principal activity of the company is in the development and manufacture of high performance scientific digital cameras, systems and software. The company reports that these cameras find applications in issues as diverse as the formation of distant stars and the development of anti-cancer therapies. Reflecting these priorities, the company spends substantially on R&D — £5.1m in the year to March 2019 and £5.5m a year earlier.

A feature of the company’s annual report is a detailed review of the risks and uncertainties facing the business. Andor has applied for Authorised Economic Operator status to facilitate movement of goods in the EU 27 after Brexit.

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