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Neil Gibson: Additional paperwork of any size may be inhibitor to trade after Brexit

Economy Watch

People here do not want ‘free UK postage’ to apply to mainland UK only
People here do not want ‘free UK postage’ to apply to mainland UK only

By Neil Gibson

I really wanted to write this article about the recently published regional happiness data which, again, places Northern Ireland at the top of the UK regional league table. I hoped that it would be a useful palate cleanser. Sadly, given the events of the last few weeks, this will be another Brexit column.

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A Brexit extension has been granted to allow the UK parliament to discuss the bill (and to add amendments) and a general election could still be coming in December.

The debate has been fierce as to whether the 'deal' is beneficial for Northern Ireland. The truth is that it is impossible to say for certain as much remains to be decided.

Additional paperwork may be a slight inconvenience or an inhibitor to trade depending on how onerous it is to complete. Emotions are running high so many contributions to the debate have to be tempered as many of the key costs and impacts are virtually impossible to accurately measure.

The concept of Brexit is an anathema to many and this may influence the extent to which 'administrative processes' are presented as being hugely costly.

Equally, those who dismiss a simple paperwork exercise as trivial forget that, as a market, Northern Ireland is very small in a UK context (about 2% in population terms) and, therefore, additional cost, however small, could deter suppliers.

I am sure many readers can remember the early days of online ordering when 'free UK postage' turned out to apply to mainland UK only! That is much less common today and I am sure no-one wishes for that to return.

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The UK's published impact assessment only adds to the confusion, with many items unquantified or listed as non-monetised, shedding little light on what the true cost might be. In fact, the only substantive cost measured is for the establishment of an Independent Monitoring Authority for the Citizens' Rights Agreements.

This lack of quantification is understandable given the lack of detail for example on paperwork requirements. A suggestion that costs per declaration might range from £15-£56 is accompanied by a caveat that this may not reflect what is needed for GB/NI trade.

Would a delivery of retail goods (which is the dominant component of East/West trade) require any paperwork pertaining to each item in the delivery? As the contents would be for final consumption, it might be expected that paperwork would not be required but what if the delivery contained items that are not permissible for sale in the EU, perhaps because of new trade arrangements signed by the UK? Perhaps not an immediate concern but one that may emerge and either deter firms from supplying to NI or lead them to increase prices. In fact, any perception of additional burden will provide the opportunity for price increases, regardless of how onerous the paperwork is.

The paperwork for East/West trade has dominated the conversation about NI impacts but issues pertaining to State Aid rules, EU funding programmes and of the ability to vary tax rates (VAT, corporation tax etc.) could each be the subject of an entire Economy Watch column.

Any additional cost, tariff or paperwork was never going to be popular but there are benefits in the deal that should not be discounted. If you were an inward investor looking to serve the UK and EU market, it is hard to think that Northern Ireland would not have at least a slight edge as a favourable location within the UK. The unfettered access promise and the access to the Republic and the EU would be a very helpful card to play in site location decisions, which can come down to very marginal factors in what is a very competitive process.

The lack of border checks is clearly welcome for both economic and wider socio-political reasons and there are people who have been heralding a 'best of both worlds' outcome for NI. I do not think, even with more time, a sensible economic impact assessment could be carried out without clarity on what the administrative process is or the potential mitigation funding available or certainty over other macro factors such as currency movements. This is about much more than economics and, although businesses may long for clarity and a way forward, they must recognise also that citizens have other concerns that must be considered.

Offering unfettered access to the GB market whilst avoiding a land border is, in my book, progress and perhaps more than I expected in terms of a compromise position. The exchanges at business events and in Parliament have suggested a (slightly) more cordial tone and a willingness to try and make progress. Hopefully this means that we are edging towards an acceptable way forward.

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