A no-deal Brexit would be disastrous for the drinks industry on both sides of the border, the sector's trade association has said.
he Alcohol Beverage Federation of Ireland (ABFI) warned that the UK leaving the EU without an agreement in place would hit Northern Ireland's whiskey distilleries and cider producers who use Armagh apples.
It would also mean delay and disruption to 23,000 annual cross-border truck movements, unnecessary tariffs on cross-border supply chains and put at risk around £320m worth of trade between the UK and Ireland.
In advance of this week's crunch EU summit, ABFI has published a new position paper, Brexit and the Irish drinks industry: Priorities for the future relationship. The paper says potential consequences of a no-deal Brexit include:
- Legal protection for drinks linked to Ireland - such as Irish Whiskey, Irish Cream Liqueur and Irish Poitin - could be jeopardised.
- Northern Ireland producers' access to global free trade opportunities would be at risk.
- Immediate tariffs on barley, malt, glass bottles, apples, finished cider and other supply chain inputs.
- Regulatory and customs checks at the border, leading to significant delays and additional costs for 23,000 cross-border truck movements.
- Requirement for up-front VAT payments on cross-border trade.
- The potential for regulatory divergence across a range of standards, from labelling to bottle sizes.
ABFI is the all-island trade association for the Irish drinks industry and forms part of Ibec, Ireland's largest business representative body.
ABFI director Patricia Callan said: "The Irish drinks industry is a highly integrated all-island sector that's important for both the Irish and Northern Irish economies.
"For us, Brexit could be highly disruptive, particularly if there was to be a disastrous no-deal scenario. However, this need not be the case and we would urge all parties to seek to ensure that a withdrawal agreement is concluded and that a no-deal Brexit is avoided.
"We want to see clear, robust provisions to safeguard the all-island economy and to avoid a hard border on the island of Ireland."
The ABFI paper outlines that global drinks exports from Ireland were valued at €1.6bn (£1.4bn) in 2017.
The total value of trade in drinks products between the UK and Ireland was €364m (£320m), one-third of which, €121m (£106m), was north-south trade.
The UK remains the dominant market for Irish beer (71%) and cider (85%).
Ms Callan added: "In terms of EU-UK trade, the economic interests of both the EU and the UK would be best served by the UK remaining in a customs union with the EU. If this cannot be achieved, then a comprehensive alternative approach must be put in place. A fall-back to EU external tariffs or WTO rates must be avoided."
A no-deal Brexit could see a range of new tariffs on cross-border supply chains, including:
- Tariffs of up to €93 (£82) a tonne on barley and €131 (£115) a tonne on malt.
- An EU external tariff of 5% on 130 million glass bottles imported into Ireland from the UK.
- A 7.2% tariff on apples grown in Northern Ireland.
"Tariffs would add significant costs to Northern Irish whiskey distilleries and breweries buying barley and malt from Ireland, to Irish craft distilleries and breweries buying specialist malts from the UK and to Irish cider producers buying apples from Co Armagh," said Ms Callan.
"Similarly, tariffs on finished cider products would damage the cost competitiveness of Irish and Northern Irish cider producers, threatening sales and jobs."
Ms Callan said Brexit not only risks disrupting free trade between Ireland and the UK, it threatens trade between Northern Ireland and the rest of the world. "We do not want Northern Ireland producers to face any significant comparative disadvantage if they lose access to EU free trade agreements," she said.