Stephen Kinnock: Thank you very much to all of our witnesses today for some very useful and very sobering analysis of the situation that you find yourselves in. I wanted to first focus on this issue of composite loads. Clearly one of the big questions is how you identify what is an at-risk product and then register what is at risk and what is not, when you are dealing with composite loads that could contain thousands of different product lines? Is there a precedent for identifying the issue of composite loads and what is at risk and not at risk? Does this happen anywhere else in the world? I am just trying to figure out how you would even technically do this.
Aodhán Connolly: There are two separate issues here. There is what is at risk for customs and then there are things that are products of animal origin, which need those export health certificates. They are two separate issues. When you are talking about composite loads, 90% of things that are going across the Irish Sea from Great Britain to Northern Ireland are composite loads. About 70% of the value of everything that is going over from Great Britain to Northern Ireland is for retailer shelves or is retail products. Yes, it does happen, though usually not in the same way. If you look at things going EU to GB, there will be fewer products on that and then they will go to distribution centres, be put into different lorries, and those lorries will go to shops and over to Northern Ireland as well. That is where you get your composite loads.
On the at-risk stuff, all of that—it does not matter what you put on that—will have to have a customs code. That needs to be put in. The Trader Support Service removes some of that friction. Remember that it is untested. There are concerns about whether it will be ready and whether it will be able to handle the capacity. We are talking to the TSS guys; we know them of old and there is a great working relationship there. The problem is the timeframe to deliver that.
We are waiting for two things when it comes to at-risk goods. The first is whether or not we get a FTA. If we get a zero-zero FTA, that removes some of that customs friction. There will still be some paperwork that needs to be done, but it will not be as heavy. The other thing is the deliberations of the joint committee. We are in constant contact with the EU side, the UK side, and even with the Northern Ireland observers who are there. What they have said is they will not be bringing anything out until they have a complete package to give to people, because they do not want it torn apart bit by bit. You can understand that. We in the business community need to show that the faith that we have put in that process has been worth it. We need to see those common-sense decisions coming from it.
On the products of animal origin side, this is where you can have up to 400 in a supermarket load, but remember that it is not just about the supermarkets. For all of the pet-lovers in Northern Ireland, those pet foods will need to have a product of animal origin. Some of the pet stores, the big guys, will have more EHCs needed than a supermarket load. What we can to do mitigate that is to have either a veterinary agreement, the same as New Zealand has, which means there is 1% checks, which for Northern Ireland means around seven lorries per day that would be checked. That is on the Christmas wish list; you would need a good fairy to deliver that.
On the other side, there is the retail movement system that has been talked about. That would mean that there would be an audited and certified supply chain, where we would give some evidence to the EU to show how we sell, where we sell, that we know what we are selling and that it is not at risk of going into the Republic of Ireland or the EU. In return, the EU would lift that mandated need for an export health certificate. That is still under negotiation. It has been in negotiation since the summertime. The big problem here is the politics of the FTA; although they are supposed to be separate but parallel negotiations, there has been a crossover. The machinations over the FTA have slowed up those deliberations in the joint committee.
Stephen Kinnock: Victor, is there anything you would like to add around this issue of composite loads and what is at risk and what is not?
Victor Chestnutt: The at-risk one is very difficult to see how that is going to play out, because basically anything that comes over into Northern Ireland is at risk of going into the south. We are hearing now it is probably going to be up to the individual farmer to give evidence that that product is for his farm and for his business. On the composite loads, yes, if we buy an animal in the UK and it comes in on a lorry with others, the problem is, if one person’s paperwork is not right, that truck will not arrive.
Stephen Kinnock: It seems to me that even if there is a deal in the next week or two, it is simply impossible that you will get all of this stuff sorted out by 1 January. Should we just call a spade a spade here?
Victor Chestnutt: That is why we need that implementation or honeymoon period. As you said, call it what you like. We need that. We are in a transition at the minute but we do not know what we are transitioning to. We need to find out what we are transitioning to and then get time to transition. It is not that we are against transitioning, but we need to know what we are going to. At the minute we cannot move because we do not know where we are going.
Stephen Kinnock: It is always good to hope for the best but plan for the worst. If we get to 1 January and there is perhaps a deal but there is not a plan in terms of how you might just get a bit of extra time, you could end up with goods coming from GB to NI. Where are we looking at the physical bottlenecks that will take place? Are they likely to be in Scotland and Wales, where you could just end up with lorries being backed up because they cannot get over into NI, or is there a contingency plan in place for this worst-case scenario where you do not have this little implementation period to help you to transition to whatever it is that has been agreed? How will that look in physical terms in terms of the actual lorries that are trying to bring this stuff in?
Aodhán Connolly: What happens on day one is the biggest concern that there is among businesses. The commitments that the UK Government and the EU have given to the people of Northern Ireland mean that we would hope there is some sort of flexibility that could be agreed on day one. If there is not, there are going to be customs checks and paperwork checks before they get on the ferry. That is in Scotland or Wales, as you rightly said. Then again, with products of animal origin, you will still have checks in Northern Ireland, so you are going to have a bottleneck in both ways.
There are things within the Northern Ireland protocol that are fail safes on this. Article 16 and annex 7 of the Northern Ireland protocol allow for unilateral measures to be taken by either side to allow the free flow of goods. That consumer welfare issue would be one of those things that would trigger it.
However, that is not a long-term solution. We need to get to that long-term solution. It is not something that businesses can write a business model or a business plan on. The fact is that retailers or any business will want to stay within the confines of the law. There is no nod and a wink here. There is no good customs fairy or good SPS fairy who is going to just wave you on.
On our side for businesses there needs to be a show that we are making best efforts to deliver what is agreed, but the reciprocal to that, from both the EU and the UK Government, is a flexibility to allow trade to continue to flow, and that is a very simple ask. It takes a lot of political will to make it happen, but our big plea to the politicians, to the Prime Minister and to Vice-President Šefčovič would be to think of the consumers and households across Northern Ireland for whom this is a standard-of-living issue.
Stephen Kelly: The beginning of the year is going to be really ugly. It is going to be really bumpy. It is going to be really difficult. Brand new, untested, first-in-the-world-type systems applied on a customs border within the territory of a single country is going to be difficult, to say the least. There is a responsibility on the UK to try to make that work, but there is also a responsibility on the EU to ensure the protocol works and that it sticks. If the approach of the EU in January, February or March is not one of being supportive of the Northern Ireland business community and is not one that is in the interests of the Northern Ireland consumer, the protocol will not work and it certainly will not stick. Although it may take four years before the Northern Ireland community has an opportunity to vote on whether it wants to remain within the protocol provisions or not, we have the ability to make this Brexit issue a recurring nightmare for the EU and the debate that is ongoing within the UK for the next number of years to come.
The EU will not want to be in that position itself. The reality is that it is a joint signatory to this protocol. The reality is that it has responsibilities there as well. Selling a lasagne at an Asda store in Strabane that may make its way into County Donegal will not pollute the entire EU single market. There is no reason why flexibility cannot be shown, particularly for those retail goods, particularly as we know the UK, certainly on 1 and 2 January, will be aligned with EU rules anyway. We hope that the UK and the EU can show the flexibility required, knowing that we have made every effort that we can, with the information that is available to us, to ensure that businesses are ready and to ensure that the beginning of 2021 is not as bad as it potentially could be.