Newry Chamber of Commerce & Trade – Written evidence (NIP0003)
Written evidence submitted to the House of Lords European Affairs Sub- Committee on the Protocol on Ireland/Northern Ireland,
30 September 2022
Submission from the Newry Chamber of Commerce & Trade
1.1 The Newry Chamber of Commerce & Trade is a membership organisation, with 290 Member organisations from across the greater Newry area geographically.
1.2 Earliest records indicate that Newry Chamber has been active since 1820. The Chamber is known for its vibrant and engaging programme of events and lobbying and for being the proactive voice of business in the greater Newry area. The Chamber’s vision is “To be the leading voice for businesses in the Greater Newry Area, promoting the area as a happy, healthy place to live, work, study, shop, visit and invest.”
1.3 Newry is situated on the east coast of Northern Ireland, almost mid-way on the Belfast to Dublin Economic Corridor; 13 miles from the border with the Republic of Ireland, 34 miles from Belfast and 67 miles from Dublin.
1.4 Newry falls into the constituency governed by Newry, Mourne & Down District Council. The estimated population of Newry, Mourne and Down Local Government District at 30 June 2020 was 181,669 (source: NISRA), with the catchment area of the Newry employment market estimated to be in the region of 500,000 if the cross- border hinterland is included. There are currently more than 9000 VAT registered businesses in the area.
1.5 Newry Chamber member organisations range from small to large employers, multi- national publicly traded companies, through to sole traders and start-ups. It also includes a diverse range of social enterprises and charitable organisations. The membership spans all sectors and has a significant proportion of importers and exporters of services and goods.
1.6 Given its proximity to the border between Northern Ireland and the Republic of Ireland, Newry Chamber of Commerce & Trade and its members have been widely consulted by national and international politicians and media, including UK and Ireland Government Cabinet Ministers and senior EU officials about the impact of Brexit and the Northern Ireland (NI) Protocol.
2.1 Historically businesses in Northern Ireland (NI) have been encouraged to trade cross- border on the Island of Ireland and further afield, supported by organisations such as InterTradeIreland and Invest NI. This position is made tenable by an understanding that NI business are uniquely placed to access markets in the UK, Ireland, EU and Rest of the World.
2.2 This is obviously why new administrative requirements were introduced as part of the UK leaving the EU, under the NI Protocol- to protect NI access to these markets, including NI access to the EU Single Market. As part of the United Kingdom (UK), NI would remain in the UK Customs Territory. This included administrative obligations for the movement of goods from Great Britain (GB) into NI, primarily to monitor goods ‘at risk’ of entering the EU from GB via NI.
3.1 The overriding view of our membership is that in so far as the NI Protocol fulfils its intention to avoid the existence of a hard border on the island of Ireland, they are broadly supportive of it. In fact, given the proximity to the border in this region, membership unanimously agrees that a hard border would have a detrimental and destabilising impact on local businesses and communities. Furthermore, the NI Protocol in its current form, is bringing significant economic benefit to the greater Newry area and the wider NI economy.
3.2 The location of Newry as a border community must be strongly considered. Anything which threatens free movement within the natural and well-established hinterland will compromise the future economic development of the region and adversely impact the quality of life of residents.
3.3 As an economic gateway region, Newry was set to exploit the opportunities presented by the NI Protocol which enabled access to both UK and EU Markets. The hinterland of Newry covers a radius both North and South of the border which impacts on key economic drivers of recruitment, healthcare provision, infrastructure, export base and import substitution which unlocks access to new markets. Any hardening of the border will impact communities on an economic and social basis, more than experienced historically. Being located in the centre of the Belfast-Dublin economic corridor, with the current Memorandum of Understanding between district Councils on both sides of the border and the recent securing of c. £200m of Belfast City Deal funding going into Newry City Centre Regeneration and large infrastructure projects such as the Southern Relief Road, any hardening of the border could create a significant opportunity cost by delaying or derailing the progression of these projects thereby stopping this area to realise its full potential.
3.4 From experience in supporting businesses, the biggest problem facing many NI traders trying to complete ‘import declarations’ is difficulty getting the information from their GB suppliers. For non-SPS goods, it has proven very difficult to get the required information from many GB suppliers such as Incoterms, a commodity code, Country of Origin (Preferential Statement if applicable), item weights and price (exclusive of VAT), even though GB suppliers should have this information readily available to provide to NI traders. Without it, businesses simply cannot complete the declaration process correctly.
3.5 The Trader Support Service (TSS) has improved considerably over the last 20 months and there is great assistance available through HMRC, Institute of Export & International Trade, InterTradeIreland and InvestNI - to name just a few. The arrangements around Steel Tariff Rate Quotas on the TSS and separately with BEIS, require greater clarity in its communication.
3.6 The NIPB requires ongoing and lengthy consultation with businesses and stakeholders to identify gaps and discuss potential amendments. However, Newry Chamber opposes any amendments to the NI Protocol which will impact on cash flow for businesses during a period when the cost of doing business is continually increasing. The Trader Support Service should remain in place to provide ongoing support to businesses with particular focus on educating businesses which trade solely within the UK.
3.7 NI businesses should not lose access to the EU markets but the movement of goods across all parts of the UK should be simplified. NI should benefit from Free Trade Agreements made by both the UK and the EU. NI could be considered a conduit for the movement of goods from GB to the EU, and as NI is part of the UK, the current NI Protocol does not result in trade divergence.
3.8 The NI Protocol in its current implementation phase is not perfect; there are issues with East West trade. Many of these issues have been identified by traders and could and should be looked at individually to identify potential solutions. Newry Chamber members have identified that many of the issues have originated not from NI businesses not being ready for the implementation of the NI Protocol but its trading partners across the rest of GB not being prepared for the implementation period. The NI Protocol does recognise and protect the unique position of NI as sharing the only land border with the EU.
3.9 Improvements to the current arrangements are required but unilateral action by the UK Government should be avoided at all costs. The biggest issue that we face in a border area such as Newry is uncertainty. The uncertainty caused by the lack of agreement and lack of a long-term solution in relation to Brexit is potentially costing our businesses opportunities, time and money. We implore the Government to reach a final decision quickly which allows our businesses to plan for the future with confidence. We want a decision which is cognizant of our unique geographic position, our strong trading relationship with our nearest neighbours and our desire to trade freely with partners across the rest of GB.
4.0 A negotiated agreement is key rather than the instability which will result from any unilateral action by the UK. If businesses trade in NI or the UK, a very streamlined declaration process is required. However, for businesses trading cross-border, arrangements must be put in place to ensure a stable and secure trading environment. It is critical that the experiences and view-points of traders are listened to first and foremost.
4.1 Newry and Mourne Co-Operative & Enterprise Agency (NMEA)
4.1.1 The leading business-support organisation in the region which assists an average of 15 new start businesses each month, the highest per capita business start-up rate in these islands, amounting to almost 3,000 new businesses created in the last 20 years. NMEA, operating in a region which had been plagued by hard border-exacerbated levels of unemployment and emigration which for most of the 20th century were among the highest in Western Europe, has reported the following:
4.1.2 “95% of those employed in the Newry, South Armagh, South Down border region work for companies employing fewer than 50 people and for 75% of those the “near” Republic of Ireland (i.e. counties Louth, Monaghan, Cavan, Meath, Fingal and Dublin counties - the “M1 Corridor”) constitutes a crucial part of their home market hinterland. In our region the Irish Republic is an especially important market for companies in the food and drink sector, in construction-related equipment and supplies, in pharmaceuticals, in a wide array of repairs and maintenance support businesses and for companies supporting the agriculture industry. Many of our business services companies also trade on an all-island basis.
4.1.3 All of these companies have adapted their supply chains and business strategies more generally to try to circumvent Brexit frictions. The vast majority did not have specialist teams to help them to navigate these complexities and had to invest significant management time to re-calibrate their business models. This at a time of pandemic uncertainty and rapidly rising costs. Yet despite having assumed they had successfully made the necessary changes (this being reflected in official figures
confirming substantially increased levels of business secured by these companies in the Irish Republic and record low levels of unemployment) they are now expressing deep concern about renewed uncertainty as to the status of the NI Protocol - with many reports of buyers of NI-produced goods now querying the stability of longer term contracts and of owner-managers of companies in our border region being deeply worried about the risk of lost business at a time when they can ill afford it.
4.1.4 The NI Protocol is working for the vast majority of businesses in our region and represents for them a dual-market access “unique selling point” (USP) which they have been quick to take advantage of. The exponential private sector growth of the last 20 years in the Newry border area is a direct function of an open frictionless border between Northern Ireland and the Republic of Ireland and the absence of any practical or perceived barriers to trade and movement of people.”
4.2.1 Waste controls across Europe follow the regulations set out in the Basel Convention. We also complete documentation on the International Waste Shipments portal at https://international-waste-shipments.service.gov.uk/account/login
4.2.2 Re-Gen has had no issues with Northern Ireland customs in relation to goods travelling from Great Britain. Our transport costs are in the region of £250,000 per year.
4.2.3 As a result of the UK’s exit from the EU, we developed an innovative artificial intelligence (AI) system to meet our obligations for Trader Support System declarations. Our solution is easy to use, and integrates seamlessly with existing systems across the company. The system has minimised a potentially costly and operationally challenging process to a workable, cost-effective solution. It reduced the processing time for each load by 90 per cent, eliminated the potential for mistakes and saved up to £324,000 on outsourcing costs per year. Each transaction was reduced from 5 minutes to 30 seconds.
4.2.4 Around 40 per cent of our trade is with the UK mainland and we wish to grow this market as part of our strategic plans.
4.2.5 We anticipate that our profits, employee numbers and tax contribution will be 30 per cent lower as a result of the UK’s exit from the EU and the full implementation of the Protocol.
4.2.6 In the procurement of materials and supplies, we have found no real issue in regard to the NI Protocol, in fact we are now able to get most of our main items from the continent a lot quicker and with less hassle than previously.
4.2.7 Pre-Brexit most of our continental suppliers would have been shipping to us from Zeebrugge or Rotterdam via England; now they are shipping from Rotterdam, Cherbourg and Bilbao to Dublin.
4.2.8 The main reasons for the increases in pricing over the last 12 months have been the surging fuel and energy costs. There has been a shortage in the supply of some raw materials for products we consume but this is solely down to production backlogs post-Covid.
4.2.9 We have faced a labour shortage which has been related to Brexit rather than the NI Protocol. The Migration Advisory Committee has previously advised on Level Reduction on Education level that a person can come into the UK. The advice of the MAC needs to be enacted to reduce labour costs. It needs to go further to address costs of labour as this is adding to the cost-of-living crisis.
4.3.1 The NI Protocol has been very positive for the Deli-Lites business and in particular for our expansion into both the GB and EU export markets. The major benefit has been the ability to continue to trade barrier free both:
1. North and South on the island of Ireland, and
2. With both GB and the EU.
This makes us more competitive than our rivals in Republic of Ireland or GB, and the business has seen notable growth with some major contracts secured in both GB and the EU.
4.3.2 Some of the challenges have been on the cost of ingredients coming from GB where suppliers have added on the cost of veterinary checks and/or any additional administrative or logistics costs. This has forced us to look at sourcing ingredients on the island of Ireland or from the EU.
4.3.3 In terms of the new NI Protocol Bill that has been proposed, our view is that it is mainly focused on helping companies in GB sell to NI with less barriers and is therefore driven by the interests of those companies as well as a small number of NI firms who have been heavily reliant on that GB supply chain. The idea of green lanes or rules of origin “red tape” will make it more difficult for us to sell into Republic of Ireland since a number of our ingredients come from GB and are then further processed before the final products are distributed down south.
4.3.4 Cross border trade has increased since Brexit and most indications are that the island economy is doing very well. Anything that complicates trade between north and south on the island will have an impact on manufacturers at this very challenging time with labour shortages, soaring energy costs and spiralling inflation due to the war in Ukraine. Anything that impacts on the status quo, or brings more complexity to an already difficult situation, will only cost jobs. The NI Protocol is not perfect but it does give us clarity and some certainty to build on after the disappointment of the Brexit vote.
4.4.1 Norbrook Laboratories Limited is a manufacturer and distributor of veterinary pharmaceuticals based in Newry, Co. Down. The Company had annual turnover of
£232m for the year ended July 2022 and sells into over 100 countries worldwide. Sales to European customers account for around 25% of total output. Norbrook employs 2,050 staff worldwide with 1,675 based at the Group’s main manufacturing and testing laboratories in Newry, Northern Ireland (NI).
4.4.2 The NI Protocol has been “positive” for Norbrook, and without it would mean having to double-up testing arrangements to quality release product for sale in Europe. The NI Protocol allows Norbrook to test and release our products from Newry, NI. Without the NI Protocol, testing for EU destined product would have to take place in Europe. Facilities and infrastructure already in place in our factories in NI would have to be duplicated in Europe, requiring multimillion capital expenditure and annual testing costs would surge. Norbrook would suffer a permanent cost base disadvantage.
4.2.3 Without the NI Protocol we would be heading into a hard Brexit environment and we could have a permanent cost duplication.
4.5.1 Warrenpoint and South Down enjoy a rich maritime history. Warrenpoint Port was commissioned in the late 1770s and created as a Trust Port in 1971.
4.5.2 Situated on a narrow 60-acre site adjacent to the town of Warrenpoint, the Port is less than 500m across Carlingford Lough from the Republic of Ireland. The Port has a good mix of tenants with strong demand for space.
4.5.3 The Port employs circa 70 people directly and indirectly sustains more than 400 local jobs. In 2021 Warrenpoint Port contributed a direct GVA of £10m into the local economy.
4.5.4 Warrenpoint Port facilitates import and export. Reaching a final decision in relation to the movement of goods, tariffs and customs arrangements is therefore essential for an organisation such as the Port, which relies on a degree of certainty to deliver long term commercial viability to its customers. In relation to the Northern Ireland Protocol at least one customer has gone on the record as saying that it is ‘working perfectly for us, don’t change it.’
4.5.5 We do recognise however, that the NI Protocol has not yet been implemented in full; and that other customer statistics indicate also that some GB exporters to this island are clearly diverting originally Warrenpoint-bound cargo to Dublin Port.
4.5.6 As a Port that relies equally on a Republic of Ireland based hinterland, as well as reciprocal access to GB and Europe, it is essential that there is clarity and certainty on current and future trading arrangements as soon as possible to help it reach its full potential as an economic entity.
4.6.1 One of the most damaging consequences of Brexit has been the acute shortages in the labour market right across the board here in Northern Ireland. When the A8 countries joined the European Union in 2004, the United Kingdom was one of three countries along with Sweden and Ireland that opened its borders immediately to citizens of those countries to come and work here.
4.6.2 The reason that decision was made was based on the need for skilled and other labour requirements that could be provided from many of the A8 countries that joined the EU, such as Poland. Northern Ireland had lost many of its skills in heavy engineering, electrical engineering, joinery, hospitality, HGV drivers and also within the health and care sectors i.e nurses, doctors, domiciliary and general care workers.
4.6.3 Polish workers came to Northern Ireland in very large numbers during the years after 2004 and at its height, there were over 40,000 Polish workers in Northern Ireland. Following the UK leaving the EU over 10,000 workers have left and returned to Poland or to other EU countries such as Germany, Ireland and Sweden. Newry was a great example of a city which had been able to absorb a large EU workforce, while at the same time maintaining a record low unemployment rate of 2.5%.
4.6.4 Currently, many industries and other sectors in the workplace are struggling continuously to find labour, which is just not there anymore. This now presents a serious problem for the future growth of our economy and will drive some industries to relocate to other places in the EU.
4.6.5 The recent announcement to bring forward the introduction of a UK Electronic Travel Authorisation (ETA) document for non-UK/Irish citizens in Ireland, presents a new challenge for people to visit Northern Ireland. This will affect tourists arriving into Dublin or EU citizens wishing to visit family and friends living in Northern Ireland.
30 September 2022