New EU trade rules could snarl Northern Ireland supply chains, companies warn

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New post-Brexit rules for trade between Britain and Northern Ireland begin to come into force this weekend, but for wholesaler Derek O’Reilly, they are already a headache.

Under the rules, which take effect from Sunday, food and drink suppliers will use a “green” lane with less paperwork for goods entering Northern Ireland from Britain that are staying in the region, and a “red” lane, with more checks, if they are travelling on to Ireland or the wider EU.

“Some [of my suppliers] are choosing the green lane, which makes life harder — it restricts me selling the product into southern Ireland, which isn’t ideal,” said O’Reilly, managing director of O’Reillys Wholesale, a Northern Ireland-based distributor of brands including Walkers crisps, Quaker oats and Cadbury’s chocolate.

O’Reilly added that some of his suppliers are not ready for the new rules and have their “head in the sand”; one brand could halt some of his deliveries for a few weeks while it prepares. “Other companies are in a similar situation,” he said.

The new system is part of the Windsor framework agreed by the UK and EU in February to resolve years of acrimonious Brexit wrangling.

When he announced the deal, UK prime minister Rishi Sunak said it removed “any sense of a border in the Irish Sea”. But businesses still face some paperwork, albeit heavily reduced, if they join a trusted trader scheme that gives them access to the green lane.

The agreement gives Northern Ireland unique access to both EU and UK markets but opposition from the Democratic Unionist party, the largest pro-UK political grouping, has brought down the region’s executive at Stormont. London and Brussels have made clear they will not renegotiate the Windsor framework to assuage the DUP’s concerns.

The new rules will be rolled out gradually with the red and green lane system extended from food and drink products to all other goods and parcels in October 2024.

Many suppliers and manufacturers are expected to opt for the red lane eventually, despite the more onerous paperwork required, in order to keep open the option of selling into the EU in future.

Peter Hardwick, trade policy adviser at the British Meat Processors Association, said a number of its members “are reporting . . . [they] will opt for the red lane”.

Carol Lynch, partner head of customs and international trade services at consultants BDO Ireland, said anyone seeking to use Northern Ireland as a “gateway to Europe” would use the red lane. “That will be a big portion going forward as Northern Ireland positions itself to have dual access to both the GB market and EU markets,” she added.

For some critics of the agreement, “until this point, maybe there was a hope the UK would change its approach. From this weekend, it’s clear that’s not happening,” said Stephen Kelly, head of trade group Manufacturing NI.

The red and green lanes simplify the problem of granting the region “unfettered” trade with Britain, a key DUP demand, but the new system remains complex and will take time to bed down.

Nichola Mallon, a former Northern Ireland infrastructure minister who is now head of trade and devolved policy at trade body Logistics UK, said the new system would be “a huge learning process” with “one year till the next set of changes”.

“Businesses are as ready as they can be,” said Roger Pollen, head of the Federation of Small Businesses in Northern Ireland. “It doesn’t necessarily mean they are fully ready.”

But others remained downbeat. “I still think it’s a monster,” said the BPMA’s Hardwick, noting that new “not for EU” labels on goods staying in Northern Ireland would push up costs for suppliers and farmers or consumers.

Shane Brennan, of the UK’s Cold Chain Federation, which represents hauliers of temperature-sensitive products, said the border still presented challenges for lorries containing mixed loads of products.

“What is clear is that the Windsor framework does not change the fundamental dysfunction of the Northern Ireland protocol for integrated supply chains,” he said.