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Irish Business Sets Out Brexit Wish List

by Jason Gorringe, Tax-news.com, London

19 June 2017


Irish business group Ibec has called for a broad, comprehensive, and ambitious free trade agreement (FTA) between the UK and the EU.

Launching a new report, "Brexit: Challenges with solutions," Ibec CEO Danny McCoy said: "The concerns of business in the UK, Ireland, and across Europe must inform the UK approach and the EU response."

The report set out five principles that Ibec said should inform the approach to negotiations: a smooth exit; comprehensive transitional arrangements; the closest possible future trading relationship; unique Irish challenges addressed; and a prosperous and competitive future EU.

McCoy said: "The closest possible EU-UK economic and trading relationship into the future is in everyone's interest. A new free trade agreement should be as broad, comprehensive, and ambitious as possible, covering both goods and services. However, a deal must not undermine the coherence and integrity of the EU single market and must ensure fair competition."

The report argued that Irish trade is uniquely exposed to potential disruption from Brexit. The UK accounts for 14 percent of Irish goods exports, the highest share of any European country. In addition, 32 percent of Ireland's goods imports come from the UK. Ibec said that if tariffs were placed on these imports, "it would put upward pressure on the overall price level and would increase business costs as many of these imports are used as intermediate goods."

Ibec would like to see the UK remain in the customs union, to enable tariff free trade to continue. However, if the UK does withdraw from the union, as planned, Ibec said that the customs requirements, procedures, and processes should be dealt with early in the Article 50 negotiations.

Furthermore, Ibec argued that any FTA should involve minimal tariff and non-tariff barriers to goods being processed and goods going to market, and should also cover services. On the other hand, if tariffs and tariff rate quotas are a feature in a future agreement, the tariff rate quota(s) volume, structure, and definition must take into account existing trade flows and market requirements.

Ibec also warned that the imposition of import value-added tax (VAT) on trade with Britain and Northern Ireland would impose significant cash flow costs on business in the Republic. It said that a mechanism should be made available to all VAT-registered companies in Ireland whereby import VAT from the UK is paid and accounted for in a simultaneous transaction.

The report said that any future FTA should ensure maximum regulatory conformity across all relevant areas, and that both parties should agree on a compliance framework, governance mechanism, and dispute resolution system.

Crucially, the report stressed that there should be no hard border between the Republic of Ireland and Northern Ireland. Any FTA "must take specific account of its unique impact on the all-island economy and include specific measures to offset the negative economic effects," it said. This should include tariff-free trade quotas for companies operating on an all-island basis and all-island customs arrangements.

TAGS: compliance | tax | business | free trade agreement (FTA) | value added tax (VAT) | Ireland | export duty | interest | tariffs | trade treaty | United Kingdom | agreements | import duty | trade | European Union (EU) | services | Europe

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