‘Big fear is UK law will shred trust in trade talks’ – DII’s Mulvihill

The fall-out is continuing this morning (Thursday, September 10) from the proposed UK law to override parts of the Northern Ireland protocol, which governs the trading relationship between Northern Ireland and the Republic of Ireland in a post-Brexit world.

The effects of this could be particularly serious for the movement of milk between Northern Ireland and the Republic of Ireland.

Speaking to AgriLand, Conor Mulvihill, the director of Dairy Industry Ireland (DII), the Ibec group representing the dairy processing sector, said: “We’re like everyone in Ireland, Europe and, to be fair, the UK as well. Taken aback is a soft way of putting it.

We would have always viewed the protocol agreed last October as somewhat imperfect, but it at least guaranteed no physical border on the island of Ireland.

“For dairy processing, that is absolutely key because, from a dairy processing perspective, it’s an all-island industry, delivering economic wealth north and south of the border,” Mulvihill explained.

He noted that some 800 million litres of milk flow across the border on an annual basis.

The Northern Ireland protocol, Mulvihill said, “guarantees that milk can flow north and south; guarantees no tariffs; guarantees no veterinary cert requirements or border inspection points; and it guarantees no regulatory divergence in how milk was processed, so milk can be regarded as ‘island of Ireland’ milk, be it ‘ROI’ milk, ‘NI’ milk, or mixed”.

Dairy produce from the island of Ireland could be seen as ‘island of Ireland’ milk because it was all created on the island to the same standards, regardless of what happened, and that is what the protocol guarantees, so that is hugely important.

But Mulvihill also stressed that, even if the EU and the UK fail to agree a trade deal come the end of the year, the protocol would still have applied, so the above advantages would still have been in place.

“But now, the UK is saying they are going to renege on an international treaty, which is mind-boggling.

“If you were the US or Australia, and you wanted a free trade agreement or an international agreement with the UK, the first thing you’d say is ‘what’s to stop them rolling back on that?’,” the DII director remarked.

Apart from the current maneuverings from UK Prime Minister Boris Johnson, Mulvihill went on to highlight the economic impact that a no-deal scenario would have if a trade agreement is not arrived at.

This impact would be particularly pronounced for cheddar cheese, which, according to the UK’s tariff schedule, would be liable to tariffs of 40% come the end of the year when the current trading arrangements under the withdrawal agreement come to an end.

Tariffs of that scale would, Mulvihill warned, “destroy the profit margin, to be blunt…it would not be worth exporting at that tariff rate”.

That’s if there is a no-deal scenario at the end of the year. But, as Mulvihill warned, this latest move by Johnson could make the chances of a deal less likely – and chances of a deal weren’t great to begin with.

“Our big fear is that this will now shred the trust of an already difficult negotiation, if the UK is going to renege on an already-signed withdrawal agreement and the Irish protocol,” he explained.