Brexit means major changes for Irish firms whether there’s a trade deal or not

An employee enters sliding doors decorated with the stars of the European Union (EU flag at the Berlaymont building, headquarters of the European Commission (EC, in Brussels, Belgium, on Tuesday, Jan. 28, 2020. It took 32 months, two prime ministers, and nearly 30 votes in Parliament to extricate Britain from the European Union and the hardest part of the negotiations hasn’t even started.

Bloomberg

DUBLIN — Customs capacity will be a major hurdle for many Irish businesses that trade with the U.K., regardless of whether a deal is struck with the EU by the end of the year.

That’s according to Ian Talbot, chief executive of business group Chambers Ireland, who said that while the Irish government committed to hiring extra personnel to handle customs with the U.K., many small businesses are unprepared for the new responsibilities that will be placed on them.

“You could end up getting to a customs point and finding your documentation wasn’t correctly prepared and you can’t proceed,” Talbot said.

For many SMEs (small and medium-sized enterprises, especially in the agriculture and food industries, any delays could be disastrous.

“We just don’t know how this is going to play out at borders. How lenient for example borders might be for the first few weeks and months as everyone gets used to this. That will be a big question in our minds. Will a minor documentation error cause a fail or will some discretion be allowed for a period of time?”

Talbot added that regardless of the deal talks on tariffs and quotas, there will be extra obligations on businesses.

“Even if we get a deal, we’re not in a scenario that we just carry on trading as we are now. On Jan. 1 there is a huge amount of extra administrative burden and complexity in trading.”

One step in getting prepared is securing an Economic Operators’ Registration and Identification (EORI number from Revenue, the Irish tax authority, which is required for anyone importing and exporting out of the EU. But it remains unclear if all the businesses that need one have obtained it.

Last year, Revenue contacted around 90,000 businesses that it identified as possibly needing the registration. A spokesperson for Revenue said that over the last month the agency has been carrying out further contact with around 14,000 businesses.

Fatigue

Brian Keegan, director of public policy at Chartered Accountants Ireland, said that drawn out negotiations and extended deadlines has caused some weariness among businesses.

“There’s been an incredible amount of Brexit fatigue. We’ve been marched up to the top of the hill and marched down again so often,” he said.

Companies could run the risk of that fatigue getting the best of them come Jan. 1, he said.

“We’re not entirely clear if tariffs are going to be applied and secondly if they are applied, the extent to which they’re going to apply between the U.K. and Northern Ireland,” he told CNBC.

“While there is a protocol in place to ensure that there is no tariff border, no hard border on the island of Ireland, it’s still very unclear how any of this is going to work and we’re less than 70 days away from the shutters coming down,” he said.

Keegan added that he’s hopeful some kind agreement can be made at this stage, which can be expanded upon beyond January.

“If Europe is struggling with its trading agreements with a G-7 country, that’s really significant.”

Data flows

The movement of physical goods is one thing, but questions still hang over the flows of data after December.

The U.K. will need to gain an adequacy agreement with the EU — which effectively says the jurisdictions are on equal footing — as well, to ensure personal data can flow.

Last month, the Irish Council for Civil Liberties argued that the U.K.’s data protection enforcement isn’t up to standard and said in a letter to the European Commission, the EU’s executive arm, that there is an “inescapable conclusion” that the U.K. shouldn’t be granted adequacy.

If no such agreement is reached, companies will have to make separate data transfer arrangements with customers and partners.

This is something that Gareth Hickey has been doing for the last several months to shore up his start-up Noa, which creates audio versions of news content and works with several large news publishers.

“We’ve had to put in place a review of all of our data transfer agreements that we have with publishers and other parties that are based in the U.K.,” he told CNBC. “There’s obviously been a cost associated with that because we don’t know what way it’s going to be left and we don’t want to be left scrambling.”

Much like customs arrangements, Hickey said some start-ups may be putting their data transfer arrangement off to the last minute.

“Just to call a spade a spade, it’s probably the case that some start-ups are going to accept the risk and not put anything in place and if data adequacy is not granted to the U.K. then they’re staring at an unknown.”

Brexit means major changes for Irish firms whether there's a trade deal or not