The Protocol on Ireland/Northern Ireland: The implications for Wales’ external trade

Summary:

This note identifies issues that may impinge directly or indirectly on the Welsh economy as a result of the adoption of the Protocol on Ireland/Northern Ireland as part of the Withdrawal Agreement and subsequent Bill. The authors believe the main implications for Wales from the Protocol to be:

• Producers in Great Britain (GB) (including Welsh producers) are likely to lose market share in Northern Ireland (NI) as goods sent from Great Britain (GB) to Northern Ireland (NI) will face new customs checks, possibly customs duties, and other regulatory/administrative checks, while NI trade with the European Union (EU) (notably with the Republic of Ireland – RoI) will remain frictionless;
• If GB relaxes its regulations relative to EU regulations, NI producers might operate under higher costs than GB firms, as NI producers would still need to produce to EU standards. NI firms may therefore struggle to compete in the GB market;
• The more extensive are the trade barriers between the UK and the EU (notably RoI), and the less extensive are the border checks between GB and NI, the more incentive there will be to divert trade from RoI-GB to NI-GB routes. This will likely impact on the level of freight going through Wales to Ireland.nThe impact might be felt particularly for consignments which are destined for NI but which are currently sent from Wales via RoI;
• Handling whichever new checks are required on trade with the EU will undoubtedly require increased border infrastructure in Welsh ports such as Holyhead, Pembroke Dock and Fishguard. Delays due to border checks will be particularly problematic for perishable food products, which make up a relatively large share of goods shipped between Holyhead and Dublin.

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