I thank the Chairman and members of the committee very much for the invitation to join them this morning. IBEC, as Ireland’s largest business organisation, has since the UK referendum on 23 June 2016 been working intensively to support our member companies as they manage the ongoing uncertainty and plan for both the known and the potential disruption when the current transition period ends.
The central priority of the IBEC Brexit campaign has and will continue to be to provide our members with clear and actionable guidance in preparation for 1 January. We have delivered this through a comprehensive suite of planning documents, a broad range of technical and political seminars and events as well as a whole range of insights and expertise from our specialist staff.
We have a large number of staff, both at IBEC level and through all our trade associations, working almost continuously and directly on Brexit. In line with the expected impact of Brexit, this campaign has focused on four central themes: trade in goods; trade in services; the all-island economy and the implementation of the protocol, which is a key issue for business; and the labour market.
IBEC has held an extensive series of virtual events and briefings to provide practical guidance and advice to members on the range of critical issues we believe they will face. As part of our programme, since September we have hosted dedicated sessions on customs, trade and VAT preparations, international data transfers, a range of broader business readiness issues, the UK land bridge and direct routes to the Continent from a shipping perspective, and the all-island economy. The campaign has collaborated closely with a range of key stakeholders and decision makers in Dublin, London and Brussels. These include the Revenue Commissioners, the Department of Transport, the Department of Enterprise, Trade and Employment, the Data Protection Commission, the Department of Foreign Affairs and, outside Ireland, the UK Government and the European Commission. In total, since September last, over 2,000 IBEC business members have engaged with these sessions. It has been very broad and extensive.
We must remind ourselves that earlier this year, on 31 January, only the political Brexit took place. The economic Brexit will take place on 1 January. The transition period is ending in less than four weeks. The UK will depart the EU Single Market and customs union. As of today, and given how little time there is left, many business still do not have clear information on the trading conditions that will apply for goods and services between Ireland and Britain from 1 January 2021. We welcome the fact that the EU and the UK continue to engage positively in difficult negotiations on their future relationship, including on the necessity of a basic trade agreement. Our concern is that now there is insufficient time for businesses to adjust to the outcomes of a prospective agreement, if indeed it is reached. This transition period was presented to business as a period for accustoming to the known changes of Brexit. I remind the committee it was intended to commence on 29 March 2019, then 31 October 2019, before eventually beginning on 31 January 2020. While business prepares for the known effects of the UK departing the EU customs union, the transition period has instead continued to be a negotiation period. It has left businesses with no lead time to implement significant changes and continued uncertainty rather than the promised clarity.
Irish businesses, from multinational companies to small and medium enterprises, SMEs, have been working diligently and are committed to ensuring they are as prepared as possible for the end of the Brexit transition period, in terms of engaging both with the EU and the UK. However, it must be acknowledged and understood that business has been preparing for the unknown in uniquely challenging circumstances, with the dual threat of the continued, extraordinary uncertainty posed by Brexit combined with the evolving consequences of Covid-19. In addition, there remain significant gaps in clarity on the rules which will apply to businesses trading goods with Britain from 1 January next.
Despite its limitations, the bare bones future relationship agreement under negotiation would be vital for Irish business. First and foremost, it would crucially avoid the EU and UK for the first time trading on WTO terms and the subsequent introduction of tariffs and quotas. If such a deal is not agreed, it would be a further blow to fragile confidence, reduce economic growth in the short term materially and impair potential recovery in future years. Until there is clarity on whether tariffs will be introduced, businesses cannot fully prepare for the future. With the UK Government’s introduction of the Internal Market Bill, we have seen that the full implementation of the withdrawal agreement and protocol on Ireland and Northern Ireland cannot be taken for granted. Members of the committee will be aware of its vital importance for avoiding a hard border on the island of Ireland and protecting the Good Friday Agreement, while also safeguarding the integrity of the EU Single Market. The protocol is critical for business by ensuring the continuation of the common travel area and protecting North-South co-operation towards the advancement of initiatives of mutual interest on our shared island. As of today, people, communities and businesses both North and South do not have the assurances they need that the protocol will be fully implemented and, crucially, operational by 1 January.
Over recent months IBEC’s work to support contingency planning has intensified. We have produced comprehensive guidance for business and have hosted numerous events, as I mentioned, providing a range of detailed expert insight into the complex issues that will need to be managed from 1 January. While our members are very aware of the risks and are planning accordingly, it would be wrong to suggest that business, or the wider economy for that matter, could ever be fully ready for the profound, overnight changes that the end of the transition period will bring. Despite the best efforts of business, successfully adjusting in a short timeframe, when so many specifics are still not known, to a radically new trading and economic relationship with one of our closest trading partners is neither possible nor realistic, particularly for companies in the most exposed sectors. What we know is that the imposition of very high WTO tariffs on certain products, combined with additional customs and regulatory barriers, would cause major trade and economic disruption.
The political brinksmanship involved in setting non-credible deadlines, both in the past and in the future relationship negotiations, has already cost the business community. Additional collateral damage must be avoided. While most larger companies have comprehensive plans in place, and IBEC's member companies are as prepared as we can expect them to be for 1 January, we are concerned that a number of SMEs are still working to be prepared. Despite major information campaigns, some companies have yet to register for the economic operators registration and identification, EORI, number and take the further steps that will be necessary to continue to trade post Brexit.
While IBEC’s work to support contingency planning will continue, it must be stressed that significant Government and EU intervention will be required to protect jobs and businesses should an agreement not be reached. The Government must bear the ensuing uncertainty in mind and ensure that adequate and agile supports are available to businesses in early January and beyond as the practical consequences of Brexit become apparent. These supports must prioritise and be quickly available to the worst affected sectors to offset the economic consequences of Brexit.