Colm Brophy (Dublin South West, Fine Gael)
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On behalf of the committee, I welcome Mr. Paul Lynam, deputy director general, and Mr. Aidan Finnegan, director of policy and advocacy from the British Irish Chamber of Commerce. I welcome Mr. Patrick Donohoe, chief corporate affairs officer from Lakeland Dairies; and Ms Carol Lynch, partner, BDO, Customs and International Trade Services. They are all very welcome and I thank them for joining us today and for engaging with the committee. Today's discussion will focus on the ongoing operation of the Windsor Framework and EU-UK relations.

Before I commence the meeting and ask for the opening statement I will read a note on privilege. It is some housekeeping we must always run through. All witness are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of that person or entity. Therefore, if their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with that direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that they must be physically present within the confines of Leinster House to participate in public meetings. I cannot permit a member to participate where he or she is not adhering to this requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting.

With that piece of housekeeping done and dusted, I call Mr. Lynam to make his opening statement.

Mr. Paul Lynam:

I thank members of the Oireachtas Joint Committee on European Union Affairs for inviting us to speak on this very important topic. I am the deputy director general of the British Irish Chamber of Commerce. I am joined by my colleague, Mr. Aidan Finnegan, who is our director of policy, and by two of our very active members, Ms Carol Lynch from BDO and Mr. Patrick Donohoe from Lakeland Dairies.

The British Irish Chamber of Commerce is the only organisation representing business activities with interests across our two islands - north, south, east and west. Our raison d'être is very simple - to champion and grow the trade between the UK and Ireland. I will give a quick recap on those figures. There is more than €100 billion in trade every single year, both ways, and it sustains approximately 600,000 jobs, of which 400,000 are in Great Britain. The majority of the jobs created by this trade are in Great Britain. A lot of people are not aware of that.

Prior to the adoption of the Windsor Framework, the chamber was at the forefront of channelling our members' concerns in relation to the then Northern Ireland protocol. The chamber held the view that very specific arrangements for Northern Ireland were always needed to ensure that no physical border on the island of Ireland would be erected for customs purposes. Equally, we were very aware of the practical flaws of the then Northern Ireland protocol and we believed it was appropriate that pragmatic changes be made. While no compromise could be 100% perfect or equal to the pre-Brexit trading conditions, we believe that the Windsor Framework alleviated the worst trade impositions between Northern Ireland and Great Britain.

When polling our members: 95% supported the framework as a pathway forward, of which 72% believed it would be net positive for our members; 23% indicated there would be no change, however 5% did indicate that it would be a net negative, based on pre-Brexit conditions.

As a result of the Windsor Framework, there has been no discernible changes in moving goods between Ireland and Northern Ireland. As the chamber and others highlighted from the outset, no regulatory barriers could be developed that would not have an adverse impact not only on all-island trade but on the integrated nature of the all-island agrifood supply chain. To understand the workings of the Windsor Framework and its ongoing operational success we can look to cross-Border dairy co-operative Lakeland Dairies, represented by Mr. Donohoe.

To give some context, Lakeland Dairies, with 3,200 farm families across 17 counties processes 2 billion litres of milk in facilities on both sides of the Irish Border and supplies 100 markets globally. Brexit posed significant challenges for the company, raising fears of a hard border, regulatory divergence, and potential disruptions to trade. Agriculture is vital to the Irish economy and concerns about tariffs, customs checks, and regulatory misalignment, particularly regarding food safety regulations, threatened the long-term viability of this business.

Lakeland Dairies processes 400 million litres of Northern Irish milk annually in the Republic, with an additional 360 million litres moving South from other processors. Northern Ireland, although only 3% of the UK's population, accounted for 40% of the UK's dairy exports in 2023. The Windsor Framework has helped mitigate these risks by ensuring smooth trade between Northern Ireland, the Republic, and the broader European Union, securing the future of businesses like Lakeland Dairies and the livelihoods of thousands of farm families dependent on cross-Border trade. Mr. Donohoe will be happy to take any questions committee members may have later on the implementation of the framework from a Lakelands perspective.

The Windsor Framework built on the protocol to simplify procedures relating to goods moving between Great Britain and Northern Ireland. At a high level, two new authorisations were introduced to widen the scheme for simplified movements along with a corresponding introduction of green and red lanes and “Not for EU” labelling on foodstuffs. This has primarily assisted the movement of food products to Northern Ireland supermarkets, as well as certain products for identifiable sale in retail in Northern Ireland.

The position relating to the movement of goods for processing in Northern Ireland is more complex, particularly where the processed or finished product could ultimately be destined for sale internationally, in the EU, on the GB market and potentially in Northern Ireland. During September it was announced that the introduction of expected customs simplifications which were to support the green lane have been delayed to March 2025. These simplifications meant that full customs declarations would not be required for goods using the green lane. In addition, the UKIMS authorisation, essentially the trusted trader authorisation verifying that you are only importing for sale in the Northern Ireland market, is quite complex and time consuming and difficult for businesses outside the very large ones to complete.

Through the Windsor Framework, the EU and UK agreed that UK public health and safety standards are applied to retail food and drink within Northern Ireland. These products must phase in labels in October stating that a product is "Not for EU". Originally it was intended that “Not for EU” labelling would be GB-wide but the Department for Environment, Food and Rural Affairs has agreed to no longer take this approach. as of yesterday, or the day before. This is a welcomed development as it would have created additional administrative burdens on businesses. However, some businesses had prepared for this scenario already.

Unlike through the protocol, certain medicines approved by the Health Products Regulatory Authority, HPRA, or the Medicines and Healthcare products Regulatory Agency, MHRA, - the regulatory medicines authorities for the Republic and the UK - cannot flow on an all-island basis from January 2025. This is an example of an additional regulatory barrier between the North and South that did not exist prior to the implementation of the Windsor Framework.

The Windsor Framework sets out simplified arrangements to support the critical flow of agrifood retail into Northern Ireland from Great Britain. However, despite reduced checks, appropriately there are checks on sanitary and phytosanitary, SPS, products from Great Britain. Further reductions would take place if a comprehensive SPS veterinary agreement was put in place between the EU and the UK. That has been a long-standing position of the chamber and one we have been articulating to the new UK Government for quite a time prior to its election.

Despite logistical challenges and teething issues, the Windsor protocol is working as had been generally intended. As committee members are aware, Article 18 of the framework contains the "democratic consent mechanism". This is a vote by the Northern Ireland Assembly on whether Articles 5 to 10 of the Windsor Framework should continue to apply. That is where EU regulations are applied in Northern Ireland. This vote will take place this year - likely in December - and we will be advocating for consent for the continuance of this mechanism.

I, along with my colleagues, am happy to take any questions members may have.

Colm Brophy (Dublin South West, Fine Gael)
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I thank Mr. Lynam for his opening statement. A number of members have indicated to me that they wish to ask questions. The first person to indicate was Senator Chambers.

Lisa Chambers (Fianna Fail)
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I thank Mr. Lynam for his opening statement and Mr. Donohoe, Ms Lynch and Mr. Finnegan for coming to our meeting. Mr. Lynam referenced the work done by the chamber during the Brexit process and when it was all very heated and we did not know what the impact on business would be, so I commend the chamber on its work on minimising the impact to businesses both in the UK and in Ireland. It was very important to get that cross-jurisdiction voice and what the impact on the ground would be. The British Irish Chamber of Commerce was always very active in that space and we have weathered the storm pretty well all things considered, because the worst-case scenarios never came to pass, thankfully. It was interesting to hear how the Windsor Framework is working out.

I have a couple of questions. What kind of changes to the market or supply chains have the witnesses noticed now that there is a new trading system in place? What are the remaining challenges to be worked out?

The witnesses from the chamber made some comments on the new Government in the UK. How is that working out in terms of the relationship? The new Government was broadly welcomed and it was thought that we would see a stabilisation in the trading relationship. Regulations are always at the back of our minds in terms of how the UK will remain aligned with EU rules and regulations. Do the witnesses have any concerns in that regard?

Mr. Paul Lynam:

I thank the Senator. At the outset, I acknowledge our work alongside the Senator, as Brexit spokesperson for Fianna Fáil, during some of the heated negotiations. Trade will go where it is easier to engage. The statistics bear this out. There has been an increase in all-Ireland trade North and South, which is to be expected. Great Britain-Northern Ireland trade is also rebounding. Finding that compromise has been a net positive. Businesses have certainly looked at their supply chains and have gone where they are most needed.

Some of the fears outlined prior to the Windsor Framework or in the midst of some of the ebb and flow of the protocol regarding major companies not exporting to Northern Ireland have not come to fruition. Obviously, there have been teething issues from the get-go in respect of the Northern Ireland protocol. Many of them have been addressed, but there will always be teething issues with any new trade barrier. All-island trade has been the big beneficiary.

Regarding the challenges, some have not come to pass as yet because they are being phased in. I will defer to Ms Lynch to discuss some of the customs queries that have come to pass from her clients.

Regarding the new UK Government, it is not just about a one-liner or quick sound bite. It is a reset in relations; there is no question about that. The new Government is coming at this from a different perspective to the previous one on quite a lot of issues. That is not to say that we did not work constructively with the previous Government or that we would not have disagreements with the current one. We are not an Irish organisation; we are a British-Irish organisation that is all about maximising trade. Certainly, Hilary Benn, the Northern Ireland Secretary, has been very proactive about engaging with us and members, listening to what is happening on the ground and trying to find compromises and proactive approaches to maximising the trade and economic environment for Northern Ireland.

One thing we could all improve on is taking the opportunities of the Northern Ireland Windsor Framework, which addresses access and the unique position Northern Ireland has found itself in. It has been well publicised and highlighted. President Biden appointing Joe Kennedy is something that has been highlighted. I do not think enough is being done from across the business community to look at the opportunities from a more local perspective in terms of investment into Northern Ireland. It is one thing to consider going to North America or Asia to discuss the opportunities for Northern Ireland, but there are opportunities for companies much closer to home in terms of investing in Northern Ireland. As a chamber, we are going to up our game in terms of highlighting that. I do not think the potential upside is being talked about a great deal and has not yet been delivered. We are in the early stages. I will defer to Ms Lynch on some of the customs perspectives.

Ms Carol Lynch:

I thank Mr. Lynam. On the customs challenges, without getting into too much technical detail, the Windsor Framework is working and has simplified some of the issues that arose at the beginning of Brexit in terms of importing into and, primarily, exporting out of Northern Ireland. It has made it a lot easier for companies in Northern Ireland to export to Great Britain without customs declarations, something which was a big issue. It has put Northern Ireland in a position whereby exporters can export quite simply to the markets in Great Britain or Europe. That has worked extremely well.

I see more challenges to come in respect of those companies which are set up more on the inward investment side, in particular large companies which will import from various territories for manufacture in Northern Ireland and then re-export those goods. In terms of trade between Great Britain and Northern Ireland, we have simplified declarations followed by supplementary declarations. That means that when companies import from Great Britain, they lodge a certain amount of information and then have to follow up with a supplementary declaration. We know there is quite a lag in those declarations.

It is quite complex to work out whether goods are at risk of moving into the EU, given that goods which are being imported for manufacture could move in many different directions post-importation. A lot of people in Northern Ireland, in particular those involved in business, are a bit frustrated that the simplified procedure has been delayed again, something we have seen quite consistently throughout the Brexit process with the UK Government in particular. Those declarations were supposed to come into place but have been delayed until next March. Again, people prepare for these things. When they are delayed, that adds a further complication.

The green lane, which is coming into effect in March, will make it easier for those goods which are not at risk of being re-exported. That will affect those goods which will remain in Northern Ireland. It still involves quite a substantial set-up process in advance in order to take advantage of it. It is not a simple process. Similarly, UKIMS authorisation, which companies can get for importing goods into Northern Ireland for sale in Northern Ireland is complete, is complex. The biggest challenge will be for companies which want to operate on a global basis and manufacture in Northern Ireland and export to the rest of the world.

Colm Brophy (Dublin South West, Fine Gael)
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If there are no additional questions, I will move on to Deputy Howlin.

Brendan Howlin (Wexford, Labour)
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I welcome the witnesses. It is almost with a sense of foreboding that we re-enter the horror story of the washout of Brexit, something which seems to have occupied not just this committee but also so much of all of our thinking for years in a very unproductive way. It is simply about trying to make the best of the situation for Ireland and, in my view, the United Kingdom. The outworking of what was negotiated, namely the co-operation and trade agreement and, subsequently, the Windsor Framework, is what we are trying to figure out.

I agree that there is a different perspective coming from the new Labour Government. From my discussions with a number of Labour people, some of whom are now in government, I would say there is some naivety about what can be achieved without being a member of the European Union. We know from the Conference of Parliamentary Committees for Union Affairs, COSAC, and talking to European colleagues that the rest of Europe has moved on. The entire focus of the European Union is now to the east and they do not want more time consumed by Brexit. In that context, I would be interested in hearing a couple of things.

Regarding the review of the framework which is due, is there anything in particular the witness would put on the agenda? There have been a series of postponements of the checks of goods going into Great Britain, for very good reason - simply, it was not ready for that. I do not think we have seen the full impact. If what was envisaged by the previous Government was put in place, it would be quite disruptive.

A number of companies in my constituency, such as Danone, in Wexford, which exports a lot of product directly to Great Britain, were very concerned about delays, bureaucracy and cost. I would be interested in hearing the take of the witnesses on that.

My next question relates to connectivity.

At an event I attended in Rosslare Harbour, a person speaking at the event said that the best advocate for Rosslare Harbour over the past decade - I thought I might get a mention - was Boris Johnson. Connectivity to the Continent from Rosslare went from six sailings a week then to 46 currently. I did some work with the British-Irish Parliamentary Assembly's economic committee. At that forum the hauliers told us that there was a dislocation of goods. A lot of goods coming directly either to Rosslare or into Dublin are now transiting further north. They are going directly to Northern Ireland to avoid any complications. Was that an initial factor or is it still one? How do the witnesses view connectivity in terms of the impact of Brexit and the Windsor Framework on the costs for businesses doing direct trade between the island of Ireland and Great Britain?

My third and final question relates to a meeting of this committee tomorrow with the Minister for the Cabinet Office in Britain, Nick Thomas-Symonds, who is responsible for EU affairs. Is there anything the witnesses would ask us to put to him on how things could be improved?

Colm Brophy (Dublin South West, Fine Gael)
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I am absolutely sure Deputy Howlin would be number two on the list after Boris. They should have mentioned that to him. Who wants to pick up the answers?

Mr. Paul Lynam:

I will start with a couple of questions and then I will ask others to come in. Deputy Howlin made a point about naivety, as a friend of the Labour Party Government. That is very well put. The response that we have got is that we are open to listening and engaging with the new UK Government. The EU is completely supportive of a reset in relations, but the rule still applies: if you are not paying the membership fees of the golf club, you cannot play seven days a week. That was the analogy given to us. If we take, for example, the SPS veterinary agreement, which is stated chamber policy and has since become stated Labour Party policy and it will be formal UK Government policy, the EU is not looking for it, but it will entertain a request from the UK Government to engage in negotiations on an SPS veterinary agreement. It will be primarily down to the terms and conditions outlined in a lot of perspectives from the EU side of things. Something that the British have always struggled with is dynamic alignment. If the EU changes its regulations then the UK will have to follow. It is not just based on mutual recognition. That could be a sticking point for British politics, but we will not to dive into that. There would be a general upside to such an agreement. It is up to bodies like us to make the case, not just to the British Government, but also to the devolved administrations, which I know are advocating for it as well, in particular for Welsh lamb and Scottish whisky. These would benefit hugely from a veterinary agreement. The scale of exports from the European Union to Great Britain in terms of agrifood would be a net positive, with Ireland being a good example in terms of it being our biggest agrifood export market and also our biggest agrifood import market. There is a case being made in that regard. Deputy Howlin is absolutely right about the naivety.

In terms of the checks coming down the line, I will defer to Ms Lynch on the various steps and the additional costs. When we put up trade barriers on the various checks that have to be implemented and the bureaucracy that goes with that, it is an inevitability that costs will go up. We can limit or reduce those costs, but the UK is slowly but surely bringing in a border-targeted operation model, BTOM, which is going to mean additional checks. That will mean additional paperwork, costs and bureaucracy for Irish companies.

We have had round-table discussions with the UK Government and its officials about the physical infrastructure of those checks and the potential delays. We want to make sure that when the checks are brought in, they are as free-flowing and seamless as possible. In the heat of Brexit, we recall the talks of delays and the worry about the extent that they would be a factor. The devolved Welsh Government says it will not introduce border posts unless it feels the infrastructure and support is there to ensure that we do not have the bottlenecks we all fear.

I referred to the reduced trade barriers in Ireland right now in terms of the capacity of Rosslare Port and Dublin Port and the transit of goods to Northern Ireland. Ms Lynch could correct me on whether that divergence will continue to maintain or if the trade will go directly into the Northern Irish ports when things are up and flowing as expected.

We have met with Nick Thomas-Symonds. He is a very pragmatic guy. We are delighted he was appointed to the portfolio. There will be a couple of elements to it. The Government must keep doing what it is doing in terms of the reset of relations between the UK Government and the European Union. It is stated chamber policy that there is an opportunity in this regard. We have seen early elements of a secondment programme between the Civil Service in Ireland and in Great Britain. We have a lot to learn from each other. In particular, I do not like the idea that many of the British civil servants who helped to design the European Single Market are now being redeployed into various Departments in the UK and there is a potential opportunity in that regard for Ireland. I am interested to see whether Mr. Thomas-Symonds would be open to an Ireland-UK secondment programme, as we would be open to availing of a lot of that expertise.

As we discussed, the veterinary agreement is something he should push for. This is stated chamber policy but it gives me an opportunity to re-emphasise it. The shared Ireland unit and fund have been a great success story. That has been very positive. I would love to see us building on it in terms of a similar model and fund based on an east-west approach between Ireland and the UK to maximise trade and engagement. There is an opportunity given the reset in relations. There is a potential opening there that the committee might just raise with Mr. Thomas-Symonds on whether that is something his Government might be open to.

I will ask my other colleagues to come in on the various elements. I might start with Ms Lynch, and then if Mr. Donohoe and Mr. Finnegan have anything to add, they can do so.

Ms Carol Lynch:

One of the issues I want to raise is the postponement of the TB checks and what has come in over this year and continues to come in. One of the issues companies exporting to Great Britain face, in particular in the agrifood area, is that a lot of the sales take place on what is called a deliver-to-UK basis. What that means is they deliver their goods to their customer, warehouse, or the large multiples in such a way that it is as if they were sourced in Great Britain. The Irish company takes care of all the associated costs involved in the export from Ireland and the import into Great Britain and the goods land with no requirement on the importer. That is a huge issue for Irish companies selling food products into the large multiples and warehouses in the UK. The difficulties that have come up in recent months as BTOM comes into effect is that in order to import into Great Britain, you need to be established, in effect, you need to have a company. If you cannot, you can get an indirect agent to act on your behalf, but it must take full liability for any costs, duties and impact and you will not get an agent to act in that way for obvious reasons. The only other option is to set up a company in Great Britain to act as the importer, and that is a huge cost to companies given what is involved in setting up a company from an establishment perspective - the staff, premises, and having all the documentation in place. There is an ancillary cost, which is not only the cost of the import, VAT, health certificates and SPS checks, but now we are looking at having another company operating in Great Britain. That is something that kind of fell out of the changes this year. Prior to this year, Irish companies had an exception whereby they could import into Great Britain much more freely.

Just as there is a common travel area for people, if a common travel area for business could be addressed, that would be very beneficial, particularly for smaller food exporters who rely on the Great Britain market for sales. I do not know how Mr. Donohoe feels about that.

Mr. Patrick Donohoe:

I will come in broadly on the Windsor Framework from a Lakeland Dairies point of view. The Brexit vote and its potential outcomes for trade barriers, tariffs and misalignment of regulation was more than just a sleep disrupter. It had the potential to erode our business, put farm families out of business and damage the all-island economy. The Windsor Framework is working well. Lakeland's milk tankers cross the Border up to 100,000 times per year. The same tanker that collects milk from a farm in Newry will collect milk from a farm in Glaslough, County Monaghan, bring it to our plant in County Tyrone, take product from that and bring it to another plant for further processing. The seamless criss-crossing nature of North-South trade must be protected and the Windsor Framework is working well.

There are a couple of wrinkles, as Mr. Lynam outlined earlier, three in particular: misalignment, veterinary medicines and democratic consent. There is one with the potential to be really damaging. Deputy Harkin has been a strong proponent of agriculture in the Border region and will be interested in this. It is the veterinary medicines issue. Right now veterinary products produced, certified and labelled in Britain can be used in Northern Ireland; from 1 January 2026, that will no longer be the case. That has the potential to remove between 30% and 50% of all medicines for animals, including companion animals and farm animals, from the NI market. What impact does that have? It is huge. We talk in southern Ireland of the impact the loss of the nitrates derogation would have on the agriculture industry. The lose of the veterinary medicines we have today would be like the derogation on steroids. It would have huge social, economic, animal health and, crucially, trade ramifications. Why do I say that? Some 2.5 billion litres are produced in Northern Ireland every year on farms. We are the largest purchaser of milk in Northern Ireland, about 1 billion litres. Some 30% of that milk comes south of the Border for processing. If vets in the Department of Agriculture, Food and the Marine are not comfortable with animal medicines used on farms in Northern Ireland, even though they are the exact same but just not certified, then where does that 30% of product go?

Brendan Howlin (Wexford, Labour)
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When Mr. Donohoe says "not comfortable", are they legally able to be comfortable?

Mr. Patrick Donohoe:

Either a product is regulated and certified or it is not.

Brendan Howlin (Wexford, Labour)
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So it is not a matter of being comfortable. It is that they cannot deal with it.

Mr. Patrick Donohoe:

Based on everything we know, from 1 January 2026, they would not be comfortable with that 30% to 50% of product. That has a huge potential impact, primarily on Northern Ireland dairy farmers. We are an all-island food nation and the impact on the dairy industry, companion animals and all ancillaries would be huge. Going back to the Deputy's analogy about a nightmare, the last five or six years have been War and Peace in terms of length.

We do not think there is a fairy tale outcome. The EU is digging its heels in on opening up to a new SPS veterinary agreement. Regarding the current grace period, the EU says is up to NI-UK to sort out its affairs and get companies to recertify in Northern Ireland or the EU.

The Deputy referred to naivety in new Labour. I would describe it as naivety bordering on positivity, or a confection of the two. Northern Ireland and GB are using this time to seek a new agreement, whereas the EU is saying the Windsor Framework is the agreement and GB must press ahead. We have major concerns about the potential impact of time running out.

Agribusinesses in the past five or six years have been marched up to the top of the hill each time there was a new deadline and new potential impact, only to be assuaged and a fudge found towards the end. This takes a long time to implement. If veterinary companies have to recertify, warehouse and batch test in the EU, that is not a weekend job; it takes months and months. We need a new SPS agreement and veterinary edits because farmers are terrified about this and our industry is really concerned. The impact on the all-island economy would be massive.

Mr. Paul Lynam:

I ask Mr. Finnegan to come in with general feedback from the rest of the membership.

Mr. Aidan Finnegan:

When we got this invitation, we surveyed our members. I will provide a snapshot of what the broader membership thinks on a cross-sectoral basis. There is strong support for the Windsor Framework. Over 95% of respondents to the survey back the framework as it stands. Our members said they appreciate the approach it takes to addressing the challenges posed by the Northern Ireland protocol and the compromises that had to be made in that sphere. Our members largely expressed optimism about the potential benefits of the Windsor Framework to their business. Some 73% viewed the arrangements as positive for their business. The sentiment is driven by the new customs arrangements, particularly the green and red lane system. The introduction of these lanes along with the trusted trader scheme represents a practical solution to streamline customs procedures and reduce the administrative burden on companies moving goods between Great Britain and Northern Ireland.

It is important to note the context in which it was agreed. The stakeholders noted and welcomed the broader opportunities that came with solving the protocol issue, especially the UK's admission to Horizon Europe, which was a major win for research and innovation and is as important for the Irish universities as for the British ones. Irish researchers overwhelmingly favour British research partners under these programmes. Overall, our members feel that, while it is not perfect, the Windsor Framework provides a workable solution to many of the wrinkles mentioned by my colleagues, fosters greater stability for businesses and customers and is essential for investment into Northern Ireland.

Marian Harkin (Sligo-Leitrim, Independent)
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I thank the witnesses for their commitment and work to date. It has been very much part of what is happening and the whole framework. I thank them for their ongoing assistance, for example, to us with today's meeting. Deputy Howlin spoke of the sense of dread when the word "Brexit" was mentioned. I remember as a Member of the European Parliament watching it being played out there and speaking not so much about the cost or geopolitical impact but about the thousands - probably hundreds of thousands - of hours that would be spent in committee meetings trying to sort it out and the cost of all of that. However, we are where we are and real progress has been made.

Mr. Donohoe mentioned the grace period for veterinary medicines runs out on 1 January 2026. He said 30% or 40% of veterinary medicines used in NI can no longer be used. That is massive. I am from a Border county and have raised at this committee the issue of the dairy industry. Milk coming from the North to the South is an integral part of the system. It is set up that way and would collapse if that did not happen. At the time, we were told things were working well - and they are - but there are huge challenges ahead with regard to the need for a comprehensive SPS veterinary agreement between the EU and the UK. Mr. Donohoe stated that the British say we probably do while the EU says "No" and that we must work within the Windsor Framework. What are the possibilities within the existing framework for dealing with some or all of the issues relating to veterinary medicines? Assuming it does not deal with them, do we need a new agreement? Is there the possibility for derogations or flexibility written into the framework? I am not au fait with all the detail. What is possible within the agreement?

If in the end it is felt that the agreement is not enough, what are the chances of reaching a new one between the two sides?

My second question relates to the regulatory burden. Ms Lynch mentioned it in respect of trusted traders. She stated Hilary Benn is very proactive in trying to find solutions. My experience is that the EU can be very sticky when it comes to regulation, and what is written is precisely what matters. One probably has this on both sides. Deputy Howlin already asked how Ireland, as an EU member state, can assist in this respect. What work can we do, as a committee or country, to smooth the pathway?

Reference was made to Irish exporters having to set up a company in the UK. I am not sure from when. It is obviously the case for exporters from France, Germany and Italy, but it has not been the case for us. Can the delegates explain how the system has worked up to now and why it needs to change? Reference was made to a common travel area for goods. Is that realistic?

Mr. Paul Lynam:

I have just a few comments before I invite Ms Lynch and Mr. Donohoe to respond. Regarding a new framework and protocol, a review is due, but we are very conscious of the amount of water we had behind us in getting here and of not reopening matters. There is a big difference between dealing with a framework that is not operating as envisaged, or with some unexpected challenges, and renegotiating a new framework, which I do not think anybody has the appetite for. One thing we wanted from the get-go from the Northern Ireland protocol, and which would still apply, was the giving of greater strength and teeth to the joint committee that overseas it. Right now, it is just a matter of making sure the protocol is being fully implemented, whereas if the joint committee had greater strength and teeth, it would have a more dynamic response to some of the unforeseen challenges that have arisen. That would be the most pragmatic way forward; however, there is a different culture, perspective or outlook from the EU.

Deputy Harkin has more experience than most in understanding that the EU, whatever else about it, is certainly a union of laws, rules and regulations. That said, there was a change of approach. Michel Barnier did much of the heavy lifting in the exit negotiations but Maroš Šefovi, who is still in place, was far more pragmatic in finding solutions outside the box. That is what got us to where we are today, with the positive steps forward. We do not really want to open the whole thing again, go through all the battles again and have problems again but there are some identifiable issues that need to be addressed, as raised by Mr. Donohoe. To go back to what Deputy Howlin said regarding the review of the framework and putting something to Nick Thomas-Symonds, one could strengthen the joint committee on an ongoing by giving it some teeth.

The common travel area is very different in terms of free movement. We are proudly and unequivocally in the customs union of the EU, and Ireland's position on that will not change. Obviously, there has to be a border somewhere when one of the countries is outside the EU but there are pragmatic approaches that we could take, as alluded to by Ms Lynch. In this regard, there is the question of whether companies need to be set up. The UK has control of its own customs policy entirely , so whatever Ireland can do under the European customs code is very different from what the UK can do. We have seen that so far in its approach, including through HMRC and Border Force.

I will ask Mr. Donohoe to go into the specifics on what the Deputy said about veterinary medicines and Ms Lynch to address the Deputy's questions on regulatory concerns, what must be done by way of establishing companies, why the existing arrangement in this regard is in place and whether there is a compromise that the British might consider.

Mr. Patrick Donohoe:

I thank the Deputy for the question and the work she did in a previous life and now on cross-border agri trade.

To start slightly flippantly, as a suckler farmer from north Longford I am eternally positive, so I believe that anything is possible, especially coming into weanling season. Things will be very difficult. I will not say both sides are entrenched but that there are different sides. They are on different sides in respect of what they believe is possible. As we know, politics is the art of the possible. A new agreement is critical. There are potential tweaks and suggestions of grandfather clauses and of using again what was in place before, but these do not seem to wash particularly well. To guarantee frictionless trade, the all-island economy and the integrity of trade, including international trade, given that we ultimately export 90% of everything we produce on farms today, we need the integrity to be upheld. It is a case of export or die, to use an old New Zealand expression. It is possible but it is a matter of clarity. We all talk about clarity and it is only the clarity that we want. If we were given clarity and told nothing could be done, we would be very annoyed, but we do need clarity to deliver a new SPS agreement. We met Baroness Hayman, the relevant Under-Secretary of State with responsibility for agriculture, in this regard and she was very keen and open. She is very proactive and informed on the matter. We need a new SPS agreement. Those concerned are far from confrontational but just on different sides or ends of the spectrum. It is incumbent on the agri-industry, Northern Ireland and southern Ireland to have this addressed. Crucially, and bearing in mind the considerable work that the chamber does, we would not be talking about the positivity associated with the Windsor framework if it were not for the collegiate, cross-party support we have here. That needs to be recognised as well. I am always positive, but I believe that, without addressing this, it will be very difficult.

Ms Carol Lynch:

Let me pick up on the two questions. Did Deputy Harkin's question on regulatory requirements concern imports into Great Britain to Ireland-----

Marian Harkin (Sligo-Leitrim, Independent)
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Exports from here.

Ms Carol Lynch:

When exporting from Ireland to Great Britain, or importing into Great Britain – this mirrors what happens with Great British companies importing into Ireland or elsewhere in the EU – the company has to lodge a customs declaration and account for its customs duties and its import VAT. If the products are food and agri products, the company has to get health certificates and be registered with the department. If selling in the UK, there will be another VAT point, along with complying with the UK rules for the specific products one is trading, as is similar with the EU. The regulatory requirements at the border can mount up, and that has become apparent to a large extent this year. The system was in place for European exporters and, as I have said, it has been in place for Great British importers into Ireland since Brexit kicked off. Irish companies had a derogation whereby they could choose, when their products arrived in Great Britain, not to lodge their customs declaration then but to do so within six months.

I would say the rules with regard to whether a company should be established in the UK to act as importer were not applied with significant rigour. The health certificates have really only started to be introduced. That avalanche of regulation came into effect as the derogations for Irish exporters were removed. These issues have started to come to the fore as HMRC has become more active in auditing and as the rules have been applied more strictly.

As Mr. Lynam said, the UK has the right now, as it is outside the EU, to apply the customs regulations within the context of the WTO rules, in its own manner. It is correct that we could not have a common travel area for goods. What I was suggesting was whether we could look at Irish companies, which export to the UK, establishing and having a UK company in place, or whether that could be resolved in some way. That is the particular regulatory issue for Irish companies.

The reason for having that, as is the case in Europe, is that if you are not established in the territory and something goes wrong, such as the wrong customs duties, the wrong SPS requirements or the wrong VAT, who do you go after? In order to go after someone, to knock on the door, essentially you have to have the established company. However, that starts a tsunami of different requirements that are behind it, when you start to dig into it and ask, "How do I import or export, if I am not established?" and say, "I will just get an agent." However, you realise that you cannot get an agent, so what happens next?

Marian Harkin (Sligo-Leitrim, Independent)
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Can I ask one brief question? Ms Lynch said very clearly that we need a new agreement. Within the context of the Windsor Framework, is that possible?

Mr. Patrick Donohoe:

It is specific to an SPS veterinary agreement.

Marian Harkin (Sligo-Leitrim, Independent)
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Yes, I understand. I should have said that. Is that possible? How would that work?

Mr. Paul Lynam:

That is altogether separate. There is the framework which deals with Northern Ireland and then an EU-UK potential SPS veterinary agreement which by knock-on effect would alleviate some of the points Mr. Donohoe highlighted.

Marian Harkin (Sligo-Leitrim, Independent)
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Would it have no impact?

Mr. Paul Lynam:

It would have a positive impact.

Marian Harkin (Sligo-Leitrim, Independent)
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It would, of course. However, will the Windsor Framework not create any barriers or challenges to that?

Mr. Patrick Donohoe:

Only that there is the grace period to negotiate parts of the Windsor Framework, which run out at the end of the 2025.

Marian Harkin (Sligo-Leitrim, Independent)
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There is a connection but not really. It is just that there is a grace period.

Mr. Paul Lynam:

If there is a comprehensive SPS veterinary agreement, it would alleviate some of the regulatory barriers that still exist even within the Windsor period because of the two jurisdictions. It would have a knock-on positive effect, but it would only have a positive effect across the Border.

Mr. Patrick Donohoe:

There are mutual recognition agreements between Canada and Austria. There is a blueprint there.

Marian Harkin (Sligo-Leitrim, Independent)
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I thank the witnesses.

Seán Haughey (Dublin Bay North, Fianna Fail)
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I thank the witnesses for their presentations this morning and for the work they have done since that fateful vote on 23 June 2016.

Seán Haughey (Dublin Bay North, Fianna Fail)
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This committee obviously has engaged with every aspect of Brexit right up to today.

Ruairi Ó Murchú (Louth, Sinn Fein)
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That would be within the rules.

Seán Haughey (Dublin Bay North, Fianna Fail)
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We did our bit, with the various ministers, civil society groups and so forth. Obviously, the main objective was no hard border on the island of Ireland and that has been achieved. We engaged many times with Maroš Šefovi. He was ecstatic at the last meeting we had with him when the Windsor Framework was agreed. He was very happy that a good day's work had been done. It is also fair to say that the then Prime Minister, Rishi Sunak, was there for the negotiation of the Windsor Framework. He was an improvement on his predecessor, and there is no need for the witnesses to comment on that.

Brendan Howlin (Wexford, Labour)
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What about what went before?

Seán Haughey (Dublin Bay North, Fianna Fail)
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Yes.

I have another comment in relation to Northern Ireland having the best of all possible worlds, access to both the UK internal market and the EU's Single Market. We take on board the point made that not enough is being done to attract investment or to highlight the advantages of the Windsor Framework from the point of view of investing in Northern Ireland. That point is well made.

Have the witnesses any statistics on trade flows between east-west, north-south, all different directions? That may be something we can get separately. Maybe we could get a summary of how things have gone since Brexit and the negotiation of the Windsor Framework as well. Have there been any significant changes in trade flows? The witnesses are not expected to have the information. We could probably get it somewhere else. However, I would be interested in anecdotal evidence of that.

The second question is on the political aspects of the various agreements, the EU-UK Trade and Cooperation Agreement, the Windsor Framework, and the withdrawal agreement before that, engagement with ministers between the UK, Northern Ireland and Ireland, engagement of civil servants and so forth. The witnesses mentioned the EU-UK specialised committee. In their experience, do they think that is working and that the committees are functioning and doing what they are supposed to do? I know there are various committees and it is quite complicated having regard to the various agreements but we can start with the EU-UK specialised committee.

The third question relates to Article 18, which was mentioned. That has to be ratified by the Northern Ireland Assembly. Is that something the witnesses are actively campaigning on? What is the feedback they are getting? The political situation has stabilised and obviously they are hopeful that that will be ratified. What are they doing in that regard and what is the feedback they are getting on that?

Mr. Paul Lynam:

There is quite a bit there, so I will take it in various different parts if the Deputy does not mind. On the democratic consensus mechanism, that has to happen in December. The most important thing is that we de-dramatise that. We do not want to play any particular political cards on it. It should just be seen as a procedural thing. We have been making the case for the benefits of the Northern Ireland Protocol, notwithstanding the concerns that we raised and the wrinkles that need to be ironed out. However, we will be supporting that but it is very important we depoliticise and de-dramatise that as much as possible and see it more as a procedural thing. There is only so much that we can do but we will be having quiet words rather than public ones, it that makes sense.

On specialised committees, that is a great point. Specialised committees went on hiatus when the Northern Ireland Protocol was put on ice. It is really only getting back into its flow now. That is specialised committees in energy and in various different avenues. We are starting to see it start to get up and running now. It probably needs a better level of communication between external bodies and specialised committees themselves. We are actively involved in the domestic advisory group to the European Commission. We would feed in our concerns directly to the specialised committees but more needs to be done there.

On the joint committee itself, and I want to be clear on this, it can only do what it is tasked and allowed to do. When I was said it needed more teeth, it just needs to be empowered more to deal with some of the unknown unknowns that it comes across on a regular basis.

In terms of the Deputy's comment on Northern Ireland opportunities, I want to clarify that it is not to say that there has not been a great campaign from Invest NI and the Department of Business and Trade of Northern Ireland, in terms of highlighting. What I am saying is putting the onus on ourselves in terms of the organisation giving better messaging to businesses based in the Republic and to businesses based in GB to also look to Northern Ireland before going more globally on it in terms of the investment opportunities for Irish businesses and British businesses in relation to Northern Ireland. I am putting the onus on myself.

In regard to trade statistics, Ms Lynch can go into the detail on it. There has been significant growth in terms of trade between Northern Ireland and Ireland - €17 million or €18 million when we count in services. Again, in regard to east-west trade, the figures are kind of skewed in relation to some of the energy figures in terms of inflation. Generally, for the past couple of years, it has been on an upward trajectory. It depends on whether it is being assessed by the CSO or the UK Office for National Statistics. However, it has broken the €100 billion barrier in two-way trade.

Ms Carol Lynch:

There are two points. First of all in regard to the work that has been done to attract inward investment into Northern Ireland, I was talking to my colleagues in BDO Belfast on this yesterday. It carried out a number of reports. In particular, there was quite a large report on prosperity in Northern Ireland, which was presented in the House of Commons and to the Tánaiste, Deputy Micheál Martin, pointing out the opportunities in Northern Ireland which are there to be availed of as the Windsor Framework has now set in. There is a significant amount of new US investment that has potential to come into Northern Ireland once the regulatory issues are settled.

There is a great deal of work there as regards publicising that. It is a matter of trying to get that message out a little more internally in Ireland and looking at the structure and employment opportunities available in Northern Ireland to support that inward investment. There is definitely some work being done there that is achieving good traction.

As regards the trade statistics, there has been a solid and really good result. Looking at trade statistics between the Republic of Ireland and Great Britain, there was certainly a belief that with Brexit initially there would be a significant reduction in imports and then, certainly from January or February of this year, with the changes in the UK as regards Irish exports, that we would have a significant reduction in exports to the UK. It is quite commendable to Irish exporters that this has not actually happened, that the work that has been done by Bord Bia, Enterprise Ireland, etc., in training and educating our exporters has really stood to them and that those challenges have been overcome. Notwithstanding the challenges I am raising as to what is coming down the line, we still have an issue with chemical exports, but I do not think that has anything to do with Brexit. As regards our food and agriculture side of things, those numbers have stayed constant. I do not have the actual details to hand, but that is at a high level.

Seán Haughey (Dublin Bay North, Fianna Fail)
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That is good to know

Colm Brophy (Dublin South West, Fine Gael)
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Does Deputy Ó Murchú wish to speak?

Ruairi Ó Murchú (Louth, Sinn Fein)
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Go raibh maith agat. Cuirim fáilte roimh na finnéithe. I apologise; I was at another event in my constituency. I have a whole pile of excuses that the witnesses will not be particularly worried about.

Brendan Howlin (Wexford, Labour)
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Constituency events are increasingly-----

Ruairi Ó Murchú (Louth, Sinn Fein)
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They are. We are operating on a particular timeline, a bit like the witnesses in what they are talking about.

Usually I say that I apologise if I repeat myself, but I probably will not do so here. The crux of the matter is that there is an issue with veterinary medications. If this thing runs out in 2025, we are talking about something that will be somewhat disastrous if we cannot get separately an SPS veterinary agreement. Again, that will not be particularly useful. There is a general conversation on misalignment and burden of regulation. I think Ms Lynch spoke about an avalanche. Really, I think she is saying it is an avalanche that is only beginning as to what the issues are, whether companies will have to set up entities in other jurisdictions and so on.

Where I was earlier was a meeting with Dundalk Chamber of Commerce in the Gateway Hotel. When they got beyond just giving a report on the budget, they went into the fact that it is a taxation issue across the board and involves cross-Border workers, particularly remote working, and that many companies do not want to engage in this because of the hassle of setting up in another jurisdiction and all that goes with it. I imagine that would be an issue here as well. The witnesses have said not enough of the players have taken all this on board. As they say, that conversation is just not high enough on anyone's agenda. I suppose it is a matter of whatever role any of us can play, even given the timeline constraints within which we are operating. Mr. Lynam sees the joint committee, if it had teeth, as being something that could at least deal with some of this more dynamically. I think the only useful thing was using the example of Maroš Šefovi as someone who was able to deal with and get around a number of issues. It is a matter of how disastrous we are talking about, how we get a framework in place and who the players who need to step up are. I imagine all this has to happen very quickly.

Mr. Patrick Donohoe:

I would save the Deputy one word by dropping the "somewhat" and just saying "disastrous". That is it. Everything else is fair.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Who are the players who really need to gear up here?

Mr. Paul Lynam:

It is the Commission, the UK Government, the joint committee. You could look for a deferral. It would be the obvious thing while negotiating an SPS veterinary agreement, which can take some time. The difference is that, until a couple of years ago, the UK was effectively in the family; it was in the tent. This should not be as long and drawn out, as long as the principle of accepting dynamic alignment is put on the table by the UK and then the EU is willing to accept a fast-tracking of an agreement. They are easy solutions but hard to get to.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Otherwise, disaster.

Brendan Howlin (Wexford, Labour)
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I understand the difference between dynamic alignment and mutual acceptable standards. Is it envisaged that an agreement would be that the European Union would accept UK veterinary standards or, more problematically, that it would accept EU standards and dynamic alignment adjusting for ever?

Colm Brophy (Dublin South West, Fine Gael)
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I want to come in on that. It is a particular matter that I want to address. One thing I will put to the witnesses upfront is that they will continue to have the support of this committee, the Irish Government and everybody else. It is really important to recognise, however, that we are probably entering a very different phase of thinking by the European Union. What is happening is very welcome as to where the British Government will hopefully, in comparison with the previous Government, position itself. As regards one of the bigger problems we have to take on board, it is a matter of how we can work together collectively in our own country, but this is a Commission-UK issue. Deputy Howlin alluded to this earlier. As to where Europe is moving and what its thinking is, which is very much on the other side of Europe and relates to accession, security and so on, it is reshaping, though, the way in which it will approach discussions it has with the UK and so on. It is the impact, as the EU will feel it, for other discussions with other countries in other ways that will shape its thinking.

Dynamic alignment is particularly important. As we have all talked about here, there are two things involved. The first is that Europe is built on regulations and the second is that, as Mr. Lynam correctly said in his opening statement, there is definitely an attitude within the Commission, and Mr. Šefovi is a very progressive person in that regard, but even he would hold that if you are not a member of the club and you chose to leave the club, you cannot then turn around and say you want the full benefits of the club. If that were to be conceded by Europe, the problem for the latter would then be why anybody else should join the club or why the existing players should stay in if they can have everything they want. That is at the crux of it, and we will get caught up in that. It will be a more difficult argument in terms of the veterinary agreement than we probably realise, although I am sure the witnesses are at the coalface of this do realise that. However, that will be a major problem. I agree that the complications and consequences for Ireland of it going wrong will be pretty staggering.

Mr. Paul Lynam:

I do not think anybody here would disagree with anything the Cathaoirleach said. On Deputy Howlin's point, the starting point is that we were talking about the EU position being dynamic alignment for a veterinary agreement. Should the UK concede that, and that is a big if, the advocacy would be in terms of fast-tracking such a veterinary agreement. Those are big ifs and buts. We do, however, have some level of precedent contained within the trade and co-operation agreement, when the negotiating position was dynamic alignment versus mutual recognition, based on key principled positions as to how we got the trade and co-operation agreement as regards goods. It will have to be much stronger than that in terms of agrifood SPS because of the sensitivity of the product. I totally accept that. I am just making the point that a veterinary agreement is in everyone's interests, but I completely accept that the UK would have to cede something as regards dynamic alignment or something very close to it. However, that is standard enough in terms of veterinary agreements. Different models exist, and the closer you get and the more integrated you get, the closer the UK will have to go to as regards dynamic alignment.

The point about EU-UK relations is completely fair. We could have reset and everything; it will never the same as being within the European Union. There is, however, precedence between countries outside the European Union and countries that have trade agreements that include veterinary agreements with them. We have that with New Zealand and Switzerland, for example.

Colm Brophy (Dublin South West, Fine Gael)
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The irony of that is that the countries that did that deal with the EU accepted some of the principles that are very problematic for a British Government to accept. That is the crux of it. Hopefully, it will be resolved. It has to be resolved. It is going to be a very interesting point as to how the British Government moves. There is also the Commission and its new mandate is starting. It will be interesting to see the way it will think. We need to maintain the willingness to engage that started to emerge at the end of the last Commission. We need to make sure that it remains and does not get sidetracked by issues happening elsewhere on the Commission's agenda.

Mr. Paul Lynam:

To be clear, the European Commission is not chasing after the UK for a veterinary agreement. Does Mr. Donohoe wish to contribute?

Mr. Patrick Donohoe:

No, that will do. It was very insightful.

Colm Brophy (Dublin South West, Fine Gael)
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That brings us to the conclusion of our engagement here today. I thank the witnesses for coming in. It is part of an ongoing engagement which will continue at our next meeting. I thank Carol Lynch, Patrick Donohoe, Paul Lynam and Aidan Finnegan for their contributions today. It was a very worthwhile exchange.

Mr. Paul Lynam:

Before we adjourn, I would like to thank the Chair and the committee for having us in today. I am also aware that two Deputies who are members of the committee will not be seeking re-election in the upcoming general election. On behalf of the British Irish Chamber of Commerce, I thank them for their service to the State and wish them well in their lives.

Colm Brophy (Dublin South West, Fine Gael)
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I thank Mr Lynam. The committee now stands adjourned.