Tesco, Sainsbury’s, Asda, M&S, Iceland, and Co-op have all stated that they may have to shift some supply chains from Britain to the European Union unless the Northern Ireland border issue is resolved.
Current post-Brexit trading arrangements are governed by the Northern Ireland Protocol. This keeps Northern Ireland inside the EU single market for goods and so requires controls on products arriving from mainland Britain. A grace period agreed between the UK and EU on some rules ends in October.
Following months of disruption, the CEOs from the six retailers, which represent over 75% of the grocery market in Northern Ireland, have now written to Brexit minister, Lord Frost, and Vice President of the European Commission for Interinstitutional Relations, Maroš Šefčovič, calling for urgent action to address the long-term future of GB-NI trade.
From October, unless a solution is found, retailers will face even more cost and complexity when moving goods from Britain to Northern Ireland. This is a result of increased checks at Northern Ireland ports, additional paperwork requirements, and the need for Export Health Certificates on products of animal origin.
The letter, coordinated by the British Retail Consortium (BRC), states that the challenges this will create in sourcing could force many retailers to move supply chains from Britain to the EU.
While some actions have been agreed by both sides, such as a recent agreement on the extension to the grace period on the movement of chilled meats, the letter notes that “much more needs to be done before the end of September if there is not to be significant disruption to supply and an increase in cost for Northern Ireland consumers.”
The letter urges the UK and EU governments to enter discussions with British retailers, visit their supply chains and distribution centres, and host joint talks between Government technical officials and retail supply chain experts to find a working solution for GB-NI trade. It warns that “without swift, decisive, and cooperative movement on this issue there will be disruption”, calling on both officials to “help us to minimise this disruption and allow us to continue to provide the people of Northern Ireland with choice and affordability.”
Possible solutions being put forward include a veterinary agreement, a wider Sanitary and Phytosanitary (SPS) agreement, a facilitated movement scheme or a Trusted Trader scheme. Retailers are not only urging the EU and UK Government to agree to these measures, which would reduce friction and keep costs down for consumers in Northern Ireland, but also to provide the time needed to implement such schemes.
Helen Dickinson, Chief Executive of the BRC, said: “The end to the NI grace period looms in the mind of every British retailer with supply chains in Northern Ireland. If no action is taken, then it will be the people of Northern Ireland, with half of the discretionary income of GB households, who bear the brunt of this stalemate – meaning less choice and higher costs for essential food purchases. Already, new red tape is causing delays, there are surging additional costs, and we are seeing challenges to ‘just-in-time’ supply chains.
“We need to see real ambition from both sides to provide a compromise that benefits those most impacted: the people of Northern Ireland. Our members made significant investments in the last few months to avoid disruption, yet disruption will become inevitable if the regime that will come into force in October is unrealistic and disproportionately onerous. Retailers have shown their compliance; the Government and EU must now help us by removing the barriers to GB-NI supply chains.”
NAM Implications:
- Ultimately these delays have to lead to increased shelf prices.
- With some suppliers in the UK deciding to forgo opportunities in NI…
- …and NI retailers searching for alternatives.
- Suppliers in vulnerable categories need to explore…
- …and neutralise the resulting implications.
