Northern Ireland’s economy minister is pushing the UK government to ease the strains of post-Brexit rules that threaten the competitiveness of the region’s aerospace industry by forcing companies to pay tariffs on raw materials imported from Great Britain.
Diane Dodds outlined aerospace companies’ mounting concerns in a recent letter to Lord David Frost, the Cabinet minister in charge of post-Brexit trade arrangements, and urged him to “ensure that the competitive position of Northern Ireland businesses within the UK internal market was not damaged” by the imposition of tariffs.
Under the Northern Ireland protocol, which sets the terms for the region’s post-Brexit trade, raw materials moved by aerospace companies from Britain to Northern Ireland are defined as being “at risk” of being moved into the EU.
That means the importing company has to pay tariffs on the raw materials as soon as they enter Northern Ireland or Ireland, a cost that could run to £14m a year according to ADS, Britain’s trade body which represents most of the 90 aerospace companies that employ more than 10,000 people in Northern Ireland.
The actual tariffs are ultimately refundable, but ADS said administration costs could run to as much as £65m annually and argued that the raw materials should be tariff-exempt because they are highly specific and only ever likely to be used for aerospace, an industry whose products are generally exempt from tariffs under World Trade Organization rules.
Dodd’s intervention came as prime minister Boris Johnson told the BBC that he was still trying to remove what he termed the “ludicrous barriers” and “unnecessary protuberances” thrown up by the protocol.
Johnson’s repeated denials of the practical realities arising from the protocol since its October signing have caused significant frustration among EU member states and the European Commission, which has launched legal action to force the UK to fully implement the deal.
Neale Richmond, European affairs spokesman for Ireland’s Fine Gael party — a member of the ruling coalition — accused Johnson of deploying “needless verbiage” instead of focusing on making the protocol operational. “Worth remembering that what Boris Johnson calls ludicrous is what he himself negotiated & ratified, the post Brexit protocol isn’t a foreign construct,” he added on Twitter.
The commission declined to comment on Johnson’s latest remarks, but said it was continuing “technical level” talks with the UK over the protocol’s implementation. Germany’s Europe minister, Michael Roth, repeated on Tuesday that the EU wanted the UK to commit to a “binding timeline for the full implementation of the protocol”.
Northern Ireland’s aerospace industry wants the UK government to use the UK-EU Joint Committee, which oversees the implementation of the UK’s withdrawal agreement, to agree a tariff exemption that “recognises the tariff-free nature of international trade in aircraft components and enables them to compete on a level playing field”, said Kevin Craven, interim chief executive of ADS.
The current regime “risk(s) putting companies at a disadvantage against international competitors”, Craven said.
Northern Ireland has a long-established aerospace cluster spanning design to manufacturing, including aircraft seats for many of the world’s airlines. America’s Spirit AeroSystems, which took over Bombardier’s Northern Ireland operations last year, is one of the largest employers and makes the wings for the Airbus A220.
Several manufacturers told the Financial Times the issue was already affecting supply chains. One executive reported recently cancelling a contract with a longstanding raw material supplier based in Britain in favour of an EU alternative.
“Northern Ireland needs to get support from [the Republic] and London and I don’t see much effort in London to help the situation,” Conor McCarthy, founder of Dublin Aerospace, one of the Republic of Ireland’s largest aerospace companies, said.
“The deep engineering and manufacturing heritage in NI should be the attraction and the payback for the British government is to alleviate their economic burden there with two out of every three jobs being a government job of some description.”
The Department for the Economy in Northern Ireland said the minister had asked the UK government to consider how tariffs could damage the industry.
“The difficulties this sector has experienced around the world due to Covid-19 are well known. This is also a sector where components tend to move between manufacturing sites during the manufacturing process,” it added.