UFU respond to UK Internal Market White Paper consultation

Friday, 14 August, 2020

The Ulster Farmers’ Union (UFU) have responded to the UK Government’s White Paper on the UK internal market which was recently launched for public consultation. The paper defines the UK internal market (UKIM) as the ‘total set of trading relationships that exists across the UK’. The purpose of the White Paper propositions is to ‘preserve the coherence’ of this internal market.

UFU president Victor Chestnutt said, “The internal market proposals set out in this paper provides the overarching architecture for the internal market, with some necessary adaptation to take into account the requirements of the Northern Ireland (NI) Protocol and commitments on unfettered access. The aim of the White Paper is to establish a mutual recognition and non-discrimination legal regime based on common frameworks to ensure that goods placed on the market in one territory can be lawfully sold in another.”

Within the White Paper, the Government does however indicate, that some areas of policy will be excluded from the mutual recognition principle.

“It is essential that the UK Government provides more information and clarity about what will be excluded. Exclusions should be agreed in collaboration with the Devolved Administrations and be established from the outset. They must not impact the ability to trade and market produce on the internal market, nor create possible distortions amongst UK producers,” said Mr Chestnutt.

One of the major issues is transiting via the Republic of Ireland (ROI). Approximately 50 percent of the produce sold by NI processors to the Great Britain (GB) market is routed through Ireland’s capital.

“The UFU welcomes the commitment given by the UK Government in their Command Paper on their intended approach to the NI Protocol to legislate to provide unfettered access for NI to the GB market. However, this has only been guaranteed by the UK Government with respect to goods traded directly from NI to GB. Produce is shipped through Dublin as it’s the only route that is feasible for meeting just-in-time requirements. There are important outstanding questions as to how unfettered access to the UKIM can be delivered via Dublin.

“In addition, while we support the UK Government’s commitment to legislate for unfettered access for NI qualifying goods and businesses, we are concerned that NI goods could still face commercial discrimination in the market as a result of differentiation that arises as a result of the protocol. Issues could emerge as a result of differences in labelling or standards and will be exacerbated if NI comes to be regarded as a backdoor for EU and non-EU produce by the GB industry and customers. This must also be addressed,” said Mr Chestnutt.

Another area of concern raised by the UFU within its response, is that the UK White Paper proposes ‘a single uniform subsidy control regime’ for the UK.  In NI, EU state aid provisions will continue to apply as relevant to the movement of goods and wholesale electricity. This is recognised in the UK Command Paper.

“It mentions that state aid has to be sorted at a later date. However, if you don’t know what your state aid rules look like it’s hard to know how the internal market is going to function properly. State aid rules are designed to stop competition being distorted within industries by regulating the likes of Government funded grants or tax breaks.

“We want to ensure that there is a state aid regime that works for the whole of the UK.  A complication for NI is that we are constrained by the EU state aid rules. We’re not saying that the UK should sign up to the EU state aid rules however, there shouldn’t be that much of a difference. It should not permit other parts of the UK to heavily subsidise, however, we in NI cannot.  A subsidy comes in all forms not just grants but with tax reliefs,” said Mr Chestnutt.

Overall, the UK Government has posed four questions that it wishes people to address in the consultation. These are not specific to NI.

“What NI needs is clarity and progress on access to the GB market has long been known and remains outstanding, including legislation on unfettered access. When it comes to the movement of goods from GB into NI, UK legislation cannot guarantee this without the final UK-EU Agreement. If there is no such deal, the uncertainties NI would face would be far greater than the scope of any White Paper,” said the UFU president.