Ireland & the Single Market post Brexit

prawnsambo · 18-01-2021 3:57pm

completedit wrote: »

We are part of an integrated political and economic union. At this stage, you can really only talk about European self sufficiency, not Irish specific. Also its a beggar thy neighbour dilemma. If Ireland goes down that road why not our export partners? Where does that leave us then? If you believe international trade to be a good thing, which it is on the aggregate from a purely economic point of view, then there's really no logic for Ireland producing certain foodstuffs on any sort of scale.

We probably do need to grow more potatoes as Sam says, since we have been importing (mostly) from the UK to make up the balance. But that would require between 2,000 and 3,000 more hectares devoted to potato growing.

Sam Russell · 18-01-2021 3:59pm

prawnsambo wrote: »

We probably do need to grow more potatoes as Sam says, since we have been importing (mostly) from the UK to make up the balance. But that would require between 2,000 and 3,000 more hectares devoted to potato growing.

When it comes to hectares, we have plenty of them.

prawnsambo · 18-01-2021 4:12pm

Sam Russell wrote: »

When it comes to hectares, we have plenty of them.

But you do have to rotate crops, so it's probably more like four times that area needed. Definitely feasible though.

Datacore · 18-01-2021 4:20pm

Sam Russell wrote: »

Well, our climate is well suited to growing sugar beet, which made us self sufficient in sugar. That was removed by some dodgy deal with the EU. Maybe we should go back to that. We should grow more spuds - I do not understand why we don't.

Poly tunnels would expand our range of vegetables and would be far more profitable than suckler beef. We sell grass fed premium beef at commodity prices into the UK - daft. It would also provide much needed rural employment.

We need to be smarter at what we do and be more self sufficient.

A lot of those issues are more to do with choices being made by Irish agriculture. I agree we should be more diverse in production and that we are obsessed with beef / dairy farming, but that’s nothing to do with the EU single market. It’s lack of imagination locally.

We are also producing vast amounts of premium, grass fed milk that is for some daft reason ending up as unbranded milk powder.

We could do with going way up the value chain, rather than having an agricultural sector that seems to neither understand the concept of marketing a green, premium Irish product nor developing enough exportable brands.

My main argument in favour of that is it would be of big environmental benefit. If we went up the value chain we could produce less, sell it at a higher price & reap major benefits for areas like tourism though improving the sustainability of production. We could also prevent a lot of shocks caused caused by shifts in commodity prices.

What would the advantage to Ireland be of being self sufficient in sugar? It’s a cheap commodity item that relies on enormous economies of scale to be viable.
If you’re looking at state owned sugar companies processing beet, you’re sort of heading into odd old days of state enterprises that had no markets.

Our lack of imagination in terms of what we could do worth farming isn’t the EU’s fault. We could very easily just wander down a Brexit style blame everyone else type discussion on that, but we usually don’t.

Shut ourselves off and drown in milk, much as the U.K. is currently drowning in rotten fish?

grayzer75 · 18-01-2021 4:29pm

Datacore wrote: »

We are also producing vast amounts of premium, grass fed milk that is for some daft reason ending up as unbranded milk powder.

It's not a daft reason at all, there is very high demand for that product all across the globe in milk powder form and also as an end product e.g. Abbott Nutrition infant formula. There's literally multiple container loads being shipped all over the world on a daily basis.

Datacore · 18-01-2021 4:33pm

And who makes the profit on that? The brand!
The value isn’t added at the milk production end. It’s added when you formulate it into a product and put it on a shelf.

The daft bit is we are chasing what are essentially commodities markets when we should have been developing global brands and leveraging our image.

Kerrygold’s success is something we should be doing a hell of a lot more of.

Obviously we have some success stories like Kerry Foods and so on, but we could be way higher up those ranks than we are.

It’s way off topic but, you’d expect Ireland to have a Danone, a Nestle or a Fonterra. We’re only beginning to get to that level in relatively recent years.

My point is that’s not about the EU single market being a threat. It’s that we’ve not done enough to leverage our position in Europe and globally to move up those value chains.

It’s an area that shows we over focused on FDI companies and didn’t grow our own brands in a way we really could have and are only recently realising.

Access to the EU markets should be giving us a huge market to develop products for and sell into.

A huge % of Irish food exports are unbranded commodity items and that does not compare well to say France or even the U.K.

If we are going to be a serious agrifood player that has to change. Otherwise we’re just primary producers.

My point is rather than bemoaning the loss of protectionism and coming up with reasons why the EU is somehow negative, we need to be using the huge market far more than we do.

The decoupling from the U.K. might perhaps serve as a wake up call too.

Sam Russell · 18-01-2021 4:53pm

Datacore wrote: »

What would the advantage to Ireland be of being self sufficient in sugar? It’s a cheap commodity item that relies on enormous economies of scale to be viable.
If you’re looking at state owned sugar companies processing beet, you’re sorts heading into odd old days of state enterprises that had no markets.

Sugar beet is a good fit for the Irish agriculture economy. It provide sufficient sugar for the Irish market as it used to do before sugar production was abandoned in 2006 following a reduction of EU sugar quotas - Irish Sugar (Greencore) took the compo route.

Also, it is a cash crop for the farmers with the by-product of sugar beet pulp which is a good feed supplement for cattle, thus reducing imported grain.

When it was in business, Irish Sugar provided freight traffic for Irish Rail, which provided jobs and revenue to IR.

All in all, it was a mistake to abandon sugar beet.

Datacore · 18-01-2021 4:59pm

If you look at the processes involved in sugar production, it’s entirely about economies of scale. It’s a process that’s not unlike running an oil refinery. It’s extremely energy intensive and the bigger the scale you can do it at, the higher the margin and more viable the business is. So smaller producers struggle to compete.

It was, for most of its existence, a state owned enterprise that was privatised and wasn’t doing very well. The fact that it supplied demand for fright to another state owned enterprise, Irish Rail is somewhat irrelevant surely?

I mean what you’re describing there is more like a Soviet command economy model.

How exactly would you propose self sufficiency? Ban supermarkets from stocking other cheaper sugars?

I mean sugar is probably one of the prime examples of an absolute commodity. It’s bought and sold by the ton on markets. It’s very low margin, with zero differentiation.

Had we grown a big, branded chocolate or confectionary brand on the back of it, perhaps? However we didn’t and we had a couple of relatively small scale sugar plants that were barely competitive.

Greencore did exactly that - spinning itself out of what was a big, low margin commodities business and growing a whole load of other product lines that are far more profitable.

The upside to being in a huge single market is market access, but you have to be prepared to compete and innovate.

prawnsambo · 18-01-2021 5:14pm

Datacore wrote: »

If you look at the processes involved in sugar production, it’s entirely about economies of scale. It’s a process that’s not unlike running an oil refinery. It’s extremely energy intensive and the bigger the scale you can do it at, the higher the margin and more viable the business is. So smaller producers struggle to compete.

It was, for most of its existence, a state owned enterprise that was privatised and wasn’t doing very well. The fact that it supplied demand for fright to another state owned enterprise, Irish Rail is somewhat irrelevant surely?

I mean what you’re describing there is more like a Soviet command economy model.

How exactly would you propose self sufficiency? Ban supermarkets from stocking other cheaper sugars?

I mean sugar is probably one of the prime examples of an absolute commodity. It’s bought and sold by the ton on markets. It’s very low margin, with zero differentiation.

Had we grown a big, branded chocolate or confectionary brand on the back of it, perhaps? However we didn’t and we had a couple of relatively small scale sugar plants that were barely competitive.

Greencore did exactly that - spinning itself out of what was a big, low margin commodities business and growing a whole load of other product lines that are far more profitable.

The upside to being in a huge single market is market access, but you have to be prepared to compete and innovate.

Yeah. I think in a situation like this, you need to assess what are viable and non-viable import substitutions. Particularly when looking at food imports from the UK. So on the face of it, increasing potato crops looks straightforward and relatively easy. But a lot depends on cost of entry, availability of suitable land and probably lots of other factors I haven't thought of.

Datacore · 18-01-2021 5:21pm

I definitely think we should be more diverse in agriculture and again it’s a marketing thing too to some degree.

There’s a demand for Irish vegetables in Ireland that often isn’t met and that’s about connecting with consumers about the quality and freshness of local products, if you can get them at reasonable cost and quality. We do have some ans it has been increasing, largely due to locavore demand.

It’s also about farming just being absolutely fixated on cows though and tillage is seen as too complex.

Even just speaking from point of view of the environmental impact, it might make a lot more sense to grow produce here where viable.

I think though we need to be taking to the EU and global markets with much better brand development. We have the ingredients, the talent and the environmental factors to do a lot more than we do.

Marcusm · 18-01-2021 5:32pm

Datacore wrote: »

And who makes the profit on that? The brand!
The value isn’t added at the milk production end. It’s added when you formulate it into a product and put it on a shelf.

The daft bit is we are chasing what are essentially commodities markets when we should have been developing global brands and leveraging our image.

Kerrygold’s success is something we should be doing a hell of a lot more of.

Obviously we have some success stories like Kerry Foods and so on, but we could be way higher up those ranks than we are.

It’s way off topic but, you’d expect Ireland to have a Danone, a Nestle or a Fonterra. We’re only beginning to get to that level in relatively recent years.

My point is that’s not about the EU single market being a threat. It’s that we’ve not done enough to leverage our position in Europe and globally to move up those value chains.

It’s an area that shows we over focused on FDI companies and didn’t grow our own brands in a way we really could have and are only recently realising.

Access to the EU markets should be giving us a huge market to develop products for and sell into.

A huge % of Irish food exports are unbranded commodity items and that does not compare well to say France or even the U.K.

If we are going to be a serious agrifood player that has to change. Otherwise we’re just primary producers.

My point is rather than bemoaning the loss of protectionism and coming up with reasons why the EU is somehow negative, we need to be using the huge market far more than we do.

The decoupling from the U.K. might perhaps serve as a wake up call too.

Glanbia is our Fonterra albeit it is moving more towards cheese accompanied by whey protein drinks!

Datacore · 18-01-2021 5:37pm

Marcusm wrote: »

Glanbia is our Fonterra albeit it is moving more towards cheese accompanied by whey protein drinks!

They’re moving that way but by comparison we are a late arrival and inexplicably so.

My point is that we need to be doing much, much more of this and building internationally recognised brands.

L1011 · 18-01-2021 5:49pm

We've Ornua, Kerry and Glanbia in the global scale food company field. There's also a very vague rumour that "someone" (read: C&C) may buy Diageo's beer and cider ops - Guinness basically - which would return us to having an Irish global scale drinks company again.

As goes vegetable production - there was an interesting RTE feature a while ago on mushroom farming having collapsed due to Brexit, and people using their old mushroom halls for computer controlled hydroponic production of salad veg, herbs etc - all imported outside of peak summer really.

Datacore · 18-01-2021 5:58pm

As I was saying we are getting there but later than many of our counterparts in Europe. It’s the direction we need to be going though rather than chasing around after low margin commodities or harking after bygone eras of state industries and protectionism. That’s the kind of delusion that walked the U.K. into Brexit or Trump supporters into trying to reopen coal mines.

The protection is well branded products that are innovative enough to find and maintain market share.

Disconnecting from the U.K. supply chains also opens up a lot of space for Irish companies to replace them.

Look at where Yogurts went over the last few years. We had dominance of mostly international brands (many produced in the U.K. or for U.K. supply chains primarily) Yoplait, Danone, Muller, etc but that market is increasingly dominated by Glenisk in particular and that came on from nowhere with an excellent product and is selling successfully overseas based on products developed for the domestic market.

It’s not all just about replacing U.K. products with more imports. It’s also a breathing space for domestic brands.

It’s not a tiny market either. The total Irish retail market (all of it not just food) is worth about €40 billion a year.

20silkcut · 18-01-2021 6:03pm

Sam Russell wrote: »

Sugar beet is a good fit for the Irish agriculture economy. It provide sufficient sugar for the Irish market as it used to do before sugar production was abandoned in 2006 following a reduction of EU sugar quotas - Irish Sugar (Greencore) took the compo route.

Also, it is a cash crop for the farmers with the by-product of sugar beet pulp which is a good feed supplement for cattle, thus reducing imported grain.

When it was in business, Irish Sugar provided freight traffic for Irish Rail, which provided jobs and revenue to IR.

All in all, it was a mistake to abandon sugar beet.

The sugar beet factory should have been in Wexford and all beet grown within 20 miles of it.
That is the European model of beet production.
Loading beet onto trains and hauling it 100 miles up the country was insanity and shockingly inefficient. No other country had specifically designated beet trains drawing beet all over the place. Basically an entire rail industry drawing massive tonnage of beet that was 70% water. There was massive inefficiency through out the entire Irish beet industry which was rooted in politics of the era of the 1930’s and not on any sound economic sense.
As was mentioned above it is an industry that could prosper in this country if done right.

Datacore · 18-01-2021 6:10pm

20silkcut wrote: »

The sugar beet factory should have been in Wexford and all beet grown within 20 miles of it.
That is the European model of beet production.
Loading beet onto trains and hauling it 100 miles up the country was insanity and shockingly inefficient. No other country had specifically designated beet trains drawing beet all over the place. Basically an entire rail industry drawing 70% water.

Fairly typical of many former state industries. Take Irish Steel - no iron ore locally, scrap metal for recycling had to be imported by ship. Ireland is very far away and has extremely expensive electricity and it caused huge environmental damage.

Why we ever thought it was a good idea to try and create a steel industry is beyond me.

It’s not just a case of any job is good. You can’t build an industry on a political whim if it hasn’t got the fundamentals to support it.

But anyway, that isn’t where we are now.

Hopefully we will be finding opportunities in the months ahead amongst them challenges.

beggars_bush · 18-01-2021 9:40pm

Irish beet industry was based on the same principle as Bord na Mona - self sufficiency

Datacore · 18-01-2021 10:33pm

beggars_bush wrote: »

Irish beet industry was based on the same principle as Bord na Mona - self sufficiency

In an era when there was no EU, no rules based global trade, protectionism was the norm and when we'd had an economic war with the UK, which was our only major export market and wars between 'the great powers' were always imminent, so you couldn't rely on anything.

We aren't in that situation now. If anything, that's where the Brexiteers are taking the UK - a sort of imagined turn of the 20th century Britain.

An Ciarraioch · 18-01-2021 10:54pm

Datacore wrote: »

As I was saying we are getting there but later than many of our counterparts in Europe. It’s the direction we need to be going though rather than chasing around after low margin commodities or harking after bygone eras of state industries and protectionism. That’s the kind of delusion that walked the U.K. into Brexit or Trump supporters into trying to reopen coal mines.

The protection is well branded products that are innovative enough to find and maintain market share.

Disconnecting from the U.K. supply chains also opens up a lot of space for Irish companies to replace them.

Look at where Yogurts went over the last few years. We had dominance of mostly international brands (many produced in the U.K. or for U.K. supply chains primarily) Yoplait, Danone, Muller, etc but that market is increasingly dominated by Glenisk in particular and that came on from nowhere with an excellent product and is selling successfully overseas based on products developed for the domestic market.

It’s not all just about replacing U.K. products with more imports. It’s also a breathing space for domestic brands.

It’s not a tiny market either. The total Irish retail market (all of it not just food) is worth about €40 billion a year.

Interestingly, even with Covid, Irish food exports were only down 2% last year, with dairy, pork and lamb actually growing, and the only real disappointments being alcohol and beef - best of all, we seem to have found new cheese markets in Africa and Asia, alongside Europe, when that sector had been most dependent on the UK:

https://www.agriland.ie/farming-news/success-of-diversification-evident-in-bord-bia-2020-export-performance-report/

Good loser · 19-01-2021 1:36am

20silkcut wrote: »

The sugar beet factory should have been in Wexford and all beet grown within 20 miles of it.
That is the European model of beet production.
Loading beet onto trains and hauling it 100 miles up the country was insanity and shockingly inefficient. No other country had specifically designated beet trains drawing beet all over the place. Basically an entire rail industry drawing massive tonnage of beet that was 70% water. There was massive inefficiency through out the entire Irish beet industry which was rooted in politics of the era of the 1930’s and not on any sound economic sense.
As was mentioned above it is an industry that could prosper in this country if done right.

In Wexford possibly.

I doubt it however. Scale would be insufficient. Two farmer groups collected money and investigated the options for many years before eventually concluding it was a non runner.
For some years the international price of sugar was good, maybe €100 per tonne but then fell to half or one third.
I believe one of the largest English factories in the south east uses imported sugar cane (probably from South America) as a feedstock.

Datacore · 19-01-2021 2:12am

Doesn’t look like M&S is solving its inability to supply its stores in France:

3 weeks on: https://twitter.com/john_lichfield/status/1351120631333580807?s=21

I’m in relatively close distance of one of their major Irish stores but I haven’t set foot in any of them since the COVID spike so I can’t really tell what the situation is.

20silkcut · 19-01-2021 1:12pm

Good loser wrote: »

In Wexford possibly.

I. Two farmer groups collected money and investigated the options for many years before eventually concluding it was a non runner.

They had zero government support and were asking farmers to make a massive leap in the dark with their own capital.

I noticed over the last few years on the road you would see the odd lorry marked British sugar in big tankers. I presume we won’t be seeing them anymore? Surely it would be uneconomic for British sugar manufacturers to export to Ireland.
I heard a guy on the radio from the ritchies sweet factory in Dublin expressing concern over the difficulties of importing sugar from Britain post brexit. Surely other companies are having the same difficulties. Beet is the type of Agriculture that suits a green agenda. Increasing sugar cane imports from South America is exactly the type of practice that flys in the face of this.

rock22 · 19-01-2021 1:28pm

View wrote: »

The solution to the latter issue was and is for importers here to replace products from the U.K. with products from the rest of the EU, with the latter arriving into Ireland via direct shipping from the rest of the EU (ie not via the U.K. landbridge).

It is unreasonable to expect consumers and businesses here to pick up the tab for headaches (and costs) arising for importers who ignored what was coming down the tracks.

And, yes, the government should have had, and should continue to have, those importers into government offices to make it clear they would be/will be hit by massive fines if they attempt to pass on any such increased costs due to Brexit because they insist on importing from the U.K.

After a long frustrating delay, i have just confirmed with an motor main dealer that all parts etc for ireand will continue to be distributed from the UK. Clearly this will have massive costs which , of course, will be passed on to the consumer.

Is there any way that the Irish government, or the EU, can insist that EU supplies should bypass UK distribution centres. I heard Leo Varadkar saying something along those lines already but apparently the car manufacturers prefer to let Irish customers foot the bill to keep everything as it were.

jm08 · 19-01-2021 4:58pm

20silkcut wrote: »

They had zero government support and were asking farmers to make a massive leap in the dark with their own capital.

I noticed over the last few years on the road you would see the odd lorry marked British sugar in big tankers. I presume we won’t be seeing them anymore? Surely it would be uneconomic for British sugar manufacturers to export to Ireland.
I heard a guy on the radio from the ritchies sweet factory in Dublin expressing concern over the difficulties of importing sugar from Britain post brexit. Surely other companies are having the same difficulties. Beet is the type of Agriculture that suits a green agenda. Increasing sugar cane imports from South America is exactly the type of practice that flys in the face of this.

Ireland could have continued growing sugar beet, if it wanted. There were originally four sugarbeet factories dispersed around the country and eventually all closed except for one. They even dismantled Thurles I think and reassembled it down in Cork which eventually it closed. Greencore who owned it, decided to close it because they couldn't compete with Brazil and Eastern Europe producers.

Just on Irish farming exports - from what I understand, Ireland supplies 14% of the world's baby formula which is regarded as a premium product. Ireland and the Netherlands have secured the premium baby food market in China. I think the Netherlands is No. 1 and Ireland is No. 2.

Ireland's climate is most suited to growing grass. We don't really have enough sunshine days to grow wheat and barley. Thats why dairying & beef production are so popular here - it suits our climate.

Here is an account of the politics of what happened:
https://www.independent.ie/business/farming/greencore-plc-must-shoulder-blame-for-loss-of-our-vital-and-strategic-sugar-beet-industry-26701921.html

Datacore · 19-01-2021 5:44pm

It's only relatively recently though that Ireland's had actual Irish brands in China.

https://www.farmersjournal.ie/kerry-launch-first-irish-brand-of-infant-formula-in-china-168458

That only pushed out around 2014-15.

That's exactly where we need to be going and it's hugely important post Brexit.

Over the same period, Kerrygold has made huge inroads into the US market and grown on the continent for a whole load of products, not just butter.

Irish beef tends to be sold in Belgium for example as a premium product: https://www.delhaize.be/fr-be/shop/Viande-poisson-et-produits-vegetariens/Viande-fraiche/Boeuf/Entrecote-Irlande-Boeuf/p/F2015061700542110000

https://www.delhaize.be/fr-be/shop/Viande-poisson-et-produits-vegetariens/Viande-fraiche/Boeuf/Rib-Eye-Black-Angus/p/F2016071300534700000

There are a few odd ones that are a bit confusing:

https://www.delhaize.be/fr-be/shop/Viande-poisson-et-produits-vegetariens/Viande-fraiche/Agneau/Cotelettes-Agneau-Celtic/p/F2011012600575800000

Zoom in on the product. Note the tricolour and the union flag are combined into a single brand.

"Celtic" which is co-branded as British/Irish with the two flags. That's very confusing in my opinion.

"Noisette d'agneau. 100% Agneau Celtic. Origine: Irlande & Grande-Bretagne."

jm08 · 19-01-2021 10:44pm

The Celtic branding may have something to do with EU origin labelling requirements. For example, lamb born south of the born and sold to a farmer in NI for fattening up (and visa versa). It will be interesting to see how if they continue to use the Union Jack flag for that. Probably best to change it to the NI/or Ulster flag.

Welsh lamb is the premium brand in France. Jumping on the celtic brand might be a way of jumping on that bandwagon, though I think the ROI imports lamb from Northern Ireland, not export it. NI are big lamb producers, exporting about 80% of what they produce.
https://www.thejournal.ie/irish-sheep-farmers-brexit-4319473-Jan2019/

With regard to exporting to China - it takes years to get into that market. It has taken 2 years between factory approval to actually sending the first steak to China. Baby formula is by far the most lucrative dairy product - selling in China at 4 times what it costs here.

View · 20-01-2021 12:22am

rock22 wrote: »

After a long frustrating delay, i have just confirmed with an motor main dealer that all parts etc for ireand will continue to be distributed from the UK. Clearly this will have massive costs which , of course, will be passed on to the consumer.

Is there any way that the Irish government, or the EU, can insist that EU supplies should bypass UK distribution centres. I heard Leo Varadkar saying something along those lines already but apparently the car manufacturers prefer to let Irish customers foot the bill to keep everything as it were.

To the best of my knowledge, there is nothing stopping the government slapping an additional set of corporation taxes on suppliers that insist on importing from outside the EU (ie the U.K.) when there are alternative (and cheaper) suppliers inside the EU available to them that they refuse to use.

I’d imagine they’d be be happy to change where they import from when it becomes clear that continued obstinacy means they “volunteer” to pay higher taxes.

sandbelter · 20-01-2021 1:54am

rock22 wrote: »

After a long frustrating delay, i have just confirmed with an motor main dealer that all parts etc for ireand will continue to be distributed from the UK. Clearly this will have massive costs which , of course, will be passed on to the consumer.

Is there any way that the Irish government, or the EU, can insist that EU supplies should bypass UK distribution centres. I heard Leo Varadkar saying something along those lines already but apparently the car manufacturers prefer to let Irish customers foot the bill to keep everything as it were.

The only realistic thing to to do is list the companies that don't do it...that way consumers have a chance to make an informed decision.

Hopefully over time they'll come to thier senses when they realise they are being priced out of the market. New comers to the market won't have these "legacy" issues.

Anyway, don't the competition laws prevent you from being redirected to a more costly fulfilment site?

Personally, I would think that only changing the other side of the road is the only way to fix this.

Nody · 20-01-2021 9:36am

View wrote: »

To the best of my knowledge, there is nothing stopping the government slapping an additional set of corporation taxes on suppliers that insist on importing from outside the EU (ie the U.K.) when there are alternative (and cheaper) suppliers inside the EU available to them that they refuse to use.

I’d imagine they’d be be happy to change where they import from when it becomes clear that continued obstinacy means they “volunteer” to pay higher taxes.

You've literally described tariffs there; that's not something the Irish government can decide on it's own.

rock22 · 20-01-2021 9:49am

sandbelter wrote: »

The only realistic thing to to do is list the companies that don't do it......

Hopefully over time they'll come to thier senses when they realise they are being priced out of the market. New comers to the market won't have these "legacy" issues.

Anyway, don't the competition laws prevent you from being redirected to a more costly fulfilment site?

Personally, I would think that only changing the other side of the road is the only way to fix this.

The garage mentioned four different car brands, two German and two Japanese, and they all are continuing to treat Ireland as a 'third' country to the UK, which is, of course, a 'third' country to EU.
I would love to hear from someone working for Irish distributors who could confirm if there are any plans to change this.
But it was implied that this seems to be an industry decision, (we are probably too small to be considered a separate market to the UK,) . I wonder what other industries are making similar decisions, with the customer left to pick up the cost. If all the suppliers in a sector do the same thing the customer really has no choice

This is certainly something i would have expected our government to be monitoring and protecting Irish consumers. Perhaps i am naïve

View · 20-01-2021 9:58am

Nody wrote: »

You've literally described tariffs there; that's not something the Irish government can decide on it's own.

No I am not describing tariffs. I am describing an additional corporation tax levied on the profits of a company. That additional corporation tax would only apply if a company voluntarily chooses to have it applied to them (by refusing to source in a manner that would benefit the consumer here).

Peregrinus · 20-01-2021 10:03am

View wrote: »

No I am not describing tariffs. I am describing an additional corporation tax levied on the profits of a company. That additional corporation tax would only apply if a company voluntarily chooses to have it applied to them (by refusing to source in a manner that would benefit the consumer here).

You may characterise it as a corporation profits surtax, and it would be calculated in a way that is different from the way tariffs are normally calculated, but it's in substance a tax on importing - as in, if the company didn't import these goods, it wouldn't be liable to this tax. I think the ECJ might have Views about this.

FreudianSlippers · 20-01-2021 10:04am

View wrote: »

No I am not describing tariffs. I am describing an additional corporation tax levied on the profits of a company. That additional corporation tax would only apply if a company voluntarily chooses to have it applied to them (by refusing to source in a manner that would benefit the consumer here).

I'm certainly no EU state aid expert, as it's a nuanced and very specific area of law, but I'm wondering would that not fall on the wrong side of state aid rules?

Peregrinus · 20-01-2021 10:06am

rock22 wrote: »

The garage mentioned four different car brands, two German and two Japanese, and they all are continuing to treat Ireland as a 'third' country to the UK, which is, of course, a 'third' country to EU.
I would love to hear from someone working for Irish distributors who could confirm if there are any plans to change this.
But it was implied that this seems to be an industry decision, (we are probably too small to be considered a separate market to the UK,) . I wonder what other industries are making similar decisions, with the customer left to pick up the cost. If all the suppliers in a sector do the same thing the customer really has no choice

It does create an opportunity, though, for the first motor company willing to set up an Irish distribution chain that bypasses the UK - they'd have a strong selling point over their rivals.

View · 20-01-2021 10:07am

rock22 wrote: »

The garage mentioned four different car brands, two German and two Japanese, and they all are continuing to treat Ireland as a 'third' country to the UK, which is, of course, a 'third' country to EU.
I would love to hear from someone working for Irish distributors who could confirm if there are any plans to change this.
But it was implied that this seems to be an industry decision, (we are probably too small to be considered a separate market to the UK,) . I wonder what other industries are making similar decisions, with the customer left to pick up the cost. If all the suppliers in a sector do the same thing the customer really has no choice

This is certainly something i would have expected our government to be monitoring and protecting Irish consumers. Perhaps i am naïve

Ireland most definitely isn’t too small to be considered a separate market from the U.K. This is a choice that is being made by people in the supply chain (probably by ones in the U.K. who don’t want to forego any of their business).

Even if we were to accept the argument that Ireland is too small to be considered a separate market, then there is absolutely no reason why Ireland shouldn’t be considered as a smaller part of either the French or the Benelux markets and supplied by the suppliers in those markets.

The insistence on sourcing through the U.K. and hence on exposing consumers here to additional costs is cartel like behaviour and is almost certainly illegal.

Peregrinus · 20-01-2021 10:15am

View wrote: »

Ireland most definitely isn’t too small to be considered a separate market from the U.K. This is a choice that is being made by people in the supply chain (probably by ones in the U.K. who don’t want to forego any of their business).

Even if we were to accept the argument that Ireland is too small to be considered a separate market, then there is absolutely no reason why Ireland shouldn’t be considered as a smaller part of either the French or the Benelux markets and supplied by the suppliers in those markets.

The insistence on sourcing through the U.K. and hence on exposing consumers here to additional costs is cartel like behaviour and is almost certainly illegal.

Theres a particular problem with cars in that the parts requirements for LHD and RHD cars differ. So you can't just supply Ireland directly out of your existing (say) Belgian centre; you have to upgrade the Belgian centre so that it can meet the demand for parts appropriate to the Irish market. And the Irish market is relatively small, and may be very small if you're a minor presence in the Irish market. Upgrading an existing EU centre to serve the Irish market might be one thing if you are Volkswagen or Toyota; quite another if you Volvo or Suzuki.

Nody · 20-01-2021 10:23am

View wrote: »

No I am not describing tariffs. I am describing an additional corporation tax levied on the profits of a company. That additional corporation tax would only apply if a company voluntarily chooses to have it applied to them (by refusing to source in a manner that would benefit the consumer here).

Yes you are; you are targeting specifically non EU companies for imports into the Irish market; that's by definition a tariff or barrier of entry that you are implementing and that's against WTO rules as well as EU rules. Either they remain competitive or they don't; either way it's not for the Irish state to decide how they import the cars. And if Irish consumers wish to pay a premium because that's their choice of stupidity; same way we said UK customers would still buy BMWs with a 10% increase in cost due to Brexit at a no deal.

View · 20-01-2021 10:35am

Peregrinus wrote: »

You may characterise it as a corporation profits surtax, and it would be calculated in a way that is different from the way tariffs are normally calculated, but it's in substance a tax on importing - as in, if the company didn't import these goods, it wouldn't be liable to this tax. I think the ECJ might have Views about this.

Suppliers that insist that Irish companies and consumers can only be served by U.K. based companies are the ones subjecting Irish companies and consumers to what is “in substance a tax on imports”.

That “in substance a tax on imports” could be avoided completely were those suppliers to supply Irish companies and consumers directly from other EU countries.

It would be a voluntary choice for those suppliers as to whether or not they want their profits to be subject to an additional tax or not.

And don’t presume that the CJEU is going to ride to the rescue of those suppliers. Our VRT, which is levied not as a flat charge but rather on the differing market value of each and every car model, is not classified as a tax on importing even though that most definitely is what it is (and indeed it was first introduced by just renaming an actual import levy that we had previously).

View · 20-01-2021 10:39am

FreudianSlippers wrote: »

I'm certainly no EU state aid expert, as it's a nuanced and very specific area of law, but I'm wondering would that not fall on the wrong side of state aid rules?

You aren’t aiding an industry by levying taxes on them - taxes they can fully avoid by rejigging their supply chains by supplying Ireland via France rather than via the U.K..

First Up · 20-01-2021 10:39am

Peregrinus wrote:

Theres a particular problem with cars in that the parts requirements for LHD and RHD cars differ. So you can't just supply Ireland directly out of your existing (say) Belgian centre; you have to upgrade the Belgian centre so that it can meet the demand for parts appropriate to the Irish market. And the Irish market is relatively small, and may be very small if you're a minor presence in the Irish market. Upgrading an existing EU centre to serve the Irish market might be one thing if you are Volkswagen or Toyota; quite another if you Volvo or Suzuki.

At least one Japanese OEM has switched coverage of Ireland from its UK base in Swindon to Rotterdam.

Peregrinus · 20-01-2021 10:44am

View wrote: »

Suppliers that insist that Irish companies and consumers can only be served by U.K. based companies are the ones subjecting Irish companies and consumers to what is “in substance a tax on imports”.

That “in substance a tax on imports” could be avoided completely were those suppliers to supply Irish companies and consumers directly from other EU countries.

It would be a voluntary choice for those suppliers as to whether or not they want their profits to be subject to an additional tax or not.

Tariffs are always a voluntary choice - you can always avoid tariffs by not importing goods. So the point you're making here, while valid, does nothing to counter the argument that the policy you propose would be in substance the imposition of tariffs, which a member state cannot do.

View wrote: »

And don’t presume that the CJEU is going to ride to the rescue of those suppliers. Our VRT, which is levied not as a flat charge but rather on the differing market value of each and every car model, is not classified as a tax on importing even though that most definitely is what it is (and indeed it was first introduced by just renaming an actual import levy that we had previously).

They won't be riding to the rescue of the suppliers; it's the importers who will suffer the additional tax you propose. And their argument will be that they are disadvantaged relative to competitors in other EU member states, who could import the same parts from the UK without attracting the extra "tariff" and then freely distribute them into Ireland.

They'd also be acting in defence of the TCA, under which the UK has tariff-free access to the EU market. The UK would argue - I think correctly - that your measure was a disguised tariff, and so a violation of the TCA.

Peregrinus · 20-01-2021 10:48am

View wrote: »

You aren’t aiding an industry by levying taxes on them - taxes they can fully avoid by rejigging their supply chains by supplying Ireland via France rather than via the U.K..

You wouldn't be aiding the Irish importers of these products; you'd be aiding importers in other EU member states, by giving them a competitive advantage over Irish importers. There's little discussion about state aids provided to businesses in other member states — for obvious reasons — but the practice is just as legally problematic as given state aids to businesses in your own country.

View · 20-01-2021 10:55am

Nody wrote: »

Yes you are; you are targeting specifically non EU companies for imports into the Irish market; that's by definition a tariff or barrier of entry that you are implementing and that's against WTO rules as well as EU rules. Either they remain competitive or they don't; either way it's not for the Irish state to decide how they import the cars. And if Irish consumers wish to pay a premium because that's their choice of stupidity; same way we said UK customers would still buy BMWs with a 10% increase in cost due to Brexit at a no deal.

No I am not.

If VW or BMW insist on supplying Ireland via their U.K. subsidiaries, they are the ones deciding that the end consumer will have to pay additional costs on those imports, as a result of their decisions.

They both have the option of supplying Ireland via their French subsidiaries (or direct from Germany), this avoiding all additional costs on those import for the end consumer here.

The additional tax would be made on their corporate profits and it would be completely avoidable based on their choice. That is not a tariff or barrier of entry since it is completely avoidable by them based on whether or not they insist on us being subject to the “U.K. tariff” as a result of them insisting that we can only be supplied via the U.K.

Sam Russell · 20-01-2021 10:58am

Peregrinus wrote: »

Theres a particular problem with cars in that the parts requirements for LHD and RHD cars differ. So you can't just supply Ireland directly out of your existing (say) Belgian centre; you have to upgrade the Belgian centre so that it can meet the demand for parts appropriate to the Irish market. And the Irish market is relatively small, and may be very small if you're a minor presence in the Irish market. Upgrading an existing EU centre to serve the Irish market might be one thing if you are Volkswagen or Toyota; quite another if you Volvo or Suzuki.

There are few parts in a car that are handed - differ between LHD and RHD. Even where there are differences, the parts are not necessarily high use requiring substantial stocking. Furthermore, many of these parts would be ordered from the mothership by the UK subsidiary to be passed onto the Irish subsidiary and then passed onto the dealer.

There is no justification at all for this behaviour. It would be simple for the manufacturer to bring the distribution back to their major warehouses. It is not that difficult.

Nody · 20-01-2021 11:35am

View wrote: »

No I am not.

You are targeting a specific country and add on additional cost for goods from them. That is by definition a tariff as you are making it more expensive to buy from a specific country. You can dress it up any way you want but it's still a tariff. It's exactly the same as with EU applying tolls on Chinese steel; the companies can simply buy from somewhere else but that does not make it any less a tariff and yes it would be struck down by ECJ as the Irish government overstepping their role. Everything else you write is purely your justification but at the core what you are doing is making it more costly to import from a specific country and that's a tariff no matter how you try to claim it's a tax instead or they got other options etc.

Sam Russell · 20-01-2021 11:39am

If I buy something on ebay.co.uk that is second hand, and sold by a VAT registered entity, does it attract UK VAT (shouldn't) and does it attract Irish VAT on importation?

I am looking at a car part costing about £200. If it does not attract UK VAT, I could get it sent to a UK address. If it does not attract Irish VAT I can get it sent direct to me.

Otherwise, I will not buy it.

rock22 · 20-01-2021 11:42am

I am talking about a major manufacturer, not a small niche one.
This was apparent before Brexit for many goods. I remember taking up an item, made , from Italy, in Easons which had a Euro price for almost all of the EU and a Sterling price from UK. The Irish price was the Sterling price plus about 40% converted back into Euro. So many supply chains supply Ireland via the UK. I worked in health care and, when the Euro was introduced, asked a supplier to guarantee we would pay the same as all other countries using the Euro. They refused and said we would pay the Sterling price plus .

But now this practice involves an EU member being treated as a non EU member state. Effectively, Irish is being taken outside the single market by EU and Irish government inaction and it will have an affect on the ability of Irish consumers to benefit from membership of the EU. This is one case where the marketplace will not work becuase the customer paying for it all has no power to change the supply chain.

FirstUp, thanks for that information about one Japanese OEM. Perhaps when we know what companies are adjusting their supply chain we could choose to change out purchasing.

Nody · 20-01-2021 11:58am

Sam Russell wrote: »

If I buy something on ebay.co.uk that is second hand, and sold by a VAT registered entity, does it attract UK VAT (shouldn't) and does it attract Irish VAT on importation?

I am looking at a car part costing about £200. If it does not attract UK VAT, I could get it sent to a UK address. If it does not attract Irish VAT I can get it sent direct to me.

Otherwise, I will not buy it.

The only applicable VAT is Irish VAT as it's an import; however that does not mean that the UK company always deduct the UK VAT on the price (as it's free profit for them not to). Hence if you send it to a UK address you'd still have to pay Irish VAT on the import once it comes on over because the Irish state don't care what other VATs you may have paid previously.

Sam Russell · 20-01-2021 12:23pm

Nody wrote: »

The only applicable VAT is Irish VAT as it's an import; however that does not mean that the UK company always deduct the UK VAT on the price (as it's free profit for them not to). Hence if you send it to a UK address you'd still have to pay Irish VAT on the import once it comes on over because the Irish state don't care what other VATs you may have paid previously.

I suspected that would be the case.

Is VAT charged on second hand goods?

Nody · 20-01-2021 12:28pm

Sam Russell wrote: »

I suspected that would be the case.

Is VAT charged on second hand goods?

As far as I'm aware the answer would be yes, VAT is charged on everything no matter the state of it. The only main difference being the value would be lower (which Revenue don't always believe).

Ireland & the Single Market post Brexit

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