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Although the EU and UK signed the landmark deal last month, food importers in Ireland are beginning to feel the effects of tariffs due to rule of origin laws. Due to the section of the agreement which refers to the rule of origin for items, businesses and exporters are stopping or reducing the delivery of products to Ireland. Despite Ireland being a member of the EU, rule of origin laws dictate any product must originate in the EU or UK to avoid receiving a full tariff.
Many companies use distribution centres in the UK but if a product is not altered before being exported back to the EU, the item will receive full external tariffs.
This means the item does not qualify as a UK originated product with food and agricultural products attracting higher rates.
Due to this, companies and businesses have asked the EU Commission to pass an immediate clarification to help trade, the Financial Times reported.
Paul Kelly, director of Food and Drink Ireland, said food importers in Ireland had now begun to raise their concerns across the sector.
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He said: “Companies are beginning to raise this across the industry.
“There’s still a lot of clarity that needs to be brought to the issue so people can make any necessary changes to their supply chain.”
Despite the concern for trade, an EU official stated businesses must adapt to the consequences surrounding Brexit.
The official said: “You can’t expect Brexit not to have consequences.
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“The UK won’t be a distribution hub for the EU any more.
“EU businesses will need to stop relying on UK hubs.”
In particular, products such as flour now face tariffs of up to 50 percent due to it having external products within it.
Until the EU offers some clarification on the matter, European producers will be hindered in trying to get goods in.
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Sam Lowe, trade specialist at the Centre for European Reform think-tank. “If the EU wants to resolve the issue, it could do so pretty easily with an extra clarification to the UK and Irish markets.”
The amount of red tape had been one of the major concerns for companies on both sides of the Channel.
Ahead of the agreement on the Brexit deal, there had been severe delays at both Calais and Dover.
While this was also in part due to coronavirus restrictions, Cabinet Office Minister, Michael Gove did warn businesses this month may be a bumpy period.
Despite the warning, port authorities in Dover had reported smooth conditions for traffic at the moment.
This, however, may change as traffic levels increase over time.
Following the implementation of the new rules, the head of the Bank of England, Andrew Bailey also claimed the UK must not submit to the EU’s demands over financial services.
Financial services were not given equivalence in the agreement, meaning access to the EU for UK businesses has been hindered.
Speaking today, Mr Bailey stated the UK must stand firm over the issue.
He told the Treasury Committee: “If the price of this is too high then we can’t just go for it whatever.
“I strongly recommend that we don’t become a rule-taker.
“If the price of that is no equivalence, then I am afraid that will follow.”
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