Majority of EU goods most exposed to Britain are Irish - study

DUBLIN (Reuters) - Eleven of the 15 European Union goods most exposed to Britain are Irish exports, an analysis by the country’s finance ministry showed on Wednesday, highlighting the extreme vulnerability to Brexit of some Irish firms.

A sign for customs and excise is seen on the motorway approaching the border between Northern Ireland and Ireland, near Newry, Northern Ireland July 13, 2017. REUTERS/Clodagh Kilcoyne

With close trading links to Britain and a shared land border, Ireland is widely considered the EU member most at risk when it neighbour leaves the bloc. Business fears Brexit will lead to a costly rise in tariffs, paperwork and transit times.

The United Kingdom accounts for around 17 percent of Irish exports, but that figure leaps to 44 percent when foreign-owned firms are excluded, with employment-heavy industries in rural areas among the most reliant on trade across the Irish Sea.

Products of Ireland’s agri-food sector are among the EU’s most exposed to Brexit, the finance ministry’s research showed, led by cereals, fruit and vegetables, almost 90 percent of which are exported to the UK.

High volume Irish industries such as meat, dairy products, the live animal trade and wood manufacturing are also among the most exposed. Cyprus and Malta are the only other two EU member states whose goods feature in the top 15.

The research also found that although Irish trade has become far less reliant on its nearest neighbour since the early 1970’s, when the UK accounted for over 50 percent of total exports, some big sectors have increased their share of exports.

The proportion of food and live animal exports to the UK increased to 46 percent in 2015 from 38 percent in 2000, while exports in manufactured goods rose to 55 percent of the sectors’ total exports from 43 percent over the same period.

Irish agri-food would face some of the highest tariffs if the EU-registered World Trade Organisation tariff schedule was applied to EU-UK trade should Britain leave under a so-called “Hard Brexit” in 2019, the report noted.

Agri-food and traditional manufacturing face an additional vulnerability due to the UK’s reliance on the two sectors, the report added, as outside the EU, Britain would have an incentive to seek trade agreements with third countries on better terms in areas in which it is not self-sufficient.

Ireland’s government has called on Britain to stay in the EU’s customs union to maintain the currently invisible border between it and the British province of Northern Ireland, an outcome that would also limit disruption for exporters.

But with Britain insisting it will leave the EU’s trade bloc, Dublin has also been introducing measures to encourage firms to diversify into other markets.

Reporting by Padraic Halpin; Editing by Catherine Evans