A lack of certainty over Northern Ireland's post-Brexit arrangements is “dampening” investment on the island, Irish politicians have been warned.
But Brexit did not impact the Republic of Ireland as hard as had been feared, an Oireachtas (Irish Parliament) committee heard on Wednesday.
No breakthrough between the UK and the EU is expected in those talks ahead of the upcoming Assembly elections in Northern Ireland.
The ongoing negotiations on the post-Brexit arrangements for Northern Ireland has been overshadowed by the Russian invasion of Ukraine.
However, the uncertainty was highlighted on Wednesday as a significant cause of hesitancy for traders.
Appearing before the Oireachtas Committee on Trade, Enterprise and Employment, one Government official said: “In large measure, Brexit was not the calamitous event that we all feared, and this can be attributed, in no small measure, to the level of preparedness of Irish businesses for the changed trading relationship with the UK in the aftermath of Brexit.”
Anne Coleman-Dunne, from the Irish-UK section in the Department of Enterprise and Trade, speaking around 15 months since the first impacts of Brexit were felt in Ireland, said that “businesses have faced the realities of the new trading relationship”.
“While for many businesses, Brexit is done, this is not the case for those in the agri-food sector and businesses in this sector need to continue preparing for the UK import controls.
Those new import controls had been set to come into effect from the start of the year.
Describing it as a “temporary reprieve”, Ms Coleman-Dunn warned that nonetheless “Brexit has changed forever the trade relationship between the UK and Ireland and the full extent of these changes will only become fully evident over time”.
Already, data from the Central Statistics Office in Ireland has shown significant changes to the trading relationship between the two countries, even as trade between the Republic and Northern Ireland appears to grow.
That change was set out clearly at the Oireachtas committee, where the decline in the use of Great Britain as a so-called landbridge for Irish traders was raised, with no indication from the data as to whether the shift is temporary or permanent.
Ms Coleman-Dunn said: “The trade data for 2021, particularly on exports to Great Britain and on trade flows North-South, is encouraging. However, uncertainty for the future of the UK-IE trading relationship remains.”
Representatives from InterTradeIreland, which promotes cross-border trade, said that with limited exceptions “Irish imports and exports to and from Northern Ireland are up across all categories”.
Margaret Hearty, the CEO of InterTradeIreland, said that the change is caused by a combination of factors, including Brexit and the pandemic, as well as the rising cost of energy and inflation.
Skills shortages are also playing a role, Ms Hearty said.
“It’s important to recognise that the rise in trade value across the border is not all resulted from new sales or supply chain activity.
“Many firms trading across the border on the island, particularly those with complex and integrated offshore supply chains, are finding adjusting to the new market rules challenging.
“Continued uncertainty with regard to the final agreement in relation to the Protocol on Ireland and Northern Ireland is having a dampening effect on investment. Removal of Northern Ireland from the EU’s single market for services is also having a particular impact on firms with an all-island outlook or aspirations.
“Many firms are still continuing to work through the impacts on services delivery and it is likely that further challenges will arise in a number of areas for services firms in the coming months and years. These challenges will likely be centred on market access, data sharing and skills.”
Quizzed by Sinn Fein TD Louise O’Reilly about the lack of a functioning Executive in Northern Ireland, Ms Hearty stressed that the “raison d’etre” of her organisation was to promote cross-border trade.
“Business continues despite what happens within politics and we continue to support businesses.”
“Uncertainty is not good for business,” she said.