Pharmaceuticals, a high-tech industry reflecting the new modern Ireland, and fisheries, an important traditional industry – while these industries lie at opposite ends of the economic scale, both will be greatly impacted by the outcome of Brexit negotiations. In this Just the Facts we explore how the two industries are now preparing for all outcomes.
Introduction
There remains a great deal of uncertainty with regard to the real impacts that Brexit will have on both the pharmaceutical and fishing industries. As a result, many economic sectors must now prepare for a wide range of scenarios.
The Irish government is providing a number of supports to many business industries. They are helping companies plan and advising on best practices. As part of these supports, they have developed the Contingency Action Plan and a Getting Business Brexit Ready guide.
Fishing and seafood have been central to rural economies for generations, accounting for €577 million of exports in 2019 and employing 16,150 across the sector. The pharmaceutical industry exported €50 billion in 2019 and employs 24,500 people directly and a similar number indirectly.
According the CSO, in 2019 the EU (excluding the UK) accounted for 64% (€371 million) of all Irish seafood exports, with 9% being exported to the UK. According to the CSO, in 2019 the EU (excluding the UK) accounted for 36% (€17.7 billion) of exports of pharmaceuticals, while 5% (€2.6 billion) went to the UK. However, both industries are still closely linked to the UK and so must prepare for the variety of possible outcomes post-Brexit.
The Pharmaceutical Industry
The most important concern for pharmaceutical companies, according to the Health Products Regulatory Authority (HPRA), will be knowledge of their supply chains. It will be important for companies to have an in-depth understanding of where all materials originate from or if they transit through the UK to arrive in Ireland.
Ensuring that supply chains can be maintained will be key in preparing for all potential outcomes of Brexit negotiations. Currently over 2,600 drugs have at least one stage of manufacturing in the UK with up to 70% of the medicines on the Irish market having some stage of production or transit through the UK.
The pharmaceutical industry has been undergoing key preparations for Brexit. According to the National Director of Acute Planning and Strategy at the HSE, planning was significantly advanced to ensure that the supply of medicines is not hampered after the UK leaves. The only immediate concern post-Brexit being for medicines with a short shelf life, as a no-deal may lead to disruptions in goods, which transit through the UK, being passed through customs.
The HPRA have also launched a Brexit transition period checklist, highlighting the major points of concern that companies should be prepared for. It ranges from supply chain, to customs and regulatory compliance. It outlines the main concern that products tested or certified in the UK must now change location to another EU-27 Member State. However, exceptions will be made, according to the European Commission, to allow companies more time to relocate their business operations.
The Fishing Industry
Currently under the EU’s Common Fisheries Policy, any EU vessel has equal conditions of access to territorial waters of all Member States, in particular beyond the 12 nautical mile line from their shore.
One of the main concerns for the fishing industry is that a no-deal scenario will mean that Irish fishers are locked out of UK waters, which account for 34% of Irish landings on average and over 60% for some species. It is estimated that a loss of access to UK waters could halve the value of the seafood sector in two years. There is also concern that no access to UK waters for other nations will lead to an increase in the number of trawlers in Irish fishing grounds and overfishing.
The Council of the EU has adopted a series of contingency plans to mitigate from the fallout of a no-deal. A new regulation will allow workers in the fishing industry “to receive compensation under the European Maritime and Fisheries Fund” for loss of access to UK waters.
Bord Iascaigh Mhara, in addition to its usual supports, is giving businesses access to mentoring for up to two days to help develop a Brexit strategy, covering areas such as supply chain concerns and logistics. Included in the 2019 budget was a €78 million Brexit package for fishermen, farmers and food SMEs along with a low-cost loan scheme. The government is also working closely with the Commission to explore all measures necessary, including state aid, to support the sector.
Conclusion
The Irish government and EU have put in place a wide range of initiatives and plans to help prepare all sectors of the economy for a no-deal Brexit scenario.
The uncertainty around Brexit talks remains the greatest concern. It is still unclear if a deal will be reached or not. Although the deadline for the transition period ends 31 December 2020, negotiations need to be completed by the end of October in order to allow time for it to be passed through Member States’ parliaments.
While talks between the EU and UK are to resume on 7 September, it has been reported that there has not been “any tangible progress” in talks over the summer months, resulting in Brexit being removed from the agenda for the EU ambassadors summit.