Mr. Aidan Gough:

InterTradeIreland is an implementation body mandated by the Governments of Ireland, Northern Ireland and the United Kingdom to promote and develop cross-Border trade and business development opportunities. As an implementation body, InterTradeIreland is preparing to help North-South trade, innovation and business development linkages continue to flourish in whatever trading relationships emerge from the UK-EU negotiations. Cross-Border co-operation and trade has been a success story during the past 16 to 18 years. Cross-Border trade in goods and services, which stands at over €6 billion, has more than doubled during the past 18 years. We have worked with more than 30,000 businesses across the whole island. We emphasise the whole island as part of our corporate strategy to ensure we work with businesses in every county, and we have done it successfully. We have created nearly 10,000 jobs in SMEs across the island and we have generated, through our initiatives for businesses, over £1 billion of added value.

The Republic of Ireland, ROI, market accounts for 16% of the external sales of Northern Ireland companies. As the external sales figure includes sales to Britain, approximately 38% of Northern Ireland's exports go to the South. Approximately 62% of Northern Ireland's total exports to the EU are to the South. The Northern Ireland market is especially significant for smaller Irish firms with nearly one sixth of exports from Irish small firms going North, while approximately two thirds of Northern Ireland's exports from small firms go to the South. We have a highly integrated market across the island. It is also very sectorally specific, with some sectors being almost an all-island industry, particularly the agrifood industry. We may want to talk about it later.

The potentially negative impact of a Brexit on cross-Border trade and business development has been highlighted in a number of reports. Our business monitor, which surveys approximately 1,000 CEOs in businesses across the island on a quarterly basis, shows the outcome of the Brexit referendum has caught a large majority of businesses offside. The report indicated that 97% of businesses in Ireland have no plan in place to deal with the consequences of the vote to leave, and that 92% of export businesses have no plan for this eventuality. The negative implications of the uncertainty - and it is the uncertainty that is causing the problems - created by the referendum result in the marketplace are reflected by the fact that one in five Irish firms reported that they planned to decrease their level or speed of investment. Approximately three in five Irish businesses believe Brexit will have a negative impact on cross-Border sales. This is a much higher figure than Northern Ireland businesses, of which one in four said it would have a negative impact, but I am sure this reflects the way exchange rates have moved.

Supporting businesses, particularly small businesses, to navigate the uncertain landscape and realise their growth ambitions as the new terms and conditions of the UK's new relationship with Europe emerge will form a critical part of our work programme over the next few years. We are well placed to engage with SMEs across the island. Our corporate e-zine will keep us in contact with businesses. It circulates to over 15,000 businesses ten times a year. The key is to get information to the businesses to help them navigate the uncertainty and present the facts where we can. Our all-island business monitor also keeps us close, in a listening mode, to the challenges businesses are facing. Our range of cross-Border trade programmes will become even more attractive to exporters and to inexperienced and first-time exporters in particular. The range includes our Acumen and Elevate programmes, which help small or micro businesses take the first step onto the export ladder. We also offer our trade accelerator vouchers and we expect a big increase in demand for all these supports.

We are also examining what we can do in the future. In the short term it is information based. We are exploring the development of a model that will allow us to assess the impact of tariffs on cross-Border trade. The impact of Brexit will be sectorally specific and even within sectors there will be greatly differentiated impacts depending on the products. With the WTO tariffs there is great variety and it will be greatest in the agrifood sector. Even there, the average EU trade-weighted WTO tariff is approximately 2.3% for non-agricultural products but approximately 22% for agricultural products. Agrifood is a massive sector, accounting for 52% of cross-Border trade. Even within agrifood there is great variety in tariffs and we are particularly concerned in a number of areas. For example, there are three flour mills in the island, two of which are in Belfast, and the Belfast mills export 60% of their output to the South. The EU tariff on flour is 65%. This could decimate one industry. We must get down to very granular detail and we hope to provide this advice to businesses as negotiations emerge and we see the tariff levels and where they will be imposed.

Meanwhile, we are encouraging businesses to continue to grow through exporting and developing the cross-Border market. We are advising them to focus on the things they can control. While there is much uncertainty, there are certain things they can control and they all make good business sense in any event. They can develop their customer and supplier relationships, which can add value to a contract. We know 70% or 80% of the businesses we work with do not even have a business plan. It is critical when navigating the landscape to have some idea of the different scenarios one could face.

We are encouraging businesses to diversify. If one is selling one product to one market, which many cross-Border traders are doing, one is heavily exposed. We are encouraging them to diversify. Linked to that, we are encouraging them to innovate because uniqueness adds value that can provide a buffer if tariffs are imposed or increased. Obviously, there is the question of currency hedging. A emerging problem is that the deals of companies have already hedged are starting to run out.

As I said, we are piloting a series of Brexit breakfasts between now and Christmas along the Border area and in the Border counties, where the impact will be felt. InterTradeIreland, as an implementation body, is prepared to help North-South trade innovation and business development linkages to flourish in whatever new relationships emerge.