Mr. William Lavelle:

I thank the Senator for the question. Hopefully, members will have had an opportunity to read the opening statement. To reiterate from an Irish whiskey viewpoint, Ireland is the home of whiskey. We have been making whiskey for longer than any other nation in the world even through the bad days for Irish whiskey during the last century. There were only two distilleries left on the island, one in the North and one in the South. We have had an integrated all-island industry for centuries. On everyday basis, that means that whiskeys that are produced in one distillery are potentially tankered across the Border to be matured in the other jurisdiction, either North to South or South to North. We have blended whiskeys. Over 95% of all Irish whiskey sold around the world is blended whiskey. That means that there are two or three different component whiskeys. Many of those blended whiskeys might contain components from distilleries on both sides of the Border. From a bottling point of view, we could have Irish whiskey that is fully produced in either the North or South, but then could go across the Border to be bottled. That is the everyday reality of our industry. It has been like that for decades and, in some cases, centuries.

The problem we have now is in terms of trade to the rest of the world, trade outside of the EU and the UK that is governed by trade agreements. There are rules of origin in those trade agreements that define which whiskeys benefit. We have an anomalous situation whereby Irish whiskey, produced fully in this jurisdiction, will qualify for the benefits of the EU trade agreements. Irish whiskey produced fully in Northern Ireland will qualify for the benefits of UK free trade agreements. However, those Irish whiskeys that are produced on an all-island cross-Border basis will fall between the gaps. They may not qualify for the benefits of either trade agreement. This is because the rules of origin, which are in EU trade agreements, have basically been unchanged for 40 years. They have a strict definition of what qualifies for those agreements.

In real terms, Irish whiskey produced completely in this jurisdiction has a 0% tariff going to South Africa. South Africa is a top-ten market. Northern Irish whiskey produced 100% in Northern Ireland has a 0% tariff, under the UK agreement. However, if there is a blend of whiskey from distilleries North and South or if there is whiskey distilled in the North and matured in a bonded warehouse over the Border, that attracts a tariff of 154 cent per litre. In summary, the Northern Ireland protocol is very important. The clear message is that the Northern Ireland protocol needs to be protected. The Northern Ireland protocol protects cross-Border supply chains from tariffs and checks. However, those supply chains, in the cases of certain trade agreements and certain markets, are being made more difficult, because we cannot rely on those supply chains to export. Therefore, a distillery down here that buys malt whiskey from the North may as well stop doing that if they want to export it to South Africa because they will be hit by a tariff.

One of the more intangible impacts is that companies have stopped sending products across the Border to be bottled, because by bottling it on the other side of the Border they will potentially gain tariffs. The failure to update rules of origin, put simply, undermines the all-island economy by making cross-Border supply chains unviable. This is not in the case of every trade agreement, every good or every movement, but it is the case in too many. That is why we need a much more flexible approach from the EU to change the rules of origin.

We do not expect the EU to go back and retrofit 76 trade agreements overnight. That would be too big an ask. There are a number of trade agreements that they should look at, and there is no excuse for new trade agreements going forward. The EU is negotiating trade agreements with Australia. It is the first negotiation post Brexit. Why cannot the EU move and look at rules of origin that are suitable for now, and not the same rules of origin that they were negotiating back in the 1970s with Switzerland? I will hand over to my colleague Mr. Mulvihill from Dairy Industry Ireland.