Oireachtas Joint and Select Committees
Friday, 22 January 2021
Joint Oireachtas Committee on Transport, Tourism and Sport
Customs Checks Post Brexit: Discussion
Apologies have been received from Deputies Cathal Crowe and Duncan Smith and Senator Ned O'Sullivan.
The purpose of our meeting is to discuss customs checks post Brexit. On behalf of the committee, I welcome Mr. Eugene Drennan, president, Irish Road Haulage Association, IRHA; Mr. Gerry Harrahill, director general, customs division, and Ms Celine O'Neill, Brexit policy branch, Revenue Commissioners; Mr. Eoin Gavin, vice president, and Mr. Ian Barrett, director, Shannon Chamber of Commerce; and Mr. Paul Savage, assistant secretary, international trade and Brexit division, and Ms Hazel Sheridan, head of operations, Dublin Port, Department of Agriculture, Food and the Marine. I thank them all for facilitating this meeting at such short notice in these extraordinary Covid times. In particular, I thank the departmental officials for attending as we only issued the invitation yesterday afternoon.
All witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise nor make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if the statements are potentially defamatory, in relation to an identifiable person or entity, the witnesses will be directed to discontinue their remarks. It is imperative that witnesses comply with any such direction.
For witnesses attending remotely outside of the Leinster House campus, there are some limitations to parliamentary privilege and as such they may not benefit from the same level of immunity from legal proceedings as enjoyed by witnesses who are physically present. The witnesses participating in this committee session who are from a jurisdiction outside of this State are advised that they should also be mindful of their domestic law and how it may apply to evidence they give.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. I also remind members that they are only allowed to participate in this meeting if they are physically located on the Leinster House campus. In this regard, I ask all members that prior to them making their contribution to the meeting to confirm that they are on the grounds of the Leinster House campus.
For anyone watching this meeting online, Oireachtas members and witnesses are accessing this meeting remotely. Only I, as Chair, and the necessary staff essential to the running of this meeting are physically present in the committee room. Due to these unprecedented Covid circumstances, and the large number of people attending the meeting remotely, I ask that everyone bears with us if technical issues arise.
This is a two-hour meeting based on Covid limitation. I advise the witnesses that we have assigned five minutes for statements. I ask them to keep to that and if their statements are longer, to give a summarised version.
I call Mr. Drennan to make his opening statement.
Mr. Eugene Drennan:
First and foremost, I would like to acknowledge the Chair. I thank him for taking us back in as he promised to do when I was here before Christmas. I wish to also acknowledge another member of the committee, Senator Timmy Dooley. He was the person to contact me originally. I have tried to give him some information but the issue is quite complex with a lot of numbers and letters. All of that may have left him further confused but I acknowledge his efforts.
I will now read our opening statement but I would like to give a foreword. Other than what has been reported, the IRHA and hauliers are not trying to change, overcome or bypass the Brexit rules in any way. We are looking to the enormous costs that are placed on hauliers and the cost of doing business now for Ireland that will have to be passed on and will end up with the consumer. All of this is summed up in one word - costs. We are at the forefront of it and are getting the brunt of it. We are here to talk about how we do our business, and how we can streamline costs and get more efficiencies.
The new systems set up by the Revenue Commissioners for pre-boarding notification, PBN, new requirements for safety and security declarations, and import and export declarations, are not working effectively.
It is clear neither the Irish authorities nor industry took an opportunity to trial the new systems before they came into effect. Consequently, the new systems have been overloaded and goods are being blocked and delayed. Licensed hauliers, as carriers of the goods, have borne the brunt of these disruptions.
The information technology systems being employed by the Irish authorities are not working and require substantial revision to ensure they can be effective at clearing the backlog of goods stuck in the system and preventing such problems occurring again. Currently, the system is being challenged at a time when import and export levels are lower than normal due to stockpiling before 31 December. The systems will collapse entirely once trade volumes are restored to normal levels if something is not done. It is deeply frustrating that despite the long lead-in to Brexit - a process now five years old - the systems and approaches being operated by the Irish authorities to manage post-Brexit trade are not fit for purpose and are actually frustrating rather than facilitating trade.
There are a number of specific measures that could be introduced to address the current crisis. There must be co-ordination between the different systems being operated by the Irish authorities, as there are alarming indications that the systems - information technology and otherwise - being operated by the Revenue Commissioners, customs authorities and the Department of Agriculture, Food and the Marine are not working in tandem. New protocols and procedures should be applied at the Irish ports to work with and support those involved in the transport of goods. Currently there is very limited communication or information being provided and there is a distinct lack of engagement at all levels.
There should be a review of processes to address the imposition of unnecessary or repetitive checks on goods being imported to Ireland. A risk-based approach to inspections is badly needed to prevent unnecessary blockages to the trade in goods. There is a distinct lack of oversight of the operations of the different Irish authorities in the ports. There is no central entity or office assessing how each of the Irish agencies is responding to Brexit and consequently the current problems being experienced are not being diagnosed and addressed. Given the lack of preparedness of the Irish authorities for Brexit, some form of adjustment period will be required to allow them to get their systems and processes to work effectively.
Licensed hauliers must meet a plethora of new protocols and requirements to keep goods moving, including securing some or all of a master reference number, a pre-boarding notification identification, an entry summary declaration number related to safety and security, a transit accompanying document, an export safety and security declaration, customs checks, Department of Agriculture, Food and the Marine checks and HSE checks. The systems are not speaking to each other and co-ordination and streamlining are absent. The effective result is that the just-in-time model is virtually impossible to achieve for Ireland. We will put ourselves into a position of a second world country within the EU if we do not take radical action to correct this.
Mr. Gerry Harrahill:
I welcome the opportunity to brief the committee on the operation of customs checks since the end of the transition period on 31 December, including some practical aspects from a Revenue perspective on how matters have progressed with trade and business. I hope it is helpful to the committee for me to give a clear picture of how goods are imported and the practical operation of customs formalities operated by Revenue and how that interacts with other State agencies, including the Department of Agriculture, Food and the Marine, the Food Safety Authority of Ireland and the HSE.
In a standard goods import from Great Britain since 1 January there are a number of parties involved. These include the exporter on the Great Britain side and possibly the customs agent representing the exporter; the importer in Ireland and possibly a customs agent representing the importer; the logistics, freight forwarder or haulage business involved in actually moving the goods from Great Britain to Ireland; and the driver of the truck and the goods it contains, who boards the ferry and arrives, for example, in Dublin Port.
The key customs components are the export declaration on the UK side, the import declaration on the Irish side, the safety and security declaration on the Irish side and the Irish pre-boarding notification, process, which applies on both the UK and Irish sides and which effectively permits the truck and its goods to board the ferry. All of these elements are critically dependent on data and their accuracy and timeliness. Getting those data elements together means that all the players in the supply chain need to be aware of their specific role, have access to and be capable of providing that data at the right time and share this information so that declarations can be completed correctly and on time.
Any delay or disruption in that process impacts on key features of that integrated supply chain, including the ability to board a ferry or the driver's ability to leave the port immediately following disembarkation at the port of destination. Since 1 January 2021 there have been 9,318 inbound freight movements across 250 ferries from Great Britain, involving approximately 668,000 declarations of various types. In addition, approximately 61,000 export declarations for movements to Great Britain were processed. All of these declarations have been successfully processed by Revenue's systems.
With the exception of specific notification requirements for certain sanitary and phytosanitary, SPS, products, the interaction with other State agencies is driven by the work undertaken by Revenue in receiving and processing customs declarations, risk-assessing those declarations and giving one of three routings to the goods movement when it arrives in Ireland: green means it is good to leave the port; orange indicates that a documentary check or similar control will have to be implemented; and red means a physical examination or inspection of the goods involved is required.
Sophisticated IT systems have been developed between Revenue and the other agencies to allow for maximum information sharing, automated communications between the Departments, reuse of data in order to reduce duplication of effort by both business and State agencies and to allow as much work as possible to be done while the ferry is sailing and in advance of the arrival of the goods in Ireland. Revenue's approach is to ensure that trade flows efficiently through the ports on arrival in Ireland and that where goods require any form of documentary or physical examination or other checks whether by Revenue or the other agencies, such interventions can be accommodated in the most efficient way possible. The customs ro-ro service is key in supporting this approach by providing a direct channel of communication with the haulage sector which was not possible previously, by reusing data and thereby reducing the number of customs declarations required and by giving visibility to the multiple stakeholders at each step of the process before, during and after the ferry journey. Based on engagement with the haulage representative groups, Revenue is exploring further ways to enhance this.
Additionally, the PBN process ensures that Revenue and other State agencies have full sight of all consignments on any given truck which allows the necessary work on risk-assessing those consignments to begin while the goods are still on the ferry. Being able to do this work in advance allows Revenue to determine whether the consignment is red-routed, orange-routed or green-routed. I am aware that it has been advocated that the PBN process should be scrapped. Without the PBN process, which is a core element of the Revenue ro-ro service, 100% of goods movements arriving in Ireland would have to be red-routed rather than the position that we have achieved where more than 70% of consignments are being green-routed, allowing the goods to move directly from the ferry out of the port. Anyone advocating the abolition of the PBN process and the customs ro-ro service is advocating that a hugely effective measure in facilitating the speedy movement of trade through our ports would be scrapped and replaced by a requirement that all goods movements would be presented to customs.
The critical infrastructure needed to be able to manage and process the flow of traffic through our ports and airports after 31 December is in place and operating as intended. The relevant State agencies have been working together since 2018 to ensure not only that the infrastructure needed is in place but also that we have developed good working relationships and a streamlined approach to import controls. That is evidenced by the introduction of the new IT systems referred to previously, the co-location at the State facilities in Dublin and Rosslare ports and the co-ordinated approach taken by operational staff on the ground.
I want to briefly mention the IT systems operated by Revenue. I have already touched on certain elements such as declarations. As Deputies and Senators will probably be aware, in line with the objectives of the Union customs code, completion of customs formalities is heavily dependent on IT processes and systems and so data accuracy and data timeliness are hugely important. Revenue's IT systems have performed well and as intended. The fact that a specific transaction is not accepted by Revenue's IT systems or cannot be processed is not a fault of the system if the data being submitted is incorrect or incomplete. The solution must be one that involves compiling the required, correct data. Revenue must have the necessary information to be able to carry out the risk assessment to which I referred and to make sure that declarations are valid and that goods requiring a documentary check or other processes can be processed efficiently. There were two specific performance issues in relation to Revenue's customs systems and on those occasions, we notified trade and business, clarified what the fallback procedures were and restored the systems to full operation as quickly as possible. We apologised for the inconvenience caused when this happened, and I repeat the apology today. It should be noted that all declarations lodged into our import system during the performance issues were received correctly and were processed on resumption of the full system.
I will comment on the first three weeks of experience.
All of the State agencies recognise that the new trading arrangements with Great Britain represent the biggest change for trade and business since Ireland joined the European Economic Community almost five decades ago. So far, we are seeing that exports to Great Britain are moving relatively smoothly. In the context of imports, traffic movements overall into Ireland are down on previous years for the same period by approximately 20%. Early indications suggest that freight or goods movement may be down further, possibly by up to 50%.
It is important to acknowledge that some businesses are successfully continuing to trade because their levels of preparation have been excellent and they addressed all of the challenges of the new trading environment well before of 31 December. It is also clear that some businesses, large and small, are having difficulty, in some cases severe difficulty, adapting to the new system and controls. We are seeing that, even in the case of significant international businesses the information required to complete the various declarations is proving very challenging because, in many instances, the effort required to assemble all the necessary information was underestimated.
We understand how being delayed is very frustrating for hauliers. Our officials are talking daily to hauliers and drivers on the ground, and sometimes on an hourly basis. It is particularly frustrating for hauliers who are dependent on either the importer, the exporter or their agent to fix shortcomings in documentation before the goods can be cleared and moved from the port. In many of these cases as far as the haulier is concerned they have been stopped by customs systems. We are actively working on how we can give the haulier greater visibility on what is causing the delayed movement on the ground.
I am aware of a view among some businesses that Revenue should set aside full compliance with the Union customs code, UCC, in part or in whole for a period of time while trade and business get to grips with the requirements. This would carry with it serious consequences for the view taken by other member states of exports from Ireland and their automatic right to free circulation within the European Union. Such an approach would be highly detrimental to Irish trade and business and to the Irish economy in general.
I am very happy to address any questions or concerns the committee may have. However, I need to refer to the provisions of section 851A of the Taxes Consolidation Act and our duty of confidentiality in respect of any individual taxpayer. Subject to that I will be very happy to address members' concerns and questions.
Mr. Eoin Gavin:
I thank the Chairman and the committee for giving me this opportunity to make a presentation in my capacity as vice president of Shannon Chamber of Commerce, representing our more than 300 member companies in the mid-west region, and in my capacity as an international road haulier. I am the owner of Eoin Gavin Transport, which operates across the 26 EU countries and into the Eastern bloc for the past 25 years. I am delighted to get this opportunity to further expand on the contents of letters submitted by Shannon Chamber to Ministers and to our local elected representatives on 11 January in which we outlined issues being experienced in the movement of goods to and from the United Kingdom from businesses in the mid-west region.
Hauliers and freight forwarders, exporters and importers, expected that Brexit would result in some teething problems, as with any major change in our economy. We accept that some exporters and importers must take some of the blame for the current delays being experienced by hauliers in transporting goods from Ireland to the United Kingdom and from the United Kingdom back to Ireland. Some of the systems in place for trading also have procedural flaws, which need to be addressed.
We understand the requirement to complete an import and export declaration when trading with a third country and that a three-step process is now required on import for hauliers trading with the UK. First, they must prepare a customs declaration and get a movement reference number, MRN, or pre-clearance to ship. They then need to complete an entry summary declaration, which is a safety and security declaration and which duplicates most of the customs entry detail in the previous declaration. Third, they need to prepare a pre-boarding notification. PBN, which is permission to board a ship with the load. This must incorporate all the MRNs. Here lies the problem. As these three layers are being completed, Revenue's systems try to tally and match them up in the background but this does not seem to be working. In many cases this is resulting in one stage wiping out the other stage. Also, the more entries one has to make the more likely there will be human error.
Why are the customs declarations and the security declarations not being combined for imports from the UK as is currently happening with Irish export declarations and as happens for exports from the UK to mainland Europe, which are also combined into one declaration?
I also question why the obligations under steps two and three have shifted to the operator and the haulier, and not to the carrier, which is the vessel and the ship, which is the requirement under the UCC that was brought in after 9/11.
There are other reasons for delays. These relate to drivers getting notifications of the status of their goods - green, orange or red - before disembarkation from ferries at Irish ports. The only way they can check this is by logging on to the Revenue website on their phones, or with a transport office doing it for them, and trying to create a routing. There is an immediate need for routing status display screens on ferries to expedite the disembarkation process at our ports.
I will provide the committee with a practical example. A truck going from London to Pariswith a load requires an export declaration. This creates an MRN and a barcode. The driver arrives at ferry in Dover and presents his papers with the MRN in order to check in. The ferry company uploads the details and he can board. On the ferry, the driver checks the display screen in the restaurant area to see which lane - green or orange - he needs to follow on disembarkation at Calais. That is the process for exporting a load from London to Paris.
The same load going from London to Dublinrequires an export declaration. This creates an MRN number and a barcode. The driver’s transport office needs to create a separate entry security declaration which has the same details as the export declaration. This creates another MRN number and barcode. The driver’s transport office then needs to enter both MRN numbers on the Revenue website to get a PBN. The office then needs to upload this to the ferry company's website in order to confirm the booking. The driver can then drive to the port to check in on the ferry. Thirty minutes out from Dublin Port, the driver’s transport office needs to enter the PBN number on the Revenue website to check which lane the driver needs to follow on disembarkation from the ferry at Dublin Port. Members will agree that there is quite a contrast.
I am here today to request that these issues be followed up on and prioritised by Revenue as a matter of urgency because they are having a significant impact on the economy. They will result in trade being stifled and in our export-led economy slowing down. This matter requires urgent attention. The solution must be executed as a priority. We would ask that a timeline for action be provided as a matter of urgency.
Mr. Paul Savage:
I thank the committee for the opportunity to address it on the experience to date in the implementation of sanitary and phytosanitary, SPS, controls by the Department of Agriculture, Food and the Marine since the end of the transition period.
The UK's departure from the Single Market on 1 January 2021 means that the seamless trading arrangements between Ireland and Great Britain that were in place up to the end of December 2020 no longer exist. Additional administrative burdens are being placed on operators and State agencies. All of those engaged in the trade and movement of goods have to acknowledge this reality an appreciate that these new arrangements are permanent.
In addition to the new customs requirements that have already been outlined, EU regulations require that certain types of consignments entering the EU are checked at specialised facilities called border control posts before being placed on the EU Single Market. These are called SPS checks. The consignments that have to be subjected to these checks are those consisting of animals, plants and plant and animal products, including food. The purpose of these controls is to ensure that plants and animals, and products made therefrom, meet the food safety standards of the EU and do not pose a risk in respect of the introduction of plant or animal diseases that we do not have in the EU. If they were introduced, they could have a devastating effect on the agrifood industry in Ireland and across the EU. Foot and mouth disease is one such example.
The controls also ensure that products being imported have been produced to the same standards. These controls are not new. They have been in place since the Single Market was first created in 1993. The difference now is that on 1 January, these controls came into force for consignments of plants, animals and plant and animal products coming from the UK, except Northern Ireland. The requirement for these controls is not affected by the trade and co-operation agreement struck on Christmas Eve, so they are required in any event.
SPS controls consist of three types: documentary, identity and physical. The frequency of SPS controls is laid down in EU legislation and member states do not have any discretion in that regard.
With some exceptions, consignments of plant and animal products, including food, coming from Great Britain must now be accompanied by a health certificate signed by an official veterinarian in the case of animals and animal products or by an official plant health inspector in the case of plants and plant products. This includes consignments that may have originated from other non-EU countries. On arrival at the port, certain products must undergo identity checks. These checks must be carried out on all live animals and 100% of animal products. Identity checks on plant products are carried out on a risk basis. Identity checks can be of two types. In the event that an official seal has been applied to a truck and the details are entered on the health certificate, the identity check will consist of a check of that seal. If an official seal has not been applied, the identity check will need to involve unloading the truck to check the identity on the boxes or whatever packaging is involved, which will take longer to carry out. Some commodities will also need to undergo physical checks. The rates are related to the risk posed by the product and can vary from as low as 1% to as high as 100% depending on the exact nature of the consignment.
These checks will take time. The European Single Market was created to enable borderless trade between members of the European Union. The decision of the UK to leave the European Union means that this no longer applies to the border between Great Britain and the European Union and, as such, the border is now no different from the border that exists to the south and east of the European Union. To treat this border differently from the other borders would fundamentally undermine the integrity of the European Union and the Single Market. This is the single most significant change to agrifood trade flows between Great Britain and Ireland that has been seen since the Single Market was created in 1993. As such, it presents a significant challenge for all stakeholders, including State agencies, in adjusting to this new reality.
The Department of Agriculture, Food and the Marine is working closely with business operators to help them to adapt to this significant change. Following the extensive engagement undertaken through a range of fora and communications channels in the period leading up to December 2020, we are continuing to assist operators with practical matters such as the submission of documents and the resolution of technical difficulties. The Department has run nine webinars on a variety of topics to help all stakeholders to understand the implications of the UK now being outside the Single Market and customs union. This series of webinars began in September 2019 and the most recent one was run last week in response to the immediate difficulties that have been experienced recently by business operators in complying with sanitary and phytosanitary requirements. The webinar last week had more than 800 attendees and a recording of it, as well as all previous webinars, can be found on the Department's website along with advice on issues such as how to access the various IT systems that business operators now need to engage with, what health certificates are required for the different commodities and also what businesses can do to reduce the time that sanitary and phytosanitary checks in the ports will take.
The Department has given presentations on sanitary and phytosanitary requirements at various fora, including the Brexit stakeholder consultative forum run by the Department of Transport and our own Brexit stakeholder consultative committee, which has met regularly recently. At all these presentations, stakeholders were advised that the sanitary and phytosanitary requirements would apply regardless of whether a free trade deal was concluded with the UK.
Regarding the experience since 1 January, in general, traffic has been moving well through the Department of Agriculture, Food and the Marine's inspection facilities at Dublin and Rosslare ports. Throughput is still quite low compared with what we expected and are ready for following significant investment in new infrastructure, staffing and IT systems over the past two years in particular. While the majority of agrifood businesses are making significant efforts to comply with the requirements for import into the European Union, there have been delays in some instances due to failure to provide advance notification, absence of health certificates and problems with health certificates. It is not the responsibility of, for instance, the driver of the haulage company to ensure compliance with these requirements. That is the responsibility of the importer or the person to whom the importer has delegated that responsibility.
I hope this gives members a good sense of the role and experience of the Department in the operation of new arrangements since 1 January. My colleague, Ms Sheridan, and I are happy to answer any questions members may have.
The purpose of today's meeting is to look at how the customs system is operating and to improve it. We hope we have all the stakeholders today and that out of these discussions will come a system that people will understand better. If the system requires amendment or tweaking, that should be done to ensure we continue to trade with and be connected to the UK.
I will move on to members. The first speaker is Deputy Carey, who has seven minutes. As we are on Microsoft Teams, I want the witnesses to know that the members will have a full seven minutes to put questions to them in a back-and-forth manner. I ask the members and witnesses who are not speaking to mute their microphones. Deputy Carey, who is on loudspeaker, has seven minutes.
I thank the witnesses for their presentations. We would not be having this meeting if there was not a problem. I have been contacted by a number of hauliers in respect of this issue. As an island nation, trade - the import and export of goods - is of critical importance to us. I was taken by the presentation from the vice president of Shannon Chamber in which he outlined an experience where he is exporting from London to Paris. One normally encounters a very streamlined system there but when one comes back from London to Dublin one must get through layer upon layer of red tape. It was expected that Brexit would throw up difficulties. Mr. Gavin has highlighted those and the practical challenges faced by hauliers.
I would like to ask Mr. Harrahill the type of engagements that Revenue has had with the Irish Road Haulage Association. I know that Revenue meets hauliers on the ground every day but what type of formal engagement has it had with the Irish Road Haulage Association? What does he say to Mr. Gavin in terms of the system that is operating from, say, a third market, namely, the UK, to France? What does he think of that streamlined system where a driver gets a single barcode, is assigned a place on a ship and then gets over to where he or she is going in comparison with the huge blockage that exists in the Irish system? Under our system, people have to enter barcodes. That does not make sense. It was said that it needs to be there and so on but why can it not be streamlined to make it easier to navigate around?
On the question Mr. Gavin posed about the role of the shipping companies operating the ferries, why is all of this being put upon hauliers? Why do they have to deal with all of these issues? Mr. Harrahill might respond on those questions first.
Mr. Gerry Harrahill:
I thank the Deputy. I will try to pick up on most or all of those. In terms of the distinction between us and the UK, I might invite my colleague, Celine O'Neill, to comment. On the question of engagement, for the past three and a half or four years we have had extensive engagement not just with the haulage sector but with all relevant businesses through a number of fora. First, we have a customs consultative committee which is broadly representative of all of the key stakeholders in terms of customs and customs formalities. That would include the haulage industry, the freight forwarders association, the customs agents and the IT software providers. That is a standing forum that has been in place for probably ten or more years in terms of a formal opportunity for engagement. We have had very productive engagement, including with the Irish Road Haulage Association, through that forum in terms of signalling developments that were coming and plans around development systems and processes so that is in place.
The second element that has happened is that in the closer lead-up to Brexit a number of stakeholder fora have been put in place under the aegis of the Department of Transport. Again, the Irish Road Haulage Association is represented on that. We have had a very positive and productive engagement with the Irish Road Haulage Association. As an example of that, I referred in my opening statement to some of the frustration for hauliers that we recognise in terms of their being caught in the middle. They are moving the goods but they are not necessarily in charge of all the customs formalities.
One of the things that has come out of that is an opportunity for us to be able to give them greater visibility as to what precisely is giving rise to the delay, such as a truck or goods consignment being detained in Dublin Port and Rosslare. That will help in terms of being able to identify it. It is being described as a delay by customs. The other thing that is hugely important is that the processes we have put in place are all designed to try to accommodate two critical requirements from our perspective. One is that we are members of the European Union and are obliged to implement the provisions of the EU customs code which is effectively the legislation that governs the requirements. We want to do that so that the confidence we want in other member states is readily available when Irish goods arrive in mainland Europe, and that we are in full compliance. The second element is to do it in a way that tries to facilitate the legitimate trade. I have spoken at probably 30 or 40 seminars with trade and business. I always start by saying that our primary objective is to facilitate legitimate trade. Everything we do is designed to try to do that. We are trying to get balance with compliance with the legislation and the EU customs code and trying to facilitate trade in the best way possible.
I will ask my colleague, Ms O'Neill, to take the members through the process as some of them have asked about the apparent difference between us and France in the three declarations required.
Ms Celine O'Neill:
To clear up some confusion that can often arise in this regard, there are always two aspects to a customs procedure, namely the export formalities from the UK and then the entry formalities into the EU. When exporting from the UK, an export declaration is needed combined with safety and security information. It is possible for those two to be combined at export but it is not the same on import. That is the first thing that always has to happen on the UK side. For import into the EU, an import or transit declaration is always needed along with a safety and security declaration. That requirement is the same whether the goods are coming back into the EU in France or in Ireland. France has a system called SI Brexit which operates in a very similar way to our customs ro-ro system. It allows declarations to be paired together and matched with a specific vehicle that is carrying those goods. This is critical, particularly because a lot of groupage loads move backwards and forwards between the EU and the UK. It gives the customs and other authorities the best opportunity to know precisely what goods are arriving and when they are going to arrive.
The method for pairing the information when going into France is slightly different from the method when coming into Ireland in that barcodes are scanned at the ferry terminal or port terminal for the short sea straits. That is done by the ferry operator or the tunnel operator. It has the potential to slow down significantly the boarding of the ferries. What we have provided on our customs ro-ro service is an opportunity to do all that work before someone gets near to the ferry terminal, ensuring that the process of boarding the ferry is maintained as smoothly as possible. We are in regular contact with our French counterparts who have been reporting the same challenges that we are noticing. There are difficulties with the safety and security declaration - either no declarations are being made or the data is incorrect. Some customers are trying to use the incorrect declaration types to move their goods - they are trying to use paper declarations rather than electronic declarations, or are using different documents that are not readily understood. Some people are presenting the UK export declaration instead of the EU import declaration. Again, they are reporting challenges on SPS products. Despite what might have been heard, the challenges are the same in Ireland and in France, but they may be presenting themselves slightly differently.
I thank the witnesses for their presentations. As the last speaker said, we would not be here if there were no difficulties.
I am especially interested in focusing on the solutions, middle ground and opportunities for improving on the current situation. I will say at the outset, as all other speakers have said, that there was no such thing as a good Brexit and it comes with hurdles that are impossible to avoid. I hope we can agree that there are some hurdles that have been, at least in part, self-imposed and there is an opportunity to refine, improve or advance on those. We have heard about replication and systems duplication and triplication. We have heard that there are systems running in tandem and administrative and bureaucratic requirements associated with that. I ask Mr. Harrahill, in the first instance, what he believes are the opportunities for improvement in these systems. Does he agree that there is an opportunity? What might that look like? We have heard that he is of the opinion that we cannot scrap the preboarding notification, PBN, and that the introduction of a transition period might be detrimental. Does Mr. Harrahill agree that there is room for improvement? What might that look like?
Mr. Gerry Harrahill:
There are a number of areas where improvements can be made. First of all, basic familiarity and understanding are hugely important in what is a new regime. Perhaps we sometimes forget that we are only three weeks into that new regime. There are businesses that are now faced with the challenge of customs formalities probably-----
I am sorry to interrupt. Could I ask Mr. Harrahill to address the changes to the systems that are in place at his end? Are there changes that can be made at his end? I appreciate there is an element around education and familiarity with the systems that are in place. What scope is there, if there is any, to improve or refine the systems that are in place at his end? Is there scope to improve and align those systems in order to cut out duplication and replication, if they exist?
Mr. Gerry Harrahill:
I do not believe that significant changes can be made to the core of the structure and framework that is there. We are certainly open to refining and tweaking things as best we can. I mentioned the education piece because I think that part of what is being described as a problem with the systems is capable of being addressed if we can get the knowledge and understanding piece right. That was why I mentioned that particularly. One of the things that we have done in recent days is to publish on our website a list of the common problems and errors that are happening. We need to fast-track the learning process around that. That is the first thing that I would say is hugely important.
I would describe the second important element as an integrated supply chain. I say that because I think it is important that all of the players and individual components in the supply chain, including all the State agencies, understand the part and contribution they make. There is information to which a haulier, for example, will not have access. If a truck and driver are in the port and there is information that somebody else has to contribute to that, it is important to have that information. We have taken some steps in the past couple of weeks to try to address some of those issues.
We are in constant and ongoing dialogue with all of the trade and representative bodies and the hauliers on the ground. I can absolutely commit that if there is something we can do at a practical level that will contribute to an easement while at the same time respecting the fact that we have to implement the Union customs code, we will be happy to look at and examine that. As an example, the suggestion that came from the Irish Road Haulage Association, IRHA, in terms of being able to look up movement reference numbers, MRNs, is a practical example of our being more than willing and happy to do that.
I thank Mr. Harrahill and will move on to Mr. Drennan. He has heard the response from Mr. Harrahill and the various contributions from representatives of the Revenue and the Department of Agriculture, Food and the Marine. Will Mr. Drennan outline the experience of red-routing of some of his members?
I have heard stories of individual drivers who are well into their 60s spending three and four days at ports in tractors that are not designed for overnight stays and having no access to toilets and basic facilities for washing and that sort of thing. I ask Mr. Drennan to touch on some of the practical experience in that regard. Will he also comment on the opportunities to improve systems and what he sees as the appropriate forum for engagement in that regard.
Finally, I refer to the need for an adjustment period. I raised this issue yesterday and received a response from the Minister to the effect that the adjustment period happened in 2020. Is it fair to say that the IRHA is of the opinion that these systems came in immediately in January, that there has been no adjustment to them and that an adjustment period would be important?
Mr. Eugene Drennan:
Due to the situation the Deputy outlined, we have called for an independent body or person to overlook this because our experience has not been what has been outlined to the committee. There are links in the chain that were outlined and that are missing and that is why we have called for this. I will address the matter of drivers first and then I move on to the other points.
Drivers come to different terminals. They go in with their phones, leave their phone numbers and then they wait in no-man's land for information. Much of that information has not been forthcoming as quickly as has been indicated and it is wrong that they cannot leave the terminals. Customs will reply that a driver is allowed to leave the terminal - but he cannot leave without his truck. Most of these are international drivers and everything they require for life is in their vehicles. It is said that we can swap them in and out but we cannot do so as a result of Covid. We cannot swap drivers in and out unless they live in Dublin. A haulier from the country cannot have people running up the road to swap in and out. If customs or the Department of Agriculture, Food and the Marine want the goods, we will leave the goods with them and come back to collect them whenever they are finished doing whatever their due diligence is. They are virtually keeping the drivers prisoner. It is not good enough and it is not fair.
I turn to the way the system is working, particularly in the context of red-routing. I will address the agriculture input first because that is causing some extra dimensions. Mr. Savage very correctly outlined what has to be done. When doing it, however, if a company is bringing up these declarations for agriculture and there is also a phytosanitary connection to it, a person has to carry out three uploads on the computer and make about six declarations. A lot of the product that comes from agriculture is repetitive. It will be the same product tomorrow as it is today. Declarations cost money. We are talking about the costs here and how it works. The declarations at the start have caused food to be dumped. They are probably saying that there is no food dumped in Ireland. That may be but it was turned back and sent abroad. The timeline has been missed and food has been dumped. It goes to the core of Irish people, dating back to the Famine, that we do not want food to be dumped. It is short-term life or just-in-time produce. When we called for an easement, it was not possible to get one as the customs code had to be protected, yet Belfast has an easement on that type of ready-prepared food. They also have one on the parcel-type service with DPD delivery.
Many people got caught out on this at the turn of the year because they had ordered stuff for Christmas and the backlog was so great that they did not get it. They fell into the crack of being caught in the new system and they did not get their deliveries. When they did, VAT, duties and whatnot were due on them. This happened to such an extent that international freight people withdrew from the Irish market for a week because it was so bad. That is on the parcel side. Also, the major international freight agents got so frustrated, they withdrew from doing Irish-English work for three, four or five days. They and their staff could not handle it because it was so cumbersome. The system is correct; they are trying to do all their protocols. I agree with that. Even though we have had a great deal of engagement, as was indicated, the nature of that was to tell us what is coming down the line and what to do. We did not see our involvement or our proposals reflected in the results.
Some of the stuff that was indicated to us never happened. I wish to acknowledge the ladies from customs who participated in our engagements. They battled hard and worked hard. I am not going to name them but I would like to acknowledge them.
We are tight on time and I have other contributors to come in. We need to bring in the officials from the Department of Agriculture, Food and the Marine. Let us have a quick question for them so we can get a response and then move on.
Mr. Paul Savage:
My thanks to Mr. Drennan for those points. The first point is on the submission of declarations. As we know, there are requirements similar to what is happening on the customs side relating to Union customs code requirements that have to be complied with. The same applies on the SPS checks side in terms of agrifood goods. There is a requirement to submit declarations for products coming in that have to be potentially checked in the port as they come through. I will not comment in detail on how many documents are uploaded or how many checks are carried out. I will leave that to Ms Sheridan. She will come back on the detail relating to the information and data being supplied.
Another point was mentioned about easements. It was said no easements are available in Dublin while they are available in Belfast. The easement is being granted in the context of the overall agreement and the implementation of the protocol. The easement relates to the movement of goods that are going directly from Great Britain into Northern Ireland. These goods are going directly into retail outlets in Northern Ireland. There are clear restrictions on how that easement works and the conditions attaching to it. For example, they have to go directly to supermarket outlets in Northern Ireland. They have to be labelled as such and the label must state they are not for consumption outside Northern Ireland. They have to move as part of a dedicated channel or routing to those areas. That is the purpose of the easement being granted in that case.
In a more general sense, other products coming in that are not specifically destined for Northern Ireland have the same checks applied to them as are applied in Dublin Port or Rosslare Europort on products coming from Great Britain. That should clarify the point on easements.
More generally, from our perspective it is very much as Mr. Harrahill mentioned in terms of the room for manoeuvre as far as compliance with the Union customs code is concerned. We have to comply with EU regulations on the implementation of SPS controls. Our room for manoeuvre is limited and we have to comply. A certain flexibility is built in for member states in applying a risk-based approach to the nature of the controls that have to be carried out. We apply this approach where we can, but we have a responsibility to operate the controls properly and to maintain the integrity of the Single Market. Our objective at all times is to do so in a way that continues to facilitate trade. We will continue to do that, including through engagement with hauliers and others where we have experienced difficulties in the submission of documents and otherwise.
A question on the submission of documents was raised as well. Mr. Drennan referred to the number of uploads or documents that have to be submitted in the case of SPS checks. I will ask Ms Sheridan to explain a little more on that point.
Ms Hazel Sheridan:
I am happy to provide clarification for committee members on SPS checks and controls. There are two major controls. There is a requirement in EU legislation for the operator responsible to submit advanced notification. This is not necessarily the haulier. It is the person responsible for the importation. It could be the importer or someone to whom the importer delegates that responsibility. That is an EU system and it is an obligation. We have no discretion in that regard.
The Department of Agriculture, Food and the Marine has built an internal information technology system designed to facilitate industry. The key facilitation in this system is that it enables importers to upload the health certification in advance. The advantage of that is twofold. The first is that for certain types of commodities, principally plants and plant products, this will allow for the checks to be carried out on the documentation in the system. Those consignments, therefore, will not have to stop in the port. To date, we have not had businesses making use of that system to the maximum extent. We will work with businesses to encourage them do so.
The second advantage of uploading documentation to the system and providing advance notification is that it enables us to see what is coming in. We can see if there are problems with what is coming in and then liaise with the operators responsible before the trucks arrive in the port.
None of us wants to be trying to resolve problems when the trucks are in the port because that leads to delays and it is the hauliers who suffer in those instances. Again, it is very important that we know who is responsible for these imports and that they engage with us. We are there 24-7 to provide support and are very keen for people to get in contact with us. We are prepared to work with them to resolve any issues.
I thank the witnesses for the presentations. I am particularly taken with what Mr. Drennan and Mr. Gavin said because, quite frankly, they have first-hand experience through their individual operations and the network of hauliers. While I accept that Revenue and the State generally have done everything they can to assist trade and business, it is often the case that those who will encounter the greatest difficulty are the hauliers on the ground because the practical manifestation of the rules that govern are theirs to try to address. They will be coming under pressure from their customers, often with a lack of full appreciation of what is involved in the minutiae of crossing these frontiers. I am surprised to some extent because Revenue has been a leading light in terms of developing its online systems. For quite some time, the Revenue online service, ROS, has been rightly held up for all sorts of awards and credits for being way ahead of other Departments and indeed countries. It is to be hoped Revenue will be able to find a resolution through some technological advancements or investment in that area that will provide the kind of solutions. In particular, Mr. Gavin has pointed out some of this work can be done or some of their problems can resolved through better use of technology. I would be interested in seeing how that might advance. Will Mr. Harrahill tell me where he sees some solutions that might come forward in that regard?
I know Mr. Harrahill indicated that Revenue met different players. Perhaps as an outcome of this meeting, at a minimum, Revenue and the Irish Road Haulage Association would get together in some formal way in the next week or so to try to thrash out, insofar as they can, some of these problems and communicate back to the committee because there is no point in us all going away today when the problem remains. Revenue might write back to the committee to give us some information about what might happen at such a meeting and if issues have been resolved.
A number of hauliers have contacted me regarding goods transiting through the UK. Switzerland was given to me as an example. So many tonnes of goods go through Switzerland. There are certain green routes based on the fact that the goods are not for distribution or breakage within Switzerland and it is just passage through. Can the same kind of solution or system be found to allow goods to make it to Ireland effectively through the UK system?
Mr. Gerry Harrahill:
I will pick up on the points made by the Senator. In terms of technology and IT investment, close to 100% of the potential that is there in the way the customs system operates is based around IT. This is not just the situation in Ireland. Practically the entirety of customs movement across the EU is supported very directly by significant investment in IT. There is an ongoing programme of implementation of the modernised Union customs code and there is a significant programme of investment across all EU member states between now and 2025.
A very heavy part of that is investment in technology. There is an acceptance across the EU and at European Commission level that Ireland is at the forefront in that regard, just to give the committee the assurance that we are always looking at the opportunities to put IT supports and solutions in place. That is exactly what drove our approach to the investment surrounding the customs ro-ro service to try to automate as much of it as possible and, as I said, to try to avoid all goods arriving in Ireland having to be presented to customs, which was the situation before 1992. That is exactly what used to happen. Every item that came into the country had to be presented at customs. Thankfully, we are outside of that now and, as I said earlier, over 70% is currently getting green-routed.
Mr. Eugene Drennan:
What Mr. Harrahill says is true, except there are two systems operating here at the moment. There was the old system, called AEP. The Revenue Commissions have two systems and have not extinguished one before the start of the other, which is called AIS. Some people have fallen into the cracks between the two systems. That development was not done. It was not turned on in time. It was turned on only in November, and 24 December, Christmas Eve, or 23 December - whichever - and then there was some other part of it on 28 December, and it is supposed to work. We have been five years getting ready for Brexit and we are a year late. If this investment was made, the questions that have to be asked are why it was not ready, why it was not tried and tested and why we are having the glitches. I agree with what Mr. Harrahill has said: there is this checking and looking to the new system in Europe. It is light years away. This is what we need. We should have had it by now. We have been five years at this. We should have the new system that combines and streamlines all of Europe. We should have it now. This connectivity fund or the €2 billion that is coming or whatever it is that is coming should be moved forward and should be in by next year or the year after because Ireland is suffering without it.
In Mr. Harrahill's response will he confirm that the Revenue Commissioners would be willing to meet the Irish Road Haulage Association on the suggestion put forward by Senator Dooley and to provide us with a response, from both the Revenue Commissioners and the Irish Road Haulage Association, as to how the meeting went? Is Mr. Harrahill agreeable to such a meeting taking place?
Mr. Gerry Harrahill:
I will indeed. To pick up and finish off on the issue of the technology and the two import systems in place, big IT programmes take a significant investment and a lead-in time. We were already engaged in a new import system called AIS before the British Government and the British people decided to leave the Single Market. What we had, therefore, was an unfortunate coincidence of a new system being introduced at the same time as Brexit coming a couple of weeks later. Specifically, and just as a demonstration of our responsiveness, our very strong encouragement to businesses was, if they were investing in technology for the first time, to invest for AIS because that is where the future will be. Specifically, at the request of trade and business, we extended the duration of the old or the existing AEP system. That was an example of the responsiveness of Revenue to practical difficulties that were arising for trade and business.
We have had significant uptake for the automated import system, AIS, in recent months.
Senator Dooley asked a question specifically around transit. It is important to explain that there is a common transit convention to which all EU member states, as well as the UK, are parties. Goods coming from mainland Europe through the UK to Ireland generally come under the transit convention. The whole idea behind it is that we recognise end-to-end transactions. The amount of interaction required with the party in between is limited. The Irish authorities, including Revenue and the Department of Agriculture, Food and the Marine, are specifically ensuring that when goods move from Ireland to mainland Europe, our European colleagues do not take a view that because the goods have transited through the UK, they have any less standing in the EU. We have invested heavily to achieve that in terms of commitment and engagement. I must acknowledge the significant support we have received from our European colleagues to ensure goods transiting are not placed at a disadvantage compared with goods that go direct. Obviously, there are delays but we have made significant investment regarding the standing of the goods and the way they are treated and viewed and it has been successful.
I will deal with some practical issues. The meeting between the Irish Road Haulage Association and Mr. Harrahill and his colleagues will be most important. It needs to take place early next week.
An issue is coming up with many of the hauliers. My understanding is that every product in a container on a truck requires a master reference number. A haulier may be transiting or taking goods for a large number of suppliers. If the MRN or customs documentation for one of the goods is not correct, the truck will be pulled in and checked at the port, causing major delays. Hauliers operate a just-in-time model in their dealing with suppliers in the UK and customers in Ireland and the UK. Will Mr. Harrahill explain this to me? Am I correct in that? Mr. Harrahill stated 70% of trucks are not checked and are green-routed. Are the other 30% checked on the basis of problems with MRNs? Let us suppose a haulier has a container with goods for 50 customers and one batch of goods has not been put through properly and the MRN is not correct. If the truck is pulled in for checking at the port, it has major time implications. Will Mr. Harrahill deal with that particular point on the practicality? Mr. Drennan might then comment on whether I am correct in my analysis.
Mr. Gerry Harrahill:
I will make a couple of comments and invite my colleague, Ms O'Neill, to comment as well. One of the challenges in the new trading environment is that, as the Chairman correctly pointed out, we can have a truck with 50 consignments for 50 different customers. In the case of 49 of the customers, the particular consignment may be green-routed but the remaining consignment may be red or orange-routed. That means the entire truck and its contents will be delayed while the issue is resolved.
We have consistently pointed out to those in trade and business the importance of understanding that groupage loads carry with them a risk that, for example, one consignment out of 50 could cause an entire load to be delayed. We have suggested in our seminars, as have colleagues in the Department of Agriculture, Food and the Marine, that businesses think about the goods that are more likely to get a risk routing compared with others. Let us suppose someone mixes sanitary and phytosanitary products with general groupage. Clearly there is a greater likelihood of that consignment being delayed than a general groupage consignment. That is one practical element.
The second element, which I touched on in my opening statement and which may be worth repeating, is that we have made available a facility for hauliers to be able to look up the MRNs for all the consignments that are on the truck and they will know whether it is one consignment or ten consignments that are giving rise to the difficulty. It is an issue that will still have to be resolved but, for example, if one has an unaccompanied load in Dublin Port, rather than turning up to collect it when there are three consignments that are still red routed, one knows, from an economic point of view, that if one wants to collect a load that has been green routed, one can go down, collect it and leave the port without difficulty. I hope that practical element of providing visibility in respect of the MRNs will be of considerable assistance to hauliers.
Mr. Eugene Drennan:
Yes. They would have made a little difference. Having a haulier check up to see which consignment would cause difficulty means the haulier must be on guard 24-7. That is not possible. If we or the declarant got notification of the consignment with which there is a difficulty and did not have to look it up, it would be far easier. To give the Chairman an example of how it works, the Port of Rotterdam just put up notification yesterday of how it will handle it. It has a platform of continuous information as to where the routing is, how it is going and when it will be ready. It goes to everybody involved - the declarant, the haulier and the driver. The truck driver does not need to come near the port until it is cleared. They do not have lock up and keep away in that instance.
Mr. Eugene Drennan:
In calling for an independent body overview, approximately 80% of the goods, as Mr. Harrahill rightly stated, are singular, repetitive loads. They should surely be easily identified and a simplified system could be put in place for them, which would ease up matters in respect of the system.
Mr. Eugene Drennan:
It is across the board. When the Department officials were clarifying matters, they forgot to tell the Chairman that in Ireland they are looking for 24 hours' notice whereas the officials in Belfast are looking for four hours' notice. In Europe and UK, the requirement is four hours' notice. It is not as simple or as easy for the haulier to keep them notified in Ireland.
I have two brief questions. Mr. Harrahill, rather than hauliers having to go up and check, is there a system whereby Revenue could notify them? Can Mr. Savage address the point about the 24 hours' notice period that is required to be provided in Ireland vis-à-visthat required by our counterparts in the North and across Europe? I call Mr. Harrahill first.
Mr. Gerry Harrahill:
I will ask my colleague, Ms O'Neill, to comment in detail on the process of looking up the MRNs, but I will make one point. In our ongoing experience and engagement with trade and business, as we are seeing issues which we would describe as common causes of difficulty. We are publishing details of those and providing information on the possible causes and some of the solutions. It is an important part of our ongoing role and responsibility to educate, support and help business to get the thing right. I will ask Ms O'Neill to comment specifically on the MRN issue.
Ms Celine O'Neill:
I will keep it brief. To address the point Mr. Drennan raised about the system introduced yesterday at, I believe, the Port of Antwerp, it is possible for those things to happen at Antwerp and Rotterdam because there are port community systems in operation there that are not in operation at Dublin Port. We have already engaged with the Dublin Port Company on the possibility of introducing something similar in Ireland. Those systems allow the involvement of multiple stakeholders. It is clear from all the interventions today that there are many different stakeholders each responsible for different aspects of the movement and each entitled to different pieces of information that we cannot share outside of who is entitled to receive it. These systems allow the stakeholders to see the information they are entitled to see without confidentiality being breached or data protection issues arising. It is something we are actively pursuing to see if we can introduce it in Ireland.
Mr. Paul Savage:
I thank the Chairman. As I said at the start, from our point of view our imperative here is to facilitate trade as best we can and move product through the port as quickly as possible. The notification period is there to try to facilitate that and make sure we can essentially speed up the process for everybody who is using the port and to try to minimise the kind of problems we have been seeing over the first two to three weeks, for instance, in terms of people getting used to the new arrangements. It is an important point, therefore, because it allows the trade, operators and users to use and engage with the system much more effectively. It speeds up checks at the port. As Ms Sheridan mentioned, it means we can clear certain consignments in advance if we have all the documentation with us and we are happy that everything is okay. We can green route consignments through the port immediately, again, reducing people's delays or interaction with any services in the port.
The third point is that from our perspective, we found that even among existing third country trade, approximately two thirds of all problems are caused by documents and notifications not being in order. To be honest, from our perspective and from the user's perspective, it is much better, therefore, if those documentary errors and issues can be sorted in advance so they do not have to be investigated in the port and delay people. Approximately two thirds of those we have experienced up to now in third country trade have those kind of documentary issues.
Go raibh maith agat. First, I am speaking from LH2000 within the Leinster House campus. It has been said that we are all here because there is a problem. We knew there were going to be problems as regards Brexit. Some may have been foreseen, to a degree, but I believe we are dealing with a situation with systems that could not be tried and tested beforehand. We have the switch from the automatic identification system, AIS, we have people operating paper systems, multiple IT systems, the manual transfer of movement reference numbers, MRN, and so on, and that all causes problems.
I would like to deal initially with the fact, as I believe has been said, that it is absolutely vital we have the stakeholders-----
It is absolutely vital that these stakeholder meetings happen as soon as possible and that we get a net result, because what I am hearing is similar to what is being said here. The fact is that many companies in Britain that are exporting have not made the preparations that have been made here and we are all suffering, particularly hauliers.
We need something done about systems. I accept Mr. Harrahill said there are difficulties with just how far we can go with regard to a leeway period or whatever but there are definite difficulties. Groupage is a problem in the sense that the entire business model has probably changed for many hauliers. I would like Mr. Drennan to lay it out because we would be under much more pressure only for the fact that there has been significant stockpiling. That is the reason a reduced number of people are transferring. I am led to believe, however, that hauliers operate on small margins, within approximately 4%. Therefore, with the added costs regarding the systems, hold-ups and all these factors there are major issues. My worries are, first, that hauliers will go out of business and at a point in time when we fix all these systems, they will not have capacity to stay in operation. Haulage firms will not be there to pick up the slack when it is necessary. Could Mr. Drennan deal with that, please?
Mr. Eugene Drennan:
Yes, indeed. As the Deputy noted, we had a protest yesterday in Dublin and hauliers not too far from his area were in it. The level of problems is so high now that a number of them are shipping empty trailers back to Ireland from England to try to service the export volume but that cannot be sustained.
If something is not done and unless it is streamlined quickly, hauliers will go out of business. I am speaking about the system and not changing the rules.
There was massive stockpiling and we will see this disappear quickly. On the other side, Ornua is a major exporter of food from here and it has massive warehousing in the north of England. England will kick in its own rules and regulations in a couple of months' time. We have huge business with it and we do not want it to see us as being excessively cumbersome and burdensome. We still have to trade with the UK. We have to try to find some way to do it in as streamlined a way as possible. If the UK comes back and kicks us in the teeth, our exports will be in serious trouble, as will farming.
To get a feel for how it is out there, when anyone thinks about the supply line, we immediately think of the shop shelf but across the board in industry and services, people are having difficulty getting parts. There is not a garage in the country that is not short of parts or slow in getting in the parts. Every sector of haulage is affected, whether people have groupage, pallet or singular loads and whether it is parcel delivery or bulk delivery. It is evidently not working and it needs urgent immediate addressing. This is why I again call on Deputies to support me. We need an independent overviewer.
We are telling the Deputies all about different numbers and all about new systems that are all new to us. They are a necessity for the customs code. What has been said here about the customs code is that it is similar to dealing with outside EU countries, perhaps such as Hungary, Iran, Iraq or Russia. We have an agreement and it has to be matched into the customs union code. Singular loads should simply be transferred. The simplicity can be brought in, even to the customs union. I do not pretend to know absolutely anything about the big bible of the customs union but surely if there is an agreement, some of this can be simplified. We need action.
I will move on the question with regard to whether it can be simplified to Mr. Harrahill. Something else that has been said by many hauliers, and it was alluded to here earlier, is that in a groupage situation there may be one particular problem that may relate to one movement reference number, MRN, but hauliers could be waiting three or four hours or more before they find this out. Mr. Harrahill has spoken about the need to offer this information. I accept there may be GDPR problems but we need to find what means will be used and how quickly this will happen from the point of view of being able to tell hauliers where the problem is in order that they can at least play a part in sorting it out and moving on the goods. Again, we are getting away with some of this on the basis we do not have the regular numbers yet due to stockpiling.
Mr. Gerry Harrahill:
It is really important that everybody understands that the agreement reached on 24 December did not in any sense do away with or lessen the obligation on and responsibility of Ireland to operate fully in accordance with the customs code and to protect the Single Market and the customs union. The agreement had the very important benefit of dealing with the question of tariffs, in particular with regard to UK originating goods. Essentially, all of the other pieces were already very clear that customs formalities would apply. In all of our engagement with trade, we made this very clear from the very start. It is very important that everybody understands this.
Another part of the question was with regard to giving greater visibility. We have just put this in place in the past week for hauliers. It is particularly beneficial in that if people know they have three different consignments on a truck and they are not clear whether all of these have cleared or not, then by looking up the MRN facility that we have now made available, they will know whether they are red, green or orange routed.
It will not necessarily solve the problem if they are red or orange routed, but at least it will mean a driver will not turn up to collect an unaccompanied trailer when something is clearly not ready to leave the port. That is already in place. One of the options we are looking at is to see how we can build on that and if there is anything else that we can do to provide greater transparency and information to the haulier without, as Ms O'Neill stated, breaching commercial sensitivity on some of these issues.
I thank Mr. Harrahill. I call Deputy Matthews. He has seven minutes. I am conscious of time. We have four contributors and they have seven minutes each. We must be out of here by 3 p.m. I ask members and contributors to be aware of time. If Deputy Matthews is unavailable, I will move on to Deputy Lowry and I will come back to Deputy Matthews.
I can confirm that I am in my Dáil office. I welcome this meeting, which I believe was necessary. The presentations have been concise and precise. I am sure everybody is acting in good faith. The reason the meeting is necessary is that in recent weeks we have heard contradictory statements in the media and in the Dáil. Today's meeting is useful in that it clarifies some of the issues that have been raised. In a simplified way, Ministers, and everybody who is commenting on behalf of the Government and Government agencies, are saying that the transport providers, in particular the hauliers, are not educated in the new system and are not prepared for it and as a consequence they are making errors which are causing the delays. Revenue is taking every opportunity to tell everyone who cares to listen that Revenue is not the problem and it is blaming the industry. Today, we hear practical examples of what has happened. What surprises me is that neither the industry nor the authorities trialled the system before it was up and running. We must be conscious of the fact that people did stockpile. I see it in business every day. All the major groups have stockpiled. I would like Mr. Harrahill to address Mr. Drennan's statement that the stockpiling is coming to an end and therefore we will have far more transactions and activity. Mr. Drennan stated that once trade volumes are restored to normal levels the systems will collapse entirely. Does Mr. Harrahill agree with that? Is there any danger whatsoever of that actually happening?
I feel great sympathy for the hauliers. As everyone said, Brexit was on the way and we were warned about it, but it is surprising that given that we had five years to prepare, we are still not prepared. The IT issue needs to be resolved one way or another. The reason I have sympathy for hauliers is that the procedures are complicated, complex, cumbersome and time consuming. According to the hauliers, they are unacceptable as an overhead. Listening to everybody here today the only conclusion that I can come to is that it is a spaghetti junction of bureaucracy. It is mad to think that the UK system for clearance is simpler and easier than our system and that needs to be addressed.
Could we get a direct answer on the necessity for independent oversight and verification of the IT system? We are talking about moving from 2 million transactions to 20 million and the question arises as to whether the system is capable of carrying the additional load. Do we have the trained expertise in the public sector or in the private sector to handle the expected volume of transactions and activity? If trade slows down, it is lost and if we lose trade, the economy suffers.
It has been suggested to us as public representatives that after the events of 11 September 2001, the European Union introduced directives or legislation on a security declaration. The arrangement placed a requirement on third countries trading into the EU, meaning that the carrier was to bear responsibility regarding the proceedings. The carrier, in this instance, is an aircraft or a vessel. How did it arise that the ferries came to an arrangement with the Revenue Commissioners that effectively transferred the IT and administrative obligations to the hauliers and factories? It has been suggested that an agreement was reached to the satisfaction of the ferries and that it added a greater burden to the transporters, particularly the hauliers.
Mr. Gerry Harrahill:
I thank Deputy Lowry for the questions. I will try to pick up on all the issues he raised. As the director general for customs in Ireland, I am in no circumstances blaming anybody for the challenges we face at the moment. I mentioned in my opening remarks that we are in circumstances that have not arisen since before Ireland joined the European Economic Community almost 50 years ago. While all of us said at various stages that Brexit would be challenging, we now realise it has been challenging, and a bit more to go with it. The only way to deal with the practical difficulties that a number of Deputies and Senators referred to is a collaborative approach involving the State agencies and all the key stakeholders. That is in the interest of everybody whose motivation is to ensure we keep our good standing within the EU at the same time as allowing legitimate trade and business to go ahead.
On the second issue, namely, trialling the system, with the exception of the customs ro-ro service, all the components for import and export to a third country effectively have been in place for many years. What has brought a particular focus with the UK's departure is that our nearest neighbour is now a third country. Therefore, the just-in-time business model that has worked so successfully is severely challenged by the fact that we have trade with a third country right on our doorstep. That has brought some unique features. Many of us who have been involved in this process over recent years probably have been aware of this matter but it is really a case of rubber hitting the road in that regard.
On Deputy Lowry's question on whether we have the expertise and knowledge to handle the systems, the answer is "Yes". We have invested considerable time, energy, expertise and knowledge to ensure we are ready to handle the volumes resulting from Brexit. I remind members that since 1 January, or in the first 21 days, we have processed 668,000 customs declarations successfully. Where we did not manage to process declaration successfully, it was not because the system by and large has not worked but because some of the core information and data have not been available. I am not attributing blame to anybody; I am just saying it is a fact and that there is work we can do in that regard.
Mr. Gerry Harrahill:
On an ongoing basis, we examine each IT project and IT systems development, in both the early and more mature stages, to make sure it is operating as intended. On the question on an external review, we have not had one directly but it is important to state that our customs systems are subject every year to a review by the European Court of Auditors. It looks into whether we collected all the customs duties that were properly due and payable. Every year, we get a positive bill of health. Obviously, issues are flagged on occasion.
Our core systems are looked at annually by the European Commission and European Court of Auditors. All of our systems, not just our customs systems, are subject to examination by the Comptroller and Auditor General at any time. I have no difficulty with any of those processes running to provide confirmation about what we are doing.
I ask my colleague, Ms O'Neill, to address Deputy Lowry's question on the safety and security declaration.
Ms Celine O'Neill:
I thank the Deputy for the question about safety and security. As he said, it is a requirement for third countries and specifically relates to concerns about preventing international criminal organisations, weapons of mass destruction and such issues. Unfortunately, the UK did not want to be part of the EU's safety and security zone, so there is no possibility of not requiring that declaration. The legal responsibility for the submission of that declaration rests with what is known as the "carrier". As the Deputy pointed out, with an airline, the airline would be the carrier, but it is not as straightforward with a roll-on, roll-off vessel. When a vehicle is accompanied by a driver, the mode of transport is legally considered to be that vehicle and, therefore, the carrier is the haulier or the haulage company. For unaccompanied trailers, the legal responsibility rests with the ferry operator. Any carrier that has the legal responsibility to provide that declaration can pass that responsibility on to another person in the supply chain. Where the ferry operators have done that, it is because they were legally entitled to do so but it would not alleviate the requirement for the haulage sector to provide declarations about accompanied vehicles. That should clarify who has those responsibilities and how they can be fulfilled.
For four years prior to Brexit, at the Joint Committee on European Union Affairs, I regularly asked if we were wargaming the ultimate outcome of Brexit. Were customs officials and Revenue working with the road hauliers? Had they done trial runs with trucks? It seems to me that if it was wargamed, it was not wargamed correctly. If it was not wargamed, why not? There was a feeling around here that it was never going to happen but we all knew it was going to happen and we find ourselves in a bit of a mess. Were the road hauliers, at any stage, brought in and run through processes so that they would have an idea of how things would go? If not, perhaps customs and Revenue officials can explain why not.
Mr. Eugene Drennan:
We were brought in to be told what was to be done at the end of different agendas being decided. I would not call it a consultation. We were told what was coming, how we were to go about it and what we had to do. We do not feel that we were consulted.
The previous speaker referred to ships and the safety and security declaration. In the declaration, under the customs union, customs officials have been strict about telling us that the carrier of the load is the registered number of the ship. If the carrier under the Union customs code is the registered number of the ship, why does the truck owner now have to take responsibility for the safety and security declaration? If we are the carriers of the load, the truck's trailer should be the identifier.
In these systems if one does not put in the correct ship registered number and one travels on a different ship, which happens regularly, that triggers a check. One will have to go through the process of being checked. Also, one has to amend the declaration. If one does not get checked in Dublin, one must amend it within four days. That is yet another declaration and uploading. That is part of the cumbersome method.
In addition, I wish to cover something that was said a minute ago, and I believe we have a breakthrough here with Mr. Harrahill. I agree with him. It is a collective approach, but the agreement has allowed us to identify what is GB product and Irish product. If the agreement allows us to do that, all of that product surely could come into a simpler system. This is why we need an independent person from business to try to tie these systems with customs' other system relating to what they do themselves. Agriculture has its system relating to what it does itself. The issue is the tie-up, the connectivity and to simplify it. If the agreement allows identifying the product, surely the system of taking that product could also be simplified.
Mr. Harrahill, there are two elements to the question. You might deal with the points raised by Senator Craughwell and those followed up by Mr. Drennan. You might also deal with a previous question from Deputy Lowry, taken up by Mr. Drennan, which was why, if they are making declarations, they must put in the reference to the ferry, yet the hauliers are regarded as the carrier.
Mr. Gerry Harrahill:
I will respond on those issues. First, it is important to refer to yesterday and the comment of Michel Barnier, when he was getting his award, that the consequences of Brexit are that the full application of all the rules and regulations that apply to a third country apply to trade with Great Britain. He was unequivocal about that in his response. That is worth having as the line in the sand as to what we can and cannot do.
The second element is that you and Senator Craughwell asked a question about the IT systems. I will explain briefly what we have done. In preparation for January, we had a comprehensive programme of testing drawn up, undertaken and completed not just of the Revenue Commissioners' systems but also the interaction between us, the Department of Agriculture, Food and the Marine and the health and safety executive of the HSE. We built the substantial work, including capacity modelling that was undertaken across the transition period. It included items such as systems testing, traffic flow simulations and management, physical testing around our sites and, ultimately, the integration of all of those elements.
Full end-to-end testing of the customs systems before 1 January was not possible simply because the UK did not become a third country until 11 p.m. on 31 December. The opportunity to have a type of play time with the new system simply was not possible. That is why we put so much effort and focus on the trade and business engagement programmes, going through all facets of the customs formalities and trying to explain to business, including through practical examples, how those customs formalities apply and what they would mean for the different players and actors. Even today, if any of the members wish to go onto the Revenue Commissioners website, they will see a series of webinars that take them through the full spectrum. I believe there are 16 separate webinars available. There are journey maps that simply take people through some practical examples.
Mr. Harrahill, the point is that there are relatively low volumes going through at present. When the peak volumes kick in when supplies are used up, will the system be robust enough, apart from the cumbersome nature which I hope will be addressed in the meetings between the Revenue Commissioners with both the Irish Road Haulage Association and the Department of Agriculture, Food and the Marine early next week?
Will the system be able to take the volumes of declarations that will be going through it? Has Revenue road tested that in a simulated way for the volumes that will go through? Mr. Harrahill referred to the number increasing from 2 million to 20 million. Is that correct?
Mr. Drennan stated that the ferry companies appear to have been able to pass the parcel on being the carrier. Ms Sheridan indicated they were legally entitled to do that. Mr. Drennan stated that when hauliers submit declarations they are required to name the ferry company. That is a contradiction. Will Mr. Harrahill explain that?
Mr. Eoin Gavin:
It is on the crux of that issue. I acknowledge that Ms O'Neill admitted that the French have a different system. I appeal to the committee and Revenue to look at the French system. The flow of traffic between the UK and the Common Market is now easier than the flow of traffic between Ireland the Common Market. That should not happen. The UK is still our biggest trading partner.
If anything is to come out of this meeting, I hope it will be that Revenue will look at the French system. It has admitted that the French system is different. I appeal to Revenue to look at and case test that system. My business and my customers' businesses have case tested it this week. We have a driver who loads in London every week and delivers in Brussels. I have not spoken to him in four days. We have a driver who loads in London and delivers in Shannon and my staff are on the telephone to him 24-7. There are five administrative steps to bring a load from London to Shannon. There is one administrative step to bring a load from London to Paris. I appeal to the Revenue not to reinvent the wheel but to look at the French system and see what technology France has used. It is all about technology.
That will link back to the role of the ferry companies. All they need to do is have the technology at the check-in. The ferry from Holyhead sails every four hours. The ferry from Dover to Calais sails every ten minutes. It is not about holding up traffic in a ferry port.
Ms Celine O'Neill:
To go back to the point about the carrier, the legal responsibility rests with the carrier. The European Union customs code is very clear on who the carrier is. Where it is an accompanied vehicle moving on a ferry, the mode of transport is considered to be the vehicle, that is, road, and therefore the responsibility rests with the carrier. What Mr. Drennan is confusing that with is the other requirements on a customs declaration to identify the vessel on which the vehicle is moving. There are different elements that must be included on a customs declaration. Each is required independently of the other and they should not be confused with the legal responsibilities surrounding the requirement to provide a declaration.
I will not keep the committee long. I thank the witnesses for their presence today. Everybody seems to be making contradictory statements. The important point is that there is consultation. If we get anything from today's meeting, it should be that there needs to be real consultation and engagement.
Does Revenue accept the statements of the hauliers that there are disjointed customs clearance systems which have been creating crippling delays in trade? Given the statement by the Minister for Foreign Affairs in the Dáil yesterday about the new realities of Brexit, can we have real engagement and consultation to iron out such matters?
We accept our new reality but such concerns cannot be allowed to continue to obtain. I ask that there be engagement between Revenue and hauliers. Do the witnesses accept that there is a disjointed approach and that this is causing crippling delays?
Mr. Harrahill might assume that an email will come from Mr. Drennan of the IRHA after this meeting, so I hope the parties will meet early next week. I hope Mr. Savage or his departmental officials might do likewise. We should look at the common interest. Hauliers must make a living and we must have food on shelves. We must have exports. Will the witnesses give those commitments in their response? Senator Buttimer referenced this. We must get solutions from today's meeting. We are here because of problems but as a committee we are looking to find solutions by working together.
I am conscious of the time. We have to be out of here by 3 p.m. because of Covid guidelines.
Mr. Gerry Harrahill:
I respectfully suggest that it is not a disjointed clearance system. There are clearly challenges but, as Mr. Savage implies, we have a close working relationship with really good ongoing daily dialogue between all the State agencies. We all share the common purpose of trying to support legitimate trade and business. I have already said we are happy to continue engagement, and this will build on the huge amount of engagement we have had already. We are happy to deepen that.
There may be much merit in people from the Revenue Commissioners and the Department of Agriculture, Food and the Marine meeting representatives of the IRHA. It would ensure there could be no misunderstandings. Perhaps representatives of the HSE could be involved as well if necessary. This is about all stakeholders getting around a table and they could report to this committee to see what further assistance we could give to ensure a streamlined and fit-for-purpose system that can operate in the new environment where the UK is no longer part of the European Union.
Mr. Gerry Harrahill:
I am happy to confirm from the Revenue perspective that it absolutely makes sense that there be an approach across agencies to such a meeting. It is really important to speak about expectation management. We are absolutely committed to finding solutions to problems and challenges but there are certain parameters, with the most important being to ensure we can continue to protect the good standing of Ireland with the EU and, in particular, that goods going from Ireland to mainland Europe continue to be accepted with the same strong standing as they are today.
Mr. Paul Savage:
We are quite happy to do that. It would make sense for it to happen with the agencies - us, Revenue and possibly the HSE - talking to the association about these matters. As Mr. Harrahill has said, there has been very close collaboration between all the agencies on information technology systems and operational arrangements on the ground. That will continue and it would be very useful for the IRHA to engage with the agencies on a joint basis. We are happy to facilitate that.
We must emphasise the point that it is appreciated that the hauliers and drivers can sometimes be caught in the middle because of the way controls must be applied. It would be useful in the hauliers' engagement with operators in the industry to get the message across to customers and companies moving goods that they must supply the correct documentation to customs and department officials. They must be able to meet the requirements. If companies can ultimately supply information to us in an accurate manner, the burden falling on hauliers and drivers would be far less.
Mr. Eugene Drennan:
I am sure that can happen, particularly as Mr. Harrahill and I are in the same room across from Leinster House.
The one thing I would call for is an independent chairman. I am asking for an independent review of these processes. I remind the committee that the State has gotten into such a mix with self-policing in many public bodies. Any of the big problems we have had, whether with An Garda Síochána or other institutions, arose because the entities were self-policing. We need an independent chairman if we are to come to the table because we feel that we were not consulted before this. Perhaps the Chairman of the Committee of Public Accounts could get involved because this is about costs. It is about costs for the hauliers, in the first instance, and for the country.
The most important thing is to find solutions. We will take it that the IRHA will invite the other parties to a meeting early next week. I ask that the witnesses report back to us on what we can do and on whether the processes are working.
I thank all the witnesses for attending today and engaging with the committee. We will have a private meeting at 4 p.m. on Tuesday, 26 January and our next public meeting is scheduled for Friday, 29 January.