Posted by Donnacha Phelan on February 14, 2017
Indeed, could public procurement act as a vehicle for cross-border trade post-Brexit?
The Prime Minister and the Taoiseach had some reassuring words on cross-border trade for Irish businesses following their talks on Brexit in Dublin on January 30th. Both leaders reaffirmed their support for cross-border trade and the continuation of the Common Travel Area. Theresa May said both the governments want a "seamless, frictionless border" to continue while Enda Kenny stated that close and friction-free trading ties between the two countries are "in our very best interests".
Certainly, Irish and Northern Irish businesses should plan for a number of scenarios regarding cross-border trade. The worst case scenario is that default WTO tariffs will apply. For many products tariffs are relatively low but for some, they can exceed 50%. InterTradeIreland can help you assess the tariff bracket that your product could face.
In the south, Irish businesses are being encouraged to seek out new markets across the EU and beyond in order to compensate for lack of access to the UK. This is easier said than done given existing supply chains and the proximity of NI and the wider UK, especially for perishable goods. NI firms also face challenges in planning for entering new markets as new trade agreements with other countries cannot be concluded until after the UK leaves the EU. It is also quite likely that severe economic impacts will be felt on both sides of the border –especially at the sectoral level (agribusiness, retail, consumer goods etc.).
Having a strong public-sector sales book helped many Irish businesses on both sides of the border get through the recent recession: public clients represent a much lower credit risk. Yes public expenditure was cut-back and pressure was applied to renegotiate contracts, but the state continued to pay its creditors. This was not the case in other sectors of the economy, most notably the construction sector where many firms were declared insolvent putting tremendous pressure on their suppliers. Many public sector contracts also span a number of years, which provides a degree of comfort when planning for your businesses future. This is especially true of the larger contracts which go out to tender.
In addition to acquiring public sector customers in their home markets, businesses north and south should not forget the public sector market on the other side of the border either. While we await the outcome of the UK’s exit negotiations, it’s interesting to note that a number of WTO members including the EU and the major world economies have already negotiated the Agreement on Government Procurement (GPA) to ensure open, fair and transparent conditions of competition in the government procurement markets. This agreement opens up many public procurement sectors to bids from other countries (above a certain cost threshold). We have seen the Prime Minister and Taoiseach make clear that supporting cross-border trade is a priority for them in the upcoming negotiations. The GPA means that public procurement will inevitably become one of the vehicles for supporting post-Brexit cross-border trade.
It takes time to prepare your business to tender successfully: assessing the opportunities, developing your bid strategy, establishing relationships with buyers and putting in place the resources to make a compelling bid document. And for businesses planning their approach, InterTradeIreland’s Go-2-Tender programme is an excellent first step towards the development of a sustainable, diversified business model no matter where the company is located on this island.