IRELAND. The Irish Duty Free Alliance (IDFA) is pushing the Irish government to review plans to preserve the duty free shopping status quo between Ireland and the UK in the event of a no-deal Brexit.
The IDFA today voiced its concerns regarding a government amendment to the UK Withdrawal Bill (Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019), which would prevent duty free sales at Irish airports in the event of a no-deal Brexit. The bill and amendments will be discussed today in the Irish Parliament and could be passed by tomorrow night. We reported news of the proposed amendment on 27 February.
The UK is scheduled to leave the European Union at 11pm UK time on Friday, 29 March 2019, though political chaos in the country means that several outcomes are possible.
These include a no-deal exit; a second referendum; acceptance (perhaps with tweaking) of the Theresa May-EU agreement; or a delay to the whole process.
Provisions under current European legislation state that duty free sales apply to routes where passengers are travelling to a “third-country”.
The IDFA said that the move by the Irish government is “out of step” with the approach taken by European counterparts, and guidance from the European Commission which stated on 13 November 2018 that duty free sales for passengers travelling to the UK must be allowed in the event of a hard Brexit.
As it is written, the government’s amendment will prevent duty free sales at Irish airports but will not do anything to stop such sales taking place on board UK-bound planes and ferries. This will put Irish airports at a considerable commercial and competitive disadvantage in the event of a no-deal Brexit, said the IDFA. It would also make Ireland the only EU state not to offer outbound travellers to the UK the opportunity to buy duty free under the no deal scenario.
IDFA Chairman Frank O’Connell said: “The Irish Duty Free Alliance’s position is that UK-bound duty free sales, taking place at airports and onboard vessels, must be allowed in the event of a hard Brexit, as the UK will become a third country and EU legislation is clear in that regard.
“A hard Brexit scenario will be hugely detrimental to IDFA members and will require substantial investment to prepare for and mitigate against risks. Duty free shopping for UK passengers represents perhaps the only silver lining in what is otherwise a very challenging outlook for our members, particularly regional airports who have a high proportion of UK routes.”
He added: “We commissioned an economic report by DCU’s Professor Tony Foley, which clearly showed that the return of duty free for passengers to the UK could have an overall positive impact on the Irish economy in the region of an additional €45 million in economic activity, and would generate 450 jobs, directly and indirectly. Furthermore, if sales are simply transferred from airports to airlines or the ferries, which is what will happen if this amendment passes without change or without reciprocal action by the UK, this will drain Irish airports of much needed retail revenues at a time when they need it most.”
“We are calling for Government to reconsider its position in respect of this amendment and to assist us in mitigating against the challenges of Brexit. It is also worth remembering that as an island economy, connectivity is absolutely crucial and therefore the wellbeing of our maritime and aviation links must be preserved at all costs.”
Separately, the IDFA said it is questionable whether the Irish government amendment would be compatible with EU legislation, notably Council Directives 2007/74, 2008/118, and 2006/112 among others, which set out clearly EU Member State commitments with regard to duty free allowances for travellers from the EU to third countries.
*In related news, the UK government looks likely to pass legislation that permit a return to duty free sales to EU states in the event of a no deal Brexit. In what appears to be a well-sourced story, The Sun reported that government would push through legislation with a view to assisting UK regional ports and ferries in particular, which would benefit. We understand however that the move may be delayed until after next week’s ‘meaningful vote’ on Prime Minister Theresa May’s withdrawal proposals.
An industry spokesman said that travel retail representatives were in contact with the UK Treasury, Customs and other government agencies to ensure the legislation is passed. It has already received the backing of many MPs, he added.
