Scope for expanding cross-Border trade in services, report finds

There is considerable scope for expanding cross-Border trade in services in the wake of Brexit, a report by the Economic and Social Research Institute (ESRI) has concluded.

The study, the first publication from the ESRI's joint research programme with the Shared Island unit of the Department of the Taoiseach, noted that cross-Border services trade is considerably lower than cross-Border trade in goods.

It makes up just 26 per cent of the total trade going from Northern Ireland to the Republic and 16 per cent from the Republic to the North.

This is in contrast with the high overall services content of the Republic’s exports to other markets, which flow from the large multinational-led information and technology (IT) sector.

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The main services traded between the two jurisdictions include transportation and storage, business services and computer consultancy.

The report indicated that there have been limited changes to cross-border market access in services between the European Union and UK since Brexit occurred in January 2021. However, it emphasised that the Northern Ireland protocol relates to goods trade only and it therefore remains possible that changes to cross-Border services trade could emerge unless the current temporary arrangements become more permanently established.

"The patterns identified in this report suggest that there is considerable scope for expansion of cross-Border trade in services," the report's author Martina Lawless said. "The monitoring of the effectiveness of trade support policies would be greatly improved by expanding and co-ordinating the information collected on cross-Border services flows," she added.

A second report on enhancing the attractiveness of the island of Ireland to high-value foreign direct investment (FDI) found that the attractiveness of a given location in the EU and UK is positively associated with EU market potential, domestic market growth, low labour costs and several other factors.

It concluded that “Northern Ireland’s continued access to the EU single market for goods secured through the protocol is a key comparative advantage for attracting high-value FDI relative to the other regions in the UK.”

Tánaiste and Minister for Enterprise Trade and Employment Leo Varadkar said: "We commissioned this research to provide a high-quality evidence base for looking, in real terms, at how we could do more, and do better together, across both parts of this island. How we could align better, levelling up and taking the best of both jurisdictions."