The Irish Government has been pressing the EU and UK to allow Northern Ireland exporters to benefit from existing and future free trade agreements between the EU and other countries around the world, RTÉ News understands.

Under the Northern Ireland Protocol, any goods produced in Northern Ireland can circulate freely throughout the EU. 

However, those goods will not be recognised as EU goods for the purposes of being exported as part of existing EU free trade agreements (FTAs) with countries like Canada, Japan and South Korea because Northern Ireland will still be legally part of the UK's customs territory.

As such, from 1 January, Northern Ireland will fall out of some 60 EU FTAs because Brexit will take effect.

The anomaly also has implications for Irish companies who use components or ingredients from the North for goods that are then exported around the world under EU free trade agreements.

RTÉ News understands that the Government has raised the issue informally at the highest levels with the European Commission and the British government.

Northern business organisations themselves have been raising the issue with both the governments and the European Commission since the Protocol was negotiated one year ago.

The Northern Ireland Business Brexit Working Group has been lobbying for clarity on the issue, and posed a series of questions to the UK government after it published a paper at the end of May on how it would implement the Northern Ireland Protocol.

The fact that Northern Ireland will officially fall out of 60 FTAs in January will have grave implications for some sectors, especially diary. 

Currently millions of litres of milk are produced in the North and processed in the south, and much of that product is then exported as EU/Irish milk around the world.

"Any dairy product manufactured in Northern Ireland is exported under EU free trade agreements," says Mike Johnstone, chief executive of the Diary Council for Northern Ireland.

"We also have a third of our raw milk moved from the North to the Republic for further processing. Some of that is manufactured, goes on to the EU, some comes back into Northern Ireland and into GB. But a significant proportion goes on to third countries and is exported under EU FTAs. 

"We're highly exposed if we cannot continue the trade flows we have at the minute. We do not have the processing capacity in NI to handle all the milk that is produced in NI. So we have to be able to take that raw milk south of the border to get it processed. If we cannot do that and cannot add the value the loser will be dairy farmers on the island of Ireland."

Stephen Kelly, chief executive of Manufacturing NI, says: "This is important for Northern Ireland because 70% of what we make is intermediate goods, components and ingredients that go into other things in the UK, but particularly a lot of things that go into Irish goods."

The Protocol means that milk, and other goods, will still be produced in the North according to EU standards, meaning it can be sold in the South and in 26 other member states.

However, because of WTO country of origin rules, the milk is not regarded as EU milk. That’s because Northern Ireland is still part of the UK customs territory.

Northern companies rely on processing in the south, and operators like Lakeland Dairies rely on Northern milk to meet the demand of customers in China and west Africa.

RTÉ News understands the issue has been raised by the Government informally at the highest level both with the European Commission and the British government.

The issue has also been raised with the EU UK Joint Committee, which is tasked with implementing the protocol. 

Although there is said to be sympathy for Northern Ireland exporters, the European Commission would have to reopen all of its trade agreements with third countries to ask partners to accept Northern Irish produce as EU produce.

It is understood that the Commission is concerned that if it started to reopen trade agreements to make this minor change, then there could be reciprocal requests for changes by the co-signatories of the trade deals.

"There’s a fair degree of sympathy for it in the Commission, but also they are wondering how would you deal with this. It may take some time," says one senior source familiar with the issue.

The other problem is that Britain would have to ask the EU to do this, and so far that request has not been formally made, according to well-placed sources.

There may be sensitivities over which camp Northern Ireland’s is in, given the UK’s ambitions to forge new free trade agreements around the world.

However, officials say that because the UK is likely to rollover many of the existing EU free trade agreements, there may not be major tariff differentials.

It is understood the Irish Government is keen that Northern Irish exporters are given a fair hearing to be able to continue availing of EU free trade agreements because of the potential burden of implementing the Protocol.

"It’s seen as an unfair situation developing in which the North has to take on board all the customs procedures and a lot of the regulatory issues associated with the [EU] single market but can’t then benefit from the trade agreements the EU has," says the source. 

The Government is also mindful that the Northern Ireland Assembly will vote on maintaining the Protocol four years after it comes into effect.

Sources say the more benign the opportunities for exporters, the higher the chances are of the Protocol gaining popular approval.

The issue reflects the complexity and ambiguity of Britain’s departure from the European Union and the Protocol on Northern Ireland.

While the UK insisted on Northern Ireland remaining part of the UK’s customs territory, so that it could benefit from UK free trade agreements, there would still be restrictions. 

For example, if the UK concluded a free trade agreement with the US that included hormone-fed beef and chlorinated chicken, such products would not be able to enter Northern Ireland as they would fall foul of EU food standards.

The British government has insisted they will not permit such produce as part of a US free trade agreement.

Likewise, if the UK concludes a free trade agreement with a third country which includes beef exports, it may not be possible for cattle that were born in the South, but then "finished" in the North to be part of that FTA, as those cattle could be regarded as EU and not British cattle.

Senior figures have told RTÉ News that the issue is unlikely to be resolved before the Brexit transition period ends on 1 January because both the EU and the UK are consumed with both the free trade negotiations and implementing the Protocol through the Joint Committee.

The Government hopes that there could be a side agreement between the EU and UK that would facilitate Northern Irish businesses in benefiting from EU free trade agreements.