The Northern Ireland Protocol and the impact on Irish Sea trade: Where are we now?
By Ciaran Gill
Today, (23 March) the Secretary of State for International Trade Liz Truss MP announced that four new trade and investment hubs would be set up in Edinburgh, Darlington, Cardiff and Belfast. How the UK and EU handle the future of Northern Irish trade may well have an impact on the state of future UK trading relations overall and ultimately determine how well these new trade and investment hubs succeed. So what is the trade situation in Northern Ireland at present?
“There is no Irish sea border.”
These six words were part of a tweet sent out by the Secretary of State for Northern Ireland Brandon Lewis MP on New Year’s Day 2021, one day after the Northern Ireland Protocol came into force.
Lewis stated that goods were flowing “freely” around the UK, but the fact that the future of the Protocol remains less than certain over three months later indicates that trade since then has not been as unimpeded as Lewis and the UK Government would have liked.
As the UK seeks to forge a post-Brexit path forward, how have we got here and what can we expect to happen in the months ahead?
The terms of the Northern Ireland Protocol were finalised in December 2020 as part of the UK-EU negotiations around the UK’s decision to exit the EU and leave the Single Market and Customs Union. With the UK-EU transition period ending on 31 December 2020, the Northern Ireland Protocol came into force on the same day.
The Protocol is an acknowledgement of UK Government policy that Brexit should entail the UK’s departure from the EU Single Market and EU Customs Union – a Brexit that prioritises sovereignty above all else – and recognises the existence of a significant trade border between the UK and the EU.
As there is a globally-agreed imperative (the Good Friday Agreement) to ensure that a ‘soft’ border continues to divide Northern Ireland from the Republic of Ireland, the Protocol de facto places Northern Ireland in the EU Single Market for goods, subsequently ensuring that goods and people can flow freely across the 310 mile-long border that cuts across the island of Ireland. As a result, the trade border between the UK and the EU has been dropped into the Irish Sea.
With London and Brussels only finalising the terms of the Protocol around Christmas 2020, little time was initially provided for traders to get to grips with the details of the new trading relationship that has since underpinned trade across the Irish Sea (in both directions).
Northern Ireland’s de facto place in the EU Single Market has necessitated the introduction of checks on goods travelling into the province. Strict EU rules covering food, for instance, mean that checks must be undertaken on products such as eggs and milk entering the region from Great Britain. Some Northern Irish importers have been able to adjust to the changes while others have recalibrated their supply chains to the detriment of Great British exporters and the benefit of Irish exporters.
Unionist politicians, led by the DUP, have been robustly opposed to the Protocol ever since its outlines first emerged in autumn 2019. In February 2021, amidst growing tension over Northern Ireland’s new trading environment, checks on animal-based goods coming in from Great Britain were temporarily suspended after it was alleged that threats were made against the safety of port workers responsible for checking imported goods.
This followed a calamitous situation on 29 January, when the EU temporarily proposed that it would invoke a provision of the Protocol, Article 16, to prevent vaccines developed in the EU from passing through Northern Ireland to Great Britain. DUP leader Arlene Foster labelled the EU’s move an “incredible act of hostility”.
Under the terms of the Protocol, supermarkets in Great Britain were provided with a three-month grace period during which their food exports to Northern Irish would not have to be checked at ports for adherence to EU rules. In early March, acting outside the confines of the Protocol, the UK Government unilaterally extended this grace period until October. Legal action has been initiated by the EU, which has insisted that the UK’s decision breaks international law.
Where are we going?
The Protocol preserves the workings of the cross-border economy in Ireland when it comes to goods but does little to preserve its cross-border economy in services. For Dublin, therefore, the Protocol is an imperfect means of ameliorating the impact arising from the UK’s decision to leave the EU.
On St Patrick’s Day, UK Foreign Secretary Dominic Raab told an American audience that the responsibility for the creation of an Irish Sea border, and the subsequent trade frictions it has created, resides with the EU. On the same day, however, US President Joe Biden held a virtual meeting with Irish Taoiseach Micheál Martin which led to a joint statement from the two in which they “called for the good faith implementation of international agreements designed to address the unique circumstances on the island of Ireland”. The Protocol, of course, is the international agreement in question.
Unionist politicians have called for the Protocol to be scrapped and the recent atmosphere between London and Brussels has at times been acrimonious. Short of scrapping the Protocol, however, itself the product of tortuous UK-EU negotiations, both parties can act to make the trading relationship better.
More work, firstly, can be undertaken by both parties to increase the collaborative work that takes place under the auspices of the Joint Committee – the body set up to oversee the implementation of the UK-EU Withdrawal Agreement. The dynamic that underpins Irish Sea trade is now exceptionally fluid and in order for changes to be made that would benefit both London and Brussels, it could be argued that more trust is needed within the relationship.
An eagerness to lower the diplomatic temperature does exist, however. The Irish Minister for Foreign Affairs Simon Coveney said on Monday 22 March that a clear UK “roadmap” on how it plans to implement the Protocol would reduce tensions between London and Brussels.
Secondly, the UK and the EU could come to an agreement on the mutual recognition of sanitary and phytosanitary measures. These measures cover animals, products of animal origin and plants, all of which, in turn, comprise a reasonable proportion of Irish Sea trade. The UK-EU Trade and Cooperation Agreement provides the foundation for both parties to form a Trade Specialised Committee on Sanitary and Phytosanitary Measures, which could provide the forum for progress to be made. Again, however, it all comes down to trust – an essential element in diplomacy, business and social relations.
It could be argued that the UK Government has benefited somewhat domestically from having a steady drumbeat of tension provide the soundtrack to its relationship with the EU, but a renewed ‘Global Britain’ will only flourish if other countries trust the UK to adhere to its legal obligations and responsibilities. British companies who are seeking new trading opportunities abroad will be the engine behind the Global Britain, and will benefit from a Government that provides certainty to its business community and forges good relationships with important trading nations such as the US.
Diplomacy, mutual respect and an eagerness to work together to produce solutions in accordance with legal obligations could benefit all, both now and in the future.