The Government this week published a Command Paper, setting out its approach to implementing the Northern Ireland Protocol in the UK-EU Withdrawal Agreement.
The Protocol gives Northern Ireland a special economic status – within the UK’s customs territory, but in regulatory alignment with the EU single market for goods. The Protocol also requires provisions to be put in place to ensure that goods “at risk” of entering the EU single market via the land border with the Republic of Ireland are subject to the correct checks and controls. The continuation of the Protocol is subject to the ongoing consent of the Northern Ireland Assembly after four years.
The Protocol places obligations on both the UK and the EU to respect the unique circumstances in Northern Ireland and the Belfast/Good Friday Agreement in all its dimensions – East-West as well as North-South. The Government stresses that its implementation must consider Article 4 (which states that Northern Ireland is part of the UK’s customs territory and subject to the UK’s independent trade policy) and Article 6 (which refers to the need to protect the UK’s internal market) equally to the Protocol’s measures to prevent a thickening of the North-South border.
This approach underpins the Government’s four-point plan for the trade aspects of the Protocol, outlined below. (The Protocol also contains non-trade provisions, such as on individual rights, but the implementation of these is less contentious). Some of the UK’s proposals will be subject to negotiations with the EU in the Withdrawal Agreement’s Joint Committee.
1. Unfettered access for Northern Ireland’s businesses to the rest of the UK
Article 6 of the Protocol states that nothing in the Protocol should prevent NI businesses from having “unfettered access” to the rest of the UK. The Government’s paper reinforces this, stating that there should be no import declarations, safety and security declarations, tariffs, or customs checks. The UK will also not impose regulatory checks on goods entering Great Britain from Northern Ireland, even if there is regulatory divergence between the two as a result of the Protocol. These checks are not required on NI-GB flows under the Protocol in any case, so not introducing them is at the UK’s discretion.
However, Article 6 of the Protocol also states that EU procedures on the export of goods will apply to NI-GB trade if they are required under the EU’s international obligations. This has been interpreted as a requirement for export or exit summary declarations on NI-GB trade. The Government’s paper states that this should not be necessary, but acknowledges that an exemption from export declarations will need to be agreed with the EU in the Joint Committee (unlike the other checks outlined above).
As there will be no checks at the land border under the Protocol, unfettered trade from NI to GB risks potential trade diversion into the UK from the EU (via Ireland). The Government’s paper states that EU goods will not be subject to the light-touch arrangements for NI goods, and will instead will face full UK customs and regulatory controls. In practice however, where there is a trade-off between the integrity of the UK’s internal market and imposing controls on the EU, the former should trump the latter.
2. No tariffs on internal UK trade
Article 5 of the Protocol states that goods travelling from GB to NI are deemed by default to be “at risk” of entering the EU (and therefore subject to EU tariffs), with some exemptions laid out in Article 5 and others to be negotiated between the UK and the EU in the Joint Committee.
The Government’s paper states, “We will not levy tariffs on goods remaining within the UK customs territory. Only those goods ultimately entering Ireland or the rest of the EU, or at clear and substantial risk of doing so, will face tariffs.” It highlights that Article 4 of the Protocol is clear that Northern Ireland remains in the UK’s customs territory, and adds that the removal of internal tariffs is “fundamental” to the nature of a customs territory.
The Government will seek to formalise this objective of avoiding tariffs on internal UK trade with the EU in the Joint Committee. The aim appears to be to agree further exemptions in order to narrow the definition of an “at risk” good in Article 5 as far as possible. The Government points out a number of examples of goods crossing from GB to NI where the practical risk of diversion to the EU is very low. In addition, as the Government highlights, 56% of Northern Ireland’s external goods trade is with Great Britain, whereas just 16% is with the Republic of Ireland. With this in mind, the Government is right to argue that the practical case for a maximalist interpretation of “at risk” is weak.
It is worth highlighting that the question of tariffs in the Protocol depends to a degree on the outcome of separate UK-EU negotiations on the future trading relationship. If a zero-tariff agreement between the UK and the EU is reached, it will be easier to implement the Protocol in the light-touch way the Government has outlined.
3. No new customs infrastructure in Northern Ireland
The Government acknowledges that some new processes and formalities will be needed on goods entering Northern Ireland from Great Britain (West-East, as distinct from East-West). For example, there will be electronic import declarations and other administrative processes on industrial goods travelling from Great Britain to Northern Ireland, which will be used to prove that these goods are exempt from tariffs. However, these processes will be implemented without any new customs infrastructure in Northern Ireland. We do not yet know what these procedures will be and Government should work with businesses to ensure they are the least burdensome possible.
Any regulatory checks on industrial goods moving from GB to NI will be minimised as much as possible, for example by conducting them in market and/or on the basis of risk assessment. The UK will make “full use of the concept of de-dramatisation”, floated by EU Chief Negotiator Michel Barnier in 2018 in the context of the original Northern Ireland-only “backstop”.
The Government acknowledges that additional checks will be needed on products of animal origin. These will be implemented by expanding existing facilities in Northern Ireland, which are currently used for checks on live animals only.
As stated in the Protocol, all these processes will be enforced and implemented by UK authorities, not the EU (though the Protocol gives EU representatives the right to be present – this was the source of recent disagreements over a proposed EU office in Belfast).
Ultimately, the Government’s position is that any additional procedures must be balanced against the obligations on both sides in Article 6 to “facilitate trade between Northern Ireland and other parts of the United Kingdom” and “avoid controls at the ports and airports of Northern Ireland to the extent possible.”
4. Northern Ireland benefits from UK trade deals
The UK will ensure Northern Ireland benefits from the UK’s independent trade policy and agreements with third countries, as envisaged in Article 4 of the Protocol. This states that nothing in the Protocol prevents the inclusion of NI in UK trade agreements, “provided that those agreements do not prejudice the application of this Protocol.” To achieve this, the Government may need to resist possible attempts by third countries to carve Northern Ireland-made products out of UK-wide provisions in FTAs, over fears that EU products will enter the supply chain duty free. Good data on trade in Northern Ireland will be crucial to gaining the trust of the EU but also other trade partners.
Does the Government’s approach address Unionist concerns?
When it was signed, the Protocol was opposed by many in the NI Unionist community – including the Democratic Unionist Party (DUP), then the Government’s Confidence-and-Supply partners, as well as the smaller Ulster Unionist Party (UUP). Unionists opposed the Protocol because of the trade barriers it envisaged between Northern Ireland and Great Britain. In the minds of many Unionists, this episode has done psychological damage to the Union and the devil may yet be in the detail of how the UK proposals are worked through with the EU. Indeed, the Protocol provides for legal mechanisms for the EU to seek enforcement of EU procedures, if it does not accept the UK’s approach. This remains an unacceptable scenario for Unionists.
As the Government recognises, the Protocol will only be sustainable in Northern Ireland if it is implemented in a way that the Unionist community can at least live with, if not actively support. The Government’s preference for a light-touch approach to implementing the Protocol is clearly designed to take Unionist sensitivities into account. In addition, the Government’s paper also stresses that Northern Ireland will benefit from many of the same regulatory freedoms as the rest of the UK. The Protocol requires Northern Ireland to align with EU rules governing trade in goods and electricity; other UK regulatory reforms to EU law, such as on immigration and services, will apply in Northern Ireland as they do in Great Britain.
The initial response to the Command Paper from the DUP suggests that, while the party was and remains opposed to the Protocol in principle, it believes the Government is making the best of a bad job in seeking to minimise its impact. Sir Jeffrey Donaldson MP welcomed the UK’s firm commitments that Northern Ireland will remain in the UK’s customs territory, that no tariffs will apply on solely UK trade, and that there will be no new customs infrastructure. Meanwhile, Gavin Robinson MP welcomed the government’s insertion of the term “substantial” to the test of whether a good is deemed “at risk” of entering the EU market.
While the Protocol remains hard to swallow for many Unionists, had the DUP reaction to the Government’s announcement been hostile, rather than a cautious welcome, the fissure in the Union would be even greater. It is worth noting that political arrangements on the island of Ireland have never been perfectly symmetrical and have often deviated from the rest of the UK. For example, although it led to majority rule, Unionists never wanted devolution for Northern Ireland in 1921. A Council of Ireland under the auspices of the Sunningdale Agreement was fiercely rejected but the Belfast/Good Friday Agreement provides for the North/South Ministerial Council and North/South Inter-Parliamentary Association, which closely resembles the structure of the Council. As the centenary of Northern Ireland approaches in 2021, those anomalous arrangements should be recalled. Ultimately, whether they work or not for Unionists will depend on the political skill with which the various actors play these new arrangements.
What will Dublin and the EU make of the Government’s proposals?
Broadly, the EU is likely to welcome the fact that the Command Paper signals the UK’s willingness to take its obligations under the Protocol seriously. Namely, that there will need to be new administrative processes for industrial goods entering Northern Ireland, agri-food products will require greater checks than currently exist, and tariffs will be due on goods ultimately entering Ireland or the rest of the EU, or at clear and substantial risk of doing so. In addition, some of the UK’s proposals do not require EU agreement, and can be achieved unilaterally. The majority of the UK’s proposals to avoid trade barriers on goods entering Great Britain from Northern Ireland fall into this category, as does the application of UK external trade agreements to Northern Ireland, which may be an issue for third countries but not the EU.
It is interesting that RTE’s Brussels Correspondent Tony Connelly notes in his analysis that the UK is making some headway in claiming the “moral high ground” on the need for the Protocol to reflect Unionist priorities under the Belfast/Good Friday Agreement. “Dublin is betwixt and between, knowing that the issue must be handled sensitively given the North’s fractious politics,” he notes. He adds that the Irish Government is “aware too that they can’t go on a solo run and diverge from the Commission’s thinking, and that of the member states, who are watching this carefully.”
Nevertheless, there remains a huge gulf in the UK and EU approach to this issue. The EU remains of the view that the default is that the vast majority of EU border processes should apply and it will no doubt set a high bar to agreeing any deviations, such as the UK is suggesting. Dublin’s approach will be crucial. We do not yet know whether the Irish Government will be supportive of the UK’s pragmatic approach during internal EU discussions or not. Appearing on RTE news last night, Irish Deputy Prime Minister Simon Coveney underlined that there will be “a lot of sceptical people in the EU” when it comes to the UK’s desire to avoid new customs infrastructure.
The UK paper should help move the debate on but this will require further intense engagement with the EU, Northern Irish politicians and businesses. Ultimately, as the Government has underlined, it is in the EU’s interests that the Protocol is implemented in a sustainable fashion. There is also an argument that a light-touch approach will be easier to implement by the end of the year. A maximalist approach, on the other hand, has the capacity to destabilise Northern Ireland but also the wider UK-EU relationship.