A UK House of Lords Sub-committee had recently published, in 92 pages, a measured report on the Northern Ireland Protocol. It highlights the negative impacts of the Protocol on Northern Ireland, but also points to the potential opportunities, in terms of dual access to the UK and EU markets, North-South trade and foreign direct investment.
UK House of Lords Sub-committee
The Protocol on Ireland/Northern Ireland has proved to be contentious since it came into force on 1 January 2021. In recognition of this, the UK House of Lords established a dedicated Committee on the Protocol, as a Sub-Committee of the European Affairs Committee. Its membership, drawn from Northern Ireland and the rest of the UK, has a wide range of expertise in Northern Ireland affairs. While some support the Protocol, others oppose it in principle. Nevertheless, as the Report points out the members have – “… unanimously agreed this report as demonstration of our mutual commitment to the economic, social and political wellbeing of Northern Ireland, and to the maintenance of North-South and East-West relations, and the delicate equilibrium between them, as encapsulated in the Belfast/Good Friday Agreement”.
The report recognises that public opinion in Northern Ireland on the Protocol is divided, and that the UK and the EU need to take urgent steps together to arrest the deepening political divide, not least by ensuring that Northern Ireland’s voice is heard both within the UK and in the EU. It puts the challenges very well when it states that there – “… There is therefore an urgent imperative for all sides to make concerted efforts to build trust by recommitting themselves to that process of dialogue, repairing the damage caused to relations across these islands during the past five years, in the interests, as the Protocol rightly acknowledges, of communities in both Ireland and Northern Ireland”.
Protocol needs to put in context
It is clear that the trading difficulties between Northern Ireland and Great Britain since the start of 2021 are not solely due to the Protocol. There have been a number of causes. They include the
COVID-19 disruption, global supply chain issues and the impact of the Trade and Cooperation Agreement on UK-EU trade, as well as the Protocol itself. Surprisingly, the initial impact has been more limited in scope than some media reports had suggested. That, however, should not lead to complacency. Businesses and consumers have to continue to adjust to the full impact of the Protocol. And as the UK House of Commons Report points out – “…The fear of the business community is that this impact will worsen when the various grace periods expire, and the full economic impact of the Protocol is felt and some initial problems in the movement of goods have been addressed”.
Of course, there are potential economic benefits under the Protocol. The fact Northern Ireland is the only place where businesses can operate without customs declarations, rules of origin certificates or nontariff barriers to both the GB and EU markets is very positive. Already there are signs of a growth in North-South trade, and evidence that Northern Ireland businesses are stepping into the gap left by suppliers in Great Britain who have vacated the market in Ireland. And in the longer term there is another area where the UK Government can assist Northern Ireland. Under Article 4 of the Protocol, the UK has the capability to include Northern Ireland in the territorial scope of its trade agreements with third countries, provided that those agreements do not prejudice the application of the Protocol. In this regard, the UK House of Commons Report concludes that the UK Government – “…has an obligation to ensure that Northern Ireland is able to benefit from, and is in no way disadvantaged by, the Free Trade Agreements that the UK is currently negotiating, or will negotiate in the future”.
The Report argues that there is need for the UK and the EU to agree practical solutions in order to meet the commitment in the Protocols’ Preamble that it should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland. It lists 22 possible solutions. They are reproduced in the Box.
The UK House of Commons Report concludes with a faint note of optimism. It notes that technical solutions to ease some of the burden of the Protocol’s practical operation can be found, as long as there is goodwill and flexibility on all sides. It also notes that addressing the issues of conflicting identity that first Brexit, and then the Protocol, have brought to the fore seems for the moment an insoluble problem. Nevertheless, the Report see a way forward, but only if – “…all sides…make concerted efforts to build trust by recommitting themselves to that process of dialogue, repairing the damage caused to relations across these islands during the past five years, in the interests, as the Protocol rightly acknowledges, of communities in both Ireland and Northern Ireland”
Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and blogs regularly for PAI. He was formerly the Senior Economist at the Department of Transport.