With fresh news coming in every day on problems with goods trade attempting to flow from Great Britain to Northern Ireland, it is no wonder that business groups and politicians across the community on both sides of the Irish Sea are looking for possible solutions. In this post, we examine some ways to mitigate these issues.
The Trade and Cooperation Agreement (TCA), which was signed at the end of 2020, avoided tariffs on Great Britain’s trade with the EU and Northern Ireland. However, non-tariff barriers (NTBs) still arise because the UK left the EU’s Single Market and Customs Union.
Furthermore, what applies to trade with the EU applies to goods travelling from Great Britain to Northern Ireland, due to the Protocol on Ireland and Northern Ireland, commonly known as the Northern Ireland Protocol. The operation of the Protocol is already proving difficult, not only for economic and commercial reasons, but also for political ones: staff at the new border posts at Northern Ireland’s sea ports managing trade from Great Britain report being on the receiving end of threatening behaviour, highlighting that the threat of sectarian unrest is never too far away.
This post discussed the problems and proposes several solutions, the best of which may be a EU-UK veterinary agreement on SPS discussed in more detail below.
The Protocol
The Protocol is a direct result of the exit from both the Single Market and the Customs Union that Prime Minister Johnson negotiated. Although Great Britain has historically been the largest provider of goods to Northern Ireland, the Protocol places the external border of the EU’s Single Market and Customs Union between Great Britain and Northern Ireland, so that Northern Ireland’s land border with the Republic of Ireland can remain invisible as established by law in the Good Friday Agreement (GFA).
Problems with keeping Northern Ireland supplied with its usual goods began as soon as the transition period ended on 31 December 2020. Goods suddenly became much more difficult to transport across the Irish Sea, as GB businesses found the new paperwork very burdensome and costly. While some of these initial trade problems can and are being resolved, there are clearly some real inconveniences as Northern Irish customers can no longer access goods that they were able to earlier, or they face serious delays, or the costs have gone up significantly.
The EU granted the UK several grace periods during which it can implement lighter checking on goods entering NI. The grace period for certain checks such as mandatory export health certificates on goods entering supermarkets in Northern Ireland ends (Lowe) on 31 March 2021. These requirements will come into effect from 1 April. The grace period for checks on certain meat products entering Northern Ireland ends on 30 June 2021, meaning, for example, that only frozen but not chilled sausages may enter. (NI Assembly).
While some sort of accommodation around goods and services might ultimately be achievable, this has to be regarded in the context of a fraught political history on the island. In other words, this is not merely a trade problem, but a much deeper political problem which will only be exacerbated after the two grace periods end and the economy gathers momentum as the lockdown eases.
A further complication to implementing the NI Protocol is that political tensions across the sectarian divide have increased, as Loyalists and indeed many Unionists see the ‘border’ across the Irish Sea as a threat to the position of the province in the United Kingdom. Staff at the Border Posts at Belfast and Larne have apparently been intimidated by threats to the point where they were asked to temporarily stay away from their in-post jobs in February 2021 (Newsletter). No one in Northern Ireland, on either side of the sectarian divide, and indeed even those in the middle, enjoys the disruption that the Protocol brings. And the more the Protocol is implemented, the more these political tensions will rise. The peace process could be derailed.
What are the new non-Tariff Barriers (NTBs)?
The UK implements the EU’s Union Customs Code (UCC) and Single Market external border processes at four ports in Northern Ireland that handle trade coming in from Great Britain. Northern Ireland maintains alignment with those Single Market rules on goods that maintain the invisible nature of its border with the Republic of Ireland, while the UK government has the right to diverge from the EU’s regulations for Great Britain.
Therefore, many barriers arose on 1 January 2021. Rules differ by sector, but the most stark examples are food, plant, and animal imports.
A simple way of seeing these new barriers is to look at the chart from DAERA, (the Department of Agriculture, Environment and Rural Affairs).
Source: DAERA
Here are a few examples of various NTBs and checks that now have to be implemented.
SPS - Sanitary and Phytosanitary Standard Checks at points of entry into NI, including Belfast, Larne Warrenpoint, Foyle Port, and Belfast International Airport. These are checks on human and animal health and plant health, respectively. There are three new types of checks that now have to take place at each point: a documentary check, an identity check, and a physical check. (DAERA). These checks are of particular concern because they require the use of CHEDs, a Common Health Entry Document to be entered online via TRACES, the EU’s Trade Control and Export system of veterinary certification, making the importation much more laborious than previously. All plants entering Northern Ireland, for example, must now have a Plant Health Release Certificate.
Export Health Certificates (EHC) - these must be registered on many types of goods, especially animal and plant products and cost £50 per consignment starting on 1 April 2021. Fish food exports to NI, for example, need export health certificates. While fish food only costs £10/tub, an EHC cost £50, rendering many small businesses’ exports unviable. (The Economist).
Wash certificates - no item, including second-hand diggers or farm equipment, may enter NI without a ‘wash certificate’ to prove that they have not got any non-EU soil on them. A thorough ‘wash’ costs roughly £200 per item. (Newsletter)
Regulations - other items, such as plants, can no longer be exported to NI unless they are in concrete or plastic, or in non-environmentally safe peat.
Grace Periods
Grace periods - The EU granted the UK several grace periods during which it would leave lighter checking on goods entering NI. The first two are:
31 March 2021 - The grace period for certain checks such as mandatory export health certificates on goods entering supermarkets in NI ends (Lowe). These requirements will come into effect from 1 April.
30 June 2021 - The grace period for checks on certain meat products entering NI ends, meaning that only things like frozen, not chilled sausages may enter. (NI Assembly).
The ending of the grace periods on these checks will be further exacerbated by the fact that the EU is expected to enact a further 200-300 new pieces of legislation per year which will affect NI. At the moment, the UK does not have the institutional infrastructure nor the political insight into how to implement these updates. (Spisak)
Effects seen so far
Many British retailers such as John Lewis, IKEA, and Dunelm, and many others are no longer sending any goods to Northern Ireland, finding the checks too onerous and the red tape too expensive to administer. (Belfast Telegraph) Some small businesses have stopped temporarily, hoping that things improve. Amazon is in the process of setting up a large distribution centre just outside of Dublin to service its Northern Irish customers, as it is no longer able to sell from its UK warehouses. (Bloomberg)
DUP member Ian Paisley, MP articulates a list of goods that cannot be brought into Northern Ireland in this clip from NewsNight. Clearly the new friction is causing some real inconvenience, indeed worse than that, to the people of Northern Ireland.
Further Current Issues
In early February, 2021 staff who were involved with the SPS checks at the ports of Larne and Belfast were intimidated by threats on social media, menacing graffiti at the ports, and they noticed that individuals were recording their car registrations, which was always a sign of being ‘targeted’ during the Troubles. Edwin Poots, the DUP DAERA minister, requested that staff be temporarily furloughed for their own safety, and it was agreed that checks would be suspended temporarily until tensions were eased. (BelfastLive). At this point, the PSNI (the Police Service of Northern Ireland) maintain it is unclear that the threats were made by Loyalist paramilitary groups, but certainly that possibility has been raised by the Chief Executive of Mid and East Antrim Borough Council. (BelfastLive).
The loyalist hardliners are keen to eliminate the NI Protocol as soon as possible, having disavowed the GFA from the beginning. The paramilitaries on both sides of the sectarian divide never really ‘went away’ during 23 years following the signing of GFA. Rather, both sides saw that the peace process was much more popular than a continuation of violence and went into the ‘wilderness’.
The Protocol was an instrument established to respect the GFA while allowing the UK government to leave the Customs Union and the Single Market. Rather than viewing this past month as just a ‘bump’ in the road, these new tensions should be seen in the context of a very fragile peace process which continues to this day. The Good Friday Agreement could only have been agreed if both the UK and Ireland were members of the EU, or at the very least, both members of the Single Market and the Customs Union.
As of mid-February, the UK had still not implemented the Trusted Trader scheme, nor the data sharing access for customs access which would ease some of the friction at the border (FT). Indeed, Michael Gove recently requested a further 18-month extension of the grace periods on further checks from the EU. (FT) The government has not yet shown a real interest in implementing these very challenging changes, preferring obfuscation and dithering to proposing realistic solutions.
Potential Solutions
The problem remains: how will tensions be eased?
The NTBs listed above are a direct consequence of leaving the Single Market and the Customs Union while respecting the GFA Brexit, and are merely the implementation of the Protocol. The Protocol itself cannot be amended or adjusted, as it is part of the Withdrawal Agreement (WA), which is itself an international treaty between the United Kingdom and the EU, unless both sides agree to re-negotiate the treaty. There is very little incentive for the EU to consider renegotiating the WA, as it spent four years painstakingly setting out its goal of maintaining the peace process in Northern Ireland and protecting the Single Market.
SPS Agreement - Flexible Options
If the UK aligns its SPS regulations much more closely with the EU’s, as Norway and Switzerland do, then most of the NTBs related to SPS procedures could be removed. The Alliance Party, the centrist, non-aligned party in the province, has called for the UK to enter into either a Swiss-style or a New Zealand veterinary agreement, which would lighten or even remove the SPS checks. (Alliance Party) This proposal is gaining traction, as UK Environment Secretary George Eustice said recently. A veterinary SPS agreement is also endorsed by trade specialist Sam Lowe and supported by the Northern Ireland Retail Consortium (NIRC). The advantage of a Swiss or New Zealand model is that they are flexible and do not impact the UK’s sovereignty. A New Zealand agreement could easily be expanded into a Swiss-style agreement, or indeed downgraded.
As of 17 February, a veterinary style agreement has been agreed upon by all five of the main Northern Irish political parties, including the Alliance Party, the SDLP, Sinn Fein, the Ulster Unionists, and, most recently, the DUP.
Grace periods extension
Another proposal put forward by a group of Irish MEPs is to call for an extension of the grace periods (BBC). However, the EU rejected this (FT) and criticised the UK’s implementation of the Protocol so far, which has been patchy and incomplete. With the grace periods coming to an end and the UK pressure to implement the Protocol properly, the checks will become more and more visible as well as onerous. The Alliance Party is suggesting that the EU show flexibility and extend the grace periods until the beginning of 2022.
Trusted Trader Scheme
Another idea is to build up the Trusted Trader Scheme, which has yet to be set up by the UK. The Protocol calls for goods “at risk of being moved to the Republic of Ireland” to be subject to regulatory checks and customs controls when they enter Northern Ireland. Indeed, this is the only risk to the EU. Goods that move between Great Britain and Northern Ireland are of no concern to the EU: an example of this is the fact that there are no issues moving goods from Northern Ireland to Great Britain.
If traders could identify themselves and or their goods easily as being destined only for Northern Ireland as they cross the Irish Sea and enter at one of Northern Ireland’s ports, then they could be expedited out of the port, reducing the incidence of checks. It is highly likely that large supermarkets such as Sainsbury’s and Marks & Spencer’s could gain Trusted Trader accreditation. The NIRC have made the point that this needs to be a simpler agreement than the one currently proposed and should lean heavily on a digital, auditable and certifiable supply chain for which most components already exist. This does potentially exclude smaller merchants in Northern Ireland.
Article 16
The DUP has repeatedly called for the invocation of Article 16 of the Protocol, but this can only be used to address unforeseen issues, and only if four specific criteria are met. The EU quickly realised this in late January 2021 when it hastily threatened to invoke this ‘get out clause’ over the vaccine row with the UK. There is nothing ‘unforeseen’ about the NTBs that the Protocol has created. (Spisak). In other words, invoking Article 16 is not a viable solution.
A Referendum on the Border?
If nothing is done other than the grace periods expire and the friction becomes worse, there could be political consequences. In May 2022, there will be elections to the Legislative Assembly (LA) in the province, and it could be that this becomes a sort of referendum on the Protocol. Even with the constitutional requirement of power sharing on the Executive, a significant reshaping of the LA could give nationalist voices more influence. Such a new LA could press for a ‘border poll’, or referendum on whether the province remained in the United Kingdom or integrated into Ireland could be called under the terms of the GFA. Indeed Gavin Barwell, the former Chief of Staff to the PM, tweeted that a possible introduction of checks at the Ireland-Northern Ireland border, as pre-Maastricht, is bound to increase support for a border poll. To avoid this, the ‘soft’ border between Ireland and Northern Ireland must be preserved.
Decision Time
Soon the UK government will have to make a decision on whether to align more closely with some EU standards to reduce friction, or consider the very real possibility that widespread discontent and potential sectarian violence could ensue. There is an increased likelihood that Northern Ireland will not remain a part of the union in the longer term.
As part of the agreement, the NI Assembly will get a chance to vote on the continuation of the key articles of the Protocol every four years, with the next vote to take place in 2024. A vote not to continue operation of the Protocol would destabilise Northern Ireland and the entire post-Brexit institutional structure between the UK and the EU all over again.
Conclusion
Triggering Article 16 of the Protocol is not a solution in any legal or political sense, and the United Kingdom, having negotiated the WA and the TCA, has an obligation to implement the Protocol. However, implementing the Protocol in itself sends a volatile political message in a landscape that is already very fraught and tense.
In this environment, some observers such as Jon Worth question whether the European Parliament will even ratify the TCA, as it is scheduled to do in late April.
Assuming that the TCA is here to stay, some tough choices lie ahead for the government as it seeks to balance its regulatory autonomy with its long-term aim of keeping Northern Ireland in the United Kingdom. An EU-UK veterinary style agreement is the best option.
* This opinion has to been provided by Rosalind Stewart who is a member of Conservative European Forum. The views and ideas expressed in this paper are not necessarily the views and ideas of the Conservative European Forum nor should they be considered to represent its policy.