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Northern Ireland protocol risks being tested to destruction

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Welcome back. Do you work in an industry that has been affected by the UK’s departure from the EU single market and customs union? If so, how is the change hurting — or even benefiting — you and your business? Please keep your feedback coming to [email protected].

Even in a perfect world, with trust established on all sides and a mutual commitment to making the best of a very difficult situation, the implementation of the protocol on Northern Ireland was always going to be difficult.

By choosing to put a trade border in the Irish Sea, Boris Johnson has unsettled the fundamental constitutional ambiguity at the heart of the 1998 Good Friday Agreement peace deal as the price of delivering a fully “sovereign” Brexit for the rest of the UK.

The GFA functions (however imperfectly) because it enables the people of Northern Ireland “to identify themselves and be accepted as Irish or British, or both”, but the protocol means the Unionist community now feels that identity is threatened.

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Brexiters have never accepted the need for the Irish Sea border that they have nonetheless created, arguing right up until the protocol was signed, that a mixture of technology and “mutual enforcement” by both sides could obviate the need for a trade border in Ireland.

But they lost that argument and under pressure from Brussels and Dublin signed up to a deal that requires all goods travelling from Great Britain to Northern Ireland to comply with EU customs laws. 

The practical question, lost in all the political brouhaha, is still whether that can be done in a way that does not destabilise the region. 

Johnson’s protestations after the deal was struck that the UK was still going to leave the EU “whole entire” and that there would be “no checks” as a result of his protocol may have infuriated his political opponents, but on one reading they did at least speak, however self-servingly, to the constitutional sensitivities.

Alas this week’s row — in which the UK government unilaterally granted itself more time to phase in burdensome bureaucracy, sparking a threat of legal action from the European Commission — shows how far trust and communication has broken down between both sides, obscuring the practical requirements noted above.

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The British government argues that it took this step simply to avoid the kinds of supermarket and other shortages that would inflame the political tensions that are already highly visible in Northern Ireland as the Unionist community unites broadly against the protocol.

Northern Irish business groups publicly backed the government’s move because, on a practical level, they were very clear that business was not ready to implement full EU regulations on the export of plant and animal products that were due to come into force on April 1.

The UK government says it had no choice but to act unilaterally because the European side was simply not listening, and while it was making signals that it might extend a grace period on export health certificates, was only going to agree to this on March 29 — which was far too late to keep shelves stocked.

The really crazy part of all this is that back in December, when the eleventh hour deal was done on a tariff-free trade deal, both sides privately accepted that the April 1 deadline was unrealistic and would have to be extended. On the substance, there isn’t any doubt that business is not ready.

But this is now about the politics, not the substance. The EU has reacted vigorously, accusing the UK of a second breach of international law, following September’s threats to override parts of the protocol unilaterally in the Internal Market Bill. 

The Irish government, which itself acknowledges the need for limited extension to the grace periods, had no choice but to row in behind the commission calling the UK’s decision to act unilaterally “deeply unhelpful” and inimical to building trust. 

But it might just be too late for that: when the UK’s EU point person, David Frost, says the UK’s unilateral moves are merely “technical steps” that are “entirely consistent” with the UK’s intention to discharge its obligations under the protocol “in good faith”, that draws hollow laughs in Brussels. 

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As Brexit Briefing predicted last month, Frost’s record of confrontation with the EU makes him a lightning rod for scepticism and grievance in Brussels.

The EU, and that includes some large member states, is not yet fully confident that a Johnson government will implement the agreement it signed — and yet in demanding demonstrations of UK willingness to implement the deal fully, it is at serious risk of testing the protocol to destruction.

As Northern trade groups have noted, the Joint Committee between the UK and the EU on February 24 was an obvious moment for extending the grace period, but so poisoned is the well politically that the EU did not move, complaining instead about the risks to the EU single market and raising questions about whether the UK was fully conducting the border checks necessary.

But if the protocol is to survive and function, it needs to be rapidly refocused on those pragmatic issues, not the politics. 

In that February 24 Joint Committee meeting, according to one person present, the DUP leader Arlene Foster ran through the data on checks conducted in January for animal products, amounting to 5,596 document identity checks and 248 physical checks entered into the EU’s Traces system.

She then posed a rhetorical question about how many pests, problems or non-compliant goods had been identified in these checks? “None!” she replied. These should be powerful arguments, but they are lost in the mire of political distrust. 

It is not yet too late to take the heat out of the protocol debate, but the current negative political spiral needs to be urgently arrested. The EU needs to be more flexible, the UK less antagonistic if that is to happen — one will feed the other.

Indeed the lack of workable alternatives to the protocol may yet still be its greatest strength. The commission’s threat of legal action may also, as it did in 2020 over the Internal Market Bill, actually create some political space for the temperature to be lowered gradually. 

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If the UK looks to strike veterinary agreement and other deals to ease the need for checks on animal and plant products over the coming months, that will also reduce pressure on the protocol as well as the Dover-Calais border. But these are all “ifs” — for now, the protocol hangs in the balance. 

Brexit in numbers

As pre-Brexit stockpiles wind down, we are now entering the next phase of post-Brexit trade adjustment and the early signs are that EU-UK trade volumes are falling.

There are further signs this week that the frictional barriers and uncertainty created by Brexit have impacted trade, with figures published by Germany’s federal statistical agency showing a consistent fall in German exports to the UK.

My colleague in Frankfurt, Martin Arnold, emails to say German exports to Britain in January were down about 30 per cent year-on-year, continuing a trend of declining trade between the two countries since the Brexit referendum. (Separately, Italy reported a 38 per cent drop in exports to the UK and a 70 per cent drop in British imports in January.)

The UK is the fifth-largest market for German goods and services, but exports to Britain from Germany have fallen from a high of €89bn in 2015 — the year before the Brexit referendum — to €66.9bn last year. Crucially, in that five-year period, overall German exports rose 1 per cent.

The federal statistical agency said in a statement that based on extrapolations, exports “will continue to decline in January 2021 due to the effects of the completed Brexit”.

Brexiters often expressed confidence that German trade surpluses with the UK would force Berlin to argue for a more cake-ist deal for the UK, but that always overlooked the fact that German exporters had 26 other EU markets to choose from, and trade takes the line of least resistance.

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