Stephen Booth is Head of the Britain in the World Project at Policy Exchange.
Following months of simmering disagreement between London and Brussels over the Northern Ireland Protocol, the scale of the gulf between the UK and EU positions has been laid bare over the past week.
On Monday, the European Commission published its proposals for solutions to ease trade friction between Great Britain and Northern Ireland, covering medicines and some animal and food safety checks. However, these proposals had already been shared privately with the UK in June.
A Government spokesperson quickly dismissed them as representing “only a small subset of the many difficulties caused by the way the protocol is operating,” adding, “We need comprehensive and durable solutions if we are to avoid further disruption to everyday lives in Northern Ireland.”
Last week, the Government published its own proposals for reform of the Protocol in a new command paper. In contrast to the EU’s proposed technocratic tweaks, the UK is seeking reforms that would fundamentally alter the operation of the Protocol. As Lord Frost notes in the foreword to the document, “They will require significant change to the current Protocol. But they will not dispense with many of its concepts.”
A key feature of the UK proposal is to build on the concept that only goods moving from Great Britain to Northern Ireland, which are “at risk” of entering the EU, should face tariffs.
The UK is suggesting that where a trader has declared that products moving to Northern Ireland are not intended for onward distribution or use in the EU, no customs processes and checks should apply. Risk-based and intelligence-led checks would be conducted to ensure compliance, but this approach would establish that the default is that goods can circulate freely within the UK’s customs territory, which, as the Protocol makes clear, includes Northern Ireland.
The same principle would apply to most agri-food trade, except for live animals. Agri-food products going to the Republic of Ireland would still be subject to the full range of EU mandated checks, but “there would be no need for certificates and checks for individual items that are only ever intended to be consumed in Northern Ireland”.
In addition, the UK remains open to a bespoke agri-food agreement based on the principle of equivalence (as opposed to the EU’s desire for alignment with EU rules) that would provide for managed regulatory divergence, and a mutual basis for assessing where risk-based checks were most necessary.
The UK has also proposed the introduction of “a full dual regulatory regime” that would allow goods to circulate freely in Northern Ireland provided they comply with either UK or EU standards. Labelling would denote those products that are only for the Northern Ireland market and, again, goods destined for the EU market would have to meet all EU rules and customs formalities.
Overall, these arrangements would remove most of the practical impact that the Protocol has had on businesses trading between Northern Ireland and the rest of the UK. Instead, traders would be subject to a light-touch regime, whereby they would self-declare their trade and agree to inspections of their supply chains.
Therefore, the arrangements the UK is proposing require a higher degree of mutual trust than we have seen to date. When viewed from Brussels, perhaps the most ambitious of the UK proposals is to remove the role of the EU Court of Justice in overseeing the Protocol.
However, as the command paper points out, the practical risk of illicit trade to the EU is extremely low, since trade from Northern Ireland to Ireland is less than 0.5% of all imports into the EU. Nevertheless, the UK sensibly acknowledges the EU’s concern for the integrity of its Single Market. To address the EU’s concerns, the UK has committed to put in place legislation to provide for penalties for traders seeking to place non-compliant goods on the EU market, which could be supported by deeper data-sharing arrangements and greater cooperation between UK, Irish, and EU enforcement authorities.
The UK proposals are bold, but they would maintain the promise of no land border on the island of Ireland and provide for a more balanced arrangement, which could therefore command greater public support in Northern Ireland.
The timetable for agreeing any changes to the Protocol is extremely tight due to the looming expiration of several grace periods, including for supermarket supplies, in the autumn. The UK has therefore suggested both sides agree a “standstill”, both on grace periods and the EU’s legal actions against the UK, to enable negotiations to take place without cliff edges, and a further escalation of political tensions.
Curiously, the UK’s proposals have met with a muted response from the EU. Yesterday, the EU chose to pause its legal action, and there have been small hints of compromise, particularly from some close to the Irish government. Previously, the UK’s public negotiating positions have often prompted instant and aggressive counter-briefing from senior EU figures. Think of the way Theresa May was treated when seeking a far closer EU relationship than the current government.
European Commission President Ursula von der Leyen simply stated that the EU would not “renegotiate” the Protocol, but would “continue to be creative and flexible within the Protocol framework”. Time will tell whether this is a semantic or substantial distinction. It is worth noting that Article 13(8) of the Protocol provides for its amendment through mutual agreement.
It is significant that the document also sets out the Government’s view that the current scale of trade diversion, negative economic and societal impact, and political instability caused by the Protocol would justify the use of unilateral action under Article 16. The Government says it will not exercise this right “for the time being”, but it remains an option if the EU refuses to engage in the coming weeks.
The EU may choose to hang tough and to retaliate against such a move. Clearly, there is a risk that the UK-EU politics get ugly. In the end, both sides need a solution, and the command paper demonstrates that the UK is prepared to play a long game.
Much of the criticism levelled at the Government following the publication of the command paper is for wanting to fundamentally amend a treaty it agreed less than two years ago. The Government makes the case that the Protocol was agreed under the extraordinary political circumstances of 2019, and that the EU rejected the opportunity to find flexible solutions to resolving these issues in the UK-EU trade negotiations of 2020.
Against those accusing the UK of not understanding the full implications of the Protocol, it should be remembered that in agreeing the Protocol, the EU pledged to protect the Belfast/Good Friday Agreement “in all its dimensions”, including the East-West strand. The UK is within its rights to hold the EU to this essential part of the bargain.
Few would argue the situation is ideal, and these political arguments are likely to be informed by one’s pre-existing Brexit prejudices. But there is a wider point that few observers now seem to disagree with. The negative economic and political real-world consequences of implementing the Protocol cannot be what either side intended. Therefore, substantive change is necessary.