Northern Ireland protocol will remain a source of tension

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The Northern Ireland protocol remains a running sore between the UK and EU, as both sides stand their ground over how the deal, which leaves a region of the UK in the regulatory orbit of the EU, should be implemented.

Michael Gove and European Commission vice-president Maros Sefcovic held a virtual meeting of the joint committee on Wednesday afternoon, but neither side cast the meeting as anything approaching a breakthrough.

The EU continues to insist the protocol, which requires all goods travelling from Great Britain to Northern Ireland to comply with EU rules, must be fully enforced, and any flexibilities can only come from within the existing legal envelope of the EU customs code. The UK, meanwhile, continues to demand concessions from the EU that it believes reflect the political realities of Northern Ireland and essentially come down to a mix of super light-touch enforcement and a very broad trusted trader scheme that goes far wider than just supermarkets.

The question now, as Lord David Frost takes over the reins of the protocol implementation from Gove, is whether these two divergent positions can be massaged into a series of perpetual and grumbling compromises, in which both sides manage to outwardly cling to their red lines while still making it work — or something more radical happens.

On past performance, the arrival of Frost on the scene is unlikely to settle things down. It was Frost, after all, who drove forward last September’s plan to unilaterally implement aspects of the protocol, even if that meant breaking international law.

As he takes the chair, Frost has no shortage of encouragement to go back to taking a tough line with Brussels, with both the Democratic Unionist party and the Tory party’s European Research Group, the keepers of the hard Brexit flame, urging the government to junk the protocol altogether.

On Thursday the ERG — which has never accepted the need for any physical border to solve the Northern Irish issue, whether north-south or in the Irish Sea — proposed its latest plans to deliver a hard Brexit without dividing the United Kingdom.

The “foremost” of its plans is the revival of the idea of “mutual enforcement” that was first suggested by a group of lawyers that included Sir Jonathan Faull, the former top commission official who superintended David Cameron’s failed EU renegotiation for Brussels.

The “mutual enforcement” concept is one in which the UK legislates to ensure that any goods that travel across into the Republic of Ireland conform with EU standards and pay any duties owing. Each side trusts the other’s sovereign legal authorities to enforce a border.

As the ERG report explains it: “Mutual enforcement does not remove the border through alignment with EU rules. It is a legal technique to remove the need for border infrastructure.”

The problem is that the EU’s regulations on plant and animal products (so-called SPS or phytosanitary rules) mean that unless the UK fully aligns with EU rules, then products need to be checked at a border control post. Physical inspections at the border are therefore required.

To make “mutual enforcement” work for SPS rules, then, the EU would need to change its existing approach specifically for Northern Ireland, even though — as the document admits — Brussels has “shown no appetite for flexibility or changing one word of its own customs law”.

This is a tacit admission that, as thing stand, the only way to really shrink the border in the Irish Sea is for the UK to align with the EU’s rules.

This was something that, as the FT revealed this week, the DUP made clear to the government last year, but was rebuffed by Boris Johnson’s government.

A letter from Northern Ireland’s then agriculture minister Edwin Poots to George Eustice in June 2020 noted that “dynamic alignment” with relevant parts of EU law and the UK “joining the common veterinary area (as in the Swiss/EU arrangement” would fix a multitude of issues.

That, of course, remains the case. All of the SPS sections of protocol could be replaced by a veterinary agreement, if it was deep enough — but that level of alignment is clearly incompatible with the sovereignty-first Brexit that Frost negotiated.

And so we are where we were. The political limits of Brexit appear to prevent the UK taking the one step that would address the issue that underpins the most onerous aspects of the protocol from a border perspective, without sliding into a soft Brexit.

If the UK did unilaterally align with the SPS rules, the EU side would find it much harder to justify its current letter-of-the-law approach to the protocol, as it defends the integrity of the EU single market.

But as it is, without some form of alignment or veterinary deal, it is not clear where a long-term solution, or equilibrium, lies for the protocol, once the anaesthetic of grace periods that have been granted for companies filling out full export documentation wears off.

And as Gove warned, the EU’s own brief flirtation with triggering Article 16 in order to police vaccine export controls has opened a Pandora’s box when it comes to the protocol.

The DUP is now politically committed to its revocation and is actively waiting to pounce on a crisis big enough to warrant the UK triggering temporary suspension under Article 16, or forcing a fuller renegotiation of the terms of the deal that Johnson signed.

The ERG weighing in behind the DUP creates further pressure on Johnson and Frost to win easements on the protocol — even as the commission sticks to its guns on implementation, partly at the insistence of major EU member states, including France.

There are forces of confrontation on both sides. Much now rests in the hands of Frost and Sefcovic if a functional equilibrium is to be maintained.

Brexit in numbers

The new UK-EU trading relationship remains in its infancy, and long-term determinations on its impact on UK traders remain very difficult to make. Still, industry analysts fear that pressure on the border and on freight-forwarders is only likely to grow as pre-Christmas stockpiles unwind and more companies seek to export.

The EU is also introducing new export health certificates in April that will capture more products, while the UK will start to enforce its own border more fully in July.

A piece of research this week from the Chartered Institute of Procurement & Supply (Cips) indicates that things might be moving in the wrong direction, with 58 per cent of businesses saying that delays have become longer since the beginning of January.

Cips said that a survey of 350 UK supply chain managers conducted from February 12-18 found that “63 per cent have experienced delays of at least 2-3 days getting goods into the UK”. That’s up from 38 per cent in a similar survey conducted in January. In the other direction, 44 per cent said they were having delays of at least 2-3 days in exports to the EU.

Interestingly, the biggest factor — by far — identified by businesses was customs paperwork. And while everyone should get better at filling in the forms, this is one aspect of trade with the EU that is not going away.

The wider question — to which we will not get an answer for a good while — is how far these delays affect business relationships, when businesses inside the single market can source equivalent products without risk of border delays.