Report from the Sub-Committee on the Protocol on Ireland/Northern Ireland: Introductory report Contents

Summary of conclusions and recommendations

The development of the Protocol and the current position

1.The Protocol on Ireland/Northern Ireland was not created in a vacuum, but rather as a consequence of Brexit. However, the Protocol that emerged was not an inevitable result of Brexit, but rather of the political decisions taken during negotiations both by the UK and the EU on what form it should take. Yet the Government did not make adequately clear to the people of Northern Ireland what the Protocol would mean in practice. Details of its practical operation were provided extremely late in the day, leaving businesses unprepared, in spite of their best efforts. The practical operation of the Protocol since 1 January has therefore come as a shock, contributing to political instability in Northern Ireland and exacerbating underlying community tensions, which could even reverse the progress made under the Belfast/Good Friday Agreement. (Paragraph 70)

2.The EU’s rigid focus on the Protocol as a tool to protect the integrity of the Single Market has failed to account of its impact on the sense of identity of unionists and loyalists, inflaming the situation still further. Thus the delicate balance between North-South and East-West relations encapsulated in the Belfast/Good Friday Agreement has been compromised. (Paragraph 71)

3.Both the EU’s rules-based rigidity consequent upon maintaining the integrity of the Single Market and customs union, combined with the Government’s apparent reluctance to accept its obligations under the Protocol, and indeed the consequences of its own policy choices, have led to a mutual lack of trust, hindering the ability to identify and implement solutions. If urgent steps are not taken to restore trust, Northern Ireland is destined to become a casualty of the post-Brexit serious deterioration in relations between the UK and the EU. (Paragraph 72)

The economic impact of the Protocol

4.The disruption in Great Britain-Northern Ireland trade at the beginning of 2021 had many causes, including 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. The initial impact was also more limited in scope than some media reports suggested, and some initial problems in the movement of goods have been addressed. (Paragraph 131)

5.Despite the best efforts of businesses, they were significantly hindered in their preparation for the implementation of the Protocol by the lack of clarity, and the late provision of guidance, on its practical operation. The publication of guidance on movement of parcels just 12 hours before the Protocol came into effect was particularly egregious. (Paragraph 132)

6.The long-term impact of Brexit and the Protocol on trade flows remains uncertain, and will not become clear for several months. But there are early signs of a shift away from Great Britain-Ireland movements towards movements between Great Britain and Northern Ireland ports, as well as a growth in North-South trade. (Paragraph 133)

7.On the other hand, the new administrative requirements for moving goods from Great Britain to Northern Ireland have had the biggest impact on business. Firms have complained in particular about the burdensome, repetitive and disproportionate requirements for completion of Supplementary Customs Declarations. This has led to increased staff costs and difficulties with suppliers. These requirements, while suitable for the shipment of containers of goods from across the globe, appear wholly unsuited to the regional supply chains used by businesses in Great Britain and Northern Ireland, many of whom are SMEs with limited resources, and where the risk of goods moving into the EU Single Market is low. (Paragraph 134)

8.While sectors that are dependent on North-South trade links may benefit under the Protocol, those that rely on East-West supply chains may suffer. While the agri-food sector shows signs of benefiting from North-South links, new sanitary and phytosanitary processes have hindered East-West trade. We have heard serious concerns about the impact on supply of medicines and medical products to Northern Ireland in the absence of further mitigating measures. The motor industry reported that new administrative requirements are deterring suppliers in Great Britain from delivering to Northern Ireland. (Paragraph 135)

9.Their experience points to a wider problem: the lack of preparedness of businesses in Great Britain for the changes in trading arrangements with Northern Ireland. There are widespread fears that businesses in Great Britain will withdraw from the Northern Ireland market. The Government urgently needs to correct the lack of understanding among businesses in Great Britain of the new requirements for trading with Northern Ireland. Likewise, the EU and its Member States must address the lack of awareness among EU businesses of the opportunities for trade with Northern Ireland under the Protocol. (Paragraph 136)

10.The impact has been felt not just by businesses but also by consumers in Northern Ireland. 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. (Paragraph 137)

11.Yet there are potential economic benefits under the Protocol, given Northern Ireland is the only place where businesses can operate without customs declarations, rules of origin certificates or non-tariff barriers to both the GB and EU markets. There are early 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. (Paragraph 138)

12.Northern Ireland also stands to benefit from foreign direct investment from firms wishing to sell into the UK and EU markets. We welcome Invest NI’s discussions with 30 potential investors in Northern Ireland across the IT, finance, manufacturing and distribution sectors. However, we note that such investment in Northern Ireland has historically been strongest in the service sector, which is not within the scope of the Protocol. (Paragraph 139)

13.Yet such benefits and investment will only manifest themselves in the long-term, and on the basis of political and economic stability. This requires all sides to work together to calm political and community tensions, provide certainty for business and investors, and to seek to maximise the economic opportunities for Northern Ireland. (Paragraph 140)

14.Article 4 of the Protocol states that nothing in it shall prevent the UK from including 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 that context, the 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. (Paragraph 141)

The political and social impact of the Protocol

15.There is no doubt that Brexit and the Protocol have had a destabilising effect on the political situation in Northern Ireland and on community relations. Both the UK and the EU have affirmed their commitment to uphold the Belfast/Good Friday Agreement, but Brexit and the Protocol have evidently placed the delicate equilibrium established by the Agreement under considerable strain, as borders and questions of identity have once more come to the fore. Just as unionists and loyalists object to the Protocol being imposed without their consent, so nationalists and republicans point out that Brexit was imposed on Northern Ireland even though the majority of votes there were to remain in the EU. (Paragraph 202)

16.The unionist and loyalist communities are deeply concerned that Northern Ireland’s place within the United Kingdom has been undermined by the Protocol. Yet the violent unrest seen in late March and early April 2021, while arguably triggered by the Protocol, was also an expression of wider dissatisfaction with the political process and a perception that some voices in Northern Ireland are not listened to. This sense of alienation has been a factor going back many years, and has multiple causes, including the lack of access to employment, skills and investment opportunities within communities that are among the most economically deprived in the UK. (Paragraph 203)

17.This dissatisfaction is exacerbated by the pervasive sense that the Protocol creates a democratic deficit, in that significant aspects of EU law with wide-ranging political and economic implications apply to Northern Ireland subject neither to UK Government participation in the EU institutions, nor to consent from parliamentarians either at Westminster or Stormont. While there are mitigating steps that can be taken, as we set out in the next chapter, there is no apparent way to eliminate the democratic deficit. We intend to return to this issue in the coming months. (Paragraph 204)

18.There is a widespread perception that the Protocol was imposed on Northern Ireland without meaningful engagement with its communities, and without a full and transparent explanation of the impact it would have. Where there was engagement, it was perceived as uneven. (Paragraph 205)

19.Given the implications of the Protocol for people in Northern Ireland, both the UK Government and the EU must develop and expand formal mechanisms for long-term engagement with all sectors of Northern Ireland civic society. As part of this, there should be a particular effort to engage those who have so far felt side-lined in discussions of Brexit and the Protocol, including young people and women. (Paragraph 206)

Mitigations and solutions

20.We acknowledge the EU’s concern to protect the integrity of its Single Market, and its argument that it has already shown pragmatism in exploring flexibilities allowed under EU law and by outsourcing to the UK the control of the external border of its Single Market. Nevertheless, it needs to do more to ensure that the Protocol is applied in a flexible and proportionate manner. The Protocol’s sustainability will be undermined if the EU does not take all relevant factors into account, including the economic importance of East-West trade, the degree of risk that the Northern Ireland market presents to the EU Single Market, and the sensitive issues of identity that the Protocol gives rise to. In that context, we note that the £13 billion total value of movement of goods between Great Britain and Northern Ireland amounts to 0.0008% of the EU’s GDP. (Paragraph 217)

21.The Government’s actions in relation to the Protocol, including unilateral extension of grace periods and a perceived failure to implement previous agreements reached in the Withdrawal Agreement Joint Committee, have been regarded as provocative by the EU, and have contributed to a lack of trust and cooperation between the two sides. The UK Government has argued that its actions were necessary in the interests of the people and businesses of Northern Ireland. However, in order to maximise the prospect of the EU taking a flexible approach to the implementation of the Protocol, the Government needs to rebuild trust by demonstrating its good faith. This requires open and constructive engagement, meetings its legal obligations and fulfilling its outstanding political commitments. (Paragraph 223)

22.If they are to ensure the proportionate application of the Protocol, and meet the commitment in the Preamble that it should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland, the UK and the EU urgently need to agree practical solutions in a number of specific areas. Many have already been identified both by our witnesses and in dialogue between the UK and the EU in the Withdrawal Agreement Joint Committee. They include:

23.We welcome the Commission’s announcement on 30 June of agreement to the extension of the grace period for chilled meats, as well as technical solutions facilitating the supply of medicines, the movement of guide dogs, and the movement of animals between Great Britain and Northern Ireland. However, a large number of outstanding technical issues still remain to be resolved. (Paragraph 244)

24.One of the most significant single measures to alleviate the regulatory and administrative burden of the Protocol would be a UK-EU SPS/veterinary agreement. The EU has suggested that a Swiss-style agreement based on dynamic alignment would remove 80% of checks. The UK has argued in favour of a New Zealand-style equivalence framework. The two sides have yet to find a compromise between their positions. (Paragraph 245)

25.While it is clearly desirable to minimise the volume of checks as far as possible, an SPS/veterinary agreement of any form is manifestly in the interests of Northern Ireland, and the failure to reach it suggests that political and economic stability in Northern Ireland is a lower priority for the EU than the protection of the Single Market, and a lower priority for the UK Government than regulatory sovereignty and the integrity of its trade policy. We regret that the UK and the EU have been unable to reach a compromise between their respective preferences for equivalence or alignment. We call on them to intensify the search for an agreed SPS/veterinary solution, in the interests of the people and businesses of Northern Ireland. (Paragraph 246)

26.We endorse the proposals by our witnesses to maximise Northern Ireland’s influence both within the UK and with the EU, including:

We will consider proposals to maximise Northern Ireland’s influence in more detail in the coming months. (Paragraph 269)

27.Some of our witnesses have stressed the importance of establishing an EU office in Belfast to allow the EU to engage directly with Northern Ireland stakeholders. The case for this and the timing of any such move needs to be handled sensitively, in close consultation with communities in Northern Ireland. (Paragraph 270)

28.The Northern Ireland Executive has a key role to play in maximising Northern Ireland’s influence. We note the significance of the joint letters sent by Arlene Foster and Martin McGuinness in August 2016, and by Arlene Foster and Michelle O’Neill in November 2020. We urge the Executive, notwithstanding the different views on the Protocol within it, to work together to promote Northern Ireland’s collective interest both to the UK and EU. (Paragraph 271)

29.We also acknowledge the potential role of the intergovernmental institutions established under the Belfast/Good Friday Agreement, including the North South Ministerial Council, the British-Irish Council and the British-Irish Intergovernmental Conference, to discuss, by agreement of all parties, issues of mutual interest and concern in relation to Brexit and the Protocol. We welcome the recent meetings of both the British-Irish Council and the British-Irish Intergovernmental Conference. (Paragraph 272)

30.We also note the important role of the Irish Government in facilitating dialogue between the UK Government and the Northern Ireland Executive on the one hand, and the EU on the other. We urge the Irish Government to enhance its dialogue with stakeholders and communities in Northern Ireland, including the unionist and loyalist communities, so as to increase the EU’s awareness and understanding of their concerns. (Paragraph 273)

31.The use by either side of the safeguarding mechanism set out in Article 16 of and Annex 7 to the Protocol is a legitimate legal and political action in the event, in the Protocol’s words, of “serious economic, societal or environmental difficulties that are likely to persist, or to diversion of trade”. The use of Article 16 should therefore be distinguished from other unilateral action outside the scope of the Protocol and Withdrawal Agreement which would constitute a breach of either side’s legal obligations. (Paragraph 292)

32.We note the strong views of some of our witnesses that the disruptive effect of the Protocol highlighted in Chapters 3 and 4 of this report already justifies Article 16 being triggered. However, we also note the views of other witnesses that any unilateral action by either side, including triggering Article 16, has destabilising political and economic consequences. In any event, the Article 16 mechanism is not designed as a means to abrogate the Protocol, but rather as a carefully calibrated mechanism of proportionate measure and counter-measure, underpinned by obligations to continued dialogue to resolve the issues of concern. (Paragraph 293)

33.It would be preferable for the UK and EU, through dialogue with each other and Northern Ireland stakeholders, urgently to identify mutually agreeable solutions. (Paragraph 294)

34.We acknowledge the principled opposition of many in the unionist and loyalist communities to the Protocol, in view of the Protocol’s impact on Northern Ireland’s relationship with the rest of the UK. But we also acknowledge the position of many nationalists and republicans, in particular, that the Protocol, while imperfect, is a necessary (and the only) means to avoid a hard border on the island of Ireland following UK withdrawal from the EU. (Paragraph 311)

35.Witnesses have put forward a number of alternatives to the Protocol, including provisions in UK law, a new UK-Irish treaty, customs derogations or a model of mutual enforcement. While such suggestions should be taken seriously, they all present their own challenges. A consensus has yet to emerge behind any alternative, notwithstanding an intensive search for solutions in the five years since the referendum. We invite those opposed to the Protocol in principle to submit proposals for a comprehensive practical alternative consistent with the method of Brexit (with no alignment to EU trading or customs rules) adopted by the Government, or any other alternatives, and which are also consistent with the Belfast/Good Friday Agreement. We will examine the feasibility of any such submitted proposals in our future work. (Paragraph 312)

36.Given its wish to uphold the Withdrawal Agreement and to hold the UK to its legal obligations under it, the Commission is anxious to stress that “there is no alternative to the Protocol”. Yet under Article 18 of the Protocol, the EU and the UK have an obligation in the Joint Committee to propose necessary measures in the event that the Northern Ireland Assembly does not support the continued operation of Articles 5 to 10 of the Protocol. That being the case, both sides have a continuing obligation to consider alternatives. (Paragraph 313)

37.In the meantime, there is an equal obligation on all sides to find resolutions within the Protocol, to provide stability and certainty to the businesses and people of Northern Ireland, and to meet the commitment in the Protocol that it should have as little impact as possible on the everyday life of communities in both Ireland and Northern Ireland. That requires the UK and the EU to uphold their obligations under international law and to work together in a renewed spirit of urgency, partnership and trust. (Paragraph 314)

Conclusion

38.The Preamble to the Protocol on Ireland/Northern Ireland acknowledges that “the United Kingdom’s withdrawal from the [European] Union presents a significant and unique challenge to the island of Ireland”; that “the achievements, benefits and commitments of the peace process will remain of paramount importance to peace, stability and reconciliation there”; that the Belfast/Good Friday Agreement and subsequent agreements “should be protected in all its parts”; and that there should be “no customs and regulatory checks or controls and related physical infrastructure at the border between Ireland and Northern Ireland”. But it also stresses “the importance of maintaining the integral place of Northern Ireland in the United Kingdom’s internal market”, and that “the application of this Protocol should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”. (Paragraph 315)

39.The UK and the EU were able to agree these underlying principles in theory: the difficulty has come in upholding seemingly contradictory principles, as the Protocol has become a reality. The upshot has been economic disruption and further political division, which has contributed to community unrest. This has undermined the advantages of dual access to the UK and EU markets that the negotiators sought to preserve. It has also led in turn to a breakdown in trust between London, Brussels, Belfast and Dublin. (Paragraph 316)

40.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. Yet 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. That was also true of the political situation in Northern Ireland during the Troubles. But through a slow and painstaking process led by political leaders in Northern Ireland and successive governments in London and Dublin, the peace process took root and flourished, leading to the Belfast/Good Friday Agreement and the subsequent steps towards a power-sharing arrangement. (Paragraph 317)

41.This process took time, patience, dialogue, and most of all trust. The same is true in addressing the problems that Brexit and the Protocol present for Northern Ireland. 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. (Paragraph 318)

42.We conclude with the words of Jackie Redpath, who has been working in the loyalist Shankill community for 50 years:

“The peace process … continues to be a tender plant that needs to be carefully looked after by all who have been involved in it—locally, nationally and internationally … The way forward … is to create a new ground of engagement. That is not primarily [about] the Protocol … It is not even about the Good Friday/Belfast Agreement. The ground of engagement needs to be something that all parties can buy in to, and that is the peace process.” (Paragraph 319)





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