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

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Follow-up report

Chapter 1: The political context

The Sub-Committee on the Protocol on Ireland/Northern Ireland

1.On 19 October 2019 the Government laid before Parliament the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and from the European Atomic Energy Community. Within it was a revised Protocol on Ireland/Northern Ireland. Following the December 2019 general election, the European Union (Withdrawal Agreement) Bill, giving effect to the revised Withdrawal Agreement and Protocol agreed by the UK and EU, was introduced, receiving Royal Assent on 23 January 2020. The UK withdrew from the European Union on 31 January 2020, and the Protocol was scheduled to come into force at the same moment as the post-withdrawal transition period expired, at midnight CET (11:00pm GMT) on the night of 31 December 2020/1 January 2021.

2.The Sub-Committee on Ireland/Northern Ireland was established in April 2021 as a Sub-Committee of the European Affairs Committee, following a recommendation of the Liaison Committee in its December 2020 Review of investigative and scrutiny committees: strengthening the thematic structure through the appointment of new committees.1

3.The Sub-Committee undertakes six core tasks, as proposed by the Liaison Committee:

• Document-based scrutiny of new or amended EU legislation within the scope of the Protocol.
• Scrutiny of the implications of relevant domestic UK legislation and policy for Northern Ireland.
• Scrutiny of the Northern Ireland-related work of the governance bodies established under the UK-EU Withdrawal Agreement, including the Withdrawal Agreement Joint Committee, the Ireland/Northern Ireland Specialised Committee, and the Joint Consultative Working Group.
• Monitoring the Protocol’s political and socio-economic impact on Northern Ireland.
• Reviewing the ongoing impact of the Protocol (and of UK withdrawal from the EU more broadly) on the UK-Irish bilateral relationship.
• Developing inter-parliamentary dialogue in relation to the Protocol, including with the Northern Ireland Assembly and Irish Oireachtas.

The Sub-Committee’s July 2021 introductory report

4.On 29 July 2021, the Sub-Committee published its introductory report into the operation and impact of the Protocol on Ireland/Northern Ireland since it came into force on 1 January 2021.2 The report noted that “the Protocol 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.”

5.The report also noted that public opinion in Northern Ireland in relation to the Protocol was split—while unionists and loyalists objected to the Protocol being imposed without their consent, nationalists and republicans pointed out that Brexit was imposed on Northern Ireland against the wishes of its people. The report drew attention to the democratic deficit, whereby significant aspects of EU law apply to Northern Ireland without its prior consent.

6.The report also analysed practical measures proposed by business representatives and other stakeholders to ease the economic burden of the Protocol, while at the same time noting that they would not be enough to assuage those who disagreed with the Protocol in principle. Nevertheless, the Committee found that the UK and the EU urgently needed to agree practical steps that would ensure the proportionate application of the Protocol, including a UK/EU veterinary agreement.

7.The report found that the search for solutions up to that point had been hampered by fundamental flaws in the UK and EU’s approach: 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, had led to a corrosive and mutual lack of trust: on the part of the EU, that the UK was seeking to undermine the Protocol and would not live up to its political and legal commitments; and on the part of the UK, that the EU would always prioritise the integrity of the Single Market over the interests and unique circumstances of Northern Ireland. The Committee found that this had contributed to a serious deterioration in relations between London, Belfast, Dublin and Brussels. It concluded that, unless urgent steps were taken to correct this, Northern Ireland and its people would become permanent casualties in the post-Brexit landscape.

Subsequent political developments

8.We summarise below the key political developments since the publication of our introductory report.

The Government’s July 2021 Command Paper

9.On 22 July 2021 (shortly before the Committee’s report was released), the Government published its Command Paper Northern Ireland Protocol: the way forward.3 The Command Paper analysed in turn the Government’s analysis of the process of agreeing the Protocol, how the Protocol was working, and the Government’s assessment that the case for invoking the safeguarding mechanism set out in Article 16 of the Protocol had been met. Notwithstanding this, the Government set out an “alternative way forward: finding an agreed new balance”, including:

• Arrangements under which it would be the primary responsibility of any UK trader moving goods to Northern Ireland to declare whether the final destination of those goods was Northern Ireland or Ireland. Full customs formalities would be required for goods going to Ireland and the UK would undertake to enforce them. Other goods would not require customs processes.
• Similar arrangements for sanitary and phytosanitary (SPS) goods, supplemented by pre-notification of movements and “an appropriately designed SPS agreement”, and arrangements for the movement of pets within the UK.
• Greater freedom to set VAT and excise rates and structures in Northern Ireland, but underpinned by clear safeguards where changes would introduce significant distortions on the island of Ireland.
• Strong reciprocal data-sharing arrangements, and, for SPS goods, appropriate labelling requirements, increased market surveillance, and penalties for non-compliant traders.
• Elimination of export declarations for goods moving to Great Britain from Northern Ireland except in the narrow cases of specifically controlled goods.
• A “full dual regulatory regime in Northern Ireland”, whereby “goods, whether manufactured or SPS goods, should be able to circulate within Northern Ireland if they meet either UK or EU rules, as determined by UK or EU regulators, and should be labelled accordingly.”
• Specific provisions for medicines. In the Government’s view, “the simplest way forward may be to remove all medicines from the scope of the Protocol entirely.”
• Removal of the existing provisions of Article 10 of the Protocol (on State aid), which, in the Government’s view, were “redundant in their current form” following the agreement of subsidy control commitments in the UK-EU Trade and Cooperation Agreement (TCA).
• Changes to “normalise the governance basis of the Protocol”, so that, instead of it being “ultimately policed by the EU institutions including the Court of Justice”, alternative dispute settlement arrangements should be established on the basis of “a normal treaty framework, similar to other international agreements including our Trade and Cooperation Agreement, in which governance and disputes are managed collectively and ultimately through international arbitration.”
• “More robust arrangements to ensure that, as rules are developed, they take account of their implications for Northern Ireland—and provide a stronger role for those in Northern Ireland to whom they apply”.

10.The Government called for agreement with the EU of a ‘standstill’ on existing arrangements, including the continued operation of the various grace periods and derogations in force in relation to agri-food, medicines, parcels and movement of pets, and a freeze on existing legal actions and processes, to ensure there was “room to negotiate without further cliff edges, and to provide a genuine signal of good intent to find ways forward.”

11.In a statement the same day, European Commission Vice-President Maroš Šefčovič said:

“We will continue to engage with the UK, also on the suggestions made today. We are ready to continue to seek creative solutions, within the framework of the Protocol, in the interest of all communities in Northern Ireland. However, we will not agree to a renegotiation of the Protocol.”4

The EU subsequently confirmed on 27 July that it was not, at that stage, moving to the next stage of legal proceedings against the UK initiated in March 2021.

12.On 6 September, Lord Frost, in his capacity as Minister of State in the Cabinet Office with ministerial responsibility for the Protocol, made a written ministerial statement confirming that “initial technical talks” had commenced between the UK and the EU, and that, while they continued, “the Government will continue to operate the Protocol on the current basis. This includes the grace periods and easements currently in force.”5

13.In a choreographed move, the Commission made its own statement the same day noting the Government’s announcement “regarding the operation of the Protocol on the current basis, including the continuation of existing grace periods”, and confirming that, while reserving its rights in respect of infringement proceedings, it was “not moving to the next stage of the infringement procedure launched in March 2021, and is not opening any new infringements for now.”6

The EU’s October 2021 ‘non-papers’

14.Against the backdrop of these discussions, the Commission published in October 2021 a set of “bespoke arrangements to benefit Northern Ireland” in the form of four ‘non-papers’ (i.e. non-legislative texts) on:

• Engagement with Northern Ireland stakeholders and authorities, including “establishing structured dialogues between Northern Ireland stakeholders (authorities, civic society and businesses) and the Commission”, and a dedicated website “to show in a clear and comprehensive way the EU legislation applicable in Northern Ireland.”
• Customs, including “measures that will simplify and make customs formalities and processes easier”, such as potential expansion of the scope of goods not at risk of moving into the EU Single Market, which the Commission argued would “cut in half the documentation currently needed for goods moving from Great Britain to Northern Ireland.”
• Sanitary and Phytosanitary (SPS) issues, including a “Northern Ireland-specific solution in the area of public, plant and animal health”, which the Commission claimed would mean “vastly simplified certification and a significant reduction (approximately 80%) of official checks for a wide range of retail goods moving from Great Britain to be consumed in Northern Ireland.” This was subject to UK commitments on construction of permanent Border Control Posts, packaging and labelling, and monitoring of supply chains. The Commission stated that its SPS and customs proposals would together “create a type of ‘Express Lane’ for the movement of goods from Great Britain to Northern Ireland, while at the same time providing for a robust monitoring and enforcement mechanism in order to protect the integrity of the Single Market.”
• Medicines, including proposals to ensure that “Great Britain can continue acting as a hub for the supply of generic medicines for Northern Ireland, even though it is now a third country. In this way, the long-term supply of medicines from Great Britain to Northern Ireland can be ensured.”7

Developments in December 2021 and February 2022

15.Discussions continued during the autumn of 2021 without resolution, leading to the Commission’s announcement on 17 December of a unilateral package of measures (including legislation) in relation to medicines. On the same day, Lord Frost made a statement that, while acknowledging positive talks in relation to medicines and (to a lesser extent) VAT and excise control, noted that there had been “much less progress” in relation to customs and SPS arrangements, placing manufactured goods on the market in Northern Ireland, subsidy control and governance. Lord Frost also stated that:

“Our preference would be to reach a comprehensive solution dealing with all the issues. However, given the gravity and urgency of the difficulties, we have been prepared to consider an interim agreement as a first step to deal with the most acute problems, including trade frictions, subsidy control, and governance. Such an agreement would still leave many underlying strains unresolved, for example those caused by diverging UK and EU rules over time. It would therefore be inherently provisional by nature and would accordingly need to include mechanisms for addressing outstanding issues and resolving new concerns as they arise. The UK has proposed a number of possible ways forward, but regrettably it has not so far been possible to make progress even on what the core elements of an interim agreement might be.”8

16.Lord Frost announced his resignation from the Government the next day, citing disagreements with the Government’s Covid strategy.9 Ministerial responsibility for the Protocol (including acting as co-chair of the Withdrawal Agreement Joint Committee and leading the continuing discussions with the EU) passed to the Foreign Secretary, Rt Hon Elizabeth Truss MP, supported initially by the then Minister for Europe, Chris Heaton-Harris MP, who was succeeded in February 2022 by Rt Hon James Cleverly MP, following his appointment as Minister for Europe and North America.

17.On 2 February 2022, the Democratic Unionist Party (DUP) Minister for Agriculture, Environment and Rural Affairs in the Northern Ireland Executive, Edwin Poots MLA, directed officials to stop conducting SPS checks on goods moving to Northern Ireland from Great Britain. The other parties in the Executive disagreed with this move, and the direction was challenged by a judicial review, with checks continuing in the meantime.

18.The next day, on 3 February, the DUP First Minister of Northern Ireland, Paul Givan MLA, announced his resignation. Under the power-sharing mechanism, this automatically triggered the resignation of the Sinn Féin deputy First Minister, Michelle O’Neill MLA. The Northern Ireland (Ministers, Elections and Petitions of Concern) Act 2022 received Royal Assent on 8 February. This allowed the Executive to continue to function in limited form without necessitating early elections. The UK Government then ruled out early elections, meaning that the Assembly was dissolved on schedule on 28 March, ahead of the Assembly elections on 5 May.

The May 2022 Northern Ireland Assembly elections

19.The status and operation of the Protocol was a key campaigning theme during the elections for the unionist parties, although the other parties represented in the Assembly tended to emphasise other issues. At the elections, Sinn Féin became the largest party in the Assembly for the first time. Overall, the unionists remained the largest designation, with 37 seats, while nationalists won 35 and Others won 18. While the MLAs in the latter two designations (53 out of 90 MLAs overall) broadly support the Protocol, all 37 unionist MLAs have stated their opposition to it.

20.As the largest party overall, Sinn Féin was entitled to nominate a First Minister, while, as the largest party of the largest designation in the Assembly, the DUP was entitled to nominate a deputy First Minister. However, the DUP Leader, Sir Jeffrey Donaldson MP, stated that the DUP would not nominate a deputy First Minister (and thus facilitate the full restoration of the Executive) until “decisive action” was taken over the Protocol. The DUP declined to nominate a Speaker to the Assembly on the same grounds, meaning that the Assembly was unable to meet.

The Northern Ireland Protocol Bill and the EU’s response

21.Following several weeks of media speculation, the Foreign Secretary made a statement to the House of Commons on 17 May announcing the Government’s “intention to introduce legislation in the coming weeks to make changes to the Protocol”, while at the same time stating that its “preference remains a negotiated solution with the EU”.10

22.Later that day, Vice-President Šefčovič made a statement that:

“Should the UK decide to move ahead with a bill disapplying constitutive elements of the Protocol as announced today by the UK Government, the EU will need to respond with all measures at its disposal. Our overarching objective is to find joint solutions within the framework of the Protocol. That is the way to ensure legal certainty and predictability for people and businesses in Northern Ireland.”11

23.The Northern Ireland Protocol Bill was published on 13 June. In an explainer document published alongside the Bill, the Government stated that it was seeking to achieve four key aims, which had previously been reflected in the July 2021 Command Paper:

• “Establish new ‘green channel’ arrangements for goods staying in the UK.”
• “Establish a new ‘dual regulatory’ model to provide flexibility to choose between UK or EU rules.”
• “Ensure the Government can set UK-wide policies on subsidy control and VAT.”
• Deal with the Protocol’s “unequal governance” by “removing the role of the CJEU in dispute settlement.”12

24.On 15 June, the Commission responded by announcing that it was taking forward the infringement proceedings that had been put on hold to allow for discussions following publication of the July 2021 UK Command Paper, as well as launching two new infringement proceedings against the UK for failing to carry out its obligations under the EU’s SPS rules, and for failing to provide the EU with certain trade statistics data.

25.In parallel with this, the Commission published two position papers, on customs and SPS issues, expanding on its October 2021 proposals. The Commission argued that these would lead to a 50% reduction in customs paperwork and a reduction of 80% of “official checks for a wide range of retail goods moving from Great Britain to be consumed in Northern Ireland.”13

26.However, the Government argued that “the EU’s proposed approach, which doesn’t differ from what they have said previously, would increase burdens on business and citizens and take us backwards from where we are currently.”14

27.The Northern Ireland Protocol Bill received its Second Reading in the House of Commons on 27 June, and Committee Stage proceedings were expected to conclude on 20 July, followed immediately by Third Reading of the Bill.

28.On 7 July, the Prime Minister announced his intention to resign once a new leader of the Conservative Party had been elected. As part of the Government reshuffle that took place the same day, James Cleverly was appointed as Secretary of State for Education. He was replaced as Minister for Europe by Graham Stuart MP. The new Prime Minister and leader of the Conservative Party is expected to be announced by 5 September.

The work of the Sub-Committee

29.In the months after the publication of its July 2021 introductory report, and against the backdrop of these political developments, the Committee scrutinised individual aspects of the Protocol’s impact and operation, leading to a series of detailed letters to Government Ministers on:

• Article 2 of the Protocol, on rights of individuals.15
• The provision of medicines to Northern Ireland under the Protocol.16
• The democratic deficit under the Protocol, whereby areas of EU law apply to Northern Ireland without its prior consent, and means to enhance Northern Ireland’s voice and influence in relation to the Protocol.17
• The role of the Court of Justice of the European Union (CJEU) in relation to the Protocol.18

30.Although we received follow-up evidence in relation to each of these areas in the context of this inquiry,19 in view of the Committee’s previous detailed scrutiny, this report does not focus on these issues. However, we do reflect on subsequent developments in relation to medicines in Chapter 3.

31.The Committee also held evidence sessions in October 2021 with academic experts and political commentators on the July 2021 Command Paper, in December 2021 with academic and legal experts on the political and legal ramifications of any decision to invoke Article 16 of the Protocol, and also in December 2021 with representatives of the port authorities in Northern Ireland on the effect of the Protocol on their operations.

32.In addition, in March 2022 the Committee published a report on Scrutiny of EU legislative proposals within the scope of the Protocol on Ireland/Northern Ireland.20 This report summarised the Committee’s scrutiny work to date (including sending over 90 letters to Government Ministers on over 40 EU legislative proposals), and concluded that both the UK and the EU needed to do more to explain the impact of EU legislation on Northern Ireland, and to enhance the voice and influence of Northern Ireland stakeholders over the application of such legislation.

33.The Committee has also scrutinised the implications of relevant domestic UK legislation and policy for Northern Ireland in the context of Brexit and the Protocol, including the Elections Bill, the Nationality and Borders Bill and the Subsidy Control Bill, as well as continuing its inter-parliamentary engagement with Committees in the House of Commons, Northern Ireland Assembly and the Irish Oireachtas.

This inquiry

34.The Committee began a follow-up inquiry into the impact of the Protocol in March 2022, by hearing from businesses, economists and trade organisations on the economic impact of the Protocol. The inquiry was then paused for the duration of the Northern Ireland Assembly election campaign. The Committee took further evidence from business representatives, representatives of the five largest political parties in the Assembly after the elections, and the then Minister of State for Europe and North America, Rt Hon James Cleverly MP. A call for written evidence was also published on 13 May, and the Committee received 25 written responses from business representatives, trade organisations, academics, legal experts, and civic society representatives. We are grateful to all our witnesses for their assistance.

35.The Northern Ireland Protocol Bill was published shortly after the conclusion of the Committee’s programme of oral evidence, and the deadline for receipt of written evidence. The Government’s intention to legislate, and much of the likely content of the Bill, was reported several weeks before this, and as such, this report reflects on many of the themes of the Bill. However, the report does not aim to set out a detailed analysis of the legislation itself. Rather, in order to inform parliamentary scrutiny of the Bill, it sets out our analysis, based on the evidence received, of the impact of the Protocol at the point of the Bill’s publication. Our intention is then to begin scrutiny of the Bill itself, and the EU’s response, in September, to inform consideration of the Bill in the House of Lords.

36.The cross-party membership of the Sub-Committee, drawn from Northern Ireland and the rest of the UK, has a wide range of expertise in Northern Ireland affairs. Our membership represents a range of views, both on Northern Ireland’s constitutional position and on the Protocol itself. While some of us support the Protocol (subject to mitigations to alleviate practical problems with its operation that have arisen), others of us oppose the Protocol in principle, even were such mitigations to be agreed. In view of this, and without prejudice to the views of individual members, we see our task as not to argue for or against the Protocol itself, but rather to scrutinise its operation and impact in an objective and evidence-based manner. Our report and the conclusions that we reach should be viewed in that context.

37.In that spirit, we make this report for debate.

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