The Northern Ireland protocol was designed to prevent a hard border on the island of Ireland but the solution, a new Irish Sea trade border, has created headaches for businesses in the North.
What is the protocol?
The protocol formed part of the Brexit divorce deal that sets out trading rules for Northern Ireland after the UK left the EU. As part of the EU-UK Brexit deal agreed in the wake of Brexit, it allows goods to pass freely between Northern Ireland in the UK and the Republic of Ireland in the EU.
The UK voted to leave the EU in 2016, requiring a deal on the post-Brexit trading rules applying to Northern Ireland to allow this to happen.
What does this mean in practice?
Goods entering Northern Ireland must continue to follow EU regulations and standards, including strict sanitary rules on food products such as milk and eggs. This has resulted in the checks moving to Northern Ireland’s ports on products brought into the country from the rest of the UK. To avoid checks on north-south trade, they had to be imposed on east-to-west trade crossing the Irish Sea.
What problems has this caused?
In the business world, companies and other traders say this has added significantly to their administrative burden and that this burden will only increase with the expiry of grace periods introduced by the UK to delay the full checks. In the political world, Unionist parties also argue that the new Irish Sea border undermines Northern Ireland’s place in the United Kingdom.
The Democratic Unionist Party has blocked the formation of a new Northern Ireland government at Stormont for more than a year as part of their continued opposition to the protocol.
Are some businesses more affected than others?
Small- and medium-sized businesses say they are particularly affected because, unlike larger companies, they bring multiple products in single containers on lorries and so this requires greater volumes of paperwork, more staff resources and higher costs to bring goods in.
How have some businesses adapted?
To avoid the red tape on goods moving from Britain, companies in Northern Ireland have instead sourced materials in the Republic and directly from the rest of the EU. This has led to a surge in north-south trade under the new post-Brexit rules.
What does the UK government want to change about the Protocol?
To remove some barriers to trade, London wants to establish red lanes and green lanes through which goods imported from Britain into Northern Ireland will pass. The green lane would be used by trusted traders such as large UK supermarket chains transporting goods for sale in Northern Ireland only, which would be exempt from customs declarations and checks. The red lane would be for products heading on to the Republic and the rest of the EU and would be subjected to full checks and customs controls.
The UK government also wants to lift EU state aid and Vat rules imposed on Northern Ireland firms under the Protocol that prevents them from receiving UK government subsidies and tax breaks.
It is also seeking an independent arbitration body to settle disputes over the Protocol which are currently decided by the European Court of Justice.
