The Commission view on the Northern Ireland Protocol

The Government’s intention to unilaterally suspend parts of the Northern Ireland Protocol is fraught with risk for Northern Ireland and the UK. Any necessary changes to the Protocol and Trade and Cooperation Agreement (TCA) should instead be agreed through negotiation and the rebuilding of trust.

Both the Protocol and TCA could and should be amended to improve outcomes for the people of Great Britain and Northern Ireland, removing unintended consequences as far as possible. Improvements can only result from negotiation between the UK and EU in an environment of increased trust.

The Northern Ireland economy which, thanks to its continued access to the EU Single Market is outperforming the rest of the UK, would be harmed should its position in that market be curtailed.

The impact on Northern Ireland’s political tensions is uncertain, but it should be clear that for the UK Government to adopt a course that ignores the newly-elected majority in the Northern Ireland Assembly, which opposes unilateral suspension of the Protocol and sees the economic advantages of the Protocol to Northern Ireland,  is unlikely to reduce tensions. 

Great Britain’s economy, already vulnerable following the impact of Covid-19, the TCA and the war in Ukraine, would suffer more harm from any trade war between the UK and EU which would likely follow unilateral suspension. It is estimated by Jagjit Chadham Director of NIESR (the National Institute of Economic and Social Research) that suspension or termination of the TCA, effectively a ‘no deal’ Brexit, would double the cumulative loss resulting from our EU departure from 3% to 6% of GDP.

Finally in the context of war between Russia and Ukraine it should be a government priority to build bridges with allies, not cause renewed division and mistrust by reneging on an international treaty.

The risks from unilateral action outweigh any gains. Instead the Government should enlist broad support both internationally and within Northern Ireland for proposed changes to the Protocol – acting in good faith rather than leaning into the preoccupations of one grouping. In doing so they would lay foundations for the coming review of the TCA in which the Government should have ambitious negotiating aims given the inadequacies of the TCA in its current form.

The Government is right to state that the Brexit deals need to be revisited. The deals as they stand are inadequate. They are causing harm to the British economy and to sectors including security and defence, health care, our diplomatic standing and reach.

Ongoing uncertainty over the future relationship between the Great Britain, the EU and Northern Ireland is contributing to political tensions in Northern Ireland, and is restricting inward investment as potential investors wait to see the outcome of talks.

Despite this Government suggestions that the way to resolve issues created by the Protocol is to suspend it unilaterally do not stand up to scrutiny.

Suspension of the Protocol would entail significant risks for the politics of Northern Ireland. There is no evidence to suggest that suspension would resolve tensions in Northern Ireland’s politics. If anything it seems likely these tensions would be inflamed by favouring the views of the DUP over the majority in Northern Ireland who support the Protocol.

Nor would suspension create a sustainable long term means of managing the need for a customs border between the UK internal and EU single markets.

Suspension entails risks too for the UK economy at a time when it is already under severe pressure. The UK economy has not fully recovered from the impact of the Covid-19 pandemic, while evidence to date suggests that the Government’s Brexit deals have cut long term GDP by 3-4%. The war in Ukraine is adding further pressure.

Were the EU to respond to any suspension of the Protocol by suspending the TCA or imposing significant additional trade barriers, or even simply instructing customs officials to work to rule at border crossings between the UK and EU, the added trade disruption could, according to Jagjit Chadham Director of NIESR (the National Institute of Economic and Social Research), double the economic harm caused by Brexit, pushing the cost of food and other essentials even higher and further inhibiting the ability of UK companies to trade and collaborate with European partners.

Suspension would extend uncertainty over trade arrangements between the UK and EU, and between Northern Ireland, Great Britain and the EU.

There is a great deal of evidence showing that uncertainty inhibits investment - from 2016 to 2020 UK investment was sharply down on pre 2016 levels.

Investment in Northern Ireland is already being held back by continued arguments over the Protocol, as prospective investors wait to see what the long term trading relationship of Northern Ireland will be with both the EU and Great Britain.

If the Government wishes to reduce both trade frictions between Great Britain and Northern Ireland, and to reduce political tensions within Northern Ireland, there are a number of easy and available fixes it could choose to implement.

SPS and veterinary agreements with the EU, for example, would remove the need for checks on food and agricultural products, livestock and pets, which are some of the most contentious and visible checks required by the Protocol as it stands.

More fundamentally, if the Government chose to invest in a working relationship with the EU it would find it easier to get agreement on other parts of the Protocol or other Brexit agreements it wishes to change, where it can produce a good case that such changes protect the interests of all concerned. The lack of trust is often cited by EU voices as a key reason why progress is difficult to achieve.

The Government claims that suspension of the Protocol would protect the Good Friday Agreement (GFA) but provides no justification for this view.

The GFA is built on, and can only endure with, trust between Northern Ireland’s communities and trust between the UK and Ireland. Suspension of the Protocol may be the goal of a minority of people and politicians in Northern Ireland, yet the Protocol is supported by the majority, including a majority of newly elected MLAs.

Suspending the Protocol without the democratic consent of the people of Northern Ireland, and without the support of politicians from all sides of the political spectrum, will diminish trust, not deepen it.

The UK Government might reflect too on the fact that the other guarantor of the GFA, the US, is clear in its opposition to the abandonment of the Protocol. It can be no coincidence that the US has recently confirmed the appointment of a Special Envoy to protect the GFA.

The risks of Protocol suspension therefore are all too clear: to the UK and Northern Ireland economies at a time when they are already under significant pressure, to the Government’s long term objective of renegotiating parts of the TCA and the Protocol due to the harm that would be caused to the UK-EU relationship and trust between parties, to the UK-US relationship given the latter’s commitment to the GFA and the Protocol, to Northern Ireland’s politics and its people given it would leave Northern Ireland in limbo, diminishing the likelihood of inward investment and of a return to power sharing government in Stormont, and to the UK’s international reputation at a time when it is seeking to strike trade deals around the world.

These harms would be caused at a time when Western powers, including the UK, US and EU, should be drawing together and putting their differences aside in order to best support Ukraine and oppose Putin.

A responsible government would not risk these outcomes, particularly given there is no clear benefit to suspension of the Protocol.

We reiterate that the Brexit agreements should be revisited in the planned review in 2026. They should be amended in light of lessons learned over what by then will have been five years of existence to improve the lives of British people. Such amendments can only follow meaningful negotiation with the EU once trust between the UK and EU has been rebuilt. The deals need to be improved, but unilaterally suspending the Protocol is not the way to achieve that goal.

Will Hutton, journalist and Commission member, said: “The Government stresses the risks in Northern Ireland from not accommodating Unionist concerns. There are risks, but the Government should also take into account the risks to the Northern Ireland economy from being locked off from the wider Irish economy, the risks to the vulnerable British economy of a trade war with the EU and in particular further intense selling of sterling and the risks to Britain’s international standing in unilaterally abrogating a treaty it signed mere months ago. Those risks significantly outweigh the risks of Unionist discomfort.”

Janice Hughes, CEO of Graphite Strategy and co-chair of the Commission, said: “The business community in Northern Ireland is united in its desire for certainty. Continuing arguments about the Protocol do nothing to help trade flow, business invest or workers produce. We urge the Government to return to the negotiating table and to listen to the voice of the Northern Ireland business community.”

Mike Clancy, General Sector of Prospect and co-chair of the Commission, said: “The Commission is committed to solving challenges created by Brexit by building on the Trade and Co-operation Agreement and Northern Ireland Protocol.

This will only be possible if the UK is seen as a trusted partner by European counterparts. If the Government unilaterally suspends the Protocol it agreed with the EU mere months ago it risks harming the UK’s reputation as a country that honours international agreements. Stability in Northern Ireland and the recovery of the UK’s economy from the pandemic are too important to be risked in this way.”

Mike Buckley, Director of the Commission, said: “The Government are right to point to the need to uphold the Good Friday Agreement. That agreement is built on close cooperation between the UK and Irish governments and an acceptance that for peace and stability to endure the UK Government must work closely with all Northern Ireland’s communities in Stormont and beyond. Unilateral suspension of all or part of the Protocol goes against these principles and against the spirit of the Good Friday Agreement, and should not be countenanced.”

George Peretz QC, member of the Commission, said: “None of the problems with the Protocol that the current Government has pointed to should have come as any surprise to it. 

As outside experts and its own officials immediately pointed out after the text was published, any careful reading of the text of the Protocol shows that it requires regulatory and customs checks on goods entering Northern Ireland from Great Britain, that it requires EU law on goods regulation and VAT to continue to apply in Northern Ireland, and that it was bound to affect trade between Northern Ireland and Great Britain.  However, for better or worse, the Government decided to sign it anyway, and did so after winning an election in which it was presented as a “great deal”. 

The Government now believes that signing it was a mistake.  But the right approach to trying to resolve the mistake is to be honest about what it agreed, not to blame the other side, and to engage in good faith negotiation with all interested parties including the majority in Northern Ireland that broadly supports the Protocol as well as the minority that opposes it. 

There could well be better solutions than the current version of the Protocol to the problems thrown up by Brexit for Northern Ireland – but those solutions are likely to depend on far greater trust and co-operation between the EU and UK, and a far better and closer overall relationship of trade and cooperation between the UK and EU, than exist now or are likely to exist if the current Government goes down the path of deliberately breaking the binding promises it made less than three years ago.”