The Irish protocol in the withdrawal agreement rules out an independent trade policy

The Irish protocol in the withdrawal agreement rules out an independent trade policy

It seems fair to say that the draft Withdrawal Agreement agreed between negotiators and published this week has not been universally welcomed. In particular the Protocol on Ireland/Northern Ireland has been the source of much criticism. In a detailed briefing by the Institute of Economic Affairs, I described how, if it were to come into effect, this Protocol would effectively rule out an independent trade policy for the UK, and would throw up serious trade barriers between Great Britain and Northern Ireland.

It’s worth reminding ourselves of why this Protocol was thought to be necessary. Our government agreed in December last year to guarantee that there would be no physical infrastructure or related checks and controls at the border between Ireland and Northern Ireland. In order to achieve this they conceded that, unless they could put forward alternative solutions, Northern Ireland would stay in alignment with the rules of the customs union and single market in all areas necessary for north south cooperation, the all-island economy and protection of the Belfast (“Good Friday”) Agreement. It was also stated in the Joint Report that the UK would not allow new regulatory barriers between Great Britain and the United Kingdom. The EU’s interpretation of that was a draft agreement under which, “unless and until” other terms were agreed that would meet the objectives for the Irish border, Northern Ireland would remain in a customs union and regulatory area with the EU. This is what the backstop is.

The facilitated customs arrangement and common rulebook of the Chequers plan were an attempt to provide the alternative arrangement that would mean the backstop would never be activated. When Chequers was roundly rejected by the EU, and the Prime Minister declared after the Salzburg summit that no prime minister could accept the EU’s terms, the negotiators went back into their tunnel and reformulated the backstop so that Northern Ireland and the rest of the UK would be in the same customs territory, and Northern Ireland would retain EU regulations on goods “unless and until” a new agreement could be reached. Mrs May is now satisfied that this is something that a British prime minister can sign up to.

Some of us have long been convinced that keeping the Irish border free of infrastructure could be achieved by way of legal, technical and technological solutions. European customs experts Hans Maessen and Lars Karlsson have confirmed to the Northern Ireland Affairs Committee that this can be done. But the EU negotiators and the Irish government have been adamant that the requirements of EU law mean that only a customs union and regulatory harmonisation on goods can achieve this, as even with a free trade agreement with zero tariffs and quotas, the risk of goods that have not been duly declared for customs purposes or that do not meet EU regulations might cross the border cannot be tolerated.

Under Article 6 of the Protocol, fisheries and aquaculture products will be excluded from the customs union arrangements. Because Northern Ireland would be part of the EU’s customs unions, fish caught by British mainland-owned boats would be subject to tariffs on import to Northern Ireland, and fish caught by Northern Irish fishermen would be subject to tariffs on being sold in Great Britain, unless an agreement between the UK and the EU on access to waters and fishing opportunities is reached. Irish Government and EU negotiators could be forgiven for assuming that the British negotiators will concede on this as they have on almost everything else, and sign away fishing rights to the EU. But they might not, and then we would face import duties being payable between Great Britain and Northern Ireland, further diminishing the idea that this is a UK-wide backstop. Bad news for the fishing industry and consumers on both sides of the Irish Sea.

It is often overlooked that as well as being by far the biggest market for goods sent outside Northern Ireland  64% of goods brought into Northern Ireland come from Great Britain, with 12% from Ireland and 59% of its external sales are to Great Britain, as against 12% to Ireland. In seeking to preserve frictionless trade with Ireland, the Protocol, if it were to come into effect, would introduce costs and formalities for the vastly more significant trade within the UK. As former Brexit minister Suella Braverman noted in her resignation letter, customs professionals are clear that this could have been avoided. It’s time to start listening to them.

Note: This article originally suggested that in the absence of agreement on fishing rights, duties would be payable between Northern Ireland and Ireland on fisheries and aquaculture. As Northern Ireland would be in the customs territory of the EU, in fact the tariffs would apply between Northern Ireland and Great Britain.

The withdrawal agreement throws up serious trade barriers between GB and Northern Ireland, says @MissVHewson
In seeking to preserve frictionless trade the Irish Protocol introduces more costs, writes @MissVHewson