Graham Gudgin is Chief Economic Adviser at Policy Exchange.
Last week the Cabinet Office released its command paper on how the United Kingdom intends to operationalise its undertakings in the Irish Protocol section of last October’s Withdrawal Agreement.
The most striking aspect was that firms must submit customs declarations for all goods coming into Northern Ireland from Great Britain. These transactions will also be subject to checks.
For animals these will take place at expanded customs facilities at ports in Britain or Ulster. For other goods, the (occasional) checks can be undertaken at firms’ premises on a risk-assessed basis. Although in a sense minimal, the requirement for customs declarations and checks on internal trade within the UK is unprecedented and extraordinary, as I set out in a Policy Exchange analysis.
How does all of this square with the Prime Minister’s bold promises on trade with Northern Ireland?
The first promise was made when the Boris Johnson spoke at the annual conference of the Democratic Unionist Party in late November 2018, when Theresa May was still Prime Minister and still attempting to push her doomed Withdrawal Agreement through Parliament. He said that the backstop “would cleave NI from the UK” and added “we need to junk the backstop”. In the same speech he expressed his support for a bridge to Ulster.
A year later, during the 2019 general election campaign, the now Conservative leader told traders in Northern Ireland that if any of them were asked to fill in customs paperwork they should telephone the Prime Minister who would “direct them to throw the form in the bin”.
Even then, confusion reigned since Steve Barclay, the Brexit Secretary, told a House of Lords Committee that businesses in Ulster would need to complete export declarations for shipments to the mainland.
The 2019 Tory manifesto had been more guarded. The Protocol was not explicitly mentioned. Instead the section on strengthening the union promised full economic benefits for Northern Ireland from any new Free Trade Agreements and unfettered access to markets in Great Britain. Tellingly, there was no undertaking to avoid customs declarations and checks for consignments going from the mainland to the Province. Instead there was only the rather oblique statement that in implementing our Brexit deal “we maintain and strengthen the integrity and smooth operation of our internal market”.
In late January 2020, Johnson – now with a stunning election victory and strengthened Commons position – told the DUP’s Sir Jeffrey Donaldson that it was “emphatically” the case that there would be unfettered trade in either direction.
Days later, Michel Barnier gave a speech at Queens University Belfast in which he warned that the legal undertakings given in the (revised) Irish Protocol could not be avoided. In agreeing the Protocol he said, “the UK agreed a system of reinforced checks and controls for goods entering NI from GB.” I know what is written in the text [of the Protocol] he added, “it is very precise”.
By that stage the UK was three days from leaving the EU, after the Prime Minister had renegotiated the Withdrawal Agreement with only limited changes to the 132-page, hugely detailed Irish Protocol.
The key change was of course to remove Great Britain from its stipulations binding the UK into the EU’s Customs Union and much of its Single Market regulatory framework. The revised Protocol largely returned to the EU’s original proposal to avoid any Irish land border by keeping Northern Ireland operationally within the EU Customs Union and within the Single Market for goods, moving the outer economic border of the EU to the Irish Sea between Ulster and the mainland. This had been previously denounced by May as something no British Prime Minister could sign up to because of its implications for the Union.
The only positive addition in respect of Northern Ireland was the undertaking that the protocol should be subject to a democratic vote in the Northern Ireland Assembly after four years. This inspired addition originated from Downing Street and notably not from the Northern Ireland Office, whose drafting on the Protocol appeared to give Brussels and Dublin everything they desired with only rather weak and vague safeguards for pro-Union interests in the UK.
This addition was strongly resisted in Dublin but eventually inserted to maintain a degree of democratic consent into what was otherwise an external imposition on the Province. Dublin’s expectation will have been that a rejection of the Protocol in 2024 would be unlikely given the built block of pro-EU nationalists in Northern Ireland. In any event there is no indication whatsoever about what would replace the Protocol if it were rejected.
The UK appeared to stall progress on implementing the Protocol but eventually, in April 2020, an initial meeting of the important Joint Committee took place chaired by Michael Gove. This was followed by an EU technical note laying out in stern detail that what was required from the UK in respect to Northern Ireland includes applying the Union Customs Code, EU law and VAT rules to all production and trade to and from NI.
Last week’s Cabinet Office document respects the legalities of the revised Protocol but attempts to do so with the lightest of touches. It avoids any export declarations for trade from the Province to the mainland as unnecessary, and has refused the EU request for an office in Belfast to monitor UK compliance with its rules. Thus, Johnson’s promise of unfettered trade from Ulster is delivered.
Customs posts are to be maintained or enhanced to check animal movements in the other direction, but this was always expected and has never alarmed the DUP. The document also claims that Ulster remains in the UK Customs Union and will gain the benefits of future FTAs.
But this is only true in as far as trade between the Province and the EU remains unaffected. Similarly, the claim of no international border inside the Union may be legally the case but, since customs declarations are needed, this is hardly the full story. The main success of the new document is the avoidance of customs posts at Irish Sea ports except for animals. Any checks will be done at firms’ premises.
So, how many marks do we give the Prime Minister? The DUP’s judgement is perhaps the best guide. They say that the Protocol should have been avoided but they recognise the difficult conditions under which it was signed, including the damaging Benn Amendment. They also respect the his efforts to minimise both the economic damage to Northern Ireland and the political damage to the Union. Arlene Foster’s judgement of ‘a glass half-full’ sounds about right.
Moreover, we are still not at the endgame. Details on customs declarations have yet to be finalised and some in Downing Street believe that HMRC could still relieve firms of the need to submit customs declarations themselves and instead use existing paperwork such as VAT returns.
The Government has also taken legal advice on avoiding the Protocol if no FTA is signed. Since the Withdrawal Agreement was signed in order to move to agreeing an FTA, any EU refusal on this matter would question the wisdom of having signed the Protocol.