Stephen Booth is Head of the Britain in the World Project at Policy Exchange.
After the relief of reaching a deal with the EU at virtually the last minute, it would be fair to say that the new UK-EU relationship is off to a somewhat rocky start.
The immediate impact of the new relationship on UK-EU trade has been hard to gauge, in part due to the effects of earlier stockpiling and depressed volumes as a result of the pandemic. Nevertheless, predictions of long queues at cross-Channel ports have not been borne out and traffic has moved relatively freely.
Some disruption was to be expected, given that traders had little time to prepare for the details of the new relationship. Larger firms tend to have the systems in place to deal with the change, whereas smaller businesses, or those without experience of trading beyond the EU, face a bigger challenge. Some of the issues seen in recent weeks will be ironed out as traders adapt to the new requirements for checks and paperwork. However, there are also likely to be changes to some supply chains, with firms onshoring or offshoring operations, to accommodate the UK’s exit from the Single Market and Customs Union.
The surprise spanner in the works has been the ongoing political fallout from the differing performance of the UK and EU Covid-19 vaccine programmes, which has this week spilled over to the Northern Ireland Protocol.
It would be fair to say that the success of the UK’s vaccine programme appears to have rattled some senior figures in the EU, which is coming under increasing scrutiny from European media, given its rollout is also lagging behind the United States and Israel.
Emmanuel Macron’s accusation that the AstraZeneca vaccine is “quasi-ineffective” on over-65s – just hours before the EU’s drugs regulator approved it for use on all adults – has understandably angered UK ministers and officials. Meanwhile, Ursula von der Leyen has this week doubled down by effectively suggesting the UK compromised on vaccine safety.
Aside from aggravating the British, these comments are deeply unhelpful to the wider vaccination effort in the EU, where vaccine scepticism is a real issue. The latest YouGov tracker finds that only 46 per cent of French and 59 per cent of German respondents say they will take a Covid-19 vaccine. The figure for the UK is 81 per cent.
This has all been compounded by last weekend’s EU decision to impose export controls on vaccines (although the power doesn’t yet appear to have been used). This caused extreme controversy because the original regulation also contained a provision to invoke Article 16 of the Northern Ireland Protocol – a provision later described as a “mistake” and revoked within hours. Article 16 allows either the UK or the EU to unilaterally override the Protocol if its application leads to “serious economic, societal or environmental difficulties”.
Not only was the triggering of Article 16 unnecessary because, due to the UK having more doses than the EU, it is more likely that vaccines would move to the EU via Northern Ireland than to the UK. The EU has also ceded the moral high ground to Unionists that have long felt that the EU instrumentalised the Good Friday/Belfast Agreement (GFA) to achieve its primary objective of defending the integrity of the Single Market at all costs. The EU invoking Article 16 effectively imposed (however briefly) the North-South border that the EU has spent the last four years saying it is essential to avoid in order to respect the terms of the GFA.
It is worth remembering that the GFA neither mandated, nor in practice established, an all-island economy. The most recent statistics illustrate that, of the goods purchased from outside Northern Ireland, £10.4 billion were from GB and £2.4 billion from the Republic. The disparity for services is similar: £3 billion were purchased from Great Britai and £0.4 billion from Ireland.
Overall, this means that Northern Ireland purchases from Great Britain were worth 4.7 times more than Northern Ireland imports from Ireland and 1.7 times more than all imports from Ireland, the EU and the rest of the world combined. Great Britain-Northern Ireland trade is the activity that most impacts Northern Ireland society and its economy. As Matthew O’Toole, the SDLP MLA for South Belfast, notes, the economies in the North and the Republic are likely to diverge rather than converge in the many areas not covered by the Protocol, including all services.
Nevertheless, despite various easements negotiated between the UK and the EU late last year, there are growing concerns that the Protocol is causing real issues for East-West trade from Great Britain into Northern Ireland. In a troubling sign of increasing tensions, this week Mid and East Antrim Council withdrew staff from Brexit inspection duties at Larne Port over security concerns.
Meanwhile, there have been reports of disruption to fresh produce reaching supermarkets, Amazon has stopped sales of alcohol to Northern Ireland, and certain horticultural products, such as seed potatoes, soil and others, are now banned from crossing from Great Britain to Northern Ireland. The existing disruption could get worse as various grace periods on checks expire in the coming months.
The DUP, which has long been opposed to the Protocol in principle, has been under pressure to toughen its stance. It has this week launched a campaign to “free us from the Protocol”. The DUP want the UK to invoke Article 16 until these problems are resolved and argues that the EU’s recent actions have “lowered the threshold of how the mechanism can be used.” Arlene Foster also complained that some of the issues were due to UK officials “looking at the regulations and implementing it to the Nth degree.”
Michael Gove, who yesterday met with Maros Sefcovic in the Northern Ireland Protocol’s UK-EU Joint Committee, has said that the problems with the Protocol are not merely “teething problems” but “significant issues”. The UK hasn’t ruled out invoking Article 16 if problems cannot be addressed via negotiation with the EU. And given that Article 16 can be invoked as a result of a “diversion of trade”, it remains unclear how much disruption to Great Britain-Northern Ireland trade would be tolerated.
However, in the first instance, the UK has asked the EU for the current grace periods for checks on certain supermarket goods, pharmaceuticals, chilled meats and parcels crossing from Great Britain to Northern Ireland to be extended. The UK should also use this opportunity to explore with the EU longer-term fixes, such as permanent derogations for Great Britain-Northern Ireland trade allowing for agri-food products to be imported with fewer checks and restrictions.
Ultimately, the consent mechanism contained within the Protocol offers the Northern Ireland Assembly the right to terminate the arrangements after four years. This episode has highlighted that it is very much in the EU’s, and especially the Irish Republic’s interest, that the Protocol retains consent in Northern Ireland – and not just of a simple majority but broad cross-community consent. If not, the Protocol is inherently unstable.
It is encouraging that the Irish government has been quick to recognise there are genuine issues to address. While blaming Brexit as the root cause of the problems, Irish Foreign Minister Simon Coveney told the BBC that “there are elements of the Protocol that are causing problems and we need to focus on improving the Protocol where possible within the parameters of the agreement.” He noted that his aim was to “try to ensure that trade from GB into Northern Ireland, in particular, can be as smooth as possible.”
The EU’s missteps over the last week have provided the UK with an excellent opportunity to seek changes to the Protocol that might provide for a more durable settlement.