Businesses face difficult 3 months for Great Britain – N Ireland trade

The N Ireland Protocol continues to be in the news. Yet it was signed nearly 2 years ago, with Boris Johnson describing it as “oven-ready“.  As the House of Lords reported today:

Addressing the implications for Northern Ireland and Ireland of UK withdrawal from the EU has been the most fraught, technically complex and politically divisive element of the entire Brexit process”.

The background is that the Protocol is part of the UK’s EU Withdrawal Act. It was agreed by the UK Parliament and endorsed in a General Election.  It created a customs and regulatory border in the Irish Sea, which the UK is legally obliged to administer under supervision from EU institutions.

Effectively, this means that inspections take place at Northern Ireland ports, and customs documents have to be filled in.

Yet back in January, the UK’s N Ireland Secretary Brandon Lewis, claimed that “There is no ‘Irish Sea Border’“. And although he has since admitted that his comment “has not aged well”, the UK government last week issued a new report effectively calling for the Protocol to be renegotiated.

The issue is that the “grace period” for the detailed new rules to apply will end on 30 September. Time is therefore starting to run out for the problems to be resolved.  And there appear to be only 3 likely options:

  • The Protocol is renegotiated in line with the UK’s position. This is the least likely option as the EU has already confirmed that it “will not agree to a renegotiation of the Protocol“. It would also be very unusual for a major treaty to be renegotiated so quickly after signature, and would take a long time to finalise.
  • The UK unilaterally invokes Article 16 to cancel key clauses. This is also an unlikely outcome as the government’s own legal advice was very clear on the likely impact of the trading arrangements before Parliament debated them. So it would be hard to argue the problems were unforeseeable.
  • The UK agrees to implement the Protocol that it has signed. By default, therefore, this is the most likely outcome, although it will not be easy to achieve.

There are 2 main reasons why the UK may end up accepting this outcome:

  • The first is that it needs to negotiate a wide range of new trade deals to replace those it has lost by leaving the EU. And it is very unlikely that major countries will be keen to sign such deals, if they feel they can’t trust the UK to deliver on what it has agreed
  • The second is that UK is very keen to agree a major trade deal with the USA.  But that depends on President Biden. And he is very proud of the Good Friday Agreement, which was brokered by the US Special Envoy to N Ireland. Putting the Agreement at risk would end trade deal hopes.

That said, there is no doubt that this would be a difficult outcome to achieve. And so it is impossible to rule out the risk that the UK may decide to implement the second option and ‘pull the plug’ on the Protocol.

In turn, of course, this would also create the risk of a wider trade war developing with the EU, as well as a highly-charged confrontation in the courts.

The Ready for Brexit team is very experienced in developing contingency plans. Please contact us if you would like our help on this complex issue.

How Ready for Brexit
can help you

  • We can help you redesign your business model and survive Brexit
  • Our consulting team have personal experience of operating before the Single Market and Customs Union
  • We know the issues and can help you solve your problems

 

We can help you deal
with key Brexit issues

Customs and Tariffs
Rules of Origin
Northern Ireland
Incoterms
REACH

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How can Ready for Brexit help you?

We can help you redesign your business model and survive Brexit.
Our consulting team have personal experience of operating before the Single Market and Customs Union began.
We know the issues and can help you solve your problems.

We can help with the key issues: