The UK’s expected decision to U-turn on plans to undermine the Ireland/Northern Ireland Protocol does little to mitigate the Brexit impact in Ireland, writes David Whelan.
For those closely following the twists and turns of the Brexit negotiations between the UK and the EU on the future trading relationship, the UK’s decision to roll back on its plans to break international law, through its Internal Markets Bill, will come as no surprise.
UK Prime Minister Boris Johnson caught many in the EU by surprise in September when he revealed the Bill which effectively gave British ministers discretion over implementation of parts of the Northern Ireland Protocol.
The clear intent to break international law sparked widespread anger, not just on the EU side, with Foreign Affairs Minister Simon Coveney TD instantly deploying Ireland’s ambassador in London to meet with Downing Street, but also within Prime Minister Johnson’s own party. Talk of rebellion spread throughout Westminster with former Prime Minister Theresa May re-emerging to led warnings that any such move would damage Britain’s standing in the world.
However, those who had analysed the UK’s approach to the negotiations to date, particularly under Johnson’s premiership, remained sceptical of the UK’s commitment to see such a bold move through.
For the cynics, the Internal Markets Bill represented little more than a threat to the EU, a bid to soften up their rigid approach to the negotiations, as proved to be the case on 8 December.
Proximity to a deal was always viewed as the perfect cover for the UK to neuter the Internal Market Bill, offered as an act of concession to the EU while at the same time saving face at home.
And so, in the build up to Johnson’s face to face meeting with EU Commission President Ursula von der Leyen, the UK Prime Minister announced the scrapping of all “lawbreaking” clauses from the legislation, in a move to improve relations.
European Commission Vice-President Maroš Šefčovič and UK Cabinet Office Minister Michael Gove announced that the EU UK Joint Committee, established to implement the Withdrawal Agreement, had come to an agreement which would see the UK withdraw all clauses in the Internal Market Bill, which would have breached the Northern Ireland Protocol and a pledge to not introduce any similar provisions in the UK’s Taxation Bill.
Solutions were found to questions around food imports from Great Britain to Northern Ireland, EU state aid rules, the supply of medicine and the EU’s presence in the North. The Joint Committee also reached agreement on whether goods originating in Great Britain would be at risk of crossing the border to the south and potentially attracting a tariff.
The Protocol on Ireland/Northern Ireland was drawn up to ensure the avoidance of a hard border in Ireland and protect the integrity of the single market, regardless of the outcome of the future relationship negotiations.
It allows the North to remain legally part of the UK customs territory but be subject to certain provisions of EU law. Under the Protocol, goods from Northern Ireland will have free and open access to the EU single market, however, necessary checks and controls will take place on goods entering Northern Ireland from Britain and other third countries.
In September 2020, the Government outlined “substantial challenges” for supply chains and trade flows which would require checks and controls in both directions on EU-UK trade, with or without a deal, in its Brexit Readiness Action Plan.
“Proximity to a deal was always viewed as the perfect cover for the UK to neuter the Internal Market Bill, offered as an act of concession to the EU while at the same time saving face at home.”
Any imports or exports between Ireland and Great Britain, be they by a company or an individual, will require the completion of a customs declaration. Trade in WTO terms would mean an addition of tariffs and quotas in trade in both directions, with particular impact on the agri-food sector.
Some of the key impacts in the future relationship between Ireland and the UK are:
The economic cost of Brexit to Ireland is an estimate. Early indications were that the long-term cost of a no deal scenario could be as much as a 5 per cent reduction in real output, while a smooth transition would still have inflicted a 2.67 per cent reduction. Covid-19 has thrown further uncertainty on economic forecasts but undoubtedly barriers between Ireland and its closest trading partner, even without tariffs, will be economically damaging.
This is largely due to disruption in trade. Disruption is envisaged between east-west trade due to delays at ports and businesses capability to meet regulatory requirements. These delays will have knock on impacts on wholesale and retail supply chain and disruptions will see lower exports to the UK as businesses seek more favourable markets.
Disruption in trade will also apply for services. From 1 January 2021, the automatic facility in EU law that has generally allowed UK businesses, as businesses established in an EU member state, to provide services in another EU member state, will end. UK businesses will no longer enjoy such benefits as freedom of establishment, a common regulatory and supervisory environment, or the EU’s system of recognition of professional qualifications. The concept of ‘passporting’, which implies that authorisations issued by one member state based on EU rules are sufficient to access the entire single market, will also no longer apply to the UK.
Any barriers to trade or tariffs will ultimately filter back to consumers. Any increased costs, including customs bureaucracy, will enhance trade disruption which will result in the potential closure of businesses and loss of jobs. The cost of living is likely to increase and disruptions to every day life will occur in the form of online retail purchases to from the UK, the exchange of personal data with UK entities and for transport services to, from and through Great Britain.
Any barriers are also a threat to the status quo of British-Irish relations. The Government has outlined plans to carry out a strategic review of the relationship in 2021, recognising that the operation of the Common Travel Area, and the safeguarding of reciprocal rights in social protection, education, and healthcare will require a strong relationship.