The UK government on Wednesday announced temporary measures to smooth the disruption caused by a new trade border in the Irish Sea after January 1, but industry groups warned they still faced “considerable” long-term challenges as a result of the Brexit deal for Northern Ireland.
The precise implementation of the Northern Ireland protocol, part of last year’s withdrawal agreement that paved the way for Britain’s legal exit from the EU in January, has been a major cause of friction between London and Brussels.
In September prime minister Boris Johnson threatened to introduce new laws that would allow him to unilaterally override parts of the agreement — which keeps Northern Ireland in the EU’s customs code — if Brussels did not implement it in a reasonable manner.
On Tuesday that threat was withdrawn after Britain’s Cabinet Office minister Michael Gove struck an agreement-in-principle with the European Commission’s vice-president Maroš Šefčovič over the rollout of the new arrangements.
Mr Gove told MPs on Wednesday afternoon that the implementation of the Northern Irish protocol would ensure “a smooth flow of trade” between Great Britain and the region after the UK’s transition period ends in just under three weeks.
He added that the agreement, the full details of which will be published in the coming days, removed all checks on goods going from Northern Ireland to Great Britain, and limited the risk of the protocol affecting UK government state subsidy decisions after January 1.
To ease the imposition of the new border controls for goods flowing the other way — from Great Britain into Northern Ireland — Mr Gove announced that supermarkets would receive a three-month grace period from needing to fill in export health certificates on animal and plant products.
A six-month exemption from rules requiring meat products to be frozen before export was also agreed in a move that temporarily allows supermarkets to continue to send meat products as at present — but this risks expiring next year if a wider deal cannot be struck with Brussels.
A “trusted trader” scheme will also be put in place to reduce bureaucracy for supermarkets and suppliers that can prove their products are going directly to Northern Irish consumers and are not at risk of leaking into the Republic of Ireland, which would make them subject to tariffs.
Supermarkets supplying Northern Ireland will receive a 3-month exemption from filling export health certificates. © Stephen Barnes/Alamy
Goods from Great Britain that could be shown to be going directly to Northern Ireland’s consumers would enter the region tariff-free, Mr Gove said. The medical and veterinary industries will also have a one-year adjustment period to adapt to the protocol and avoid shortages of critical medical supplies.
Despite the temporary measures outlined by Mr Gove, Northern Irish businesses said they would still be facing significant frictions when trading in future with Great Britain.
UK officials conceded that after the grace period, all animal and plant products entering Northern Ireland from Great Britain would require export health certificates — which cost £200 each — and all goods would need import declarations.
After the expiry of the six-month grace period for chilled meat, Northern Ireland will have to source fresh meat products from either its own producers or the Republic of Ireland, unless the exemption could be extended to all UK-EU trade by agreement with Brussels.
Trade groups said privately that while Mr Gove has focused on the narrow question of “tariffs”, in reality the additional bureaucracy created by the protocol would fundamentally change the relationship of Northern Irish businesses and consumers with those in Britain.
“There are short-term measures to stop the images of empty shelves on January 1 and save face for both the UK and EU — but not enough to stop costs rising,” said a trade executive who asked to remain anonymous to preserve their relations with the government.
Aodhán Connolly, director of the Northern Ireland Retail Consortium, said further work would be needed to protect households from unaffordable price rises and availability issues. “There will also be considerable challenges in the medium term,” he said.
Groups representing smaller businesses in the supply chain questioned whether wholesalers and suppliers to the hospitality sector would be eligible to use the trusted trader scheme.
Shane Brennan, chief executive of the Cold Chain Federation, said that a scheme that only helped big supermarkets would be an “an anti-competitive hammer blow” for wholesalers that serviced small and local food businesses. “The derogation should apply widely and not just service the biggest companies with the loudest voices,” he said.
Northern Ireland’s trade groups warned this week that despite the creation of a £200m trader support service (TSS), they would not have time to adjust to new computer systems and border processes by January 1.
In other areas of contention for Brexiters, such as whether the EU would have a permanent diplomatic presence to monitor the implementation of the protocol, Mr Gove said the EU would have no “Belfast ‘mini-embassy’ or mission”.
Instead, EU officials will be present as needed in Northern Ireland to monitor compliance and have the power to request checks, which must then be conducted by UK officials. They will also have access to relevant databases.
In the last area of contention — whether clauses in the protocol might inadvertently impinge on UK government decisions to provide subsidies for companies after January 1 — Mr Gove said that two sides had clarified the agreement in order to limit its scope to cut across UK sovereign decision making.
“It means firms in GB stay outside state aid rules where there is no ‘genuine and direct’ link to Northern Ireland, and no ‘real foreseeable’ impact on NI-EU trade,” he told MPs, although some legal experts have questioned whether the “clarification” carries legal force.
Source: Economy - ft.com
