Documents to download

The Northern Ireland Protocol: Background and trading issues

Following the UK’s decision to leave the EU, the two sides drew up a Withdrawal Agreement (WA) that set out how the UK’s exit would work. This Agreement came into force on 31 January 2020.

The WA is separate from the UK-EU Trade and Cooperation Agreement (TCA), which sets out the future relationship between the UK and the EU.

The Northern Ireland Protocol (the Protocol) is an integral part of the WA. The Protocol sets out Northern Ireland’s post-Brexit relationship with both the EU and Great Britain (the rest of the UK).

Trade in goods under the Protocol

The Protocol states that Northern Ireland (NI) remains part of the UK customs territory and so NI will be included in UK free trade agreements. UK authorities are responsible for implementing the Protocol in both GB and NI.

However, more significantly the Protocol states that NI must follow the EU’s rules for bringing goods in and out of the EU (the customs code) and many EU single market rules for goods, while GB will set its own customs and regulatory rules. This allows for the free movement of goods between Northern Ireland and Ireland and the rest of the EU.

This approach means new checks and controls are needed for goods moving both from Great Britain to Northern Ireland but also, to a lesser extent, from Northern Ireland to Great Britain. This is often referred to as “putting a border in the Irish Sea”.

Issues, negotiations, and grace periods

The full details of how the Protocol would operate were not decided by the EU-UK Joint Committee, set up under the WA, until December 2020. This gave little time for business in NI and GB to prepare for the new regime. The EU and UK agreed therefore, to simplify some procedures for a short period and temporarily suspend the full application of EU law to NI that mandated checks and controls in several parts of the Protocol, in a series of what became known as “grace periods”.

Some of the most consequential of these were:

  • a three-month grace period for supermarkets and their suppliers, for EU agri-food rules;
  • a six-month grace period for supermarkets for EU rules on certain types of chilled meats, such as sausages;
  • a one-year grace period for implementing in full the EU’s rules on testing and selling human and veterinary medicines.

Despite these grace periods, problems with moving goods between GB and NI have emerged, and businesses are concerned that these issues will get worse when the grace periods end and are looking for permanent solutions.

In response the UK has since asked the EU for flexibility in several other areas, such as steel quotas, the movement of livestock, and the movement of pets.

The UK unilaterally extended the three-month agri-food grace period in March 2021. In response the EU started an enforcement mechanism, raising tensions between the two sides. In June 2021, the UK then asked the EU to extend the six-month grace period for fresh meats, which the EU has granted for a further three months, alongside announcing several proposals for new Protocol flexibilities.

Flexibilities requested and granted

The EU’s proposed solutions included flexibilities for the movement of guide dogs, the movement of livestock from GB to NI, and a requirement for UK drivers to show motor insurance green cards. The EU also agreed to change the application of EU law to ensure that medicines from GB can move into NI without constraints that might affect supplies in the region.

Article 16

The Protocol includes an emergency brake mechanism that allows either party to introduce emergency measures to deal with serious difficulties arising from implementing the Protocol. This is set out in Article 16.

Article 16 (1) states that if applying the Protocol leads to “serious economic, societal or environmental difficulties that are liable to persist”, or to “diversion of trade” then either side can impose “appropriate safeguard measures”. These measures, however, need to be targeted in scope and duration to directly address the problems they are trying to fix. The other side can also implement their own counter-balancing measures.

The EU briefly proposed using Article 16 to stop vaccine exports from the EU moving to GB through NI, but swiftly backed down after criticism from the Irish and UK Governments.

Unionist politicians in NI have been calling for the UK Government to trigger Article 16 to stop checks and controls on goods entering the region.

Command Paper on ‘the way forward’

On 21 July 2021, the UK Government published a Command Paper, Northern Ireland Protocol: the way forward. The paper in part reiterated the Government’s calls for the EU to show more “flexibility” and “creativity”.

Specifically, it suggested that the EU could use the “at risk goods” principle used under the Protocol for applying tariffs to GB-NI trade to both customs and Sanitary and Phytosanitary (SPS) checks (checks on agri-food, plants and animals), to differentiate trade based on its destination. Goods that were destined for Northern Ireland would not require customs processes and most SPS checks, while those moving to Ireland would have full customs and SPS formalities which the UK would enforce.

The Government asked for the grace periods to continue indefinitely and for the EU to halt its legal proceedings while the EU and UK negotiated.

The paper also proposed some significant new changes to the Protocol, asking for the jurisdiction of the Court of Justice of the EU (CJEU) over the Protocol to be removed, as well as restrictions on State Aid. It also requested new flexibilities in areas such as VAT and for medicines to be removed from the scope of the Protocol entirely.

On Article 16, the Government said it believed the threshold for triggering it had been reached but it would not do so yet, hoping for further solutions in the negotiations.

EU reaction

The EU rejected renegotiating the Protocol, pointing to the new flexibilities it had already proposed in areas such as medicines and the movement of live animals.

It said, however, it would continue to engage with the UK, including on the suggestions made in the paper. While it was ready to continue to seek creative solutions, they should be “within the framework of the Protocol”.

On 27 July the EU said that it would halt legal proceedings against the UK for breaching the Protocol, “in order to provide the necessary space to reflect on these issues and find durable solutions to the implementation of the Protocol”.

NI reaction

DUP leader, Sir Jeffrey Donaldson MP, welcomed the paper as a “step in the right direction”, but said permanent solutions were needed. His party wants the Protocol removed. Sir Jeffrey warned that if solutions are not found soon, he may remove his party from the Executive, also said he would direct DUP Ministers to not implement any new checks on goods at NI ports, and ask his Members of the Assembly to not pass any new legislation required to keep NI in line with EU single market regulations.

Sinn Féin rejected the paper, calling for the UK Government to implement the Protocol it negotiated and agreed to, saying it must not be allowed to “renege on international law”.

The Social Democratic and Labour Party (SDLP), Ulster Unionist Party (UUP), and Alliance parties all advocate for the EU and UK to sign up to some form of veterinary/SPS agreement aiming to significantly reduce the number of checks on agri-food products moving from GB to NI. However, while the UUP welcomed the Command Paper as “providing a potential pathway” to sorting out the Protocol, the SDLP and Alliance criticised the UK Government’s approach calling on them to engage with the EU.

UK extends grace periods indefinitely, pushes EU for answer

The UK has pushed the EU to respond to its Command Paper proposals. The Irish Foreign Minister, Simon Coveney, suggested that proposals would be coming in the “second half of October”.

On 6 September in a Written Ministerial Statement, Lord David Frost said the Government will “continue to operate the Protocol on the current basis”, including grace periods and “easements” that are in place. This suggests that all grace periods have been extended indefinitely.

Proposals for permanent solutions

A more permanent solution to controls on animals and plants, (SPS checks) would be for the UK and EU to sign a veterinary agreement.

Two of the EU’s veterinary agreements have been suggested as models for an EU-UK deal, one with Switzerland, and another with New Zealand (NZ). The EU-Swiss agreement removes almost all checks and paperwork. However, it requires Switzerland to largely align to the EU’s food and plant safety and animal health rules.

The EU-NZ agreement is an ‘equivalence agreement’, in which both sides certify their rules and regulations are equivalent to each other, which would significantly reduce the number of checks. However, veterinary certificates would still be required under such an arrangement, and the EU prohibition on chilled meats would also still apply.

The UK Government has said it would consider a NZ-style equivalence agreement, but not one that constrains it from signing trade agreements with other countries.

Other suggested solutions for problems in trading goods include “trusted trader schemes” and building on the “at risk goods principle” used for applying tariffs on agri-food goods moving from GB to NI .

There have also been calls for Northern Ireland’s political institutions and civil society to have a greater say on Protocol-related discussions between the EU and UK

Documents to download

Related posts