The UK’s move to scrap part of its post-Brexit deal with the EU could lead to a trade war, British food sector representatives have warned, while calling on both sides to resume negotiations.
Foreign secretary Liz Truss on Monday evening tabled a bill in Parliament aimed at changing aspects of the Northern Ireland Protocol, which kept the region inside the EU’s single market for goods but has been criticised by unionist political parties for creating a de facto internal economic border in the UK.
The government’s proposed “green and red channels” for goods entering Northern Ireland from Great Britain would “remove unnecessary costs and paperwork for businesses trading within the UK, while ensuring full checks are done for goods entering the EU”, Truss said. She claimed the measures would “end the untenable situation where people in Northern Ireland are treated differently to the rest of the United Kingdom” but would at the same time “safeguard the EU single market and ensure there is no hard border on the island of Ireland”.
So what has been the response to the proposals?
What food sector bodies are saying:
Stuart Anderson, head of public affairs at the Northern Ireland Chamber of Commerce & Industry, says that while the proposals feature “attractive elements”, there remains the need to strike “a careful balance” to ensure “gains made to date by our exporters and agri-food sub-sectors”.
According to Ulster Farmers’ Union president David Brown, “pragmatic solutions need to be found to make the NI Protocol work for agriculture in its entirety, and as one of NI’s largest and most economically valuable sectors, it’s in government’s best interests to deliver on this immediately”.
Michael Bell, executive director of the Northern Ireland Food and Drink Association (NIFDA) says “food and drink businesses in Northern Ireland need to have frictionless trade with the UK and the EU”. The protocol is “vital to ensuring continuity of trade in goods across the island of Ireland, and between Northern Ireland and Great Britain”, he adds.
And Nick Allen, CEO of the British Meat Processors Association, warns against the UK making changes, saying the meat sector has “adapted to the new system and things are now running smoothly”.
“While it would be preferable not to have the extra friction, we understand that the new trading environment demands it,” Allen says of the post-Brexit rules, which he further warns are “preferable to the kind of trade war that could be sparked if the UK decides to unilaterally walk away from the agreement”.
Andrew Opie, director of food & sustainability at the BRC, says “consumers in Northern Ireland need long-term stability based on an agreement which gives the EU the controls they need to ensure there is no leakage into the single market, and also ensures GB-NI trade is administered in a way which avoids unnecessary and unaffordable costs for retailers and their consumers in Northern Ireland”.
“We believe that the traceability and IT controls that retailers use can demonstrate that products remain in Northern Ireland,” he adds. “In the immediate term, it is crucial we maintain the use of grace periods which have avoided unnecessary costs for retailers doing everything they can to control food price inflation.”
Marco Forgione, director general of the Institute of Export & International Trade, says “steps need to be taken to help facilitate the free flow of goods and services”, while Stephen Phipson, CEO of manufacturers’ organisation Make UK, calls on “both sides to come together and solve this in a way that meets the needs of business”.
“We recognise that the protocol in the current state does need to be changed,” Phipson says. “But the way to do this is not to start a trade war with the EU in the middle of a financial crisis which would be damaging for both British and EU businesses alike and put further strain on already stretched supply chains.”
Some food suppliers in Northern Ireland say they have benefited from retaining access to the vast EU market and from a surge in all-island farm and food trade.
The Northern Ireland Meat Exporters Association says the protocol has complemented the wider EU-UK deal and helped establish “an effective and workable platform for trade between these islands and beyond”.
But the deal means the border for goods going to and from Great Britain to the EU, which came into force in early 2021, has not been applied on the island of Ireland but instead effectively runs down the Irish Sea.
The UFU’s Brown says “while some parts of the NI Protocol are working for several commodities, it is causing havoc for others” – which he says is down to ”NI remaining within the European Union regulatory zone, while Great Britain is considered a ‘third country’ outside the EU, creating restrictions and checks on agricultural produce, animals and plants moving from GB to NI”.
Last month Marks & Spencer told a House of Lords hearing that compliance with the protocol meant reduced shelf lives for some goods, costing the retailer some £30m.
But a day ahead of the government’s widely anticipated announcement, Bell of NIFDA said “Brexit itself presented Northern Ireland food and drink companies with many major challenges”. Most of these challenges, he added, “have been resolved by the protocol whilst offering new opportunities”.
“From an industry perspective, the protocol is working,” says the meat industry’s Allen, who describes as “a political issue” any decision to ditch the deal.
What the EU is saying:
The impasse over the protocol looks set to lead to ever-more strained political relations between the UK and EU. Truss earlier on Monday announced on Twitter that she had spoken to European Commission vice president Maroš Šefčovic – “to discuss the legislation we are announcing today to fix the problems with the Northern Ireland Protocol and restore political stability”.
The terms of the protocol allows for either side to make unilateral changes if it could be shown it have caused diversion of trade, though does not explain what threshold or measurement be used in making any such assessment.
But Šefčovič described the UK’s move as “unilateral action”, which he said was “damaging to mutual trust and a formula for uncertainty” – a line echoed by Ireland’s foreign minister Simon Coveney, who, after an early Monday phone call with Truss, warned the UK against “unilaterally introducing legislation which breaches international law”.
The serious situation in Northern Ireland means we cannot afford to delay.— Liz Truss (@trussliz) June 13, 2022
This Bill sets out comprehensive solutions to fix problems with the Northern Ireland Protocol, while protecting the Belfast (Good Friday) Agreement.https://t.co/4pFlz7IQhmpic.twitter.com/HEse2Hq4B1
What are UK and Irish politicians saying?
Prime minister Boris Johnson, who last week survived a no-confidence vote, told LBC Radio ahead of Truss’s announcement that any legal or trade sanctions retaliation by the EU would be “preposterous”.
By Tuesday morning, newspapers in Dublin were quoting unnamed EU officials claiming the bloc was drawing up a “hit list” of British goods, such as scotch whisky and car parts manufactured in regions where Johnson’s Conservative Party made gains in 2019 elections, which could be targeted.
Environment secretary George Eustice said the protocol, which has been furiously opposed by unionists in Northern Ireland, represented “a serious threat to the Belfast Good Friday Agreement”, the 1998 peace deal overseen by the London and Dublin, with backing from the US and EU.
The Democratic Unionist Party has cited its opposition to the protocol as justification for vetoing the establishment of a new devolved government in Northern Ireland, in which the DUP would play second fiddle to Sinn Féin, the Irish nationalist party which for the first time topped the poll in recent regional elections, and which on Monday labelled the UK government’s protocol proposals as “utterly reckless”.
Proponents of the protocol, including Sinn Féin, argued on the contrary that it was needed to preserve the 1998 peace deal, as otherwise it could lead to a reimposition of a formal border on the island of Ireland, a move that would likely spark opposition on both sides of the now name-only frontier.
The Tories received less than 300 votes in the most recent Assembly elections.— Sinn Féin (@sinnfeinireland) June 13, 2022
Boris Johnson and Brandon Lewis have absolutely no mandate or support for their reckless Brexit agenda.
A majority of people and parties support the protocol, and the opportunities that it creates. pic.twitter.com/iiOA4GOWOk
A letter opposing the UK’s move was signed by a majority of parliamentarians in the Belfast assembly, but not by any representative of the three unionist parties, with the DUP suggesting it would await passage of Truss’s new bill before announcing a decision on setting up an administration in Belfast. Truss on Tuesday urged unionist parties “to get on with” reestablishing the Belfast administration.
The proposed revision of the protocol came after the UK last week backed, along with EU and US, the so-called Joint Statement on Open and Predictable Trade in Agriculture and Food Products, which “reaffirm[ed] the urgency and importance of maintaining open and predictable agricultural markets and trade to ensure the continued flow of food, as well as products, services and inputs essential for agricultural and food production and supply chains” in the wake of the Russian invasion of Ukraine.
But backing out of the protocol hampers the UK’s prospects of persuading the US to negotiate a bilateral free trade deal, according to Democratic Party colleagues of president Joe Biden. The UK recently proposed amending regulations related to genetically modified food – potentially moving the national food industry closer to long-established norms in the US and in turn facilitating increased trade in food.