What would the proposed changes to the Northern Ireland protocol mean for businesses?

The government has started another major Brexit row after announcing it will introduce legislation to unilaterally override parts of the Northern Ireland protocol. Brussels reacted angrily after Liz Truss laid out plans to scrap parts of the agreement to ease the flow of goods between Great Britain and Northern Ireland.

What is the dispute?

The government claims that, as it is currently operating, the protocol undermines the Belfast Agreement, better known as the Good Friday Agreement, that safeguards peace in Northern Ireland.

The protocol seeks to ensure there is no hard border on the island of Ireland by ensuring goods going from Great Britain to Northern Ireland follow the rules of the EU’s single market.

The government says this creates an unacceptable border in the Irish Sea, which effectively separates Northern Ireland from Great Britain. It wants the EU to allow a relaxation of checks at that border, particularly on food.

It accepts that goods destined for the Republic of Ireland will be subject to full checks. However, it wants the “burden of proof” to be reversed so that it is assumed that goods going from Great Britain to Northern Ireland stay in the UK unless it is proved that they are heading for the Republic of Ireland, which is in the EU.

It also wants so-called trusted trader firms to be subjected to light checks, or no checks at all. At the moment, traders moving goods into Northern Ireland from Great Britain have to make customs declarations. The British government wants to simplify this process by cutting the amount of information that needs to be submitted for goods.

Sam Lowe, director of trade at consultancy Flint Global, said he believes these measures are “all theoretically possible”, but firms may not be ready to implement them. It would also require “a lot of EU-UK trust”, he said. That is not something in plentiful supply right now.

The UK wants businesses in Northern Ireland to have a choice: to either conform with UK regulations and standards (if placing the product solely on the UK market) or EU regulations and standards.

What does that mean for businesses and trade?

Checks undoubtedly present obstacles to businesses moving goods between Great Britain and Northern Ireland, and then onward into the Republic of Ireland.

A poll by the Northern Ireland Chamber of Commerce found that, during the first three months of 2022, 55 per cent of businesses there said Brexit had increased company costs and 43 per cent said the protocol had increased costs. Archie Norman, a former Conservative MP, and now chair of Marks & Spencer claimed on Tuesday that a lorry full of food driving from Great Britain through Northern Ireland to the Republic has to carry 700 pages of documentation.

However, it has also provided opportunities for businesses in Northern Ireland. That burden has caused some businesses to move part of their operations to Northern Ireland so that they can sell goods freely across both the UK and EU.

What do businesses want?

Across the board, business groups urged the two sides to negotiate a compromise. A trade war could be disastrous. “The UK and EU governments need to work together to find a practicable solution to trade under the Northern Ireland protocol,” Andrew Opie, director of food and sustainability at the British Retail Consortium, said.

“This means giving the EU the controls they need to ensure there is no leakage into the single market, but also ensuring GB-NI trade is administered in a way which avoids unnecessary and unaffordable costs for retailers and their consumers in Northern Ireland.”

And according to the Food and Drink Federation’s head of international trade Dominic Goudie, “The Northern Ireland protocol has brought increased complexity and cost for businesses moving food and drink within the UK. We urge the UK government and the EU to redouble their efforts to find a mutually acceptable solution to moving goods in and out of Northern Ireland and to work closely with industry on both sides of the border in doing so.”

Are those changes realistic?

There is scope for the EU to reduce the burden of checks while still maintaining the integrity of its single market for goods.

Boris Johnson said on Tuesday that the plan is to get rid of “some relatively minor barriers to trade” but they would require some fairly fundamental changes to the Brexit deal that he agreed.

And what the UK is asking for is beyond what the EU is currently likely to agree to, not least because it requires rewriting the protocol.

Is the UK legally allowed to do this?

The foreign secretary, Liz Truss, said that the government is “very clear” that the changes are “consistent with our obligations in international law”.

However, unilateral action through domestic legislation is at odds with Article 4 of the withdrawal treaty, which is the UK's international obligation.

Instead of introducing domestic legislation, the government could have used measures under the treaty itself to address exceptional circumstances. Article 16 allows the EU or UK to do just that.

To achieve the level of change that the UK is demanding would require a different agreement and the EU has no mandate for that.

What has the EU said?

Maros Sefcovic, the European Commission vice president in charge of Brexit negotiations, said the EU will use “all measures at its disposal”. That could mean imposing tariffs or scrapping the post-Brexit free-trade agreement.