Protocol on Ireland/Northern Ireland (EUC Report)

This is reinforced by Article 6, which states:

“Nothing in this Protocol shall prevent the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom's internal market.”

However, these are offset by Article 5, which applies the entirety of EU customs legislation, including the union customs code, to Northern Ireland. Article 5 thus retains a single regulatory zone for goods on the island of Ireland, achieving the key aim of avoiding a hard border between Ireland and Northern Ireland. Yet this requires the imposition of new customs processes and regulatory checks on goods moving from Great Britain to Northern Ireland.

The first paragraph of our summary noted that:

“On the one hand, the UK Government has been unable to explain precisely or consistently what it agreed with the EU. On the other … the EU’s insistence that ‘the rules are the rules’ has left Northern Ireland businesses fearing that there will be no flexibility to apply the Protocol proportionately. This has led to a diminution of trust between the two sides, with the upshot”—

in the words of a witness—

“that Northern Ireland has felt like ‘a pawn in the game’.”

Those words date from 1 June 2020 and events since then, notably in the last few days, suggest that the drafting has withstood the test of time. A good number of the issues that we highlighted in June 2020 remain matters of contention today. Indeed, the report anticipated many of the concerns set out over a year later in the Government’s Command Paper, Northern Ireland Protocol—Next Steps, published on 21 July this year. There are many potential illustrations of this point. To pick just two, in paragraph 25 of our report we said:

“The Protocol must ultimately be viewed through the lens of the peace process, and therefore judged by the impact it has on the people, communities and economic prosperity of Northern Ireland and Ireland.”

The first of a few questions for the Minister is: will he confirm whether or not he agrees with that assertion?

These issues will be resolved only by dialogue in a spirit of trust. My final question to the Minister is therefore this: in the light of the publication of the Government’s July 2021 Command Paper and the further extension of the grace periods announced last week, what steps is he taking to ensure that the ongoing talks with the EU will take place in such an atmosphere of co-operation and trust, above all putting the interests of the people of Northern Ireland first?

Our report highlighted many other issues, and I am sure we will hear about many of them. In particular, it highlighted the vital importance of parliamentary scrutiny of the operation of the protocol. I was therefore delighted when, in December 2020, the Liaison Committee of this House agreed that the new European Affairs Committee, which I chair, should appoint a dedicated committee on the protocol. At this point, I will pass the baton to the Chair of that committee, my noble friend Lord Jay of Ewelme, to introduce his own report.

I emphasise in particular the importance of the committee’s scrutiny of EU legislation as it applies to Northern Ireland. We are no longer able to examine draft legislation round the EU’s council table, so parliamentary scrutiny of the legislation that will affect Northern Ireland really matters. I am grateful to the noble Lord, Lord Frost, for recognising the importance of comprehensive and comprehensible explanatory memoranda.

Chapter 2 gives an account of the negotiation and implementation of the protocol and of developments since it came into force on 1 January. The committee identified five interlocking problems or failures by the Government or the EU that have contributed to the tensions that have arisen: lack of transparency about what was agreed; lack of readiness, notwithstanding the best efforts of business, for the protocol’s provisions to be implemented; lack of balance and understanding of the protocol’s impact, in particular on Northern Ireland’s relationship with the rest of the UK; lack of flexibility in the application of the protocol; and a lack of trust between the two sides.

Chapter 3 sets out the economic impact of the protocol. The initial negative impact of the protocol in the first weeks of its operation had many causes and was more limited in scope than some media reports would have us believe, but businesses were undoubtedly hindered by the lack of clarity in advance about the protocol’s operation. The long-term impact of the protocol on trade flows is not yet clear, but there are early signs of a growth in north/south trade. On the other hand, businesses told us of repetitive and disproportionate new logistical processes for goods moving from Great Britain to Northern Ireland. We heard serious concerns about the impact of the expiry of the grace periods and the absence of mitigating measures, and fears that businesses in Great Britain will withdraw from the Northern Ireland market because of the actual or perceived administrative burden of the protocol. Yet we also identified potential economic benefits under the protocol, given Northern Ireland’s unique access to both the UK and the EU single markets, including as a destination for foreign investment. However, political stability is a prerequisite if such benefits are to be fully recognised.

Chapter 4 sets out the political and social impact of the protocol. We acknowledge the destabilising impact of first Brexit and then the protocol on the political situation in Northern Ireland and on the delicate equilibrium encapsulated in the Belfast/Good Friday agreement as questions of borders and identity have once more come to the fore. We heard about the concerns of the unionist and loyalist communities that Northern Ireland’s place within the United Kingdom has been undermined by the protocol. Yet the unrest and sense of alienation in loyalist communities has several deep-seated causes, and there are also deep concerns over the democratic deficit at the heart of the protocol whereby significant aspects of EU law apply to Northern Ireland without its consent. While that deficit can be mitigated, it cannot be eliminated. This is a difficult issue, to which the committee will return later in the autumn. We also stress the importance of meaningful engagement by both the UK and the EU with the people and communities of Northern Ireland, including women and young people who have felt sidelined in discussions so far.

Chapter 5 of our report considers mitigations and solutions. We called on the UK and the EU, in a renewed spirit of urgency, partnership and trust, to agree practical solutions to ensure the proportionate application of the protocol in order to meet the commitment that it should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland. Business leaders and others proposed over 20 practical mitigations, including a UK-EU SPS veterinary agreement. We also called for measures to maximise Northern Ireland’s influence both within the UK and with the EU, and stressed the key roles to be played by the Northern Ireland Executive and the intergovernmental institutions established under the Belfast/Good Friday agreement.

Some witnesses argued that the disruptive effects seen since the protocol came into force already justify the use of the safeguarding mechanism in Article 16. Others argue that any unilateral action by either side had destabilising political and economic consequences. In any event, Article 16 is not a means to abandon the protocol, and is a measure underpinned by an obligation to continue dialogue to resolve the issues of concern. It would surely, therefore, be preferable for both the EU and the UK to seek to identify mutually acceptable solutions.

Our report also acknowledged the principled opposition of many in the unionist and loyalist communities to the protocol and the alternatives that some of them have put forward; yet, for many nationalists and republicans, the protocol is a necessary and the only means to avoid a hard border on the island of Ireland. We stressed that the UK and the EU had an obligation both to consider alternatives and to work together to seek resolutions within the protocol.

Our report was agreed a matter of hours after the Government’s Command Paper was published on 21 July. It does not therefore take account of the Government’s specific proposals. The committee’s intention is to scrutinise the Command Paper and the EU’s response in the coming weeks as talks between the two sides continue and, we hope, make progress. In that context, I note the Minister’s announcement last week that the current arrangements for the protocol will continue and that the grace periods will be rolled over, and the European Commission’s response that no new infringement procedures will be opened for now. We all hope that this opens the way for constructive discussions between the UK and the EU, but the gap between the two sides remains large. The cliff edge has, if you like, been replaced by a slippery slope.

What updates can the Minister give us today on the discussions that have taken place since the Command Paper was published? How long can those discussions realistically continue? What assurance can he provide that the opportunity that this breathing space has provided will not be wasted and that both sides will explore the room for compromise that will be necessary if agreement is to be reached?

I finish by reiterating the final conclusion of our report:

“addressing the issues of conflicting identity that first Brexit, and then the Protocol, have brought to the fore seems for the moment an insoluble problem. That was also true of the political situation in Northern Ireland during the Troubles. But through a slow and painstaking process led by political leaders in Northern Ireland and successive governments in London and Dublin, the peace process took root and flourished, leading to the Belfast/Good Friday Agreement and the subsequent steps towards a power-sharing arrangement … This process took time, patience, dialogue, and most of all trust. The same is true in addressing the problems that Brexit and the Protocol present for Northern Ireland. There is therefore an urgent imperative for all sides to make concerted efforts to build trust by recommitting themselves to that process of dialogue, repairing the damage caused to relations across these islands during the past five years, in the interests, as the Protocol rightly acknowledges, of communities in both Ireland and Northern Ireland.”

The truth is that the multiple problems of the operation of the protocol, which the report of the sub-committee of the noble Lord, Lord Jay, has done such an excellent job of conveying, did not arise out of the blue during the implementation phase; they were baked into the treaty the Government signed. The Government know this to be the case, as do Northern Irish unionists, whose opposition to the Brexit deal was crystal clear from the outset and who now oppose the protocol for the same reasons they opposed it before it came into operation.

The protocol made Brexit technically doable by accepting rules that changed the commercial arrangements between Northern Ireland and Great Britain. That is the nature of the beast to some significant extent, whatever tweaks to the protocol might be achieved in the months or years ahead by the noble Lord, Lord Frost, and his team. I make this point because it is important for a Government demanding changes to the protocol, as our Government have done now for some months, to be candid and transparent about what the true negotiating space is. I am not clear that that is the case at the moment.

Of course, both the EU and the UK Government need to shoulder responsibility for some aspects of the current state we are in. The EU has clearly acted inflexibly in some respects. In particular, as the July 2021 report shows, the supplementary customs declarations required for moving goods from Great Britain to Northern Ireland are not suited to the regional supply chains where the risk of goods moving into the EU single market is low, but the problems of the UK Government’s position are more serious, because they continue publicly to demand “interpretive” changes to the protocol which are in fact substantive alterations to it. Their rhetoric, such as that on unfettered access, continues to fuel unrealistic notions that a revision of the protocol can get rid of all commercial restrictions on trade between Great Britain and Northern Ireland. Yes, more flexibility on the part of the EU is required, but getting rid of contradictory ambitions is a more pressing requirement on the part of the UK Government.

In the short term, I am sure that Members across the House will welcome the idea of grace periods on existing terms of trade being extended to allow more time for discussion on the timetable for introducing the protocol’s provisions. From the standpoint of stability, it is obviously far from optimal to have unilaterally declared grace periods that keep getting extended. However, given the position in which we find ourselves—the DUP withdrawing from North/South Ministerial Council, and the threat possibly to withdraw in the near future from the power-sharing structures altogether —the extension of grace periods as a temporary measure last week by the Minister, the noble Lord, Lord Frost, was a necessary move, and one that looked to be co-ordinated, at least in some tacit way, with the European Union.

However, extending grace periods on SPS rules, agri-food certification, customs declaration arrangements and so on is not a long-term way out of the current mess. Indeed, while, in the short term, the greater risk is that differences over the protocol threaten peace and devolved power-sharing arrangements inside Northern Ireland, the longer-term danger is that the fudges required to delay the protocol and avert these threats never get unblocked—a situation in which the temporary fixes become permanent simply because the politics do not exist to go any further. It is a world in which grace periods, extended serially, would become the norm—governance by grace periods, if you like.

There may be a temptation for many to think that this would not be such a bad place for Northern Ireland to be in eventually; after all, the world is full of impasses with interim arrangements whose fundamentals never get sorted, because political moves beyond the interim are unmanageable. It would be a mistake, however, to contemplate this as a durable future state of affairs for Northern Ireland, in part because the UK signed an international treaty, of which the protocol was a key aspect. Avoiding its implementation as part of a long-term political strategy would do immense damage to the UK internationally. More importantly, it would be a very bad outcome for Northern Ireland. In the medium term, investment in Northern Ireland requires the economic, institutional and political certainty that continuously extended short-term grace periods just cannot provide. It is also crucial for Northern Ireland, especially given its history and the intricate web of bespoke institutions, rules and understandings on which the Belfast agreement was built, that the arrangements on which economic and social life depend continue to enjoy basic consent. That is not the case at the moment, but it has to be an ambition if the protocol is to enjoy long-term confidence.

We already know something about what the solution to the protocol might look like: it will be messy, complex and please no purist on any side. What we do not know is whether those party to bringing this solution about will have the political courage to make the compromises required. However, we do know something about the political conditions that will be conducive to a successful outcome. They will require the Government to reject the dangerous idea, suggested by some on their Back Benches, that the protocol can be abandoned without thereby creating serious consequences for stability, democracy and prosperity in Northern Ireland. They will require those in Northern Ireland who are passionate about the union to work within, rather than outside, the multiple structures established since the Belfast agreement. They will also require the EU to seek resolution through long, patient negotiation rather than through taking legal action. I hope we can all agree that, whatever our party and whatever our view on Brexit, we will do whatever we can to make all those conditions come to pass.

As other noble Lords have already indicated, quite a lot has happened since both the committee reports we are debating today were published—not least the publication in July of the Government’s own Command Paper on the protocol. At the end of last week, we also had Commission Vice-President Šefčovič’s visit to Northern Ireland, where there were some very welcome changes of tone.

I will concentrate my remarks this afternoon on three areas raised by the sub-committee’s introductory report. The first point is the very urgent need to reach agreement on a UK-EU SPS/veterinary agreement. As paragraph 246 of the introductory report states,

“an SPS/veterinary agreement of any form is manifestly in the interests of Northern Ireland”.

Does the Minister agree with the report that not to reach such an agreement, when it would make such a positive difference to the lives of people in Northern Ireland, would indicate that the Government consider regulatory sovereignty a higher priority than political and economic stability in Northern Ireland? Can he further say whether there are areas he may be willing to compromise on to reach such an agreement?

The second theme that I would like to highlight from the report—already raised by the noble Lord, Lord Jay—is trust. Paragraphs 317 and 318 highlight the importance of the dialogue and political leadership over several Governments and many years that helped bring about the Good Friday/Belfast agreement. That dialogue, trust and constructive leadership have sadly been lacking in the last five years since Brexit.

There was a welcome change of tone, as I have referred to already, from the European Commission Vice-President last week, when Mr Šefčovič ended his visit by saying that the EU was not looking for a political victory in Northern Ireland. I hope that the Government will adopt a similar tone. The business community and the majority of the wider community in Northern Ireland want certainty and solutions rather than dialled-up rhetoric. For there to be trust, there has to be a level of openness and transparency that has been very much lacking up until now.

In an extremely thoughtful article in response to the publication of the Government’s Command Paper in July, Professor Katy Hayward from Queen’s University highlighted some of the political consequences in the months ahead—in particular, that the protocol will inevitably feature heavily in next year’s Assembly elections. In their dialogue and negotiations over the next few months, I hope the Government will factor in the potential impact of these negotiations, as well as their tone, on the forthcoming Assembly elections. The Government’s July Command Paper highlights that the lack of unionist and loyalist buy-in has brought tension into the Executive and Assembly, but the Government never publicly acknowledge that there is a parallel lack of buy-in to the whole Brexit process from the majority of Northern Ireland voters.

My third and final point follows on from this: that is, the need for enhanced political dialogue and inclusion at all levels. As paragraph 205 rightly states:

“There is a widespread perception that the Protocol was imposed on Northern Ireland without meaningful engagement with its communities, and without a full and transparent explanation of the impact it would have.”

There has also been extremely little done to sell the potential positive benefits of the protocol for Northern Ireland, with its unique access to both EU and British markets. Can the Minister say whether the Government intend to provide an information campaign on these potential benefits and how they plan to improve dialogue with all sectors in Northern Ireland, including civil society? As we approach the next stages of negotiations ahead of the end of the various grace periods in the weeks and months ahead, will the Minister give very serious consideration to the proposals contained in paragraph 269, which sets down some very constructive suggestions for strengthening Northern Ireland’s influence within both the UK and the EU?

Our Democratic Unionist confidence and supply partners had been given an oral briefing the night before—but, crucially, no text—on the basis of which, Mrs May’s political advisers assured her that everything was fine. Well, it took little more than a few seconds to glance at the text to see that this could not possibly be the case. We were frankly shocked at what we saw. On seeing it, even the then Permanent Secretary at the Northern Ireland Office rushed into the Secretary of State’s office and said, “I don’t see how the DUP could possibly agree to this”, at which point I added, “I don’t see how the Secretary of State and I can possibly agree to this”. At a meeting the following day in the Cabinet Room, I stated that the document had every hallmark of having been drafted in Dublin, at which point one very, very senior official replied, “That’s because it largely was”.

As a result, as is well known, Mrs May was forced to return from Brussels that day, and there then ensued four days and late nights of discussions with the DUP, including my noble friend Lord Dodds of Duncairn, and the Commission in an attempt to salvage the situation and keep the Government together. In classic EU negotiating fashion, we were unable to remove any of the agreed text and therefore had to resort to adding language, including paragraph 50, on unfettered access, to counter paragraph 49, which contained the dreaded backstop, in an attempt to come up with something we could live with. Early on the Friday morning, Mrs May did indeed fly to Brussels and sign the joint report. Regrettably, the die had been cast and whatever way we tried to present the situation, the principle that Northern Ireland would be treated separately from the rest of the United Kingdom had been conceded. Thereafter, the debate was about how that separate treatment might manifest itself. To me, this was a fundamental mistake that has dogged us ever since.

My second, briefer, point concerns the EU, which, for whatever reason, seems to see Northern Ireland through predominantly nationalist eyes and the 1998 agreement almost exclusively through strand 2, the north-south relationship, with everything else subordinate to that. This was made very clear to me at a meeting with the apparently now Eurosceptic Monsieur Barnier in Brussels in June 2018. To my astonishment, I found myself having to explain to him that the 1998 agreement did not establish Northern Ireland as some kind of hybrid state—half in and half out of the UK—that the only choice in the agreement is full membership of the United Kingdom or a united Ireland, and that by disregarding the views of the pro-union majority, he risked undermining the very stability ushered in by the agreement that he was purporting to uphold. At that point he rather bizarrely accused me of wanting no deal, to which I had to reply that, as a remain voter in the referendum, I wanted to leave in good order, consistent with the constitutional and economic integrity of the United Kingdom. It was not a very happy encounter, but it did underline the apparent unwillingness of the Commission to consider all strands of the 1998 agreement equally.

As is frequently said in Northern Ireland, and as was just repeated by the noble Baroness, Lady Suttie, “we are where we are”. To paraphrase Burke, we need to confront the world as it is, rather than how we would like it to be. For my part, I do not doubt the intentions of the Prime Minister and my noble friend the Minister in agreeing the protocol in good faith, and I do not for a second underestimate the near-impossibility of the predicament they found themselves in in the autumn of 2019. I also strongly supported the commitments around unfettered access as set out in the Northern Ireland Conservative manifesto at the 2019 general election, sections of which I drafted. But what is abundantly clear is that, however well-intentioned the protocol is, in its current form it is simply not working, and our report contains many examples to support that view. It has disrupted trade, damaged businesses, hit consumers and contributed to growing political instability in Northern Ireland. It has to change fundamentally, and in this respect I warmly welcome the Government’s Command Paper published in July and the approach of my noble friend.

Let me conclude with a few thoughts. We have been told throughout that checks are an essential part of protecting the EU single market and, as a rules-based construct, the EU’s position is one we all respect. However, it seems to many of us that what has been insisted upon is wholly disproportionate to the actual risk. Leaving aside the utter absurdity of having to check products going from Great Britain to supermarkets in Northern Ireland owned by retailers who have no stores outside of the United Kingdom, it has always seemed to me that the notion of using Northern Ireland to flood the EU single market with illegal produce is somewhat exaggerated when one considers the logistical and transportation challenges involved. To make any money, one would have to be doing it on such a grand scale that it would quickly and easily be detectable by any law enforcement or intelligence agency, of which we still have an extensive capability within Northern Ireland.

Therefore, while I accept that some checks might be necessary, they should only be proportionate to the risk. The Government, our committee and others, including both the Democratic Unionists and the Ulster Unionists, have set out positive and constructive proposals as to how such checks can be mitigated. After all, the EU has obligations under the laws of international trade and treaties it has signed to adopt a proportionate approach to border-related checks and control. It accepts in the protocol that it should

“impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”.

I sincerely hope that the EU engages seriously around the alternatives because, as my noble friend and the Prime Minister have both made clear, the current situation is not sustainable; indeed, it is becoming increasingly dangerous. It is no good Maroš Šefčovič insisting in Belfast last week that the protocol is not the problem but the solution. Such a position is regrettably a conflict with reality. Without urgent action and remedy, we now risk rushing headlong into a full-blown political crisis from which the institutions established under the 1998 agreement could take years to recover—if they do at all. It would be a supreme irony if the EU’s theological and dogmatic interpretation of the protocol that it insists is designed to protect the 1998 agreement resulted in the destruction of that agreement; an agreement that a number of members of this Committee, on all sides, have spent many years trying to uphold, myself included.

Common sense, pragmatism, proportionality and an understanding that arrangements that do not command widespread consent across the whole community in Northern Ireland can never work are needed from the EU now—perhaps that common sense and pragmatism which were in such short supply in early 2016 but which, had they been forthcoming, might have prevented us from being in this position in the first place. Of course, addressing overzealous implementation of checks does not deal with some of the more fundamental constitutional and democratic issues thrown up by the protocol, something to which I hope the committee will turn its attention shortly, but it would be a start and I wish my noble friend every success in his endeavours.

“Under the terms of the Protocol on Ireland/Northern Ireland agreed between the EU and the UK as part of the Withdrawal Agreement, Northern Ireland has a unique status.”

That is the fundamental point: our status has changed. People can huff and puff, but that is a fact. It goes on:

“It is part of the UK’s customs territory but is subject to the EU’s customs code, VAT rules and single market rules for goods … SPS … rules to protect animal … health”,

et cetera. So it has changed. For proof of that, when some people decided to take legal action against the Government and challenge the protocol, what was the Government’s defence? “Oh, but we’ve changed the act of union” was their defence. That is being appealed and it would not be appropriate to comment further on it, but I am just making the point.

In parallel with that, the Secretary of State for Northern Ireland said in the earlier part of this year that there was no border. When he was interviewed later in the year, before the Summer Recess, he had to concede that it was a comment that had not aged well. It was nonsense when it was made and it is still nonsense. The Government have to be much more realistic about where they are. As a former colleague of mine in local government who made malapropisms from time to time said, the cows are coming home to roost. That is what is happening to us now. All these contradictions are confronting the business community and people who are trying to make a living. We as a country are spending hundreds of millions of pounds on providing mechanisms, through the trader arrangements, to deal with the paperwork and to try to keep businesses going. This is an unsustainable position.

The noble Lord, Lord Jay, on numerous occasions used the word “trust”. We have to have a negotiation. We can call it whatever we like—discussions, chatting to the vice-president, or whatever it is—but we have to sit round the table. The European Union is our nearest and most significant trading partner. Looking at the world in the past few months, one can see the necessity for this. The EU was willing to play a significant part in solving our problems in Northern Ireland from the days of Jacques Delors, who was the first person to agree the funding streams that are still going on, so surely, with that sort of approach, it ought to be possible to get a negotiation going that will deal with the downstream consequences of all this.

Under these rules, we are effectively being treated as a third country. My noble friend Lord Caine was talking about Sainsbury’s sausages, but that is what he meant. What nonsense this is. Our committee was given statistics by Professor Shirlow of the University of Liverpool. He pointed out that trade from Great Britain to Northern Ireland is equivalent to 0.0008% of European GDP and that only a very small proportion of that would be at risk of entering the EU single market. People on the island will know immediately if there is any attempt to flood the EU single market with inappropriate goods. My party has called for the law to change—I was delighted to see this in the Command Paper—to make it an offence to use the territory of the United Kingdom to send unregulated goods into the single market. That would send a signal to the EU and our traders that that is not something we will allow.

Other issues in the report and the Command Paper can be used as a strong basis. One thing stands in the way of taking the positives from this. If you are trying to get people to invest in the unique situation of having access to both markets, there is one roadblock, which is the requirement for the Assembly to approve it after four years. If you are going to market something to an inward investor, that is a huge roadblock. That is saying that there is a question mark over the investment before you even get started.

While we have that sort of arrangement, which is not satisfactory anyway, getting any gain or advantage will be hugely challenging. There could be potential, but we also have the democratic deficit. I think that the phrase used during the referendum was of a “vassal state”; well, we are the vassal region. We are taking rules over which we have no say or input whatever. It is a constitutional carbuncle. When my noble friend replies, can he tell me and the Committee on what basis did the Government attempt to establish what consent existed for the protocol? Who indicated consent for the core elements within it? How did they judge that?

What we should now be doing—I hope that our committee addresses this—is to encourage a dialogue, sitting down away from the war that goes on in the press. We are in a difficult period in Europe, with elections coming up for the French president and a new chancellor in Germany. These are important times. As my noble friend said, we risk instability in Belfast if we do not deal with this now. We have to sit down with our colleagues in Europe and settle this.