All at sea
Is the new Northern Ireland Protocol working?
It’s been a fortnight since the Northern Ireland Protocol was introduced and yesterday in parliament the DUP MP Jeffrey Donaldson secured an Urgent Question on the problems it has caused in that short time. Responding, Michael Gove (who privately hinted to Brexiteer MPs it would never be introduced) said that there had been “challenges” but added that freight volumes into Northern Ireland were at normal levels for this time of year and that supermarkets were “now generally reporting healthy deliveries of supplies into Northern Ireland”.
This was news to the DUP’s Westminster leader who politely suggested that the difficulties being encountered by the intra-UK border might be “greater than he recognises”, and pointed out that it was not the case that supermarket shelves were fully stocked. Gove’s claims are even more curious considered the previous evening all the major supermarkets had written to him describing the Protocol system as unworkable and a threat to sustainability, choice and costs. So far the Cabinet have resolutely stuck to the line that the border between NI and GB doesn’t break anything – not Michael Gove or Boris Johnson’s promises , not anything in, or apparently implied by the Belfast Agreement, and not even the Act of Union.
Supermarkets are actually waiting for the full rules to kick in but other businesses and suppliers had two weeks over Christmas to learn the complex new system. Industry figures say they needed at least six months. So could the troubles Northern Ireland is experiencing simply be teething problems, as Mr Gove claims? Last week the Northern Ireland Committee got together for an evidence session with industry representatives in an attempt to answer this question. Although it was a heavily technical session there were a few things everybody could get to grips with.
If nothing changes, Northern Ireland’s century-old pedigree trade is set to end
For a start, under the deal signed by Boris Johnson last year, and brought into effect by the Scottish former DEFRA Secretary, Mr Gove, Northern Irish sheep farmers who had bought flocks of specialist sheep in Scotland cannot currently get them back home. The brains at DEFRA have told them to sell, but farmers say there’s no market for specialist sheep at this time of year. This also means farmers can’t take pedigree flocks or herds to a show in England, because they aren’t allowed to bring them back home for six months. If this is not sorted out industry figures say it will end NI’s century old pedigree trade.
A core part of the protocol is the ease of flow, but only in one direction. It’s very easy for goods to move from NI to GB because when the UK was negotiating the treaty they had no concerns about the “integrity” of the UK market in the way the EU was. To “protect” the EU’s Single Market (a need the EU insisted came before any concerns about ‘peace’, let alone the Agreement, and on which Whitehall curiously never pushed back), and to prevent any extra checks on the border between the Republic of Ireland and Ulster, goods must pass muster to cross the Irish sea. But the discrepancy of flow means lorries are getting stuck in GB and more of them travelling empty just to get back. This effectively doubles costs on many shipments which will have to passed on to Northern Ireland’s SME’s (who already face high transport costs) and their consumers in one of the poorer regions of the UK.
In announcing some solutions yesterday, Michael Gove highlighted the level of interference he had agreed to in the Joint Committee. A VAT rule that would have closed second hard car dealers bringing cars from the mainland was to be changed and new guidance was to address potential steel tariffs of 25% from GB to NI that would have crippled one of the positives of the Northern Ireland economy, manufacturing.
Statements from Ministers that there will be no border in the Irish sea gave hauliers a false sense of normality
The DUP’s Ian Paisley MP repeatedly asked the witnesses on the committee if they wanted Westminster to invoke Article 16 of the NI protocol which would allow the UK to unilaterally override parts of it which are causing serious problems that are “liable to persist”, but the normally loquacious and grindingly partisan industry representatives became very coy at this point, regarding it as straying into politics. Yesterday at PMQs Boris Johnson said that he would be willing to invoke Article 16 if needed, which Michael Gove reiterated in response to the UQ. This puts them, at least on paper, slightly less pro-protocol than the May-era chair of the Northern Ireland Committee, Simon Hoare, who said it would be “eccentric” to get rid of the protocol after it had only just been introduced, likening it to throwing away a new computer before you’d read the instructions. Hoare went even further when he questioned the PM at the Liaison Committee, saying that even talking about invoking Article 16 “should be avoided at all costs”.
This was, however, a consensus amongst the industry representatives that this “new computer” had no redeeming features. The Road Haulage Association, separately have painted a very stark picture. The idea put forward by the Government to sell the protocol – that it gives NI the best of both worlds – has not, so far, been matched by any eager investors willing to set up shop in a place which, for now, looks like the worst of all worlds. In fairness, Seamus Leheny who represents the trade body Logistics UK was keen to reassure everyone that logistics firms were adaptable and could cope with the new rules. But seeking to prove his point he praised some truckers he’d heard of who had learnt how to fill in some of the new paperwork from watching a YouTube video tutorial over the weekend. His anecdote didn’t quite have the desired effect.
The Government said it was the best of both worlds, but right now it’s looking like the opposite
Critics point out that filling out separate declarations for different goods only makes sense for long haul journeys cross-continent, not within a single country where several pick-ups add to the admin cost. The Cabinet Office Minister said today they were looking at the problem of multiple deliveries and would hope to come to a solution (though their draft solution is to add another check). But for now, each pre-notification declaration form needed for “at risk” goods takes about 15-25 minutes to fill out, but if the lorry contains 15 different products each one needs a separate form. The time and costs of declarations soon add up and seem set to have a chilling effect on the willingness of British firms to trade in Ulster. It’s likely that frequent statements that there will be “no border in the Irish sea” from Ministers has given hauliers a false sense of normality. Industry representatives said Lorries have been turning up in NI since the new year with no declarations at all, with some detained for up to eight hours. Michael Gove may actually be correct since being detained for eight hours technically isn’t a queue.
NI and GB have had highly integrated supply chains since the Act of Union but Victor Chestnutt, the President of the Ulster Farmers Union, said sending goods to NI from the UK mainland is now not very different to sending goods to France, which might explain why supermarkets in Northern Ireland and Marks & Spencer in Paris (supplied by GB) are both experiencing shortages. The problem of multiple items in a lorry, known as groupage, is especially difficult for trade in food as animal products needs an additional export health certificate, these difficulties are despite the full rules not yet kicking in. At the Liaison Committee this afternoon Hilary Benn asked Boris Johnson if he would extend the “grace period” afforded to the retailers. The Prime Minister would not commit.
Even lorries that contain no “at risk” goods, (at risk of upsetting the EU customs officials, who are by right supervising the whole process inside UK territory, if such items might conceivably go on to the Republic of Ireland) still need a GMR to enter the port, achieved through the GVMS system. In order to access the GVMS you need a mRN which you obtain from the TSS portal having declared the product. If you don’t know what any of these mean, you’re not alone.
Northern Ireland hauliers say that their lorries are much more likely to be held back by Irish customs
I said earlier that lorries travelling from Northern Ireland to Great Britain can do so very easily, but even that depends on good weather. Dublin has been an important transit port for NI goods for some time but when storms prevent ferries from using the other crossings, the Dublin to Holyhead route is a vital alternative to keep supplies going. With the Protocol, goods in transit from Northern Ireland to GB are then subject to extra checks because they pass through EU territory but Republic of Ireland officials reduced some customs checks on this route because ROI truckers threatened to blockade the port if they continued. Northern Ireland hauliers say that their lorries are much more likely to be held back by Irish customs (on one evening last week 15 trucks were being held – 14 of them were NI hauliers) and the Irish government has refused to use a derogation for ‘Just In Time’ food shipments to arrive with 4 hours notice demanding the longer 24 hours. Interestingly, the ROI route was the one which Mr. Gove actually admitted had suffered significant disruption.
There undoubtedly will be teething problems with a system introduced without much warning, and as we saw just before the Brexit trade deal was struck Michael Gove’s EU-UK Joint Committee had the power to decide things very quickly. But most of the examples listed can’t be solved in the committee and will need an agreement at a higher level between the UK and the EU. It was interesting that Sir Bernard Jenkin said yesterday that he hoped things could be solved without invoking Article 16. Does this comment represent the ERG giving up on their mission to scrap the new rules? Michael Gove has a great personal stake in the protocol, having backed it in every iteration going back to when it was Theresa May’s notorious Backstop, and some unionists fear he will be keen to keep insisting its potentially crippling effects on NI businesses can be solved with more and more sticking plasters, rather than wholesale reform. The Article 16 lever to terminate parts of the agreement might be “eccentric” for some, but without it many businesses may not survive the time it takes for the Government to realise they have a big problem.
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