January 2022 and still looking for clarity

A new year has dawned but, for the third consecutive January, the twin spectres of Covid and the NI Protocol appear with the tedious inevitability of an unloved season, with each continuing to present major challenges for business.

It is still unclear how or when either will conclude but with Covid there is a growing sense of moving towards a state of ‘learning to live with it’ – with evolving vaccines holding out the prospect of prevailing. Humanity against a virus. No negotiation, an unpredictable opponent, the rigour of evidence-based scientific advance tempered by the vagaries of human nature, the global inequities of vaccine production and distribution which highlight that no country is insulated from the circumstances of others when it comes to viruses. Of the two challenges, it would be reasonable to expect that Covid should be the harder to overcome – and yet progress with the NI Protocol is so mercurial that few would attempt to call it with any great sense of confidence.

In January 2020 we were on the cusp of what was supposed to be the Transition period – but it hadn’t been agreed to what we ‘transitioning’. In January 2021, the Protocol came into operation with parts only agreed days earlier; but systems weren’t ready, so business wasn’t ready. Notwithstanding, great efforts were made by business, officials, the Trader Support Service, and politicians which, combined, saw us fudge our way through. There were workarounds, light touch checks, agreed grace periods, unilateral grace periods…..and lots of money thrown at the problem, all of which helped us to get through. But we’re still not operating under the Protocol as it could be – the grace periods are masking a lot of realities whilst many businesses are also soaking up pressure and cost and here we are in January 2022, still looking for clarity.

The past month has only added to the opacity. The UK’s Chief Negotiator, Lord Frost, stepped down at short notice without an obvious reason as to why. He had spent much time and effort in getting to know and understand the NI economy, its trade flows, and its businesses. Having initially been so uncompromising as to be inflammatory, latterly he appeared to have begun to foster the quality of relationship with his EU counterpart that meant he had gained the space and scope to reach compromises that could actually deliver a better Protocol. Whatever the real reasons for his leaving, the job was unfinished and the challenge for his successor is now perhaps even greater. She has not had the benefit of the time Lord Frost spent in understanding the details of the situation but as secretary of state for foreign, Commonwealth and development affairs, the NI Protocol can only justify a fraction of the ministerial attention it previously enjoyed. That is a concern.

Liz Truss is engaging with businesses and politicians here this week before hosting Maroš Šefčovič at Chevening on Thursday, having written recently that it is her “absolute priority to fix the many flaws in the Protocol and safeguard peace in NI”. That commitment is welcome, but the means of achieving it are key to long term stability. The Protocol has become something of a Gordian knot but bold, unilateral action is unlikely to cut it.

FSB wrote a paper in 2018 to set out how NI could become an Enhanced Economic Zone and really capitalise on its unique position following Brexit - as a global trading centre with access to the major markets of the UK and EU, underpinned by state of the art regulatory compliance certification. That vision still holds the essence of the resolution of the Protocol but, to maximise the benefits and deliver the economic boom for NI, it will need to be achieved by consensus – even if that consensus comes after some tough negotiation. That both sides recognised the Protocol wasn’t working and needed to be reviewed and revised was welcome. Movements are being made, concessions secured, perhaps even common sense and pragmatism prevailing over legal purism, but unless and until we get a sense of having reached the conclusion, the ongoing uncertainty means we will still not maximise the investment and growth that ought to be achievable from this unique position.

The prize from a successful Protocol negotiation in which all parties feel they have won would be massive, but as with any contest for which the reward is so richly worth competing, the cost of failure is equally great. We cannot countenance such failure, so we are urging the Foreign Secretary and the Vice President to maintain the momentum that seemed to have built up in late autumn and drive the negotiations forward in a spirit where they result in NI finally having the means and opportunity to trade its way to real prosperity for all its people.

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