The business of dealing with Protocol

The Northern Ireland Protocol has been with us now for more than 6 months, having come into force on January 1.

The Northern Ireland Protocol has been with us now for more than 6 months, having come into force on January 1.

To say it splits opinion would be somewhat of an understatement. For our political parties, it is either a necessary protection against the worst excesses of Brexit, or a constitutional abomination, with disastrous consequences for Northern Ireland’s economy and society. For businesses too, the experience is varied. FSB represents SMEs of all shapes and sizes, from ‘one-man-band’ self-employed people to medium-sized companies with up to 250 employees and sometimes more. Within FSB’s membership we also represent every business sectors including retail, manufacturing, food, professional services, hospitality, digital, transport and more. Views on the Protocol, or indeed Brexit itself, will be determined by the nature of the business and its typical trade flows. We have members who tell us that the Protocol has enabled established cross-border supply chains to be maintained; great solace to those whose concerns regarding the consequences of a ‘no-deal’ Brexit was that these would be ruptured beyond repair. Others testify that the Protocol is actually bringing new opportunities, as NI businesses have barrier-free access to the EU and GB markets for outbound trade, which gives them a competitive advantage over their counterparts in the RoI and GB who face barriers accessing each other’s markets and, indeed, an advantage over suppliers from almost anywhere else in the world.

On the other hand, many businesses tell us that they are struggling with the new arrangements. New customs requirements on goods moving from GB into NI are increasing costs for firms. New bureaucracy disproportionality falls heaviest on microbusinesses with less resource and fewer staff to devote to fiendishly complicated administration. Even worse, in some cases businesses in GB are refusing to supply to NI because of the uncertainty or lack of willingness to comply with new requirements, while the new Sanitary-Phytosanitary rules (SPS) for GB-NI trade are making some established business models unviable. Therefore, whether the new arrangements allow the maintenance of the status quo, provide new opportunities or, indeed, present significant problems, is very much in the eye of the beholder. Unfortunately, this nuance can often be lost in discourse where false prospectuses claim that only one or the other can be true.

FSB NI Policy Chair Tina McKenzie

Recent discussions between the UK and EU have also shown no real sign of finding common ground. The unilateral extension of two key grace periods by the UK regarding the retail movement of food and parcels from GB to NI has temporarily prevented some of the impacts of the Protocol from affecting the everyday lives of citizens. However, this has led to the EU taking action against the UK Government for what they see as a breach of the Withdrawal Agreement. Recent agreement on the extension of the grace period for pre-prepared chilled meats displayed some harmony, but both sides continue to see the way forward very differently. The UK Government wants to see alterations to how the Protocol is practically operating; meanwhile the European Commission say the only solution is the ‘full implementation of the Protocol’. The frustrating thing for businesses is that we can see that solutions are available to satisfy the EU’s concerns about protecting their Single Market, while also ensuring that Northern Ireland can continue to play a full role in the UK’s Internal Market; but trade talks are usually more about politics than economics, viewed as a zero-sum game with a winner and a loser. In business, a mutually beneficial way forward is usually the desired and achieved outcome.

Lord Frost, the UK Minister responsible for Brexit, is expected to set out the UK’s future approach to the Protocol by the end of this week. While we are unsure of the details of his plans, businesses will be keen to hear how he intends to resolve troublesome issues. While further unilateral action may relieve pressure, it may also sow discord. Both have consequences. Business has been to the fore in communicating issues and potential resolutions to both sides and has offered its services in terms of delivering practical and workable solutions. The guiding light for negotiators must be delivery of the key commitment already made, which states that the Protocol should ‘impact as little as possible on the everyday life of communities’. If this can be achieved then that mercurial business outcome – a mutually beneficial way forward – will ensure that there will be no losers, only winners.