Jim Allister: Calling out the economic costs of the Windsor Framework - 2024 to 2025
Rishi Sunak claimed that the Windsor Framework offered Northern Ireland the opportunity to become “the world’s most exciting economic zone” on account of affording us dual market access - strangely, though he didn’t want such for his own constituents.
Up until the protocol, UK businesses were located in a single internal market within which they could buy and sell freely without encountering an international sanitary-phyto-sanitary (SPS) and customs border. When their goods reached that border, they arrived at the edge of our market and, if they crossed it, moved from one single market into another, an action that engaged a series of additional costs: all the SPS and customs paperwork, the potential checks which could result in goods being returned, the customs duties etc.
In this context, dual market access post Brexit was made to sound like a very attractive proposition because it implied that we could be in two internal markets at the same time, as if the border that exists between the two could be removed. The truth, however, is that you can’t really have dual market access anymore than you can have a square circle.
We used to be fully located in the UK internal market for goods and now we are fully located in the Republic of Ireland internal market for goods. The price for this change has been the erection of an international SPS and customs border between Northern Ireland and what used to be the rest of our home economy, Great Britain. Rather than causing us to be uniquely favoured, this arrangement has resulted in our being uniquely disadvantaged, alienated from our home market.
When we were fully located in the UK internal market for goods, we enjoyed the supply chain economies of scale associated with being part of the fifth largest national economy in the world, rather than the limitations associated with being part of a much smaller divided economy that cannot provide the requisite inputs for our manufacturing sector.
Northern Ireland manufacturing has always depended on sourcing its inputs from our wider home economy in Great Britain and yet now these inputs can only reach us if they negotiate the costs of a full red lane customs border. In distancing many businesses from their supply chains, the Windsor Framework, rather than providing an incentive for new businesses to come to Northern Ireland, is actually causing some existing businesses to question their continued location in Northern Ireland.
Into this already very challenging situation the extraordinarily demanding EU General Product Safety Regulations (GPSR) have now arrived. I first raised the regulations in Parliament during July and was told by the Government that their impact would be ‘slight’ but, as we have now seen, their effect has been anything but slight.
While people joke about EU bureaucracy, these new regulations take things to a new whole level, demanding that anyone selling anything (other than SPS products which are regulated separately) to the people of NI has to assemble a huge amount of information pertaining to the product, the collection of which is costly and brings with it the risk of fines if you get anything wrong. In this context, since the GPSR came into force on December 13, we have seen many more GB businesses deciding not to supply NI businesses going forward.
When the border first came into operation in 2021, albeit with grace periods, around 200 companies in GB stopped supplying NI. Another tranche of suppliers withdrew October 2023 with the full introduction of the SPS border. Now the GPSR has greatly added to this tendency once again.
In the last few days, we have seen online sales platforms like Etsy (which services 5.9 million traders around the world) being forced to give businesses the option of continuing to sell to GB but not NI, as many long-term suppliers to NI small businesses have reluctantly decided to cease trading with us. This is placing some of our businesses in a really challenging position because the alternative providers in the Republic are so much more expensive.
Of real concern, though, things are going to get worse in the New Year.
Quite apart from anything else, the Red Lane still has not been applied to ‘business to business’ parcel transactions. This was supposed to take place on October 1 but was put back by the Government at the last minute to March 31 next year. This delay has masked the full supply chain implications of the Irish Sea border for NI companies, many of which receive their production inputs through parcels.
Then we have to remember that although we have an Irish Sea border of sorts, it is not yet being properly enforced because the border control posts needed to do so are still being built. This process is supposed to be completed so that the border can become fully operational from July. It is only once we pass that point, and businesses have adjusted to it, that we will really know what is entailed in being set apart from the rest of the UK, and all the price implications of losing the related supply chain economies of scale.
Rather than affording Northern Ireland the best of both worlds, the Windsor Framework imposes upon us the worst of all worlds both economically and civically.
Not only has the protocol/Windsor Framework failed to deliver a single Foreign Direct Investment (as conceded now by Invest NI and the economy minister), it has also resulted in the humiliation of our disenfranchisement in 300 areas of law.
Happily, there is a solution to both the economic and the civic challenges in the form of Mutual Enforcement for which I have provided a delivery mechanism through my EU Withdrawal Arrangements Bill currently before Parliament. To find out more please visit www.restoretheunion.co.uk
l Jim Allister KC is MP for North Antrim and leader of the TUV