Farmers carry the risk from protocol changes

The UK government has introduced legislation that, if approved by parliament, will give ministers the power to override various parts of the Northern Ireland (NI) protocol.

The protocol is cumbersome for trade between Britain and NI, but with NI following EU rules for goods, it does facilitate uninterrupted movement across the Irish border of livestock products such as milk, lamb and pigs.

With the EU exploring legal options in response to the UK plans, unless compromises are found it could threaten the ability of NI to trade unhindered into the EU, and ultimately, it puts at risk the existence of the entire EU-UK Brexit deal, worth in excess of €1bn of tariffs to Irish farmers.

The main changes proposed by legislation include;

Red and green lanes

The core purpose of the legislation is to remove all checks on any type of goods that are moving from Britain to NI that will be used in NI only. It is intended that these would travel through ports in what are described as ‘green lanes’ and would not require either sanitary and phytosanitary (SPS) controls, or inspections if animal or plant products. These currently require veterinary certification for every consignment, irrespective of how small or large the quantity.

This has caused great difficulties for supermarkets in NI that are supplied from distribution centres in Britain, from which multiple consignments of these SPS-controlled products are sent. The new UK legislation would eliminate this requirement and traders would be trusted to use the green lanes with robust penalties for any abuse of this. For goods travelling to Britain from NI intended for onward sale into the EU, the legislation proposes a ‘red lane’ for these through the ports and continued application of full SPS controls. This would apply to a beef factory that sources carcases in Britain for processing in NI and onward sale in either the UK or EU.

Dual regulatory system

The purpose of this in the legislation is to enable businesses supplying goods to NI to operate to either EU or UK regulatory standards – whichever they prefer. This may not be a major issue while the EU and UK remain closely aligned, but has the potential to increase in significance as regulations diverge over time.

This is an area of concern for farmers, as if UK feed and veterinary medicine standards differed, it could effectively mean NI farm produce not having access to cross border markets.

Dispute resolution mechanism

This is an area that is politically sensitive, though of negligible practical interest to farmers or the food processing industry. The protocol as currently structured provides for the European Court of Justice (ECJ) to arbitrate in any disputes between the parties. The UK legislation proposes ending the jurisdiction of the ECJ and replacing it with a dispute resolution mechanism with balanced involvement by both the EU and UK.

State aid

The protocol requires NI to be subject to EU state aid rules for the expenditure of government money, unlike the rest of the UK, which is free to make their own state aid rules.

The UK government legislation would remove this requirement, putting NI business on the same format as UK state aid rules. The same would apply to VAT.

Future changes

The legislation allows UK ministers to override elements of the protocol not specifically legislated for in future if they become an issue.

The legislation doesn’t propose any changes to the trading relationship between the Republic of Ireland and the UK.

For farmers in NI, it will depend on what measures the EU impose, given its hostile view of unilateral action by the UK to change the protocol.

The main concern for farmers is if the EU sees this legislation as a de facto ending of NI’s participation in the single market, it would make exports of Northern Irish milk and lambs no longer viable if they were subject to SPS controls crossing the border for processing.

If the issue escalated to an EU-UK trade war and the suspension of the Trade and Cooperation Agreement (TCA), then farmers in the Republic of Ireland would be severely hit because of astronomical tariffs on beef and cheddar in excess of €1bn yearly.

The EU responded by saying it was with “significant concern that we take note of today’s decision by the UK government to table legislation disapplying core elements of the Protocol.”

On Wednesday, the EU launched infringement proceedings against the UK for non compliance on the protocol.

The EU also published details of possible solutions whcih they said would “demonstrate that solutions to the issues raised by business and people in Northern Ireland exist.”

Is there a solution?

A big part of the problem with Brexit and the protocol is that it has become intertwined with the politics of both Stormont and Westminster, leading to the adoption of polarised rather than practical positions. The EU was too slow to realise that full international border controls designed for cargo ships with a single consignment were simply impractical for warehouse distribution between Britain and Northern Ireland.

Yet despite all the noise, the proposed UK legislation is, at best, several months away from becoming law and may even be rejected or substantially amended as it proceeds through Parliament.

Commercial interests can visualise a system that would work within the red and green lane framework, through comprehensive sharing of data and controls at businesses.

Managing NI’s unique position requires less pure EU controls and realisation by the UK that Brexit requires an element of controls to enable NI to have maximum freedom in trading with both the EU and the UK.

The president of the Ulster Farmers’ Union (UFU) David Brown has said it is time that both the EU and UK came together and delivered a negotiated solution to outstanding issues surrounding the NI protocol.

While he recognised that the protocol has worked for some parts of the NI agricultural industry, Brown claimed that it is “causing havoc for others”.

“We’ve been lobbying politicians for months on the NI Protocol and were promised the best of both worlds, sold on the idea that farmers would have unfettered access to British and EU markets. However, in specific areas we’ve ended up in no man’s land, unable to use products from Britain and equally unable to switch to Republic of Ireland inputs, as they’re not licensed in the UK,” said Brown.

Sectors

Those issues around licencing have mainly impacted the crops and horticulture sectors.

In dairy, with around 800m litres of NI milk processed in Republic of Ireland factories, the chief executive of the NI dairy council, Dr Mike Johnston, has been clear that the protocol has worked for the sector.

His counterpart in the NI meat exporters’ association (NIMEA), Conall Donnelly, said his members benefit from unfettered trade to Britain and the EU. He acknowledged that there are some wider issues that need to be fixed, but called for solutions to be jointly agreed by both sides through compromise.

–David Wright