The View from the Chair, November 2021

Press Releases 9 Nov 2021

The Lord's Gambit

In July, when Lord Frost unveiled his Command Paper on the Northern Ireland Protocol, it was greeted with a degree of shock in many quarters, as it set out in the starkest terms the UK Government’s assessment that the arrangements were having such detrimental effects they believed conditions had been met to allow unilateral suspension of parts of its operation by triggering Article 16. The Command Paper distilled and laid bare in clinical terms many of the debilitating burdens that the Protocol’s operation has imposed since the beginning of the year. The paper also set out a plan for fundamental reform of the Protocol, for which the Government sought agreement with the EU.

Clearly, the much-vaunted ‘balance’ between protecting the EU Single Market and maintaining Northern Ireland’s place within the UK Internal Market had not yet been struck. However, others contended that the negative implications are a consequence of the form of Brexit which the UK has chosen, and the Protocol which was willingly agreed by Parliament and initially championed by the Government. Like with Brexit, the Northern Ireland Executive has yet to find a common position on the Northern Ireland Protocol, and the issue is likely to be a source of a division among Stormont parties in the lead up to the 2022 Assembly Election.

Last week, one FSB member whose business is a long-established luxury food emporium, reported that over twenty suppliers in GB have stopped sending goods because of the burden of complying with the new bureaucracy. That same business owner recently saw one member of staff spend seven hours completing forms with commodity codes and other information that was never before required yet still, despite the work spent on complying with these new demands, the business is overwhelmed with a further forty uncompleted declarations outstanding. The real irony, however, is that the business trades solely in Northern Ireland and, as such, presents no risk whatsoever to the EU’s Single Market. Of course, this business, like so many others will adjust, adapt, find new supply chains and new customers, and get through it somehow; but the harsh reality is that it is no longer able to operate freely within the UK Internal Market in the way that a comparable business in Scotland, England or Wales can do.

The business community has played a key role throughout – identifying businesses that are negatively affected; critiquing proposed solutions brought forward by either side or both; developing solutions of its own and, all the while, aiming to avoid being portrayed as implicit supporters of one side or another. As the largest business organisation, with the most diverse range of businesses in its membership, FSB has been able to identify examples that are actively benefitting from the Protocol, those that have seen little difference as a result, and others that are facing collapse because of it. Inevitably, as a lobbying organisation, our efforts focus on those who need government to do something differently in order to relieve the pressure. Both the EU and the UK Government had been made aware of the problems, acknowledged them and, in their own ways, attempted to respond to them.

So what will be the next move? In a remarkable volte face, it is the business community that has been lobbied intensely by politicians and diplomats over the past week, as concern rises about the possible triggering of Article 16. Some business owners believe the conditions might well have been met to justify doing so, but cannot see what its triggering would actually achieve. Others feel that it needs to be triggered in order to expedite negotiations towards a more settled and sustainable future trading relationship – to create a deadline of sorts; while some are anxious about the set of consequences to which the triggering of Article 16 may lead, with retaliatory measures and potential loss of the much-coveted access to the EU Single Market. As informed commentators have stated, using Article 16 is not getting rid of the Protocol but is, instead, meant to be an evidence-based mechanism that either side can invoke to resolve excessive frictions. However, the same provision also allows the other side to respond by taking balanced and proportionate counter measures.

Just last month, there was a welcome sense that both sides had accepted the need for change and both were prepared to bring forward fresh proposals. Lord Frost drew on the words of Edmund Burke, observing that the UK prefers arrangements to evolve in a process of human nature, whereas the EU prefers the strict code and legal framework that reflects human reason. For business, Burke made another perspicacious observation when he said: “All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter.”  The longer we have an uncertain outcome the more we risk diminishing the benefits for Northern Ireland that the Protocol sought to deliver, and the more damage that will be caused unnecessarily to good businesses.

We are all but observers in this highly-charged negotiation so we can only speculate as to whether the threat or the actual triggering of Article 16 will be Lord Frost’s next gambit. All sides know the challenges that the current implementation of the Protocol are presenting and therefore what needs to be overcome, so we urge the UK Government and the EU to ‘compromise and barter’ - but to do so as a matter of high priority.