Written by Luke LaMere
The Northern Ireland Protocol (NIP) continues to disrupt trade between Ireland and Great Britain and incite political strife. Drafted in 2019, the protocol prescribes that imports from Great Britain are inspected at ports in Northern Ireland so that they may move freely across the land border between Northern Ireland and the Republic of Ireland. While it may appear a straightforward settlement, NIP is the imperfect product of a politically tumultuous past in the British Isles. Negotiated inIn 2019, the protocol was negotiated between the United Kingdom and the European Union, the NIP aimed to satisfy the technical challenges posed by Brexit (2020) and the Good Friday Agreement (1998) regarding customs and immigration. After the United Kingdom revoked its EU membership, Northern Ireland and the Republic of Ireland were no longer both EU members, leading to different standards in quality inspections of imports from Great Britain. To further complicate matters, the Good Friday Agreement stipulates the absence of all visible signs of a border between Northern Ireland and the Republic to minimize political tensions. As a solution, NIP essentially stipulates that Northern Ireland accept EU product standards so that goods may flow freely into the EU single market across an invisible Irish land border. (Edgington).
Despite its intuitive appearance, NIP is anything but a satisfying solution to the challenges posed by Brexit and Northern Ireland’s violent past. Stringent EU quality standards on products such as food and medicine have augmented the costs to British firms exporting products to Ireland because of increased time and resources required to complete large quantities of paperwork. Consequently, some British goods are disappearing from store shelves in Northern Ireland (Castle). Other goods, such as sausages and other chilled meats, have been banned directly by the EU, prompting widespread disgruntlement amongst consumers in Northern Ireland and tense negotiations between the UK and EU (Landler).
Aside from angering NI consumers and pro-UK political groups, NIP is imposing a substantial amount of macroeconomic stress on Northern Ireland. Ulster University economist Dr. Esmond Birnie estimates that the costs of imports from GB to NI firms has risen by about 6 percent on average, equating to an additional cost of £600 million annually for the region since NIP went into effect (Birnie). Without revising the protocol or implementing new trade policies, Birnie contends that it is possible that output and GDP in Northern Ireland could decline alongside these growing trade costs. Albeit to a lesser degree, the British mainland is also experiencing considerable setbacks arising from the increasing complexities of trade with Northern Ireland. Over the course of 2021 and 2022, the UK has increased expenditures by about £250 million annually to fund logistical programs such as the Trader Support Service and the Digital Assistance Scheme in addition to inspections at NI ports (Birnie). As Birnie argues, these UK budgetary changes come with considerable opportunity costs in the realm of public services such as education and healthcare which, unlike the NIP, benefit the economic and physical wellbeing of UK residents.
Political instability in Northern Ireland may also unpredictably impact GDP in the UK as a whole. Caustically referred to by unionists and loyalists in Northern Ireland as the “Irish Sea border,” the NIP provisions requiring inspections of British imports at NI ports has brought about considerable violence and political turnover in recent months. In late March and early April of 2021, bloody riots spilled over the streets of Derry, Belfast and Newtown abbey as, among other factors, pro-UK groups became outraged by the NIP’s so-called separation of Northern Ireland from mainland Britain. On 4 February 2022, Paul Givan of the Democratic Unionist Party, Northern Ireland’s former First Minister, resigned causing what The Irish Times described as a “crisis” for the NI political system (McClements). If social and political instability continue, uncertainty may cause foreign and domestic investors in Northern Ireland to liquidate their domestic assets and move them abroad. Such a capital outflow out of the UK could increase the supply of British pounds in the foreign exchange market, thereby reducing the real exchange rate of pounds to other currencies. With a lower real exchange rate implying diminished purchasing power of the British pound in foreign markets, the UK would be more dependent on exports as a source of GDP. Moreover, reduced investment in technological and other key sectors of the British economy could hamper productivity and GDP growth in the UK should the NIP incite a political crisis.
Clearly, more negotiation between the UK and EU is necessary to mitigate the new array of costs and uncertainty caused by the protocol. British demands include the elimination of paperwork and checks between Northern Ireland and Great Britain, confirmation that imports staying within Northern Ireland do not have to meet EU standards, and ending European Commission and European Court of Justice oversight of the protocol (Edgington). The uncompromising nature of these demands invigorates hardline Brexiters and their desires for a UK free of outside European interference. In response, the EU is willing to reduce checks on food imports by about 80 percent, reduce paperwork by 50 percent, and allow chilled meats and medicines passage across the Irish Sea (Edgington). However, if these measures remain unsatisfactory to British officials, London has one nuclear option on the table: Article 16 of NIP. The invocation of this article implies that parts of the protocol are causing “economic, societal, or environmental difficulties” and would lead to a suspension of these provisions (Edgington). However, a UK-EU trade war may erupt as the EU would likely respond with aggressive tariffs on British imports in Ireland. As a result, costs for many NI firms would continue to rise, further straining economic stability.
If the UK does not alter its hardline stance and consider some concessions to EU negotiators, economic productivity of Northern Ireland and Great Britain will continue to hang in the balance. As negotiators come to the table, it is imperative that they forgo noncompliant political posturing and instead consider the needs of British and Irish firms. NIP negotiation is not a zero sum game, and it is imperative that UK and EU politicians are able to find a solution that maximizes economic prosperity in the British Isles while complying with political standards. In the meantime, as tensions rise and negotiations labor on, storm clouds rise above the UK economy.
Birnie, Esmond. “The Irish Sea Border Is Costing Northern Ireland £850m a Year.” News Letter [Belfast, Northern Ireland], 12 Aug. 2021.
Castle, Stephen. “E.U. Offers U.K. Concessions on Northern Ireland. Here’s What the Spat Is about.” The New York Times, The New York Times, 17 Nov. 2021, https://www.nytimes.com/article/uk-northern-ireland-protocol-eu.html.
Edgington, Tom, and Chris Morris. “Brexit: What’s The Northern Ireland Protocol?” BBC News, BBC, 3 Feb. 2022, https://www.bbc.com/news/explainers-53724381.
Landler, Mark. “Britain and the E.U. Defer Action on Northern Ireland.” The New York Times, The New York Times, 30 June 2021, https://www.nytimes.com/2021/06/30/world/europe/britain-eu-northern-ireland-sausage-protocol.html.
McClements, Freya, et al. “Paul Givan’s Resignation as First Minister a ‘Very Damaging Move’.” The Irish Times, 2022, https://www.irishtimes.com/news/ireland/irish-news/paul-givan-s-resignation-as-first-minister-a-very-damaging-move-1.4793216. Accessed 20 Mar. 2022.