There is renewed speculation that the United Kingdom will delay the introduction of full import checks on food arriving from the European Union. Seen together with the ongoing disagreement with Brussels over the Northern Ireland Protocol, this reflects the British government’s continuing difficulty to reconcile leaving the single market with increased barriers to trade.
It is now over fifteen months since the UK left the EU’s customs union and single market. But full import checks have yet to be introduced at the British border. In particular there are no SPS checks on food products arriving from the EU, and controls on all goods arriving from Ireland continue to be relaxed.
Physical checks on food imports were due to be introduced from 1 July 2022, but there are concerns from government and importers that their impact could be to add delays and cost at a time when inflation is rising.
British exporters facing EU checks complain that the current situation undermines their competitiveness.
Continued talks about the Northern Ireland protocol are officially the reason for treating goods coming from Ireland differently to those from the rest of the EU. However, there is a particular conundrum for the British government, which is how to maintain their promise of no checks on goods from Northern Ireland while not leaving a permanent hole in the UK’s import arrangements.
This speaks in turn to a broader problem that the UK government has generally chosen not to acknowledge,which is that seamless trade is only possible where regulations and customs are aligned.
Former EU negotiator Lord Frost has for example suggested that the UK does not need to put in place the same checks as the EU, not noting however that even a lighter touch would slow the high volume of trade between Dover and Calais.
Similarly, there has not been a full discussion of the way in which divergent regulations between the UK and EU, particularly on food, will affect trade.
Sometimes it feels like the UK government is still frightened of revealing the true nature of its chosen Brexit, i.e. one that involves trade barriers.
While this denial persists, quick resolution of issues seems unlikely, with Northern Ireland most adversely affected.
Regulatory divergence’s practical dilemmas
Until Boris Johnson became Prime Minister in 2019 trade specialists had a broad assumption of some sort of model of UK-EU regulatory relations, such as full goods regulatory alignment known as the ‘Jersey model’.
This was abandoned in favour of pursuing a policy that presumes regulatory divergence, including over food regulations. This is reflected in choices such as not pursuing a veterinary agreement with the EU to the accompanying Trade and Cooperation Agreement.
What few realised at the time was that this meant every UK or EU regulatory decision contained within itself the possibility of divergence. The same approach applies to services – such as data – as much as goods such as food or chemicals. This is a problem particularly for UK business.
All this means that every potential ‘Brexit dividend’ reliant on regulation changes away from the EU, potentially incurs trade costs. This is more so if it were to lead to the withdrawal from the EU’s current data adequacy decision for the UK.
Tracking down every potential divergent step has become a challenging task. There seems no framework within government to assess its regulatory decisions coherently.
It is also hard to see the kind of regulatory cooperation emerging to match for example that between the United States and Canada who seek to coordinate some of the timing and impacts of their respective regulations. There has been no suggestion this would happen through the UK-EU Partnership Council.
The policy course seems set, despite becoming a particular focus affecting political stability in Northern Ireland.
Protocol feeds into Northern Ireland’s political crisis
There is growing concern about the aftermath of elections to Northern Ireland’s Assembly in May.
The Sinn Fein party, nationalists seeking a united Ireland and with former links to terrorists, may well become the largest party, with the right to name the First Minister. Even though, by status, this role involves equal powers with the Deputy First Minister, which in this scenario would be held by the largest unionist party seeking retention of UK ties, many unionists may not agree given they have always previously held leadership of devolved institutions.
Such political instability is made even more difficult as the currently largest party by seats, the Democratic Unionists, has said it will not return to government if the Northern Ireland protocol remains in place.
While the UK and EU have been negotiating their contrasting papers on the implementation of the Northern Ireland protocol, in Northern Ireland it has become a divisive issue. Nationalists support it, unionists believe it to be undermining Northern Ireland within the UK.
The issue is unlikely to go away while every individual goods regulation in UK or EU stands to increase barriers between Great Britain and Northern Ireland. Local business has sought pragmatic solutions such as tripartite meetings with EU and UK to resolve issues as they arise, but have struggled to be heard between EU demands for full UK implementation of the protocol, and UK suggestions of triggering the Article 16 safeguard clause.
There is every sign therefore that it will be difficult to build a functioning Northern Ireland government after elections – and the protocol will be a key part of the problem.
British trade policy still in the balance
The UK government has been looking globally for trade policy success, though even here regulatory issues have been problematic. Its support for tariff removal has been shown by openness to asks by Australia and New Zealand in completed FTAs. Yet neither agreement could be seen as particularly ambitious on non-tariff barriers.
Talk of diverging food standards from the EU, such as a Canadian ask for hormone treated beef in FTA discussions, continues against the UK government’s denial that this will be considered. It is quite possible that UK negotiators are holding the possible change to food rules for a potential US trade deal if this could help deliver a priority government, even though this would add yet a new layer of complexity to Northern Ireland discussions.
It is equally likely however that the UK government simply hasn’t got to grips with the complexities of the post-Brexit regulatory landscape.
Many of Brexit’s strongest supporters still believe in a divergence dividend – even if thus far it has proven elusive – and that following EU regulation will be costly. Business, that also traditionally supports the Conservative Party, is mostly advising against change, and that to act otherwise will carry a cost.
We may end up with a government simply unable to decide on an issue with no easy answers. In which case, questions of divergence and the Northern Ireland Protocol will not be resolved any time soon.