Originally posted on Business Post 14 March 2021.
Responding to questions on the operation of the Northern Ireland protocol in Westminster last week, Brandon Lewis, the Northern Ireland secretary, made repeated mention of the role of business.
He hoped that Maroš Šefčovič, the EU vice-president with responsibility for Brexit, could “visit Northern Ireland more”. By implication, if Šefčovič really understood the issues affecting people and businesses in the North, he might be more positive about the British government reneging on the previously agreed trade controls under the protocol. This is not far short of victim-blaming.
The wonder of the Northern Ireland protocol is not that there are problems with it, but that it operates at all. The same thing could be said about all types of trade in goods since the UK finally left the protection of the customs union and single market on January 1.
Businesses are used to deadlines. Owners and managers are all too aware that they will face action from government statistical agencies, registrars of companies, revenue authorities, local authorities, health and safety inspectors and heaven knows who else, if compliance or payment deadlines are not met, and met routinely.
This awareness of obligations and their consequences was underlined during the pandemic. Both jurisdictions on this island extended routine deadlines without penalty – and obligations to file, report or pay under a wide range of legislative provisions were postponed or deferred. Nevertheless, relatively few businesses availed of some or any of these extensions.
If businesses can cope with a pandemic, they can surely cope with new administrative arrangements for imports and exports. It is not business that needed grace periods for the checks and controls imposed by Brexit and the Northern Ireland protocol. It is government and its agencies.
The shape of the Northern Ireland protocol was well known long before the Trade and Cooperation Agreement between the UK and the European Union was finalised on Christmas Eve last year. The requirements of the protocol in terms of Vat and customs were well known and should have been understood over a year ago but government did not prepare for their implementation.
It was known that the protocol created a dual status for the North, but the British government ignored the practicalities. There was no official indication of the British government’s intentions in handling the protocol until last May, stated in a so-called Command Paper.
That paper noted that the protocol “enables tariffs to be collected on goods at risk of entering the EU’s Single Market at ports of entry, rather than at the land border that is the legal boundary between the UK and EU’s customs territories”. Yet three months into the operation of the protocol, no government system exists to manage refunds of customs duties due to traders where goods are subsequently found not to be at risk. This is not the fault of business.
Again, according to the Command Paper of May 2020, the protocol “respects the pre-existing status, accepted by all parties, of the island of Ireland as a single epidemiological unit for food and animal health purposes, and provides for wider regulatory alignment on industrial goods on the basis of democratic consent”. So why does this checking process now have to be delayed at the expense of a breakdown of trust between the UK and the EU?
Extending deadlines for the kind of checks which have given rise to last week’s legal action by the European Commission against the UK does nothing to address the underlying problem which is that the British government simply failed to be ready to implement the protocol in good time. It now plans to further extend the light-touch approach on imports into Britain beyond the existing March 31 and June 30 deadlines.
That announcement certainly benefits Irish exporters to Britain in the short term, but it is yet another attempt by the British government to postpone the worst of Brexit.
What businesses need is coherent direction on customs and trade clearance, backed up by fair and efficient administrative procedures on both the EU and UK sides. It is the absence of these procedures, rather than the inability of business to cope with new rules, that is giving rise to the current crisis. Unfortunately these repeated extensions also dull the advantages of the protocol for Northern Ireland.
This is not to downplay for a moment the difficulties created by Brexit and the operation of the protocol for businesses both north and south of the border. Instead, it is to point out that businesses on the island of Ireland are remarkably adaptable, provided that they know what they need to do and how to do it. In this regard, the British government has failed miserably in its obligations.
There is now no excuse for the British government dragging its heels on full Brexit implementation. Undermining the protocol by having lax management arrangements in the North undermines the value of its participation in the customs union. Further grace periods for checks and controls will not ultimately facilitate businesses on this island. They merely offer a sticking plaster to mask how unready the British government was to get Brexit done.
Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland
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