Northern Ireland dominated the first phase of Brexit talks because of bitter divisions over the land border with the Irish Republic.
Under Boris Johnson’s withdrawal agreement — which comes into force late on Friday — the frontier will stay open. Yet more tension looms in the second phase, this time over new Irish Sea trade checks between Northern Ireland and Britain.
“There will be added administration wherever borders go up or there’s an interruption to trade,” said Richard Kennedy, chief executive of Devenish, a Belfast agritech company which specialises in animal nutrients. “We’re working up scenarios and trying to see what needs to be done.”
Although Mr Johnson’s Brexit treaty has been cast as a “best of both worlds”, turning Northern Ireland into a special economic zone allowing it to trade freely with both the UK and the EU, anxiety about short-term risk outweighs business optimism about the long-term opportunity.
The Northern Ireland protocol, a pivotal part of the Brexit divorce deal agreed by the UK and EU leaders last October, removes the need for Theresa May’s contentious Irish backstop which would have come into force in the event the two sides could not agree a new comprehensive trade deal.
Under Mrs May’s plan — rejected three times by UK MPs — Northern Ireland would have remained in the EU’s single market while the whole of the UK would have stayed in the bloc’s customs union — anathema to Tory Brexiters who insist on the freedom to negotiate trade deals with other nations outside Europe after Britain leaves.
But rather than constraining the rest of Britain inside the EU’s customs union, the so-called “frontstop” instead places a new regulatory and customs border in the Irish Sea. And the accompanying prospect of checks between Northern Ireland and the rest of the UK has quickly become one of the more contentious points of Mr Johnson’s Brexit deal.
According to the agreement, Northern Irish businesses importing goods from the rest of the UK will be charged the EU tariff rate on goods if they are deemed likely to end up in the republic — part of the bloc.
Businesses can reclaim the money if they prove the goods did not cross the border while a new EU-UK joint committee will set out criteria for when a product is not “at risk” of entering the EU and will not be subject to EU tariffs. The joint committee will also set out arrangements for Northern Ireland to maintain alignment on goods with EU VAT and excise rules. Companies in the region may also have to fill in customs declarations.
Mr Johnson nevertheless has insisted there will not be fresh controls on trade between Northern Ireland and Britain, saying repeatedly that there will be no checks on goods travelling in either direction.
But Michel Barnier, the EU’s chief Brexit negotiator, could not have been clearer when he told a Belfast audience on Monday that frictionless commerce was impossible because the deal creates two regulatory spaces. Checks were therefore “indispensable”, said Mr Barnier.
“We will need sanitary and phytosanitary checks on food products and live animals,” he said. “The EU must be able to assess risks on any product coming into its market and, if necessary, activate physical controls. These checks must take place somewhere.”
At Stormont, seat of the region’s devolved government outside Belfast, there is deep scepticism about Mr Johnson’s claim that checks will not be required.
The recent restoration of the regional executive followed a deal between the Democratic Unionists and the Irish nationalist Sinn Féin party to end a long schism, which called into question the durability of institutions set up under the Good Friday peace pact.
On the Brexit treaty itself however, there is rare unity — although the pro-Brexit DUP and anti-Brexit Sinn Féin oppose Mr Johnson’s deal for different reasons. In one of the Stormont assembly’s first acts since it started sitting again this month, all five parties in the legislature voted last week to withhold consent from Mr Johnsons’ treaty.
The vote was not binding on London — Brexit will still go ahead. But it shows that basic arrangements for the future of Northern Ireland’s economy remain deeply contentious almost four years after a 56 per cent majority in the region voted to remain in the EU. “It’s in nobody’s interest to have, and nobody wants to see, any trade barriers, either east-west or north-south,” said a senior Stormont official.
In spite of Mr Johnson’s promise to provide “unfettered access” for goods moving in either direction between Northern Ireland and Britain, the details of what exactly the treaty means for the region’s companies have yet to be hammered out.
But businesses in Northern Ireland, as well as hauliers, port operators and shipping lines, have already started preparing for such checks. Seamus Leheny, Belfast-based policy manager of the Freight Transport Association, said: “There are going to be checks and they are likely to take place at the ports. For the haulage industry it is going to be a whole new level of administration.”
While the original Brexit battle centred on the 310-mile Irish land border, more trade goes by sea. In 2017, Northern Ireland imported £10.5bn worth of goods from Britain and sold £7.7bn to it, according to its statistics agency. The figures for the republic were £2.6bn and £3bn respectively.
While some flow through Dublin or Cork, the agency said that most of the goods moving between Britain and Northern Ireland use an airport or seaport in the province without crossing the Irish land border and will be caught by new checks.
“The extent to which there’s any damage to east-west trade between Northern Ireland and Great Britain is the big test and is the gravest short-term risk,” said Neil Gibson, Belfast-based chief economist for accountants EY Ireland.
There were potential prizes, he added, “but not immediately” from the possibility to draw investment into the region by offering preferential access to EU and UK markets.“Firms are going to want to see that everything settles down, that there are no wrinkles in the system,” he said.
