The Northern Ireland Protocol has been a source of tension since it came into force at the start of 2021.
After Brexit, special trading arrangements were needed for Northern Ireland, due to the fact that it has a land border with an EU country – the Republic of Ireland.
In order to protect the Good Friday Agreement and avoid any political tensions and instability on the island, it was agreed that hard border would not be a good solution.
To avoid checks on north-south trade and eliminate the need for hard border between NI and Ireland, they had to be imposed on east-to-west trade crossing the Irish Sea. Goods coming in from the UK and outside the EU would now be checked at Northern Ireland’s ports.
As a result of negotiations the EU and the UK signed the Northern Ireland Protocol as part of the Brexit withdrawal agreement. It is now part of international law. The Protocol allows goods to pass freely between Northern Ireland in the UK and the Republic of Ireland in the EU.
However, this arrangement has added significantly to businesses’ administrative burden. Small- and medium-sized businesses say they are particularly affected because, unlike larger companies, they bring multiple products in single containers on lorries and so this requires greater volumes of paperwork, more staff resources and higher costs to bring goods in.
To avoid the red tape on goods moving from Britain, companies in Northern Ireland have instead sourced materials in the Republic and directly from the rest of the EU. This has led to a surge in north-south trade under the new post-Brexit rules.
Some companies have broken supply chains with Britain where they can, but goods still flow from there for cultural, historic and economic reasons and because of a common currency. In Britain, the new rules have discouraged some exporters from selling to Northern Ireland.
It is also argued by Unionists that the new Irish Sea border undermines Northern Ireland’s place in the United Kingdom.
In order to ease these issues, the UK government wants to change the Protocol, and create red and green lanes for goods imported from Britain into Northern Ireland.
The green lane would be for trusted traders transporting goods to Northern Ireland only. These would be exempt from checks and customs controls.
The red lane would be for products going to the EU, including the Republic of Ireland. These would undergo full checks and customs controls.
Tax rules would also be changed. Northern Irish businesses currently follow EU rules on state aid and VAT. That means government payments to help firms in Northern Ireland, and tax breaks, must be within limits set by the EU. The UK government wants to remove these limits.
It also wants an independent body to settle disputes over the Northern Ireland Protocol, rather than the European Court of Justice.
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