Welcome back. Do you work in an industry that has been affected by the UK’s departure from the EU single market and customs union? If so, how is the change hurting — or even benefiting — you and your business? Please keep your feedback coming to
It has taken four years of often bitter negotiations to get to this point, but it now seems that the UK and the EU are heading for a potentially boil-lancing clash over the post-Brexit trading arrangements for Northern Ireland.
Yesterday’s meeting between David Frost and Maros Sefcovic, the two lead actors for the UK and the EU sides, was “pretty much a car crash”, according to a diplomat on the call, with neither side moving from the opposing positions publicly outlined before the meeting.
So what happens next? Well, it is all about the sausages and a looming July 1 deadline over whether the UK will unilaterally extend a “grace period” allowing chilled meats to be sent to Northern Ireland by retailers and manufacturers in Great Britain.
This issue is shaping up to become a test of British good faith in implementing the Protocol on Northern Ireland, and EU willingness to be flexible and recognise the “unique circumstances” of that region. On one level this might all feel trivial — Fleet Street loves a headline about “Sausage Wars” — but on another the sausage question has become a fundamental test of the protocol, an agreement designed to avoid the return of a north-south trade border on the island of Ireland.
To avoid that border, all goods travelling to Northern Ireland from Great Britain must follow EU rules. Those rules clearly say that “chilled meats” (sausages, mince, chicken nuggets etc) must be sent frozen. (And, to be clear, this is the case right now for a UK company exporting mince to Munich, or sausages to Santander.)
The question is whether the same rules should apply for bangers going from Birmingham or Brighton to Belfast or Ballymena, when those places are all part of the same country, the same customs territory and the same internal market.
The protocol says that they should go frozen, indeed the deal lists a vast body of EU laws (see Annex 2) that would apply to goods going into Northern Ireland from Great Britain, including the chilled meats prohibition.
This was further, explicitly agreed by the UK in a declaration last December setting out that the six month grace period would allow NI business time to “adjust”, ie source chilled meat products from either NI or the Republic of Ireland.
It is, therefore, pretty galling to Brussels that the UK is now saying that, on reflection, it is “bonkers” (the Environment Secretary George Eustice this week on Radio 4) that British bangers should have to go to NI in frozen form, when that was what was explicitly agreed.
After the meeting yesterday senior UK officials were very clear that Boris Johnson has no intention of falling into line. British bangers will go to Belfast, was the message, and Boris himself will see to that himself if necessary.
Which is why both sides are now on a collision course. Sefcovic has threatened retaliation, including tariffs and quotas on UK goods, if the British do not implement what was agreed. As Sefcovic put it: “We cannot undo the core of the protocol.”
The European Commission argues it has shown flexibility — for example on the supply of medicines, the movement of guide dogs for the blind and tax regime for second-hand cars — but the truth is that the British side is now looking for more than “fixes” around the edges.
In the Commons yesterday, Johnson said the government was defending the right of people in Northern Ireland to have “free and uninterrupted access to goods and services from the whole of the UK”, a statement that cannot be squared with the Protocol as it stands.
The interruptions caused by the protocol are undeniably real, as this CBI paper released this week clearly enumerates. A piece of cheese going from GB into NI now requires eight forms to be filled, and the new Irish Sea trade border is checking some 2,000 Common Export Health Documents each week, according to the NI department of agriculture.
And all this even before several other “grace periods” expire. Come October, trade groups warn, the bureaucratic burdens will be greater still.
The CBI points out these checks are making trade “unviable” for many smaller GB businesses supplying Northern Ireland, something that Frost says the UK government did not foresee, but trade group chiefs like Shane Brennan, head of the Cold Chain Federation, confirm is the case.
As a result, Frost argues, the Irish Sea border as it currently stands is incompatible with the pledge in the protocol that the agreement “should impact as little as possible on the everyday life” of both Ireland and Northern Ireland.
In the short term, we now wait and watch to see if, over the next 20 days either side steps back from its current position on sausages, perhaps agreeing a further extension of the labelling system that has been used for the past six months to allow chilled meats to travel.
But this kind of can-kicking would just be a sticking plaster on a wound (self-inflicted or not) that the British government now sees needs pretty major surgery.
Plenty of clever people are advancing possible solutions, based around various flavours of bespoke veterinary agreement (to more closely align standards and reduce physical inspections) and so-called “trusted trader schemes” as well as the deployment of digital technology (to streamline checks).
But to be useful, all of these require the EU and the UK to be working with a common purpose to implement the agreement, not at cross-purposes, as currently seems to be the case.
It is clear that the UK is looking for something more fundamental than a mere streamlining of protocol processes, perhaps based around a broader “mutual recognition” of standards across the board on agrifoods that they argue can do away with the vast majority of checks.
At the same time, Tory MPs are actively developing plans for a form of “mutual enforcement”, which agrees a baseline of mutually recognised standards, and then manages future divergence through a mixture of product labelling schemes and enforcement by either side.
But any such practical, technocratic solutions feel quite distant in the light of the divisions exposed this week and the growing bitterness on both sides.
Johnson told MPs that he is working to “protect the territorial and economic integrity of our country”. The EU would be unwise to underestimate the strength of feeling that the prime minister could arouse both in GB and NI by harping on that theme.
The same goes for anti-protocol protests in Northern Ireland itself. It will not take many Loyalist troublemakers to make the point forcibly during next month’s Marching Season.
And while the EU is determined not to concede on the “core” of the protocol, Brussels may yet find it has overplayed its hand if Ulster is in full-throated uproar and the European Commission is still protesting the importance of heeding EC directives on sausages. It would be naive to think Frost and Johnson have not considered this scenario.
By the same token, EU diplomats warn the UK would be equally unwise to “underestimate the strategic depth” of the EU, and its willingness to both support Ireland and slap sanctions on the UK, not just with tariffs but by the European Council putting much wider issues of EU-UK co-operation in the diplomatic deep freeze.
None of this changes the fact that a new equilibrium still needs to be found. The obvious midpoint is for the UK to accept the principle of the protocol, while the EU softens its implementation of the deal.
But that is easier said than done. The difficulty is that this situation is increasingly resistant to diplomatic fudge because this is Brexit as it lands in the real world.
When this protocol deal was done in October 2019 it was still all a distant hypothetical. The text is a confection of contradictory aspirations that have now crumbled in the face of political realities. Creative ambiguities risk being rendered irrelevant by the facts on the ground.
It is not too late for everyone to take a step back. But this week has not inspired confidence that this is what is going to happen. Things look likely to get worse before they get better.
Brexit has opened the door to the government’s “Australian-style”, points-based immigration system which prioritises skilled labour and makes it legally impossible to hire lower-skilled workers like truck drivers.
Industries that relied heavily on labour from the EU, such as hospitality and construction, are already starting to feel the squeeze, partly exacerbated by the fact that a lot of EU citizens returned home during the Covid-19 period. It is not clear how many will return.
For the construction industry labour shortages loom in both the short and longer term. According to the ONS Labour Force Survey, between 2017 and 2020 the EU construction workforce fell 42 per cent in the UK and by 54 per cent in London, where the building industry is particularly reliant on EU construction workers.
Noble Francis, the economics director at the Construction Products Association which represents building suppliers, says that a shortage of EU labour “could hinder recovery for construction in the capital”, or lead to “substantial labour inflation” as London draws in workers from the UK causing knock-effects in UK regions.
In the medium term, Francis adds, the construction sector (much like UK truckers) is top-heavy with older workers. The ONS Labour Force Survey shows that more than 500,000 UK-born construction workers will retire in the next 10-15 years.
At some point the government will have to find a way to square the circle between these numbers and its pledge to “build back better”, including greening the UK’s ancient housing stock which first needs insulating and double glazing, before hundreds of thousands of heat pumps are installed each year.
And finally, three unmissable Brexit stories
• Biden-Johnson talks undermined by ‘deep concerns’ over Northern Ireland: Joe Biden meets Boris Johnson in person for the first time today, with hopes over a new US-UK “Atlantic Charter” undermined by “deep” concerns in Washington over the post-Brexit situation in Northern Ireland.
• Lurching towards a new era in freedom of movement: It is not just Covid-19 that is reshaping travel between the UK and EU, writes Jonathan Derbyshire, now there’s Brexit to consider, too.
• UK post-Brexit green watchdog will be weaker than EU predecessor, warns law body: The UK’s new green watchdog, the Office for Environmental Protection, will be almost powerless to impose penalties on public authorities that commit environmental damage and will lack independence from ministerial interference, a top law body has warned.