The Northern Ireland Protocol: What It Is, Why It Matters and What Happens Next

What are we looking at?

The Northern Ireland Protocol (Protocol) was introduced to keep Northern Ireland within the EU single market for goods as part of the Brexit withdrawal agreement. It was negotiated to avoid strict EU food and border checks on goods such as milk and eggs arriving from a non-EU country. The Protocol allows Northern Ireland to maintain frictionless trade with the Republic of Ireland while creating checks on goods entering Northern Ireland from Great Britain.

What is the Protocol about?

Before Brexit, goods moved freely across the border between Northern Ireland and the Republic of Ireland. After the UK left the EU, a new arrangement was required to avoid reinstating a hard border.

Under the Protocol, checks and inspections occur between Great Britain and Northern Ireland, not along the Irish border. Lorries can deliver goods from Northern Ireland into the Republic of Ireland without paperwork or checks. However, goods entering Northern Ireland from Great Britain require documentation and inspection.

What is going wrong with the Protocol?

Although the UK signed the agreement in 2019, it is now calling for changes and has threatened to invoke Art. 16. The UK argues that the Protocol was a major compromise and that the EU is applying the rules too rigidly.

Article 16 allows either side to suspend parts of the agreement if it causes economic, societal or environmental difficulties.

UK proposals include:

• Removing border checks and paperwork between Great Britain and Northern Ireland
• Ensuring goods staying in Northern Ireland only need to meet British standards
• Removing the role of the European Commission and the European Court of Justice in overseeing the Protocol

EU proposals include:

• An 80 per cent reduction in checks on food products and halving paperwork
• Reduced customs information requirements
• Legislation to allow medicinal trade between Great Britain and Northern Ireland
• Relaxed rules so chilled meats can continue to be shipped
• Safeguards to prevent goods entering the Republic of Ireland

The EU has stated that renegotiation is out of the question but is willing to adjust implementation.

What is the big picture effect?

Northern Ireland elections

On 3 February 2022, the Democratic Unionist Party's First Minister resigned in protest against the Protocol, triggering elections on 5 May. Polling suggested Sinn Féin could become Northern Ireland's largest party for the first time in its history. This would be symbolically significant given Northern Ireland's creation in 1921 to prevent rule from Dublin.

Northern Ireland's power-sharing system requires the largest and second-largest parties to jointly fill the roles of first minister and deputy first minister. If the DUP refused to nominate a deputy first minister, the executive could collapse.

In 2024, the Northern Ireland Assembly will vote on whether to keep the Protocol. Sinn Féin broadly supports it, while the DUP strongly opposes it. If the Assembly votes against retaining the Protocol, the UK and EU would have two years to negotiate a new arrangement to avoid a hard border, in line with the Good Friday Agreement.

A potential UK–EU legal battle

The UK government is seeking new external legal advisers ahead of negotiations. Ministers may be preparing to trigger Art. 16. EU Member States such as France and Germany have urged Brussels to prepare tough retaliatory measures if the UK suspends trading arrangements.

Reports suggest the UK prime minister has drafted legislation that would give ministers powers to revoke parts of the Protocol. This could lead to damaging retaliation from Brussels. One possible response could target energy supplies, as the UK relies on undersea cables and pipelines from the EU for around 10 per cent of its electricity and 12 per cent of its gas.

European diplomats have stated they do not want a trade conflict, particularly while the EU is focused on the Ukraine–Russia war.

Economic impact

Analysis from Esmie Birnie suggests the Protocol may increase the cost of bringing goods from Great Britain to Northern Ireland by around 6 per cent, equivalent to approximately £600 million annually.

The Fraser of Allander Institute estimates that in the medium term, the Protocol could leave Northern Ireland's economy 2.06 per cent smaller than before Brexit, equivalent to £900 million to £1 billion in foregone output.

If the UK and EU agree to reduce checks and controls, the economic impact could fall to around 1.5 per cent.