Written evidence submitted by Mid and East (NIP0006)

Introduction The Protocol comes into force from 1 January 2021. The Protocol is a solution designed to reconcile the UK’s decision to leave the EU with the unique circumstances in Northern Ireland. It reflects the specific challenges Brexit poses for Northern Ireland, due to its land border with the Republic of Ireland (an EU Member State) and its position as part of both the UK and the island of Ireland. The Protocol is a significant change for Northern Ireland. On 1 January 2021, the UK will cease to apply EU laws, but under the Protocol some EU laws will continue to apply in Northern Ireland. The Protocol therefore creates new areas of legal divergence between Northern Ireland and other parts of the UK. The Protocol also creates entirely new mechanisms, such as the requirement that Northern Ireland must periodically renew its consent to parts of the Protocol. The Protocol will therefore form an important part of Northern Ireland’s legal and constitutional architecture. The NI Affairs Committee has launched an inquiry on the Northern Ireland Protocol to scrutinise the Protocol’s implementation and to examine its consequences for government, people and businesses. The Committee welcomes a submission of evidence that addresses a range of issues that are outlined in tables below. 1. Outline the preparedness of government, public services and businesses for the Protocol taking effect on 1 January 2021. Council has been monitoring developments very closely during the Transition Period due to the potential impact of Brexit on the local economy and our citizens.

In general, the COVID-19 pandemic has undoubtedly detracted important attention from Brexit preparations and the EU-UK trade discussions. Council is concerned that there is now very limited time to agree and ratify a deal and ensure preparedness on the ground.

Council was pleased to note that the EU and UK have agreed a phased-in approach for regulating medicines until January 2022. However, overall, Council has concerns with the state of readiness for 1 January 2021, the lack of clarity at this late stage for Local Authorities and businesses as well as the potential for delays at the ferry ports. Council agrees with the findings of the recent National Audit Office report (November 2020) which has found that although government departments have made progress with the changes required to systems, infrastructure and resources to manage the border at the end of the Brexit transition period “it is still likely that widespread disruption will occur from 1 January 2021”.

Port infrastructure readiness The UK government’s Command Paper, setting out the UK’s Approach to the Northern Ireland Protocol, stated that implementation would not involve new customs infrastructure. Facilities are, however, being expanded, including those at the Port of . Following FSA instruction, Council has completed the recruitment of 12 new Environmental Health Officers to carry out food-related inspections at the Larne Port Border Control Post. We understand that if the EU does not agree to significant reductions to the level of checks required on day 1, it is likely that control bodies and traders will not be able to comply with EU legislative requirements.

COVID-19 has highlighted the importance of the port and the reliance of the supply routes in Northern Ireland for food, medicines, and other essential supplies. Council is aware that the new customs facilities will not be in place by 1st January 2021 (likely June 2021) and that contingency plans have yet to be approved by the EU. Concerns have been raised in respect of the readiness of new IT systems such as the Goods Vehicle Movement System.

Any delays to the movement of goods vehicles caused by unfinished port infrastructure and IT systems are of grave concern.

Local businesses preparedness Council has been working closely with businesses to provide support as they prepare for the implementation of the Protocol. However, there is growing concern regarding the lack of clarity on the practical implementation of the Protocol, specifically around what additional requirements and administrative processes will be necessary. In the Mid and East Antrim Borough, small and medium sized enterprises make up 91% of all businesses. Most of them have not traded beyond the UK and have not therefore been required to complete customs declarations before. The announcement of the £200m Trader Support Scheme was very welcome, as was the establishment of the Business Engagement Forum. However, our local businesses are struggling, first and foremost, to cope with the impact of the COVID-19 pandemic and Council remains concerned that some businesses may simply not be aware of the extent of the requirements of the NI Protocol. If businesses are unprepared, they may face supply chain disruption and delays from 1st January 2021.

Lack of communication and information has hampered business’ ability to prepare for 1 January 2021. Since October 2020 additional information and support has become available but this has not always been provided in a clear manner. The Trader Support Service and the ‘NI business info’ page, which advises businesses of the 10 steps to take to prepare, has helped but there still is a great deal of uncertainty due to the fact that the final details of the agreement are still being agreed with time running out.

Certainty and clarification is urgently required and we note that Northern Ireland businesses called on 18 November 2020 for an extension to the Brexit transition period, warning they “simply will not be ready” for the mandatory border checks on 1 January 2021.

Engagement Council has written to the Chancellor of the Duchy of Lancaster to request that he consider a phased approach to the implementation of the Northern Ireland Protocol. This would allow for flexibility in implementing the requirements in the months following the 1st January 2021.

It is of critical importance that Northern Ireland is given sufficient time to fully understand, prepare for and implement the requirements of the Protocol. Without built-in flexibility, it is likely that delays will occur in the movement of goods, with associated increased costs, meaning that businesses and residents in both Northern Ireland and Great Britain will suffer economic consequences.

2. What are the implications of the Protocol for intra-UK Government and public service co-operation, and for intra-UK trade; Clarity on Structural Funds and State Aid As a member of the European Union, the UK received structural funding designed to support economic development and reduce inequality between regions across Europe. During the 2014-2020 period, Mid & East Antrim area received the highest investment outside of with £40.62m of ERDF grant funding secured. Mid and East Antrim Borough Council is experienced in the governance, management and delivery of a range of programmes funded via EU Structural Funds including ERDF, ESF, Rural Development and PEACE. In 2017, the UK government announced that it would replace EU Structural Funds with a successor arrangement called the UK Shared Prosperity Fund (UKSPF). Under the Protocol, EU State Aid rules will continue to apply in relation to the movement of goods and the Single Electricity Market. This may constrain the design of the SPF as the UK will be required to comply with EU state aid rules where any UK measure potentially affects the relevant trade between Northern Ireland and the EU. Council remains frustrated with the lack of detail and substantive engagement on the SPF and seek clarification on the operation of the Shared Prosperity Fund immediately to ensure that Council may plan for the future and ensure that the funding is used optimally to meet local needs across the regions.

Intra-UK Trade The regional economy is reliant on unfettered access to/from Great Britain as NI purchases and sells more to GB than to any other destination. Data shows that, in 2017, this amounted to sales in goods of £7.6bn, and purchases of £10.5bn from Northern Ireland to Great Britain (53% of external sales). This is augmented by a further £3.7bn in service sales and £2.9bn in service purchases.

The Office of National Statistics reported that Gross Value Added per capita in Northern Ireland was one of the lowest amongst the UK regions in 2017. Ensuring unfettered intra-UK trade is an essential element in levelling up the regions. However, the implementation of the requirements of the Protocol appears set to bring friction to trade from GB to NI. Businesses with any sort of non-domestic trade either as a supplier or as a trader in finished goods and services will be impacted. The transfer of goods and services between Great Britain (GB) and Northern Ireland (NI) will be subject to review, additional documentation & administration and in some instances tariffs. Goods coming into NI will also need to make declarations in relation to their final destination as goods will still be able to pass between NI and the Republic of Ireland (ROI). From an intra-UK trade perspective, the key business implications will be the greater number of checks required at the ports, knowledge around paperwork, the requirements and possible consequences if delays are experienced. In addition, at this present time, the definition of “at risk” goods has still not been defined.

Concerns have been expressed about continuing supply of some goods into NI given the extra checks and paperwork required. Sainsbury’s supermarket, for example, warned on 6th November 2020 that there may be a restriction on the range of products sold. Marks and Spencer has also said that its business in Ireland could be affected if no deal is agreed with the EU, and significant tariffs and bureaucratic costs were added to food imports. We note that the First Minister and Deputy First Minister wrote to the Vice President of the European Commission on 5th November 2020 to raise concerns in relation to the application of sanitary and phytosanitary controls on goods arriving in Northern Ireland. The letter stressed that there is a “real threat to the continuity of the supply of existing food and other products to our market”. 3. What are implications of the Protocol for inter-governmental and public service co-operation between Northern Ireland and the Republic of Ireland, and for trade between Northern Ireland and the Republic of Ireland; Inter-governmental and public service co-operation The UK Government’s Command Paper on ‘The UK’s Approach to the Northern Ireland Protocol’ states that it is vital that East-West and North-South cooperation continues to be supported as envisaged in the Good Friday Agreement. Co-operation will include the areas of environment, health, agriculture, transport, education and tourism, as well as energy, telecommunications, broadcasting, inland fisheries, justice and security, higher education and sport.

Article 11 of the Protocol makes provision for the Joint Committee to monitor the impacts of the Protocol on the necessary conditions for North-South co- operation.

Council is pleased that the EU and the UK have agreed to continued PEACE funding with a new €650m PEACE+ programme that will be run by the Special EU Programmes Body as a North-South implementation body established under the 1998 Agreement.

NI-ROI Trade In relation to trade between NI and the RoI, the Northern Ireland Protocol may give traders in goods in Northern Ireland an advantage relative to their competitors in the Republic of Ireland, if Northern Ireland traders have full access to both the European Union and the Great Britain markets for goods.

For Northern Ireland–Republic of Ireland trade, the EU’s Union Customs Code (customs rules) apply and there would be no tariffs or restrictions.

Goods moving directly from Great Britain to Northern Ireland will not be subject to a tariff unless the goods are “at risk” of being moved into the EU afterwards. Likewise, goods from third countries entering Northern Ireland will be subject to the UK tariff, unless they are at risk of being moved to the EU.

For goods deemed “at risk”, the EU tariff will be applied. If the UK tariff is lower, and those goods are proved to have stayed in Northern Ireland, the UK can reimburse traders.

However, Republic of Ireland traders will be subject to tariffs (in the event of a no-deal) and to more stringent customs controls and declarations on sales to and purchases from Great Britain relative to their Northern Ireland counterparts. There will be import and export declaration requirements in Great Britain and the Republic of Ireland.

Northern Ireland traders are guaranteed unfettered access to the Great Britain market with controls. Imports into Northern Ireland which are intended to be moved into the EU, principally the Republic of Ireland, are to be subject to tariffs and controls, but the controls are likely to be much lighter than those applicable to direct imports from Great Britain to the Republic of Ireland.

4. What are the implications of the Protocol for citizens’ rights and access to public services on the island of Ireland; The Protocol sets out the UK’s commitment to ensuring no diminution of rights, safeguards or equality of opportunity as set out in the 1998 Agreement, resulting from the UK’s withdrawal from the EU. These commitments have been given effect in UK domestic law in the European Union (Withdrawal Agreement) Act 2020, which establishes a ‘dedicated mechanism’ for the implementation of these provisions and ensures that individuals can challenge alleged breaches of the commitment before the domestic courts.

The Protocol affirms that the 1998 Good Friday Agreement (GFA) will be protected. It recognises that cooperation between Northern Ireland and Ireland is a central part of the GFA and is essential for achieving reconciliation and the normalisation of relationships on the island of Ireland, and recalling the roles, functions and safeguards of the Northern Ireland Executive, the Northern Ireland Assembly and the North-South Ministerial Council (including cross-community provisions), as set out in the 1998 Agreement.

The Common Travel Area (CTA) will continue to apply to the UK, the Crown Dependencies (Bailiwick of Jersey, Bailiwick of Guernsey and the Isle of Man) and Ireland. It is not dependent on EU membership and, in any case, it is protected under the Protocol. Citizens’ rights including free movement and access to public services should continue to be upheld. For example, CTA citizens will have the right to access healthcare in either state and when visiting can receive the treatment needed during their stay.

EU Settlement scheme Other citizens (EU, EEA or Swiss citizen) will have to apply to the EU Settlement Scheme to continue living in the UK after 30 June 2021. Settled status will grant a person the same rights to healthcare, education, benefits and pensions as a British citizen. This will allow access to use the NHS for free, if they can at the moment, enrol in education or continue studying, access public funds such as benefits and pensions (if eligible) and travel in and out of the UK. Employers and landlords will be required to check that EU citizens are entitled to work or live in the UK, or they will face penalties. There is some concern that EU nationals will be rejected for interviews, jobs or flats due to a lack of awareness of the law.

5. What are the implications of the Protocol for the Northern Ireland economy and for investment in Northern Ireland; The regional economy is reliant upon trade with Great Britain as NI purchases and sells more to GB than to any other destination including the Republic of Ireland. Latest NISRA figures show that exports of goods and services into the Republic comprise only 6% by value of all goods and services produced in NI. This would suggest that there is a greater risk to NI business and economy from a border with GB than with the ROI. Council therefore believes that unfettered access to and from GB should be absolutely essential and Mid and East Antrim Borough Council’s The Chief Executive gave evidence to that effect to the NI Affairs Committee in April.

The UK Government’s 7th August Policy Paper made it clear that the NI Protocol will bring about changes for goods travelling from the rest of the UK to NI. This will entail new administrative processes for traders, notably new electronic import declaration requirements, and safety and security information. As mentioned in section 1, the requirements of additional checks and paperwork on goods travelling from GB to NI will add friction to GB-NI trade. Even if a trade deal is agreed, the Northern Ireland Protocol will have a significant impact on businesses, and in particular manufacturing and agri-food. Much of our trade, production and commerce is based on ‘Just-in-time’ delivery and any friction in trade flows caused by implementation of the Protocol will have a significant impact on businesses. Council is also concerned that the additional costs associated with customs checks will put local businesses at a competitive disadvantage and there is a risk that goods might become more expensive for NI consumers if suppliers pass on additional costs of doing business here. Impact of Tariffs The full impact of the NI Protocol on the economy will depend on whether a Free Trade Agreement (FTA) is signed between the UK and the EU before the end of the current transition period. A change in the terms of trade with the EU and other trading partners could result in higher tariffs, especially if we revert to WTO trade terms with the EU and the rest of the world (one NI firm recently estimated an increase of £250k in costs for its business through tariffs alone in this scenario). With an FTA there should be no or few tariffs and quotas on UK goods entering the EU and thus no need to charge tariffs on those goods entering NI from GB which risk passing on into the EU across the Irish land border. The NI Protocol applies the Union Customs Code to all goods passing from GB directly to NI. In the absence of an FTA, all goods deemed at risk of passing through NI into the EU will have to pay tariffs and customs checks. The Trader Support Scheme will mean that an HMRC agent will act as a customs broker free of charge to the traders. One option is to charge tariffs on all goods entering NI from GB and then put in place a reclaim process once the firms prove that the goods did not move into the EU. Council is concerned that this could create a huge administrative and costly burden for businesses. In addition, without a FTA there could be an increase in GB firms relocating to NI to take advantage of the ability to sell goods to the EU across the Irish land border free of tariffs and quotas. Whilst this may be viewed as a positive, there may be implications for indigenous businesses. Investment There are possible advantages in some sectors such as Life and Health sciences where a company can service two markets so this may attract Foreign Direct Investment (FDI) interest – especially if linked to ‘special status’ to offer low regulatory landing zone for access in to GB and EU markets as part of the FDI offer.

6. What are the implications of the Protocol for devolution, including:

o Northern Ireland’s position in the UK internal market;

o Northern Ireland’s ability to benefit from the UK’s post-Brexit trade policy; and

o how the Protocol interacts with the UK’s new system of common policy frameworks. Internal market bill The UK Internal Market Bill aims to create a UK wide internal market and is designed to enable goods and services to flow freely across England, Scotland, Wales and Northern Ireland once the transition period is over. The Bill is based on non-discrimination and mutual recognition principles. Council is concerned with the practical outworkings in respect of NI where EU Single Market rules will continue to apply under the Protocol from 1 January 2021. NI could therefore fall under two sets of regulations with the UK responsible for implementing EU law in NI.

The Bill also allows for the UK Government to make payment to any person in the UK for the purposes of economic development, infrastructure, cultural and sporting activities, and international and domestic educational and training activities. Concerns have been expressed about the impact of the Bill upon the powers of the devolved administrations as it will allow the UK Government to make funding decisions in devolved areas. Council is concerned that the Bill also gives the government the power to unilaterally change aspects of the EU Withdrawal Agreement and that it could break international law. Post-Brexit trade policy The Protocol should ensure that Northern Ireland remains in the UK customs territory and the UK Government will negotiate and deliver trade deals on behalf of the whole . It is currently unclear whether the EU will allow NI to participate in EU trade deals given that it will remain in the EU Single Market for goods and the Single Electricity Market.

Common Frameworks Council understands that the UK Government has been working jointly with the Scottish and Welsh Governments and the Northern Ireland Executive to ensure a common approach is taken where needed on policy areas that intersect with devolved competence by developing UK Common Frameworks.

Council agrees with the Committee for the Executive Office, which has written to the Chancellor of the Duchy of Lancaster (11 November) stating that it is “unclear how the common frameworks process will provide for the special and specific circumstances of Northern Ireland with respect to adherence to the Protocol and potential conflict with intra UK common frameworks”.

Intergovernmental relations Council notes that the Chancellor of the Duchy of Lancaster has announced new measures to improve the transparency and accountability of relations between the UK Government and the devolved administrations. A new dedicated GOV.UK webpage has created for intergovernmental relations (IGR). On this website, all documents relating to IGR, including the Memorandum of Understanding on Devolution, relevant documents and reports related to intergovernmental fora will be published at timely intervals. The Government has committed to publishing a quarterly report on engagements, resolved disputes and their outcomes and associated third-party reports. An annual report will provide further detail, with the first report expected to be published in 2021. The Government has also committed to making regular statements to Parliament, including appearances before relevant committees when requested.

7. What are the implications of new legislation on the operation of the Protocol; It is difficult to comment on the full implications of new legislation until the outcome of trade negotiations are known and future EU-UK relations are shaped. New legislation will certainly have to take into account the particular circumstances of NI under the Protocol.

For the Protocol to work, it must respect the needs of all Northern Ireland’s people and recognise that Northern Ireland is an integral part of the customs territory of the United Kingdom and there needs to be minimum disruption within Northern Ireland.

8. Outline the interaction between the Protocol and the future relationship between the UK and the EU; The true picture of the future relationship between the UK and the EU is reliant upon the outcome of negotiations.

Council is pleased to note that the Committee for the Executive Office has written to the Chancellor of the Duchy of Lancaster, requesting written evidence about the Future Relationship with the European Union (11 November 2020). The Committee has requested clarity on the mechanisms that are being considered to allow for transparency and scrutiny of the work of the Withdrawal Agreement Joint Committee, Specialised Committee and Joint Consultative Working Group from 1st January 2021.

Council regrets that the UK government will not agree to an EU permanent presence in NI and it is unclear what presence NI will be afforded within the EU. Council believes that NI representation is required within the EU given that NI will remain within the Single Market for goods. We were pleased to note that the Committee for the Executive Office’s 11 November letter referred to this matter and requested detailed information on how the UK Government will seek to influence EU policy that will apply to Northern Ireland under the Protocol and how any proposals/policy changes will be monitored and communicated.

9. How can the Protocol be effectively implemented, including in a scenario where no UK-EU future relationship is agreed; It will be more difficult to implement the protocol if no UK-EU relationship is agreed.

The Northern Ireland Protocol is designed to prevent a hard border in Ireland - or any new checks at the Irish border. Therefore, in order to be effectively implemented, NI needs to remain in the EU's single market for goods, there needs to be no hard border within Ireland and the compliance burden and checking process needs to be as minimal as possible.

The precise nature of these checks needs to be agreed and negotiations concluded between the EU and UK as a matter of urgency in order to implement the Protocol effectively within the timeframe.

10.Outline any potential mechanisms to facilitate parliamentary scrutiny of the operation of the Protocol, including:

o scrutiny of any new UK or EU laws that would create divergence between Northern Ireland and other parts of the UK after the end of the transition period; and

o scrutiny of the UK-EU Withdrawal Agreement Joint Committee and its specialised committees. Council notes that there is provision for the Protocol to be disapplied if Northern Ireland’s Elected Representatives vote in favour. The first opportunity will be in 2024, four years after the end of the Transition Period.

As above under section 8, the Committee for the Executive Office has written to the Chancellor of the Duchy of Lancaster, requesting written evidence about the Future Relationship with the European Union (11 November 2020). The Committee has requested clarity on the mechanisms what are being considered to allow for transparency and scrutiny of the work of the Withdrawal Agreement Joint Committee, Specialised Committee and Joint Consultative Working Group from 1st January 2021.

December 2020