Cliff Taylor: North must seek Brexit opportunities not just problems

There is the politics of the Northern Ireland protocol. And then there is the reality on the ground.

The politics has been well-rehearsed during the week – a big blunder by the European Commission threatening to trigger article 16 of the Northern Ireland protocol, jumped on by the DUP; threats from London, relationships damaged and a racking-up of tensions in the North.

But what about the reality? This is a mile away from the black-and-white world presented by the DUP – there are problems, but the wheels of commerce have not ground to a halt. Nor however does it entirely fit with the argument from Dublin that the protocol offers the North “ the best of both worlds” with free access to the UK and EU markets.

The EU must recognise it has a duty of care towards the North. Let's just say it has started badly on this one

The protocol was a messy, last-minute compromise reached after British prime minister Boris Johnson and then taoiseach Leo Varadkar met in Cheshire in late 2019. It was a political deal to solve a highly technical problem – how a trade border on the island of Ireland could be avoided in the case of the kind of hard Brexit which Johnson wanted, supported by the DUP.

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This was never going to be straightforward. And the risks increased because the final deal on the future EU/UK relationship was only tied up on Christmas Eve. Some businesses were guilty of not preparing properly anyway – but this left them scrambling to work out some of the crucial details days before they came into force.

So where from here? We can go back into the politics of this and you would really struggle to work out the DUP strategy first in supporting Brexit and then the UK’s exits from the single market and customs union.

Goodwill solution

But let’s try and look at possible ways forward. One is to minimise the problems the protocol is causing.

This requires support from the Irish Government at EU level, because it is very much in the Republic’s interest that this works. Some of the current problems will ease.

Some seem solvable with a bit of goodwill – for example some of the issues relating to the delivery of foodstuffs. Doing so requires the EU to recognise, as Queen's University professor Katy Haward has put it, that it has a duty of care towards the North – and let's just say it has started badly on this one. And it needs action from London , which has not done all that it can to try to make trade as smooth as possible.

The North needs to invest – in infrastructure, education, research and skills

But some problems will persist. The EU will defend the integrity of the single market. It will only go so far in trying to fix the problems. Johnson’s decision was to allow Britain to diverge from the EU and its rules and standards – and this is the consequence.

Given the politics, I suspect there is a way to go on this one yet. But the key for Irish politicians is to try to nudge the EU as far as possible to fix things and allow flexibility and more time to adjust – not to engage in shouting matches with the DUP. Irish interests lie in the protocol settling down and working. A few tense months lie ahead – the European Parliament has still to approve the December deal and who knows what antics Johnson will pursue in the meantime.

There is another striking point. It is the lack of any political focus on the opportunities here for Northern Ireland. Remember that it will hold a unique position to trade freely – in goods – with the EU single market and the UK.

Inward investment

There are opportunities here to attract inward investment – the Industrial Development Board in Belfast has already had some inquiries. The North should surely be attractive for some US manufacturers and also for some UK firms looking to sell to the EU.

Business people in the North interviewed this week by the BBC pointed to the competitive advantage now over the rest of the UK in being able to sell freely both to Britain and the EU and the opportunities to substitute domestic goods for some which now face more difficulties entering the North.

To take advantage of the opportunities in the longer term, the North needs to invest – in infrastructure, education, research and skills. Finding cash for this may not be easy. But this is the way to leverage the opportunity to attract investors in the years ahead. There are politicians in the North trying to point a way forward, but for now they are drowned out in the noise.

Goods vs services

While there are opportunities in manufacturing, the future of large parts of the services sector is tied in with the uncertainty facing all of the UK. The Brexit deal is bad for services in the UK – like banking and finance.And the North remains part of the EU single market for goods, but not for services.

SDLP MLA and former UK government adviser Matthew O’Toole pointed out this week that while the all-island economy may be a reality for goods, for services like banking the Border now very much exists. Strategically, the decisions the EU will take on how UK financial companies call sell into the EU in future will be important, as well as other areas relevant to services.

There is one nagging question about the new opportunities. It is that there will be a vote in four years in the Assembly on the future of the protocol, which creates uncertainty about whether the new arrangements will survive in the long term. For firms planning investments, this may raise some doubts.

It was a move to try to give the protocol political legitimacy, but it has practical consequences. All the more reason to make the protocol work and try to get a political consensus about it. The long shadow of Brexit lives on.