NI protocol explained
Post-Brexit at the end of January 2020, there was a transition period that lasted until the end of December 2020. Thereafter, the Northern Ireland Protocol (NI protocol) was agreed upon during negotiations between the EU and UK. Simply put, the agreement stipulates that no new checks of goods at borders would be implemented, as a way to ensure that despite the UK’s exit from the EU, pre-Brexit customs, tariffs, cross-border regulations and paperwork remains applicable. The protocol has three core aims, which have been stipulated as:
- To avoid a hard border between Northern Ireland and the Republic of Ireland
- To make sure of the integrity of the EU’s single market for goods
- To facilitate unfettered access for NI goods to the British market, and the inclusion of NI goods in free trade agreements between the UK and third countries
Concerns over the implementation of NI protocol
Despite the previously agreed upon matters, there has been much contention and need for clarity on the progress being made on the NI protocol of late, with the Scottish Government voicing its concerns on the UK’s staggering plans to renegotiate the protocol. There have been disruptions to the medical and food supply chains, due to new trading rules and regulations that have been implemented. In early August 2021, a Scottish official expressed that the tensions between the EU and UK remain of great concern, following Brexit’s minister, Lord David Frost confirming the need for reform and changes to the current state of affairs. According to reports, both sides have been accused of lacking flexibility, which has ultimately resulted in the current predicament.
Moreover, as further confirmation of the apparent disjoint that exists, Shirley McCay, the Director of Trade and Investment with the British Embassy in Ireland, confirmed the need to pay close attention to the areas of the NI protocol that appear to be failing, as they have come to the fore in recent criticism. The Democratic Unionist Party’s Sir Jeffrey Donaldson was also quoted as saying, “The EU needs to recognise that the protocol has failed, it is creating very substantial problems in terms of barriers to trade between Great Britain and Northern Ireland, our biggest market, and distortions in trade.” He further reiterated the need to “respect Northern Ireland’s place within the UK’s internal market.”
Current state of affairs
The tensions between the UK and EU have had a direct impact on the currency market as well, as the Pound saw a drop in its value in June 2021, which proved beneficial for the FTSE 100. The index has several companies that trade in Dollars, therefore, they are harmed by the strengthening of the Pound. Seeing as that was not the case in this instance, some UK companies on the FTSE 100 witnessed an increase in their CPIs, with one of the most notable being AstraZeneca, which was up 195p at 8,130p at the time.
On Friday, 13 August 2021, the UK Government publicised one of its moves to address the apparent tensions and affirm that the NI protocol will not be disregarded anytime soon, despite the naysayers. The government advertised permanent job vacancies for senior officials that will be solely tasked with NI protocol-related matters, suggesting that plans to see it through remain in place.