Lord Frost statement on Protocol on Ireland/Northern Ireland 17 December 2021

The objectives of the Protocol on Ireland/Northern Ireland agreed between the UK and the EU in 2019 are to protect the Belfast (Good Friday) Agreement in all its dimensions; to respect Northern Ireland's integral place in the United Kingdom, its internal market and customs territory; to uphold the essential state functions and territorial integrity of the United Kingdom; to avoid a hard border on the island or Ireland; and to help protect the EU's Single Market.

It is now widely accepted by all parties that the current operation of this Protocol does not fully support these objectives and that changes are needed if the current situation is to improve. It is clear, including from recent polling, that a large majority across Northern Ireland shares that perspective.

The Command Paper we published on 21 July outlined comprehensive and lasting solutions to the current difficulties. We decided then that the right route was to prioritise negotiated change to the Protocol rather than, at that point, use the Protocol's Article 16 safeguard measures. I and my team have engaged in detailed negotiations with the EU Commission on this basis in recent months.

There has been some progress, but not as much, and not as quickly as we had hoped. Although we have worked with the proposals put forward by the Commission in mid-October, they do not solve the problems, and even in some aspects take us back from the current unsatisfactory status quo.

The main area of progress has been on medicine supply to Northern Ireland. I believe that our proposal to remove medicines from the Protocol is still the most straightforward solution, given that the provision of health services is an essential state function and that Northern Ireland medicines are overwhelmingly sourced from elsewhere in the UK. But we have been willing to look at the EU's preferred option, pursuing unilateral amendment of its own laws. The EU's proposals, published today, follow on from discussions between our teams. They could constitute a constructive way forward, and we are willing to look at them positively, but as we have not been able to scrutinise the texts in the necessary detail we are not yet able to make that judgement with full confidence.

There has been much less progress in other areas. The burdensome customs and SPS arrangements for goods moving between Great Britain and Northern Ireland have had a chilling effect on trade, increasing costs and discouraging firms from trading within their own country. It is vital to get the arrangements in this area right, given the overwhelming importance to the Northern Ireland economy of links with the rest of the UK. We have argued consistently that the simplest solution is to put in place substantively different processes for goods which all sides agree will stay in the UK and those which do not. These should cover not only goods moved directly, but also the increasing proportion of goods moved by parcel, and other kinds of movements such as pets, livestock, plants, and seeds. The proposals made by the EU in October constituted a step forward but, based on what we have heard to date, our expert analysis does not support the ambitious public claims made for them. Overall, it is not possible to envisage an agreed solution which does not deliver significant change in this area.

Nor have we managed to have a constructive discussion about the regulatory burdens being faced by operators in Great Britain looking to place manufactured goods on the market in Northern Ireland.These burdens will get worse over time as UK and EU rules diverge.

We have had some limited discussions on subsidy control. The Protocol's provisions in this area, leaving Northern Ireland subject to EU state aid rules, were agreed in 2019. Since then, the UK and the EU have agreed entirely new subsidy control rules in our new free trade deal and we have brought in an entirely new national subsidy control regime. The rules need to evolve to reflect this new reality. Northern Ireland businesses are facing unjustified burdens and complexity, and the Government cannot deliver aid to Northern Ireland, for example for Covid recovery support, without asking for the EU's permission. We need to find more appropriate and proportionate arrangements that reflect the low level of risks posed to the single market in practice by subsidies in Northern Ireland.

There have been relatively constructive discussions on VAT and excise policy, but we have not yet found a way of ensuring that Northern Ireland can properly benefit from its place in the United Kingdom's VAT and excise area in the same way as other parts of the UK.

Finally, a solution is needed on governance. As the EU's preferred way forward on medicines illustrates, neither Northern Ireland nor the UK more broadly gets any say on the way EU legislation is imposed on Northern Ireland. This remains a fundamental issue of democratic accountability. Nor is it reasonable or fair for disputes between the UK and the EU relating to the Protocol to be settled in the EU Court of Justice, the court of one of the parties. The Withdrawal Agreement already provides for the use of an independent arbitration mechanism instead, and the simplest and most durable way forward would be to agree that this should be the sole route for settling disputes in future.

Overall, with the potential exception of medicines, I do not believe that the negotiations are yet close to delivering outcomes which can genuinely solve the problems presented by the Protocol. The EU's proposals only cover certain areas and would not do enough to ease the burdens faced by people in Northern Ireland; or to create the conditions for genuinely cross-community support.

Our preference would be to reach a comprehensive solution dealing with all the issues. However, given the gravity and urgency of the difficulties, we have been prepared to consider an interim agreement as a first step to deal with the most acute problems, including trade frictions, subsidy control, and governance. Such an agreement would still leave many underlying strains unresolved, for example those caused by diverging UK and EU rules over time. It would therefore be inherently provisional by nature and would accordingly need to include mechanisms for addressing outstanding issues and resolving new concerns as they arise. The UK has proposed a number of possible ways forward, but regrettably it has not so far been possible to make progress even on what the core elements of an interim agreement might be.

It is disappointing that it has not been possible to reach either a comprehensive or worthwhile interim agreement this year. A solution needs to be found urgently early next year. For as long as there is no agreed solution, we remain ready to use the Article 16 safeguard mechanism if that is the only way to protect the prosperity and stability of Northern Ireland and its people.