Observations

The Northern Ireland Protocol does what it says on the tin. It is designed to create friction between two parts of one country – the United Kingdom – and it achieves this.

Unfortunately trade figures are collected far more slowly across the UK and were not traditionally used to detect trade patterns within what was originally called the domestic market, but the Northern Ireland Protocol has changed all that. Figures for trade between Northern Ireland and Great Britain will not be available in the normal detailed form until much later this year. Instead, other measurements from HMRC using VAT returns and a new system of estimates from the ONS will appear before then. But we have to wait.

Meantime we can study the Irish data and ask what it tells us. It is simply not credible for the trade figures between the two economies that have been trading with open borders already to increase by such a large amount organically – there has to be a contributory factor at hand that is distorting trade by encouraging, or even forcing, it to change.

That factor is the Protocol, because it is creating friction between Northern Ireland and Great Britain. This friction is causing trade to run a new course and that is the route of least resistance, which means more trade to take place over the existing open border between the North and the Republic.

Why, you may ask, is trade from Northern Ireland to the Republic climbing but trade from mainland Great Britain falling? The answer is obvious, the Protocol is doing its job, it is pulling Northern Ireland into the Republic while trade from Great Britain faces friction.

Yes, there are factors that need to be taken account of, such as the fact that during the pandemic Ireland has been a large manufacturer of vaccines destined for the UK – pushing up the trade numbers to both NI and GB in 2021. What has also become clear, however, is that the Protocol has revealed past trade figures underestimated the amount of trade from NI to the Republic of Ireland. This is because the UK’s VAT codes did not identify the origin of the goods within the UK but now they do it is possible to see that in the past there was more trade than recorded.

While there are no corresponding trade figures yet available from the UK’s Office for National Statistics to show trade patterns between Great Britain and Northern Ireland, what is abundantly clear from the Irish data is that trade substitution is taking place.

There are many other reasons for repudiating the Northern Ireland Protocol: its breach of the Acts of Union, its breach of the Belfast/Good Friday Agreement, the lack of democratic accountability for emerging laws regarding trade and taxes being the most egregious. For all these reasons the Protocol must go, but for those who see it simply in terms of trade there is now no reason left to defend the Protocol.

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