(Bloomberg) — Boris Johnson’s government described the Brexit deal he signed in 2020 as the “best of both worlds” for Northern Ireland, giving it a foot in both the UK and European Union markets.
Most Read from Bloomberg
Now the British prime minister wants to rip it up — and businesses in the region are furious.
On Monday, the UK unveiled legislation allowing ministers to scrap most of the post-Brexit Northern Ireland protocol agreed with the EU, and replace it with new rules on customs checks, tax and arbitration. Johnson has long complained his deal was disrupting trade between the region and the rest of Britain.
Read More: UK Sparks EU Ire With Bill to Override Parts of Brexit Deal
Yet that argument gets short shrift in much of Northern Ireland itself, where after some initial teething problems, many businesses have adapted supply chains to their post-Brexit circumstances. In assembly elections in May, parties in favor of the protocol won more support than those who were against it, contradicting London’s narrative about widespread discontent.
“The protocol is working,” Mike Johnston, CEO of the Northern Ireland Dairy Council, said in an interview. “It’s allowing our trade flows to continue as they had done pre-Brexit. And that’s very, very important for us.”
What that really means is that post-Brexit rules have ensured that Northern Irish farmers still have frictionless access over what is effectively an invisible border to the Republic of Ireland, an EU member. It’s the only region in the UK to still have it, and data show many businesses are taking advantage.
That presents Johnson with a major headache, both locally and in the broader debate about the merits of the Brexit he championed and delivered.
Avoiding a hard border with Ireland, which was seen as a necessity to protect the region’s peace process, was one of the most intractable problems of Brexit and played a major part in Theresa May’s downfall in 2019. For her successor Johnson, the Northern Ireland protocol was the key part of his election pitch that year to “get Brexit done” with an “oven-ready” deal with the EU.
Having secured a large majority for the ruling Conservatives, Johnson fast-tracked the divorce agreement through Parliament, ignoring warnings that he was storing up trouble among unionists loyal to London in Northern Ireland.
Read more: Johnson Drags UK Into Brexit Groundhog Day Over N. Ireland
The Democratic Unionist Party balked at the rules Johnson signed up to, and is now refusing to take its place in Northern Ireland’s power-sharing government until the protocol is removed. Its opposition is ideological as well as economic, believing Northern Ireland must not be treated differently to the rest of the UK.
That’s why Johnson’s ministers have shifted the justification for rewriting the protocol, from focusing primarily on trade disruption to the threat to Northern Ireland’s fragile politics. The hardline approach has drawn criticism, including among Tory MPs, about the risk of provoking a trade war with the EU. The bloc is expected to respond in more detail to the UK bill on Wednesday.
Meanwhile Northern Ireland businesses are being caught in the middle.
“This just dramatically increases the uncertainty,” Katy Hayward, professor of political sociology at Queen’s University Belfast, said of Johnson’s bill. “It’s completely wiping out the legal terms for trade to and from Northern Ireland, and the production in Northern Ireland as we know it under the protocol.”
To say the deal he signed up to just 2.5 years ago needs rewriting is a humiliation for Johnson, especially as many in his party now accuse him of breaking international law to try to rectify it. But it also presents businesses with the prospect of future costs and another overhaul at the worst possible time as margins are squeezed in the post-pandemic cost-of-living crisis.
Read more: Businesses Are Getting Over Brexit Faster Than Politicians
Some businesses will also suffer from the measures Johnson’s bill proposes, said Stephen Kelly, head of the Manufacturing NI lobby group. To reduce checks, the government plans green and red trade channels, separating goods flowing between Britain and Northern Ireland from goods intended for the EU.
While the green lane is broadly seen as a positive step, most goods produced in Northern Ireland will have to go in the red lane anyway because companies often don’t know where the final consumption of goods is going to be, Kelly said. “Businesses will abide the law, so they’ll go through red, which remains very problematic for people,” he said.
If the bill passes, the UK also plans to let firms operating in Northern Ireland choose to meet British, EU, or both standards on goods. Kelly said that would be “potentially catastrophic” because responsibility for compliance would pass to businesses.
For farmers represented by the dairy council, the risks are especially great. While the legislation would give them the option of following EU standards, so Northern Irish milk could still enter the Republic of Ireland to make products including infant formula, complications could arise when grain and veterinary medicines come into Northern Ireland from Britain, Johnston said.
Read more: Brexit Bill Wins Praise, But No Promises, From N. Ireland’s DUP
The premier’s critics say he is taking a gamble on Northern Ireland’s economy — the only part of the UK other than London to have bounced back above pre-pandemic levels — for largely political reasons. Convincing the DUP to get back into the power-sharing government is part of that.
But he also wants to win back Brexiteers in his party after barely surviving a confidence vote last week. The diversion of trade away from Britain-Northern Ireland routes undermines his Brexit arguments, while many Tories are demanding an end to the European Court of Justice’s role in the region.
None of which will provide much reassurance to Northern Ireland businesses. “All they ask for is to know the rules that apply, to know the direction of travel,” Hayward said.