For a century, Northern Ireland has been defined by its in-betweenness. It is in the United Kingdom but on the island of Ireland. For some it is “Ulster” and for others “the North.” It is the origin and home of a distinctive flavour of both Britishness and Irishness. In this way, Northern Ireland exists in a permanent state of liminality, with a population which is neither wholly British nor wholly Irish, it is an irreducibly complex, place between. 

For most of its one hundred years, Northern Ireland’s in-betweenness has derived from, and resulted in, contestation over national identity and constitutional future. In the last four years, Brexit has added a new dimension to Northern Ireland’s defining feature, establishing it as a place between two markets: the UK’s and the EU’s. 

Management of this new dynamic of economic in-betweenness will determine the political, societal and constitutional path Northern Ireland takes. The substance of the issue can be understood by looking at the interplay of two legal texts: the Ireland/Northern Ireland Protocol and the United Kingdom Internal Market Act. 

The Ireland/Northern Ireland Protocol

The Ireland/Northern Ireland Protocol is part of the UK-EU Withdrawal Agreement. It sets out the agreed “arrangements necessary” to avoid a hard border on the island of Ireland and to protect the Belfast/Good Friday Agreement “in all its dimensions” in the context of Brexit.

According to the Protocol, EU rules governing trade in goods will continue to apply in Northern Ireland even when they do not apply in Great Britain. This avoids the need for any new checks or controls along the winding 300 mile Irish land border; the flip side is that new checks and controls will be necessary on the “Irish Sea border” – i.e., at ports and airports – to ensure that goods travelling from GB to NI and, to a lesser extent, from NI to GB comply with EU rules made applicable by the Protocol. In addition, under the Protocol, EU state aid laws will continue to apply in Northern Ireland.

So, while the whole of the UK is technically leaving the EU’s single market and customs union, as a result of the Protocol Northern Ireland will de facto stay in the EU market for goods.

The United Kingdom Internal Market Act

After Brexit takes effect on 1 January 2021, EU-derived rules that governed internal UK trade during membership will no longer apply. Many policy areas affected are also devolved to Scotland, Wales and Northern Ireland. This is a potential problem because the “repatriation” of these powers risks creating trade frictions within the UK. 

The United Kingdom Internal Market Act (UKIM Act) attempts to prevent this.

By establishing principles of non-discrimination and mutual recognition for internal UK trade the UKIM Act seeks to ensure that local UK goods and services do not receive preferential treatment in their own region or jurisdiction and can be sold anywhere in the UK regardless of what region they are produced in. Additionally, the UKIM Act gives the UK government, rather than devolved legislatures, the power to regulate on matters of state aid to industries as this can be a key determinant of market outcomes.

Due to the relative economic size of the constituent parts of the UK – England, Scotland, Wales and Northern Ireland – the two UKIM Act principles and state aid controls will in effect centralise power governing the internal market of the UK at Westminster. Under the Act, the UK government is obliged to consult the devolved institutions before exercising some powers, but devolved consent is not required, nor do devolved legislatures have power to amend the UKIM Act as it applies in their respective jurisdictions. 

The Protocol vs The UKIM Act

So, under the Protocol, Northern Ireland is the only part of the UK in which EU rules governing trade in goods will apply but, under the UKIM Act, UK rules governing trade in goods and services will be centralised and controlled in Westminster. Can these two facts be true? In short, no.

When first introduced by the UK government, the UKIM Bill proposed to break with the UK-EU Withdrawal Agreement by giving UK Ministers power to disapply parts of the Protocol concerned with Northern Ireland access to the internal UK market and state aid law. 

Notwithstanding the Protocol’s explicit aim to “protect the 1998 Agreement in all its dimensions” (Article 1, para 3), the UK government justified breaking its terms, via the UKIM Bill, in order to “protect peace in Northern Ireland and the Belfast/Good Friday Agreement.” A peace that was apparently threatened by a Protocol designed to protect it and one that the UK government had signed up to just a few months ago… 

The EU rejected the UK government argument that the Protocol threatened peace in Northern Ireland and began an infringement process against the UK for breaching the terms of the UK-EU Withdrawal Agreement. Northern Ireland’s newest liminal status as between two markets was not looking comfortable.

A breakthrough?

A partial breakthrough came on 8 December when the UK and EU announced that they had reached “agreement in principle” on outstanding issues related to the Protocol and the UK agreed to remove the “law-breaking” clauses from its UKIM Bill just in time for it to become an Act in UK law. That in-principle agreement came in the form of four draft decisions and five sets of unilateral declarations made in the UK-EU Joint Committee that is responsible for overseeing the implementation of the UK-EU Withdrawal Agreement and Protocol.

UK-EU Joint Committee decisions are legally binding. The four decisions taken by the UK and EU at the Joint Committee on implementing the Protocol relate to: first, the annual levels of support for the Northern Ireland agriculture (£382m) and fishing industry (£4m); second, the process for determining which goods entering Northern Ireland from outside the EU will not be considered “at risk” of onward travel into the EU via a “trusted trader” scheme; third, the correction of some errors and omissions in the Protocol’s annexes; and, fourth, the “practical working arrangements” for EU officials to monitor the Protocol’s implementation in Northern Ireland. 

Unilateral declarations made at the Joint Committee are not legally binding. Of the five declarations, 3 were UK declarations of which the EU “took note” and 2 were EU declarations of which the UK “took note.” 

In its three declarations the UK first indicated that if information normally provided in an ‘export declaration’ is acquired “by other means” for good moving from NI to GB, the UK government will deem the requirements of EU customs code, applicable under the Protocol, to have been met; second, the UK declared it would allow certain meat products normally prohibited or restricted under applicable EU law to travel freely from GB to NI for six months, thus allowing more time for “supermarkets in Northern Ireland to adjust” with the UK committing to stay aligned with applicable EU law for the duration; third and finally, the UK declared that it would allow “a restricted number of food suppliers for supermarkets” to move goods from GB to NI without an Export Health Certificate otherwise required under the Protocol. This arrangement will last for just three months, during which time the UK commits to take “all necessary measures” to ensure compliance with EU law until the end of the 3month period. 

In its two declarations the EU the first provided for a 12 month adaption period for suppliers of medicinal products to Northern Ireland to allow “relevant stakeholders” time to establish new supply routes “where necessary;” the second EU declaration relates to the way in which it will apply EU state aid rules in Northern Ireland, on this the EU “underlines” that the effect on any UK-measure subject under this part of the Protocol “cannot be merely hypothetical, presumed, or without a genuine and direct link to Northern Ireland.” This latter EU declaration addresses UK concerns that state aid provisions in the Protocol could have so-called ‘reach back’ effecting in Great Britain.

On 17 December, the UKIM Act received royal assent. Instead of the “law-breaking” clauses, the final version requires that the terms under which Northern Ireland goods access the “UK internal market” are compliant with “any international obligation or arrangement to which the United Kingdom is a party” (Section 47, para 2) that includes the Protocol. 

So, what does all of this mean for Northern Ireland? In short, it means a lot.

In taking its four decisions, the Joint Committee addressed almost all of those issues that needed to be resolved before the Protocol entered into force on 1 January 2021. A decision on arrangements for landing the catch of Northern Ireland fishing boats is still outstanding.

In making unilateral declarations the UK and EU indicate some understanding for one another’s perspectives on the Protocol, but these should not be mistaken for exemptions or derogations, they are only declarations. For Northern Ireland businesses and producers, the prospect of the delayed application of some of the new checks, controls and systems is very welcome. That said, the decisions and declarations also underline that the Protocol will be fully implemented, so significant change is coming.

A new in-betweenness

From 1 January 2021, Northern Ireland will be operating under two novel and untested frameworks for market access and market participation. Although the Protocol was specifically designed to address the “unique circumstances” of Northern Ireland facing Brexit, it also bears strong resemblance to its “backstop” predecessor, which was only intended as an insurance policy, and ideally one that was unnecessary.

Notwithstanding threats of legal challenges by the Scottish and Welsh governments, the provisions of the UKIM Act centralise regulation of the UK market under a government determined to diverge from the EU market – with the crucial exception that the Northern Ireland goods market will be regulated according to the Protocol as provided for in the revised UKIM Act.

So, taking everything together, under the Protocol and the UKIM Act, Northern Ireland is about to become the place between two powerful economic markets pulling in opposite directions. Perhaps not the gift you would choose for your one hundredth birthday.