Northern Ireland Protocol – is there a simpler solution for protecting the EU Single market ?

This blog was originally published last October. Given the efforts currently in progress to secure a solution to the NI Protocol , I've updated it to reflect changes since then, in the hope that it may contribute to a practical solution for import compliance monitoring.

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I’ve often wondered why Brussels are so concerned about goods intended for use in Northern Ireland straying into the Irish Republic....

After all, UK was a member of the EU until very recently, and the standards we apply to our goods within UK are still closely comparable with those applied in EU. For the most part, this is likely to remain so, despite our current national obsession with 'going it alone'. Tariffs for UK goods imported to EU are effectively 'zero-rated' under the current withdrawal agreement, so there is little financial incentive to 'smuggle' goods into Eire from NI. The proportion of goods flowing into NI from UK that is destined for Eire is also very small.Why therefore would anyone bother ?

Standards equivalence means that it is very unlikely that anything that was imported to NI from the UK which was not intended for export beyond NI would do any real harm to the single market, even it did find its way into Eire. It would be even less likely to travel onwards into mainland Europe, given the lack of financial incentive. The only conclusion I can come up with is that the ‘spat’ prior to the recent agreement was largely politically motivated, and aimed at emphasising UK's territorial sovereignty and independence in the face of Brussels' perceived over-regulation and lack of flexibility.

The 'bad blood' caused by this dispute seems to have subsided, as might have been expected as Brexit slowly disappeared from our collective consciousness, and EU and UK both gradually come to terms with ‘living together while apart’, as recently-divorced exes often do when working out how to manage their offspring. The changes in ‘mood music’ started following the EU get-together hosted by Macron last year and attended by our then (i.e.last) new PM provided some optimism for a somewhat overdue thaw in EU-UK relations. Our current PM's determined efforts at securing an agreement with EU have finally borne fruit. Putin’s War and its consequent ‘unification’ of Europe may yet turn out to have contributed indirectly to actually solving some of our ‘problems’ with our European neighbours. 

Last weekend's much heralded agreement with EU on a new version of the protocol is indeed a landmark, but has still to be 'approved' by the DUP. Until it does, Stormont will remain dysfunctional. 

If it does work, traders exporting goods destined for 'NI only' should face much reduced administrative and cost burdens. Any other consignments will continue to face a high burden of complex administrative paperwork, and much higher costs as a result. The additional built-in delays to consignments due to the current regime have meant that it has been impracticable to deliver some highly perishable commodities in acceptable condition with any sort of useable shelf-life at all. This, and the extra costs of shipping generally,  has already led to many UK suppliers actually excluding NI from their destinations served, on the grounds that it simply isn’t worth the trouble. Apart from the sovereignty issue, and their desire to avoid being in devolved government with Sinn Fein as the majority party, this has hithero been one of the principal reasons why the DUP have refused to participate at Stormont. As discussed, this particular consequence of the Protocol has led to the effective paralysis of the devolved NI government, with the inevitable harm to its economy and inconvenience to its population.

It is of course to be hoped that the new arrangement works well for all. Before we become too optimistic, however, we should accept that there is also a potential issue with 'Green Channel' compliance monitoring to sort out and it remains to be seen whether taking things 'on trust' will actually work. How do we ensure to the EU's satisfaction that no goods declared as 'NI only' manage to stray across the border ? 

This may seem a naïve suggestion, but could some use not be made of 'smarter' product labeling to help solve this problem ?

Leaving aside the wider political issues and the role of the ECJ in arbitration of the Protocol, as I see it, the main practical issue for Brussels is how to protect the EU single market from 'foreign' goods entering Eire from NI across a 'soft' land border. We all accept that re-introducing a hard border as the conventional solution would have been unacceptable, given the political and sectarian sensitivities in NI and international concerns, so an Irish Sea trade border was the only real option.  

The Irish sea border will still be there, even with the concessions the EU has made and fresh NI elections will eventually have to be held if the DUP reject the new EU terms and remain obdurate in boycotting Stormont. And despite all the associated effort and costs involved, there is no guarantee that the impasse will be solved thereafter, whatever the election result. 

There would seem to be plenty of incentive therefore to find a simple workround and allow the new Irish Sea ‘border’ to be effectively policed to everyone's satisfaction. To do this, we need an effective but non-intrusive check on imports to NI from GB.

What could be done in practical terms to monitor Green Channel compliance ?

All commercial goods items nowadays are packaged or labelled in some way. We now have the technology to ‘tag’ each individual package with passive Radio Frequency ID (RFID) chips. These can store a variety of information including details of manufacturing origin, batch details, sell by dates, etc. – quite enough info. in fact to provide a machine-readable and unique ID for each item. The cost of passive RFID chips nowadays is mere pence per unit. The information stored within them can also be made ‘Read Only’ to prevent tampering. Any attempt to remove the tag physically from the packaging would be obvious, and it would in any case be near impossible to do this for each and every item in a large consignment. It would also be likely to render the item unsaleable. Tagging packaging in this way should therefore provide an effective disincentive for any would-be smugglers, and detection of any interference with a consignment should be relatively easy. 

The devices needed to read RFID tags are now ubiquitous – any smartphone equipped with NearField technology is quite capable of reading passive tags of the sort now widely used in chip-and-pin cards.

If manufacturers were to include read-only RFID tags routinely in the packaging of each item intended for consumption in NI and not licensed for EU export, the authorities in Eire (or indeed any other part of EU) would have the means to scan any item for the presence of an 'offending' RFID tag and thus identify any contraband items that shouldn’t have entered the Single Market. These could then easily be traced back to the importers via the info. read from the chip, and the appropriate tariffs/penalties applied.

Checking within Eire or in other parts of the EU could be done on an at risk basis, wherever it was perceived most likely that smuggling might occur, thus obviating the need for the current elaborate customs controls and checks on all goods at all NI ports and airports, and the inevitable transit delays they cause. 

Would we actually need Green Channel monitoring at ports of entry at all if all 'NI only' products were RFID-labelled ? Possibly not - from a financial point of view, since the vast majority of imports to NI are currently zero-rated, there would be little incentive to 'mis-declare' Red channel goods, so the only reason to do so would be to avoid delays and extra paperwork. Bulk goods which cannot be individually packaged (e.g. petrol, bulk milk deliveries) are effectively single items and could be treated separately at NI ports of entry without the need for channel separation.

A tremendous amount of customs checking and admin. resource could be saved on both sides in return for a relatively small increased risk of EU tariff evasion on any goods which are currently not zero-rated and actually manage to slip through the net.

RFID technology will inevitably replace 2D- and 3D-optical barcodes in the near future more generally for product ID and management, due to the increased ease of interrogating products on the shelves that it provides. It would also avoid the more obvious problems we've all faced at automated tills with non-reading barcodes such as faded printing and label misalignment or folding. As discussed, RFID has already replaced 1D and 2D barcodes for many financial applications – a successful implementation for this particular application might even help hasten the revolution for the retail sector.

Worth some further thought by the policy makers, perhaps ?.....

Viv

Version date 5.3.23