The supply chain industry has responded to the UK Government’s call to renegotiate the Northern Ireland Protocol and its potential impact on businesses.
A Command Paper has set out the Government’s intention to seek a negotiation of significant changes to the post-Brexit trading arrangements.
The paper outlined the reasons why the Government says the Protocol is not working in its current form or delivering on its objectives. It further stated that the Protocol will not be scrapped, but significant changes are needed to achieve a sustainable ‘new balance’ which puts the UK-EU relationship on a stable footing. This, the paper said, is the only way to ensure protection for all dimensions of the Belfast (Good Friday) Agreement.
Dave Howorth, executive director of the supply chain and logistics consultancy SCALA, has reported “significant disruption” to supply chains between mainland UK and Northern Ireland since the Protocol’s introduction on 1st January 2021.
Whilst businesses now understand the administrative requirements of the trade agreement, Howorth explained, “there are fundamental obstacles associated with some products, most notably sausages and chilled meats due to the UK leaving the EU and its food regulatory standards.”
Howorth said that the need to avoid a hard border between Northern Ireland and the Republic of Ireland, keeping Northern Ireland effectively part of the EU single market, was “at the crux of this issue, and the other challenges associated with the supply of products from UK mainland to Northern Ireland.”
He continued: “Beyond a potential ‘Sausage War’ it is clear that the Northern Ireland Protocol is forcing businesses to rethink their supply chains. Retailers in Northern Ireland have already switched to more local sourcing. They are experiencing additional cost of supply from the UK mainland and therefore, ultimately, prices to consumers have increased.
“One wonders whether at some point retailers such as Sainsbury and M&S will ultimately consider the difficulty of supplying to and trading in Northern Ireland too high an effort to sustain, with the news that M&S will be cutting its Christmas range unless a resolution could be found a potential harbinger of events to come.
In terms of a resolution, Howorth stated that “the stakes are high.” He continued: “If the UK Government was to press the ‘nuclear button’ and independently refuse to comply, the EU may take punitive action and suspend parts of the wider UK-EU Trade Agreement, which would send a shudder down the spine of supply chain directors across the UK and Europe.”
