Northern Ireland’s next trade headache: Britain’s bonfire of old EU laws

LONDON — The U.K.'s bid to ditch thousands of EU rules still in force post Brexit risks throwing up fresh trade barriers between Great Britain and Northern Ireland, Rishi Sunak is being warned.

Business groups fear the U.K.'s Retained EU Law Bill — which if passed would compel Sunak's government to replace or shred an estimated 4,000 EU laws still on Westminster's statute books by the end of 2023 — could lead to more disruption if London chooses to diverge significantly from Brussels' rules.

Unlike the rest of the U.K., Northern Ireland still follows EU customs union and single market rules post Brexit. The Northern Ireland protocol, negotiated as part of the U.K.'s exit from the EU, sees goods flow unimpeded across the politically sensitive Irish land border, but requires checks on goods imported into Northern Ireland from the rest of Britain.

Firms are now warning that the prospect of an increasing mismatch between EU and U.K. rules risks new regulatory headaches for businesses moving goods between Northern Ireland and the rest of the U.K.

Tina McKenzie, policy chair of lobby group the Federation of Small Businesses (FSB) said: "Businesses in Northern Ireland need certainty and clarity. Political agreement was reached on the protocol without the input from business, resulting in unintended consequences."

“This should act as a warning to the U.K. government," she added. "The prospect of pressing ahead with the Retained EU Law Bill before fully understanding all of its consequences is a cause for concern."

William Bain, head of trade policy at the British Chambers of Commerce, said “over time regulations could diverge between Great Britain and Northern Ireland,” depending on decisions made by the U.K. and EU.

“The [BCC's] chambers network believes that avoiding unnecessary barriers to trade occurring through this process is vital,” he added.

Businesses are also concerned that divergence between the U.K. and EU could spark legal disputes under the separate U.K.-EU trade agreement, struck in 2020.

Brussels could take action against London if it is concerned new U.K. rules could hand an unfair advantage to British firms in areas including tax, business subsidies, workers’ rights and environmental protections.

Anand Menon, director at the UK in a Changing Europe think tank said he would be "amazed if the [U.K.'s] Northern Ireland Office hasn’t raised this issue with the government.”

“The greater the divergence — particularly relating to trade in goods — between Great Britain and the EU, then the greater issues with the Northern Ireland border,” he added.

The warnings come at a sensitive time in U.K.-EU relations, as the two sides look to be closing in on an agreement to a long-running dispute over the Northern Ireland protocol. The U.K.'s bill to repeal EU laws is popular with the right of Sunak's Conservative Party, although some of his own MPs have called for more flexibility on the deadline and tighter parliamentary oversight of the exercise.

Labour's Shadow Northern Ireland Secretary Peter Kyle warned that the Retained EU Law Bill would be “the protocol on steroids” and said it would create “more uncertainty for businesses already struggling with regulatory barriers in the Irish Sea."

A spokesperson for the U.K.'s Department for Business, Energy and Industrial Strategy said: “The Retained EU Law Bill will give us the powers to deliver reform, making it easier for retained EU laws to be removed or updated where it is no longer fit for purpose.

“The measures in the bill will not alter the [U.K's] devolution settlements. We will continue to work closely with the devolved governments as the bill proceeds through parliament.”