The main benefit of the Withdrawal Agreement is it provides a framework for a managed exit. Time will tell whether a sufficiently attractive FTA can be negotiated before the end of the Transition Period.
For many businesses operating in Ireland, the focus will be on the terms that emerge from the future FTA, not only in goods but also in services – the latter are not typically comprehensively dealt with in FTAs.
For businesses trading across the border with Northern Ireland, the Protocol is welcome in that it will allow for free movement of people and goods across the border with no tariffs, duties or paperwork, and this will apply irrespective of whether an FTA is agreed before the end of the transition period.
It will be interesting to see how the Withdrawal Agreement and the future FTA impact on the competitiveness of businesses based in Northern Ireland and the Republic of Ireland.
It will be important that the operation of these mechanisms do not have an impact on Ireland’s reputation or secure place in the Single Market – particularly should the UK diverge significantly from EU rules.
The Protocol relating to Northern Ireland is welcome in some respects. It brings certainty to Northern Ireland business that trading relationships with the EU (including ROI) and Great Britain will remain substantially unchanged, at least for now. For those NI businesses which trade only across the Island of Ireland, the Withdrawal Agreement will provide certainty of the status quo position (including unfettered access to the EU market for goods) even after the transition period expires and regardless of whether a free trade agreement (FTA) is reached between the UK and the EU.
The terms of the EU/UK FTA reached and the extent of any UK divergence from EU rules in the future will dictate the level of complexity for NI businesses as regards their ability to deal with and adhere to the application of the Protocol in practice, in particular those trading largely with GB. These arrangements could be costly for businesses and consideration will need to be given to possible derogations, relief measures and compensation.
The role of the joint committee discussed here will be of particular importance for Northern Ireland businesses and it will be critical they have the opportunity to input into the joint committee to ensure their concerns are addressed. It will also be important to obtain protections from the UK that exports from NI into the UK internal market will not be impacted by any future regulatory divergence between the UK and EU.