Trade waits for no one: four updates this week after highly-charged political developments

Fri 8 Jul 2022
Posted by: Grace Thompson, Phil Adnett, Noelle McElhatton

Your IOE&IT Daily Update bulletin, with help from our policy adviser Grace Thompson, here summarises this week’s extraordinary political developments in the light of UK trade.

1. Northern Ireland Protocol

Political stalemate continues in Northern Ireland, with Democratic Unionist Party (DUP) leader Sir Jeffrey Donaldson refusing to nominate ministers to a new Stormont Executive without movement on the protocol.

Sir Jeffrey had previously called for the UK government to make changes to the protocol.

Under the Good Friday Agreement, the NI executive needs cross-party support is needed to form a government. Without the support of the DUP, a new executive cannot be formed.

After Boris Johnson’s resignation, Sir Jeffrey commented: “I recognise the efforts made by the outgoing Prime Minister Boris Johnson and his team to replace the Northern Ireland Protocol with arrangements which can command the support of unionists as well as nationalists.”

Sir Jeffrey met with the new Northern Ireland secretary, Shailesh Vara, hours after Johnson’s resignation, describing it as a “constructive meeting”. The Lagan Valley MP added that he looked forward to “working with the Secretary of State to ensure the bill continues to be advanced and intact.”

Today (Friday 8 July) Vara visited the region, less than 24-hours since his appointment.

2. NI bill – timetable in parliament

The first day of the Northern Ireland Protocol Bill’s committee stage (which scrutinises the bill line-by-line) remains scheduled for Wednesday 13 July.

Time on 18-19 July has been provisionally earmarked as well. As no parliamentary time has yet been scheduled for remaining stages, the Commons stages of the bill will not be completed before summer recess (starting 21 July).

The bill would still have to clear the report stage and the third reading to pass in the Commons, to then face the House of Lords. Uncertainties regarding the bill are likely to continue until there is a new PM who can either halt or accelerate its progress.

3. New UK prime minister: EU hopes high

As it stands, there is no clear front-runner in the Conservative Party leadership contest. The field is expected to grow over the coming days.

The EU reaction has been more positive towards the idea of a new working relationship: Irish Taoiseach Micheál Martin has welcomed the opportunity for a ‘reset’ of relations between the UK and EU over Brexit.

Michel Barnier, the EU’s chief Brexit negotiator, did not hold back when expressing his hopes: “The departure of Boris Johnson opens a new page in relations with the United Kingdom. May it be more constructive, more respectful of commitments made, in particular regarding peace and stability in Northern Ireland, and more friendly with partners in the EU. Because there’s so much more to be done together.”

4. Progress of Australia and New Zealand FTAs

Meanwhile, parliament’s International Trade Committee members are frustrated at what they call the persistent refusal of their request to extend the parliamentary scrutiny period for the ratification of the Australia-UK free trade agreement (FTA) beyond 20 July.

The committee has been pushing hard for a full debate on the agreement, which would have included a vote at the end of the debate and could potentially delay the ratification of the deal.

Scottish Nationalist MP and chair of the committee Angus MacNeil, had written to ask the Leader of the Commons to confirm if the Government would meet the request for a debate between 13–19 July.

Yesterday (Thursday 7 July), however, leader of the house Mark Spencer MP announced the upcoming parliamentary schedule up until recess, which did not include either a general or a substantive debate on the UK-Australia free trade agreement.

This is a particularly significant omission, given it is the first new FTA the UK has signed since it left the EU. MacNeil said that rushing the deal through parliament is “bad for scrutiny, bad for business, and bad for the country”, emphasising that the issue of extending the parliamentary scrutiny had become a greater necessity given there would be a change in prime minister soon.

International trade secretary Anne-Marie Trevelyan had not appeared at a previously scheduled committee meeting on 29 June to discuss the Australia and New Zealand FTAs.

Trevelyan instead attended the committee on Wednesday 6 July, offering to set up a meeting between department officials and the committee to improve working practices and improve scrutiny.

IOE&IT comment:

The challenge for the new post-Johnson administration will be around repairing relationships – internally and between the UK and EU – and considering processes around parliamentary scrutiny of FTAs.