Recommendation 8

HM Government Accepted in Part

We appreciate the Committee’s recognition of the scale of opportunity that sits with Northern Ireland from its place in the United Kingdom and its position in the EU single market, and this Government’s commitment to realising that opportunity. Where goods are moving from Northern Ireland into Great Britain the Government supports unfettered access, which means Northern Ireland goods placed on the market in Great Britain can meet either UK or EU standards. Latest figures published by NISRA show that sales of goods and services from NI to GB were £10.9 billion in 2020, an increase of 0.7% compared to 2019. Meanwhile Northern Ireland’s position in the EU single market has meant that Northern Ireland’s exports to the EU also remain strong, totalling £5 billion in 2021 and representing 63.7% of Northern Ireland’s total exports. To support businesses exporting to Europe, the DIT Northern Ireland trade and investment hub works to raise awareness of DIT support services including the Export Academy, the UK Tradeshow Programme, and the Export Champions. The team also promote DIT’s Export Support Service, a tool which provides guidance on buying and selling across any country in Europe and beyond, while the Trader Support Service guides through changes related to the implementation of the Northern Ireland Protocol. On inward investment, DIT’s Northern Ireland hub works closely with Invest Northern Ireland to shape and define Northern Ireland-specific investment propositions for the global market, while DIT overseas posts (in over 100 markets) promote Northern Ireland as an attractive destination for foreign investment, using sector-specific propositions to reflect Northern Ireland’s sectoral strengths. In 2021-22 Northern Ireland secured 32 foreign direct investment projects, creating 2,112 new jobs. The Government recognises the points made about the practical difficulties arising from the subsidy control provisions in Article 10 of the Northern Ireland Protocol. It is the Government’s preference to resolve the problems we have been seeing with the Protocol through talks, and we are engaging in constructive dialogue with the EU. However, the Government has also introduced the Northern Ireland Protocol Bill, which aims to fix parts of the Northern Ireland Protocol, including those relating to subsidy control and restore stability and protect the Belfast (Good Friday) Agreement. It will domestically disapply EU State aid law in Northern Ireland and extend the UK’s new domestic subsidy control regime to cover Northern Ireland. It will provide a uniform set of rules across the UK, reduce the burden on public authorities, and make arrangements more straightforward for businesses. The report recommends that the Government incorporate the effect of the Protocol into detailed and precise economic impact assessments. The impact assessments we publish for the UK’s Free Trade Agreements do consider the economic impacts across all four nations including Northern Ireland, but it is correct that our impact assessments do not currently consider the specific impacts of specific measures under the Protocol. Accounting for the Protocol requires significant development to both data collection and modelling techniques, made more complex by the fact that the Protocol is subject to grace periods, standstill arrangements, and remains a topic of ongoing negotiation and proposed legislative change here in the UK. The challenges of getting to the relevant data were reported in the Trade Modelling Review, to which DIT is preparing an official response alongside a workplan to better understand how trade impacts differ across parts of the UK using alternative approaches. The report also recommends that the Government include for each agreement an explanatory memorandum setting out where it expects the provisions of the Protocol to take precedence over the provisions of the agreement. Draft explanatory memoranda and impact assessments are published alongside trade agreements once they are signed; we consider it unnecessary to provide separate explanatory memoranda specific to how trade agreements interact with the Protocol. All provisions of the UK’s free trade agreements co- exist with provisions within the Protocol. Where the Protocol applies different measures in Northern Ireland from the rest of the UK - tariffs and goods regulation - Northern Ireland businesses can access guidance and support through the Government’s UK Trader Scheme and Trader Support Service. These support Northern Ireland businesses to find out which tariffs apply to their imports, to self-declare imports as not “at risk” where appropriate, and to complete declarations. There are two points from the main body of the report it would be useful to clarify, regarding the application of the Rules of Origin provisions under the Protocol (paragraph 42) and the impact assessments of the Australia and New Zealand trade agreements (paragraph 43). On Rules of Origin, if a good ent