A key report by the House of Lords has highlighted a litany of uncertainties and contradictions in the British government's approach to the Northern Ireland Protocol.

Peers have also accused the UK of appearing to "reinterpret" the Protocol when it comes to one of its central elements.

The report repeatedly warns of what it calls the "Herculean" task facing Northern Ireland business to come to terms with the Protocol, and the fact that time is running out for them to prepare for the changes involved.

The 107-page report by the House of Lords Select Committee on the EU says the UK government's approach, as well as a too rigid approach by the European Union, pose a "potent threat to economic prosperity and political stability in Northern Ireland".

Speaking on RTÉ's Morning Ireland, the chair of the House of Lords committee said there is a large amount of work to be done and his chief concern is that there is not a good process for getting the small detail sorted out so that businesses on the island of Ireland can plan for a post-Brexit future. 

Lord Kinnoull said that if details are not completed by September or October, it will be very difficult for businesses to plan and discussions of detail need to happen now, in order to give businesses any chance to prepare.

He said the committee view is that it would be sensible for the British government to seek an extension but although this has "been put to them many times", the UK government is absolutely clear there will be no extension.

The Protocol on Northern Ireland is contained in the Brexit Withdrawal Agreement and will come into effect on 31 December, unless the UK agrees an extension to the Brexit transition period.

It provides for Northern Ireland to remain in the EU's single market for goods and means there will be customs, VAT, state aid and EU regulatory formalities for goods moving between Great Britain and Northern Ireland.

Cabinet minister Michael Gove in Warrenpoint, Co Down last year

The report, drawn up by the 19-member committee, reflects what it calls "the very high level of anxiety" among Northern Ireland businesses over the scale, complexity and costs of putting the Protocol into practice in just seven months' time.

Peers have accused the British government of issuing "a series of seemingly contradictory statements, amounting to an inability to confirm and explain precisely what it agreed with the EU under the terms of the Protocol".

The report also criticises the European Commission for insisting that "the rules are the rules", without indicating any flexibility over the interpretation or application of those rules.

The Lords committee has compiled the report following months of hearings with senior UK ministers, including the former Brexit secretary Steve Barclay, and Michael Gove, the senior cabinet minister charged with implementing the overall Withdrawal Agreement.

The committee also took detailed submissions from Northern Ireland business and freight stakeholders, as well as key trade and legal experts and academics.

It comes in the light of ongoing tensions between the European Commission and the UK government over the meaning, scope and obligations of the Protocol.

The report quotes the view of the Northern Ireland Business Network (NIBN) that the approach taken by both the UK and EU made Northern Ireland feel "like a pawn in the game".

The uncertainties and lack of detail from the UK government, said the network during hearings, "hindered Northern Ireland stakeholders from preparing for the 'seismic change' that would happen on 1 January 2021".

During the hearings the NIBN expressed its "deep frustration" at what it called the lack of engagement by the UK government and warned that "if there are new costs in terms of tariffs, paperwork or staff hours, and if costs exceed the product margin, then the product or business model becomes unviable".

The border at Jonesborough, Co Armagh

While welcoming the recent UK Command Paper on how it would implement the Protocol, the House of Lords committee "regrets" it took seven months to appear.

The report also calls on the British government to explain how its promise not to create new customs infrastructure to cater for the incoming customs formalities is compatible with the demands of the Protocol.

"It is incumbent on the Government to explain how the new processes required under the Protocol can be undertaken, in the absence of new infrastructure," the committee states.

"In particular, it needs to clarify whether and how existing infrastructure at ports will be used."

Despite senior British figures, including prime minister Boris Johnson, declaring there would be no checks or controls on goods either going GB-NI or NI-GB, the UK has recently conceded there would be regulatory checks and controls on live animals and agri-food products, and that there would be "administrative processes" in terms of customs formalities for goods going from Great Britain to Northern Ireland.

The report highlights the double impact of the Covid-19 pandemic and the new regime on Northern Ireland

The Lords report welcomes the admission but says "the Government needs to set out with urgency the detailed steps that it will take to ensure that the necessary infrastructure is in place before 1 January 2021".

Furthermore, the committee warns there is a "real danger" that the extra formalities around sending goods to Northern Ireland will prompt UK firms to "conclude that it is economically unviable to continue to operate in Northern Ireland, leading in turn to reduced choice and higher costs for Northern Ireland consumers, thus undermining Northern Ireland's economic model, its future prosperity and, potentially, its political stability".

The report highlights the double impact of the Covid-19 pandemic and the new regime on Northern Ireland.

"Given its refusal to countenance an extension to the transition period, the Government must urgently explain to Northern Ireland stakeholders the practical steps that will be taken to ensure the Protocol is operational from 1 January 2021," the report states.

Under the Protocol, any goods from Great Britain at risk of crossing the border into the Irish Republic will be subject to tariffs, unless it can be shown that they are not at risk and are only destined for Northern Ireland.

The Committee points out the discrepancy between the UK Command Paper's interpretation of what is required and what the Protocol states.

EU chief negotiator Michel Barnier

The report notes that "whereas the Protocol refers only to goods 'at risk' of moving into the EU, the Command Paper strikingly introduces references to goods 'at clear or substantial risk', or at 'genuine and substantial risk', of doing so".

This is an "apparent attempt" to reinterpret the Protocol, the committee concludes.

However, the report repeatedly calls on the EU and the Joint Committee, comprising senior figures on both sides and which will implement the Withdrawal Agreement, to take a pragmatic and flexible approach to how the Protocol is put into effect.

"If the Northern Ireland economy is to be protected," the report states, "the Protocol needs to be implemented in a way that takes full account of the unique circumstances in Northern Ireland, and in particular the reliance of its economic model upon fast and efficient supply chains within both the United Kingdom and the island of Ireland".

While the report notes UK government claims that it will use electronic procedures to simplify customs procedures, and that it will be able to exercise "discretion," it states that London "provides little detail on how it will do so".

The Lords committee also states that the burden of the Protocol on Northern businesses will be greater depending on the ability of the EU and UK to conclude a close free trade agreement (FTA) by the end of this year.

"The greater the future regulatory alignment between the UK and the EU, the less burdensome such checks will be," the report states. 

"It is therefore highly desirable that a comprehensive UK-EU free trade agreement should be concluded by the end of 2020. If it is not, the consequences for Northern Ireland's economy arising from the imposition of all the checks and processes envisaged in the Protocol will be significant."

It says the agreement of the Protocol by the EU and UK in October last year did not mean tensions had been removed

The report also questions the UK's belief that there will be no exit summary declaration forms required on goods going from Northern Ireland to Great Britain.

The EU has insisted that its customs rulebook, which Northern Ireland will follow so as to avoid customs checks on the land border, requires exit paperwork for goods leaving the North and crossing to GB.

During hearings the NIBN pointed out that the standard EU exit summary declaration required answers to 31 questions, with a €300 fine if the form was completed incorrectly. 

The NIBN told peers that if this meant one form per consignment it could amount to 70 forms for a single lorry, with the burden falling on freight companies "who would be relying on the exporter for information".

The committee says "the EU should take this argument seriously, but the [UK] Government in turn needs to explain how such an exemption can be reconciled with the EU's international obligations under the [European] Union Customs Code".

The report concludes by saying that Brexit and the negotiations around the revised Protocol have "regrettably" placed relations between both communities in the North and between Ireland and the UK "under considerable strain, with a concomitant diminution of trust on all sides".

It says the agreement of the Protocol by the EU and UK in October last year did not mean tensions had been removed.

"On the contrary, with implementation and the practical operation of the Protocol still to come, significant challenges lie ahead. There are now seven months to go until the Protocol becomes operational on 1 January 2021," the report concludes.

"Clarity on the practical measures that will be necessary to implement the Protocol, and the steps that businesses based in or trading with Northern Ireland need to take to prepare, is now required as a matter of acute urgency if damage to the Northern Ireland economy is to be avoided."

UK hopes latest EU talks will keep process on track

Meanwhile, a spokesman for Mr Johnson has said that Britain hopes the latest round of trade talks with the EU - starting tomorrow - will keep the process on track before a high-level meeting later this month.

"We hope this latest round is constructive and we hope that it will keep the process on track ahead of the high-level meeting later this month," the spokesman told reporters.

The talks on a free trade deal and future relationship have stalled in recent weeks, with both sides urging the other to find the political will to change their positions