The Northern Ireland Protocol risks becoming a constant irritant in future EU/UK relations unless both sides change their “fundamentally flawed” approaches to resolving the dispute, peers have found.

A House of Lords committee set up to examine the controversial post-Brexit trading arrangements for the Irish Sea has warned that Northern Ireland could become a “permanent casualty” of Brexit unless compromise is found urgently.

The EU and UK remain at odds over the implementation of new checks and processes on goods being shipped into Northern Ireland from the rest of the UK.

The committee has published an introductory report on the arrangements that have created the economic barriers on Irish Sea trade.

Despite having membership drawn from a variety of political viewpoints, including nationalist and unionist peers from Northern Ireland, the committee’s findings were unanimously agreed.

The peers expressed concern that the “fundamentally flawed” approaches adopted by the UK and EU were hampering efforts to find solutions.

They said the UK approach had been characterised by a “lack of clarity, transparency and readiness” while the EU had demonstrated a “lack of balance, understanding and flexibility”.

They said the EU mistrusts whether the UK is acting in good faith while the UK believes the EU is adopting a disproportionate approach to the implementation of the protocol.

This has led to a “serious deterioration” in relations between London, Belfast, Dublin and Brussels, the report found.

Lord Jay of Ewelme, who chairs the committee on the protocol, said there was an urgent need for compromise.

“That won’t be easy, but it is an absolute necessity that the UK and the EU should now work together urgently to identify solutions if Northern Ireland is not to become a permanent casualty of the Brexit process,” he said.

“The tensions over the protocol currently seem insoluble. Yet that was also true of the political situation during the Troubles. But the peace process ultimately took root and flourished, through a process of time, patience, dialogue, and most of all trust. Those same qualities are now needed to address the problems that Brexit and the protocol present.”

In an interview with the PA news agency, he added: “If there is no resolution, if it just festers, it seems to me it will become a constant irritant in the relationship between the EU and the UK and it will become an irritant within the island of Ireland, between north and south.

“I cannot see that that is in the interest of either community or any of the communities in Northern Ireland nor of business people in Northern Ireland nor of the economy of Northern Ireland and that’s what worries me, that’s why I really do think it is important to reach an agreement here.

“This is not something in my view that can just be allowed or should just be allowed to fester. I think that’s a real worry.”

The committee’s key findings and recommendations include:

– Trade between GB and Northern Ireland has been “significantly disrupted” by protocol red tape and there is a risk that some British businesses will withdraw from the NI market. It noted particular concerns around the future supply of medicines and medical products to Northern Ireland.

– The protocol provision for dual access for Northern Ireland business to sell unfettered within the UK market and EU single market offers potential economic opportunities. It said those benefits would take time to bear fruit and would depend on political stability and certainty.

– A host of practical and specific solutions to ease the bureaucratic burden has already been identified by business representatives.

– One of the most significant single measures would be a UK-EU agreement on veterinary standards. The committee noted the disagreement over how the UK might align its rules to the EU’s under such an arrangement but called on both sides to find a compromise solution.

– Steps are needed to ensure the views in Northern Ireland are better reflected at UK and EU level.

– Alternatives to the trading elements of the protocol must be considered, given the Stormont Assembly will vote in 2024 whether to drop those arrangements.

The committee on the protocol is a sub-committee of the House of Lords European Affairs Committee. It will resume its examination of the arrangements after the summer recess.