Summary
Following a lack of progress in EU/UK discussion on the implementation of the Northern Ireland Protocol, the UK government has tabled a position paper proposing what amounts to a fundamental re-writing of the mutually agreed Protocol. This would bring into question the continued participation of Northern Ireland in the EU customs union and single market as agreed in the Protocol. The EU continues to insist solution must be found within the framework of the agreed Protocol. Prime Minister Johnson’s willingness to suspend the Protocol, so the UK can act unilaterally subject to joint decision making under the Protocol, if acted upon, could result in a serious deterioration in EU/UK trade relations as early as October 2021. This could then be the final nail in the coffin of ACP triangular supply chains. Even if such action is temporarily averted in October, the UK proposals leave unaddressed issues related to the future regulatory regime applicable to ACP products onward traded from GB to Northern Ireland. This in turn will make it more difficult to set in place solutions to the issues disrupting the functioning of wider ACP triangular supply chains (both ACP-to-UK-to EU and ACP-to-EU-to-UK)
In July 2021 the UK government published a paper entitled ‘Northern Ireland Protocol: the way forward’, which proposed significant changes to the jointly agreed Northern Ireland protocol finalised in 2019 (1). This followed months of meetings (no fewer than 70 meetings) and discussions with the EU aimed at finding what the EC described as ‘constructive and pragmatic solutions to all identified implementation issues’ (2). Discussions which, despite the tabling by the EU of multiple technical proposals and outline solutions, resulted in little or no progress on the implementation issues faced.
In the foreword to the July UK position paper Prime Minister Johnson argued the protocol as agreed and interpreted by the EU was ‘not possible to operate.’ Against this background the position paper contained proposals which the UK government maintained aimed to remove ‘the burdens on trade in goods within the UK while managing the real risks to the EU Single Market’. The proposals put forward seek to achieve this objective in ways which allow Northern Ireland businesses and consumers to have normal access to UK goods, while protecting the EU single market, without the need for a border on the island of Ireland.
Specific proposals advanced cover:
- The management of customs issues in trade between GB and Northern Ireland.
- SPS Import Control Measures on trade between GB and Northern Ireland.
- The establishment of a dual regulatory regime for goods placed for sale in Northern Ireland.
- Unfettered Access for Northern Ireland Goods to the UK Market.
- A further review of VAT and Excise issues beyond measures agreed in the existing Northern Ireland Protocol.
- The removal of Northern Ireland wholly from the EU’s subsidy control framework and incorporation of Northern Ireland fully into the UK ‘s subsidy control regime.
- The establishment of an ‘effective monitoring and enforcement’ regime with measures being ‘underpinned by strong reciprocal data sharing arrangements’ (despite the UK having so recently withdrawn from EU electronic trade administration systems which facilitated the sharing of data.
- A fundamental review of the governance arrangements for the oversight of the regulatory regime for goods in Northern Ireland, through the revocation of Articles 12(4) to 12(7) of the Northern Ireland Protocol, which would remove any role for EU institutions and courts from the oversight of the regulatory framework for goods in Northern Ireland.
Proposals to remove Northern Ireland from the jurisdiction of EU institutions including the Court of Justice, in a move which the UK government describes as a normalisation of ‘the governance basis of the Protocol’, alongside other proposals amount to a fundamental re-writing of the Northern Ireland Protocol, in ways which undermine a number of its cornerstones.
The July 2021 proposals pose a serious challenge to the integrity of the UK government’s nominal commitment to jointly acting with the EU in the implementing measures which keep Northern Ireland in the EU customs union and single market, thereby avoiding the need for a border on the island of Ireland. As such these proposals also pose a serious challenge to the integrity of the EU single market
Ulster Unionists warmly welcomed the UK governments’ July proposals, describing it as a ‘significant step in the right direction by the government and an acceptance that the Protocol is not sustainable’. The leader of the DUP urged Prime Minister Johnson to ‘continue at pace to remove the Irish Sea Border, which is fracturing the economic and constitutional integrity of the United Kingdom’ (3).
Against this background, it should be noted Prime Minister Johnson maintained the difficulties in implementing the Northern Ireland Protocol are so profound ‘I have had to consider whether safeguarding action is necessary under the Article 16 framework.’ He suggested ‘the circumstances in which we find ourselves would justify such an approach,’ unless there were ‘significant changes to the existing protocol.’
In this context the 16-page substantive proposal contained in the UK’s July position paper included 2 pages devoted to a justification of why the invocation of Article 16, suspending the application of the Protocol would be appropriate.
The foreword to the UK position paper by Prime Minister Johnson, alongside comparable Ministerial level statements, strongly implies if the UK does not secure the concessions it is seeking, it will invoke article 16 suspending the Northern Ireland Protocol, thereby enabling the UK government to take unilateral action in areas subject to joint decision making under the provisions of the Northern Ireland protocol.
In response to the UK’s July position paper proposals the EC’s Vice President Maroš Šefčovič emphasised how while the EU was open to ‘creative solutions’ to the current difficulties in trade between Britain and Northern Ireland (which he stressed were caused by the Brexit process), the EU was not willing to renegotiate the Northern Ireland Protocol (3).
He highlighted how the Northern Ireland Protocol as negotiated was a ‘joint solution’ reached in close association with Prime Minister Boris Johnson and Lord Frost, with this solution having been ‘ratified by the UK parliament.’ In this context Vice President Šefčovič stressed how for the credibility of the UK government ‘respecting international legal obligations is of paramount importance’ (4).
Ireland’s Foreign Minister Simon Coveney, meanwhile, has suggested a need to ‘closely analyse British proposals to reduce trade frictions between Britain and Northern Ireland’, but stressed how ‘any solution must remain within the terms of a deal agreed with the EU last year.’ While the Irish Taoiseach tried to adopt an optimistic view of the UK position paper stating, ‘the proposals showed the British wished to find a negotiated solution’, there is reportedly ‘little optimism in Dublin that talks over the coming weeks will produce any agreement.’ The general view is the British Government was ‘seeking a rewriting of the protocol to get concessions for the UK that it could not secure in the original negotiations’ (4).
| Comment and Analysis The fundamental changes to the Northern Ireland Protocol set out in the July UK government position paper, particularly in regard to the governance of regulatory matters related to goods in Northern Ireland, could prove to be a concession too far for the EU. However, lack of progress in this area could give rise to the triggering of Article 16 by the UK government. This would be likely to generate substantial additional tensions in EU/UK trade relations which in 2022 could give rise to a de facto trade war. If this occurred this would be likely to place the final nail in the coffin of any ACP exports routed along triangular supply chains, be they ACP-to-UK-to EU supply chains or ACP-to-EU-to-UK supply chains. However, there does appear to be a temporary way out of the crisis which would otherwise come to ahead in October 2021. This arises from the proposals to freeze existing legal actions and processes, to allow time for solutions to be found. At the end of July 2021 in response to this UK proposal the EC announced further steps in the legal process initiated against the UK government for violations of the provisions of the Northern Ireland Protocol would be suspended (6). If this process of ‘freezing’ legal action and processes extends to changes to UK regulations which would otherwise lead to a divergence in UK and EU regulatory standards, this could de facto introduce a temporary alignment of EU and UK regulatory standards. While this would in no way constitute a ‘dynamic alignment’ of UK and EU regulatory standards, it would provide a beathing space for the negotiation of longer-term arrangements. Such a development would effectively replicate the process by which the 30 June agreement to extend the ‘grace period’ until October was set in place. This could offer a means for the EU and UK to continue talking beyond 1 October 2021, thereby averting a potentially damaging wider trade dispute. However, while such a move would reduce trade tension between the EU and UK, it would leave longer term issues unresolved. This includes issues of direct relevance to ACP exporters, including, for example the treatment of products where UK and EU phytosanitary certification requirements now already diverge (e.g., trade in citrus fruit, mangoes, kiwis, and seven other fresh products) and the marketing of UK refined raw cane sugar products in Northern Ireland. This forms part of the wider shortcomings in the UK proposals which leave entirely unaddressed the question of the standards third country goods onward traded from GB to Northern Ireland would need to comply with. Would it be EU standards or UK standards?
For example, after 1 October 2021, would ACP mango exports destined for Northern Ireland require a phytosanitary certificate, as would be the case if EU standards were to apply, or would it be possible to export mangoes to Northern Ireland from GB without a phytosanitary certificate? These considerations apply to all other products where EU and UK phytosanitary certification requirements diverge. In addition to mangos this includes citrus fruit, kiwi, passionfruit, guava, kumquat, bitter orange, persimmon, cotton (bolls), and curry leaves. Similarly given the absence of any customs or regulatory border controls on the island of Ireland, questions arise as to whether the onward trade in 3rd country produce from GB to Northern Ireland would in future require the issuing of phytosanitary re-export certificates or whether an alternative system of traceability and documentation of the phytosanitary status of products traded could be set in place? These are either/or questions. The dual standard regulatory framework proposed by the UK government for Northern Ireland simply cannot be applied in practice. These kinds of complications in the standards to be applied to products entering the Northern Ireland market are likely to multiply as UK and EU regulatory requirements diverge. The prospect of early regulatory divergence was brought closer on 22 July 2021 when the UK government announced a regulatory review, which included proposals to consider whether to move away from ‘the EU’s excessive use of the precautionary principle’, through adopting what the UK government describes as a ‘proportionality principle’ is noteworthy. According to the UK governments’ press release this review process would aim to focus regulations on ‘outcomes, not processes and be proportionate to the issues and impacts on businesses and people.’ For the UK government the issue is about ‘taking back control’ over the regulatory process on a basis which works best for British business, workers, and the wider economy (5). Unfortunately, the complexities this gives rise to the UK’s trading partners, including those in the ACP, are simply not part of the considerations informing UK government policy making. These consequences are likely to fall most heavily and the UK’s small and least developed country trading partners, whose businesses have limited capacities to adjust to the changes the UK’s policy approach is giving rise to. This may well see many of them pushed out of a range of agri-food sector supply chains, particularly where the delivery of products to the final market requires the crossing of an EU/UK customs and regulatory border. |
Sources:
(1) gov.uk, ‘Northern Ireland Protocol: the way forward’, July 2021
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1004581/CCS207_CCS0721914902-001_Northern_Ireland_Protocol_PRINT__1___2_.pdf
(2) EC, ‘Statement by the European Commission following the eighth meeting of the Specialised Committee on the implementation of the Protocol on Ireland and Northern Ireland’, 19 July 2021
https://ec.europa.eu/info/publications/specialised-committee-implementation-protocol-ireland-northern-ireland_en
(3) RTE, ‘UK seeks ‘standstill period’ to negotiate NI Protocol’, 21 Jul 2021
https://www.rte.ie/news/2021/0721/1236322-ni-protocol-statements-parliament/
(4) Irish Times, ‘Brexit: EU ‘will not renegotiate’ Northern Ireland protocol as UK demands changes’, 21 July 2021
https://www.irishtimes.com/news/politics/brexit-eu-will-not-renegotiate-northern-ireland-protocol-as-uk-demands-changes-1.4626719
(5) gov.uk, ‘UK to seize Brexit opportunities and unleash innovation by overhauling approach to red tape’, 22 July 2021
https://www.gov.uk/government/news/uk-to-seize-brexit-opportunities-and-unleash-innovation-by-overhauling-approach-to-red-tape-22-july-2021
(6) euronews.com, ‘EU halts legal action against UK over Northern Ireland Protocol breaches’, 27 July 2021
https://www.euronews.com/2021/07/27/eu-halts-legal-action-against-uk-over-northern-ireland-protocol-breaches