EC Proposal for Resolving Northern Ireland Protocol Issues Could Offer Model for Addressing ACP Triangular Supply Chain Concerns

Proposals to Address Current SPS Challenges Around the Implementation of the Northern Ireland Protocol

According to the EC non-paper on SPS issues, EU SPS law is not being correctly applied to the movement of goods from GB to Northern Ireland in line with commitments jointly agreed by the EU and UK under the Northern Ireland Protocol. For the EU ‘Northern Ireland is part of the EU’s SPS area’ and is to be ‘treated as if the UK were a Member State as regards the territory of Northern Ireland.’ In the EC’s view this means SPS goods shipped from Great Britain to Northern Ireland should be subject to the same import controls as imports from any third country, ‘including any mandatory checks’ for full compliance with the relevant EU SPS requirements. The EC see’s the current problems arising from the UK’s unilateral decision to extend the initial grace period on implementation, in the face of infrastructure and staffing constraints in Northern Ireland (2).

While the EC recognises the UK governments concerns over the disproportionately high administrative burden on good moving from GB to Northern Ireland, it fails to recognise the constitutional issues which are at the heart of Ulster Unionist objections to the Northern Ireland protocol. This is based on the view this constitutional issue was addressed through the UK’s signature and ratification of the text of the mutually agreed Protocol on Ireland /Northern Ireland.

Against this background the EC proposals are focussed on ‘addressing identified real supply problems for retail goods’ within the scope of the implementation of the existing Protocol provisions. It ‘would neither abolish certification nor all SPS checks.’ The EC insists ‘bespoke solution must be based on a thorough risk assessment and an analysis of changes that have already happened or are being implemented in supply chains’ (2). It is argued these solutions should involve:

· Simplified sanitary and phytosanitary certification processes and reduced checks
for consignments where the components of the load face the same level of SPS
risk, with high-risk goods being shipped separately and being subject to more
rigorous controls

· A move over to remote checking through the use of electronic trade documentation
systems, thereby reducing the need for physical checks. Significantly, ‘the level of
checks would not be managed at the level of individual traders / consignments /
products but as part of an overall system defining the risk management principles.’

· For meat products, where EU and UK standards remained aligned a reduction in
standard checks would be possible.

· Products shipped would need to be packed for end consumers and labelled as
solely for distribution in Northern Ireland, with goods destined for EU27 markets
being subject to different arrangements (2).

These arrangements would be subject to ‘reinforced monitoring of supply chains’ (2).

Unfortunately, from an ACP perspective, in the EC non-paper it is explicitly stated these trade facilitating arrangements will only apply to ‘end products produced from primary products originating in UK in accordance with the EU-UK Trade and Cooperation Agreement or coming from the EU’ (2)

EC proposals on Customs Arrangements

In terms of the application of customs tariffs on goods shipped from Great Britain (GB) to Northern Ireland the key concept is ‘not at risk’ goods. This involves goods which are considered as ‘not at risk of being subsequently moved into the Union.’ These products are subject to UK customs duties not EU customs duties. However, goods which are ‘imported for the purpose of manufacturing in Northern Ireland’ are ‘systematically considered as ‘at risk’ goods’ (3).

This being noted there are some ‘flexibilities,’ with ‘small businesses in Northern Ireland … and businesses which process goods for a specific purpose such as the sale of food to end-consumers in Northern Ireland,’ being considered as being carried out as ‘non-commercial processing.’ Equally, for goods brought in from Great Britain, the good is considered ‘not at risk of being moved to the Union if the Union customs duty is equal to zero’ or the product is brought from the rest of the world, in which case ‘the UK tariff applies if the Union tariff is equal to or less than the UK customs tariff’ (3).

There are also additional flexibilities for authorised traders. These authorised traders are considered as importing ‘not at-risk goods’ if they can guarantee that these goods will be sold for end use solely in Northern Ireland. This ‘scheme is available to business established in Northern Ireland and to business which have a fixed place of business there’ (3).

According to the EC ‘the main purpose of this scheme is to reduce the costs of moving goods from Great Britain.’ This means ‘such traders do not need to calculate the Union customs duties which would be payable.’ Their compliance costs are therefore reduced. This arrangement is implemented through the UK Trader Scheme (UKTS) which has been jointly agreed, and through which 3,000 applications have been made and approved (3).

The EC takes the view the existing framework as mutually agreed under the protocol, if fully implemented by the UK authorities, could then be further elaborated to address specific operational challenges now faced. It is felt there is no need to renegotiation or amend the agreed Protocol. It is held the adjustments which can be introduced within the existing framework ‘should reduce formalities, checks and controls at the border for East/West trade without threatening the integrity of the Union’s Single Market and Customs Union’ (3)

However, this is based on the UK authorities taking practical action to ensure:

· EU representatives have full real time access to UK IT systems so as to monitor the
implementation of the agreed trade arrangements.

· Appropriate monitoring and enforcement measures are in place which are sufficient
to generate confidence the integrity of the EU single market and customs union is
bring protected.

· Continued support for measures to assist businesses in utilising agreed flexibilities,
particularly through the existing Trader Support Scheme (3).

However, the EC has made it clear the new arrangements should not disrupt supply chain adjustments which are underway, as a result of Northern Ireland remaining part of the EU customs union and single market, unlike other areas of Great Britain (3).

In this regard the principle used in identifying ‘at risk’ and ‘not at risk’ goods where the UK/EU ‘customs duties is equal to zero’ could usefully be built upon. At the level of customs treatment, emphasis should be placed on recognising the need to systematically treat goods which enjoy duty-free/quota-free access to both the EU and UK markets as goods ‘not at risk’ of undermining the integrity of the EU customs union and single market. This would then lay the basis for ‘re-exports’ across EU/GB borders to take place without further customs controls.

The aim of such bespoke arrangements would be to establish an ‘express lane’ for triangularly traded products where duty-free/quota-free access is enjoyed to both the EU and UK markets and where equivalent sanitary and phytosanitary import controls have been conducted on goods at the initial port of entry (whether in the EU or UK), prior to onward shipment with traditional time frames for such onward freight movements across EU/GB borders.

In this context, where EU and GB phytosanitary import control requirements are the same, and re-exports have been subject to equivalent import controls upon completion of the inter-continental component of the journey, no further phytosanitary import inspections should be required. This would be consistent with UK phytosanitary import control practices since 1 January 2021, an arrangement which has been extended until 1 July 2022 for most of the affected products.

This should be possible since there has been only limited divergence in UK and EU phytosanitary import requirements (e.g., while still required for entry to the EU market phytosanitary certificates are no longer required for citrus fruit, mangoes, guava, kiwi, bitter orange, persimmon, passionfruit, kumquat, curry leaves and cotton bolls for entry to the UK market). Such arrangements for triangularly traded goods would require engagement with private sector bodies and subsequent close monitoring. However, such arrangements could build on existing proposals for trusted trader arrangements and pre-export preparation of trade documentation for ‘groupage’ loads.

Such arrangements would not only minimise additional tariff and phytosanitary inspection costs but would also minimise border clearance delays and establish a basis for restructuring ‘groupage’ loads for re-exports across EU/GB borders. This would then serve to minimise value losses and reduce current road haulage freight cost inflation along triangular supply chains, which has in part been linked to fears of border clearance delays.

Such arrangements would however be likely to increase the trade administration burden, unless simplified systems of verification, were designed and implemented, based on routine trade documentation. The operationalisation of trade administration on a simplified basis will need to be defined on a sector-by-sector basis (or even product-by-product basis), in close association with the affected stakeholders in the ACP, EU and UK

Given the fundamental differences which still exist, most notably in regard to the UK government’s rejection of any role for the European Court of Justice and the UK’s reluctance to allow the building of border control post in Northern Ireland to control GB to Northern Ireland trade in ‘at risk’ goods (which politically explosive in Northern Ireland), it is possible there will be no EU/UK agreement on the basis of the EC proposals.

Nevertheless, there would appear to be scope for elaborating certain elements of the EC proposals in ways which extend the principles and modalities proposed to resolving issues along triangular supply chains.

This process would need to occur on a sector-by-sector basis, with ACP exporters and their EU and UK trade partners needing to take up sector specific challenges, and ensure they are put forward in the appropriate structure for institutional dialogue with the EU and UK respectively (e.g., under the structure of the various EU EPAs or UK Continuity Agreement). However, the initial political lobbying to create the space for such technical solutions could be taken up by the governments of the most seriously affected ACP countries (e.g., in East Africa and the Caribbean).