The EU has announced it will suspend its legal action against the UK for allegedly breaching the Northern Ireland protocol by unilaterally extending grace periods related to trade between Great Britain and the province. The intention is for both parties to discuss realistic and practical solutions to the trade issues arising from the protocol, which is the agreement they negotiated to avoid a hard border in Ireland as part of Brexit. So where do they go from here?
Since the Brexit referendum, the question of the status of Northern Ireland has been an ever-present thorn in the side of those in the UK wishing to ensure a clean break from the EU. The UK recently asked for a renegotiation of the protocol, but the changes it proposes are not getting anywhere with the EU.
At the heart of the issue is that need to avoid a hard border in Ireland. The problem has always been that because of leaving the EU’s customs union and internal market, border checks on goods moving between the UK and the EU were required.
To avoid this, the EU and the UK negotiated the protocol. It placed Northern Ireland within the EU internal market for goods, which meant it had to comply with EU customs rules. This meant that goods traded between Northern Ireland and the Republic of Ireland would not be subject to border checks. However, because the rest of the UK no longer followed EU rules, goods imported from Great Britain into Northern Ireland would be subject to checks.
Since January 2021, we have seen this play out in, for example, requirements for trade in cattle to include EU Export Health Certificates signed by approved veterinarians, and in some cases, bans on imported products like soil and eels.
These kinds of potential problems were acknowledged from the outset by both parties. They agreed to temporary grace periods suspending checks on a number of goods to allow Northern Irish traders to gradually adapt to a new reality of higher barriers to trade with the rest of the UK.
Despite this, the entirely foreseen consequences of the protocol seem to have taken some – included those in government – by surprise. And as these grace periods progressively expire, we have seen increasing calls in some quarters for the protocol to be revisited.
The latest came in the form of the UK government’s recently published command paper calling for significant portions of the protocol to be rewritten. It frames the protocol as an arrangement that the UK government never fully accepted (despite agreeing to it in January 2020). It mentions the possibility of triggering article 16 of the protocol –- the so-called safeguards measures -– which would allow the UK to temporarily suspend its obligations under the protocol under certain conditions.
It lists a number of problem areas, including the trade barriers between Britain and Northern Ireland; the operation of the value added tax and state aid systems; and the question of the continued jurisdiction of EU courts relating to the application of relevant EU laws in the UK.
Proposed changes
Under the current system, British goods imported into Northern Ireland are subject to EU tariffs if they are seen as being at risk of being moved into the EU. Regulatory compliance checks are also required on British imports into Northern Ireland to ensure that goods entering the EU internal market comply with EU rules.
The UK government suggests a regime where UK traders can declare where the goods will ultimately end up. Customs and regulatory compliance checks and formalities would then only be required where traders declare that goods are intended to ultimately enter the EU. This system is based on two questionable assumptions. Firstly, that traders will always declare the ultimate destination of goods honestly. Secondly, that traders can know, and guarantee, at the time of declaration, where the goods will end up.
The UK paper acknowledges the risk associated with a system based on trader declarations, stating that it should be supported by an intelligence-led enforcement mechanism base on full transparency of supply chains. How this system would work in practice is not explained.
The paper also mentions the possibility of establishing an equivalence regime on sanitary and phytosanitary (plant health) standards where the parties could mutually recognise each others’ standards on a product-by-product basis. In this case, regulatory compliance checks would no longer be required, or more likely, significantly reduced. This proposal has already been rejected by the EU, which wants the UK to agree to comply with EU product rules across the board.
There are good reasons for the EU’s stance. Maintaining a system of mutual recognition of rules is not easy. It works within the EU because all member states subject themselves to a common legal and institutional framework. It is otherwise fiendishly difficult to maintain equivalence permanently. Most such systems outside the EU tend to be short-lived for this reason.
Unrealistic proposals
The UK therefore knows it is proposing unrealistic “solutions” from the EU’s perspective, which will be rejected. The same goes for the proposal to eliminate the exclusive jurisdiction of the Court of Justice of the European Union on matters relating to the EU law covered by the protocol. The EU would never allow an institution to do this.
In this sense, the command paper is very much a missed opportunity to propose practical solutions to pressing concerns. For example, as the grace periods gradually expire, an agreement where the UK would temporarily align to the EU sanitary and phytosanitary regime would have given UK traders a welcome reprieve.
A discussion could be had as to whether the regime that imposes tariffs on goods “at risk” of entering the EU could also apply to regulatory issues – meaning British imports to Northern Ireland would only face regulatory compliance checks where they are at risk of entering Ireland. These solutions could be pursued by renegotiating the protocol or signing additional treaties complementing it.
But other technical solutions could be achieved within the protocol’s existing framework. A House of Lords subcommittee report identifies a number of areas where the protocol could be improved, including simplifying customs procedures, clarifying certain legal concepts, and granting access to UK customs and IT databases to the EU.
Instead, the UK government has sought to distance itself from any ownership of the protocol and to challenge many of its central commitments, completely changing the nature of the agreement. The irony, of course, is that its proposed reforms would require an extremely high level of trust between the parties – a level of trust which is unlikely to exist if one party continually contests the terms of mutually agreed solutions.
The UK would achieve far more by accepting the protocol as negotiated and seeking to improve it, rather than questioning its existence entirely.