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The Northern Ireland Bill of the UK: More Trouble in Paradise?

Writer's picture: Arne MielkenArne Mielken
Jun 14, 202211 min read

The UK wants to unilaterally tear up part of the NI Agreement. Why? Analysis, Details, Explanation and the EU response - HERE!


Content

  • The WA?

  • Why does this agreement matter?

  • 2021 Troubles

  • 2022 Troubles

  • Why is Northern Ireland trade so complicated?

  • 5 Reasons why the NI Protocol was accepted in 2019

  • What customs law applies in NI?

  • What about customs duties?

  • Why is a new NI Bill proposed?

  • What is in the Northern Ireland Bill of 2022?

  • Four fundamental challenges

  • The UK Solutions

  • Tell me more about the Green and Red Channels

  • Dual Laws for placing goods on the market

  • Is this change lawful?

  • What did the EU say?

  • Conclusion

  • How We Can help

  • About Customs Manager Ltd.


The WA?

To recall, the WA is the international treaty that was signed in late 2019 and which regulates the divorce proceedings and makes sure that both parties break up in a civil manner. This is known as an "orderly withdrawal" rather than a chaotic one. It includes extensive provisions as regards NI-GB trade and vice versa.


Why does this agreement matter?

The WA, which went into effect on February 1, 2020 has legal authority under international law. Since that moment, neither the EU nor the UK have been entitled to unilaterally revise, clarify, amend, interpret, ignore, or disapply the agreement - if you want to respect international law


The Protocol on Ireland/Northern Ireland, in particular, is a crucial component of the Withdrawal Agreement. It was the outcome of lengthy, comprehensive, and tough discussions between the EU and the UK with the goal of protecting peace and stability on the island of Ireland.


2021 Troubles

The NI Protocol has always been about politics, trust and the law.


In 2021, UK government wanted to push through the “United Kingdom Internal Market Bill” which the EU felt would constitute an extremely serious violation of the Withdrawal Agreement and of international law. The UK argued it needed the ability to disallow the lodging of export declarations out of NI to GB if it wanted to. After working through the UK's concerns, the EU and the UK found mutually agreed solutions. So the UK has instead withdrawn clauses 44, 45 and 47 of the UK Internal Market Bill, and not introduce any similar provisions in the (Cross Border) Taxation Bill.


2022 Troubles

On 13 June 2022, the UK had another go, publishing a law proposed which intends to repair elements of the Northern Ireland Protocol, restore stability, and safeguard the Belfast (Good Friday) Agreement.


Why is Northern Ireland trade so complicated?

The Protocol-I-NI (or NI Protocol for the UK) become applicable from 1 January 2021. It was conceived as a stable and lasting solution, as a practical way to avoid a so-called “hard” (controlled) border on the island of Ireland. This has been achieved by

  • making NI part of the Customs Union of the United Kingdom.

  • However, NI will remain aligned to a limited set of EU rules, notably related to goods.

This arrangement has important consequences for the UK and EU businesses trading with NI and vice versa.


5 Reasons why the NI Protocol was accepted in 2019

For the UK Government, which signed the agreement, we recall, that this was acceptable in 2019 because it

  1. upheld unfettered access for Northern Ireland businesses to their most important market,

  2. eliminated most Northern Ireland to Great Britain export declarations.

  3. safeguarded Northern Ireland’s place in the UK’s customs territory,

  4. established the platform to preserve tariff-free trade for Northern Ireland businesses,

  5. protected the internal UK trade and maintain the UK’s VAT area.


What customs law applies in NI?

The Union Customs Code (UCC) applies to all goods entering or leaving Northern Ireland. This will avoid any customs checks and controls on the island of Ireland.


What about customs duties?

  1. EU customs duties will apply to goods entering Northern Ireland if those goods risk entering the EU's Single Market.

  2. No customs duties will be payable, however, if goods entering Northern Ireland from the rest of the United Kingdom are not at risk of entering the EU's Single Market.

  3. For goods coming in from another country other than the UK or EU, a good being not ‘at risk’ will mean UK duties will be charged. This includes any preferential rates under UK Free Trade Agreements where those goods are eligible.


Why is a new NI Bill proposed?

This has been a long time coming. The UK government stated already in July 2021 that Article 16 of the Protocol had been met, since it caused trade diversion and serious social and economic problems. EU discussions, however, for 18 months, haven't produced any long-term answers, and the Protocol prevents the creation of a new Northern Ireland Executive.


So, the UK felt they had to take action.


What is in the Northern Ireland Bill of 2022?

The UK government says that the law proposed on June 13 intends to repair elements of the Northern Ireland Protocol, restore stability, and safeguard the Belfast (Good Friday) Agreement.


In particular, the bill should

  • improve the social and political environment while respecting the Protocol's goals, such as trade and partnership between the North and South and EU and UK interests.

  • safeguard the delicate balance of the Belfast (Good Friday) Agreement in all of its components

  • alleviate social and political tensions in Northern Ireland.

  • restore East-West links without damaging North-South.

It does all of this WITHOUT affecting the EU. This is the crux of the issue. The actions suggested in the bill will not impact the EU. In fact, robust safeguards for the EU have been added to the bill.


Four fundamental challenges

The UK says the Protocol legislation would save excessive expenditures and bureaucracy for companies by introducing lasting remedies to the four fundamental challenges the UK has identified

  1. Cumbersome customs procedures

  2. Rigid regulation

  3. Tax and spend disparities

  4. Democratic governance concerns.


According to the UK, these have led to trade interruption and diversion, as well as major expenses and bureaucracy for businesses. Most importantly, they say, this is eroding all three strands of the Belfast (Good Friday) Agreement and have resulted in the breakdown of Stormont's (Northern Ireland's Parliament) power-sharing mechanisms.


The UK Solutions

As a result, measures are required to maintain Northern Ireland's market access to the UK and vice versa. There are four principle solutions:

  1. Green and red channels to eliminate excessive expenditures and bureaucracy for firms dealing inside the UK while guaranteeing complete inspections on products entering the EU.

  2. Businesses should be able to choose whether to place items on the market in Northern Ireland under UK or EU norms, to ensure that Northern Ireland consumers are not precluded from purchasing UK-standard goods, especially when UK and EU requirements diverge over time.

  3. Ensuring Northern Ireland receives the same tax benefits and expenditure initiatives as the rest of the UK, such as VAT reductions on energy-saving goods and Covid recovery loans

  4. Normalise governance structures so that disagreements are settled by independent arbitration rather than the European Court of Justice.

Read more in the UK's Explainer Document here:


Tell me more about the Green and Red Channels


These are the most relevant topics for the trade in goods and customs.


In a nutshell, a new green and red lane model will be set up, underpinned by commercial data and a trusted trader programme. In this way, it removes barriers to internal UK commerce while avoiding a border on Ireland, preserving both markets and lowering costs for people and companies.


It will look like this:



Green lane for British goods

UK aims to create a new "green route" for products remaining in the UK, so alleviating the constraints and complexity generated by the current application of EU customs and SPS laws to all commodities. Goods remaining in the UK would be exempt from onerous paperwork, inspections, and levies, with just standard business information needed rather than customs procedures or complicated certification requirements for agricultural goods. This minimises inspections on agricultural items, eliminates taxes on UK commerce, and lifts superfluous product prohibitions.


EU products use the red lane.

Goods entering the EU or being transferred by merchants who are not part of the new trusted trader system would be subject to full inspections and controls, as well as full customs processes, preserving the EU Single Market.


Robust protection of Single Market


1) Trusted Trader

The green lane would be for participants in a new trusted trader scheme covering all goods exchanges. To facilitate auditing and compliance, businesses will need to show their activities and supply networks. Mail and parcels will automatically utilise the green lane without registration.


2) Punishments are harsh

Traders who misuse the new system risk civil and criminal penalties and cannot use the green lane.


3) Data sharing

The UK sends the EU about a million rows of data weekly. In the new arrangement, we would continue to share data with the EU on the functioning of the trusted trader system and on all items moving between the UK and Northern Ireland to monitor abuse and allow risk-based information sharing and collaboration.

  • Purpose-built IT: Information would be available in real-time and within the time needed to cross the Irish Sea.

  • Green lane: Merchants' regular data interchange.

  • Red lane: Sharing over 110 customs declaration fields under EU Customs Code.

4) Risk assessment quickly

The UK would continue to implement restrictions where a different hierarchy of risk exists, just as we did before the UK's EU exit (for example, on live animals). UK and EU authorities would cooperate under a new biosecurity assurance framework to control risky commodities.



Dual Laws for placing goods on the market


The UK also wants a dual-regulatory framework that provides businesses choice together with strong promises to defend the EU single market. What is proposed:

  • Goods may be sold in Northern Ireland provided they fulfil UK, EU, or both standards, ensuring customers can obtain the items they want and avoiding supermarket gaps.

  • EU-marked goods must continue to fulfil all EU criteria.

  • If the criteria are met, goods may be CE or UKCA designated, or both.

  • This technique has been proven and tested in the UK, where NI products have had unhindered access since January 2021.

Strong EU market safeguards

Safeguards would prevent UK products from entering the EU market.

  • Importers, manufacturers, and producers will be responsible for putting products on the market according to the right laws.

  • Goods placed on the market in Ireland must follow EU standards, just as they do today. Rulebreakers face harsh consequences.

  • Agrifood could only enter NI through our Trusted Trader Scheme, with strict sanctions for noncompliance. EU has approved that products may enter and stay in NI under the present framework for supermarket items.

  • Market surveillance authorities will continue to have powers to ensure product safety inside the UK internal market, including the ability to visit premises, confiscate items, and seek legal action for criminal offences. These measures would be strengthened, including with coordination between UK, Ireland, and EU agencies to promote compliance and parallel operations.


Is this change lawful?

The UK Foreign Secretary thinks so. Overall, the UK government wants the EU to recognise that the Protocol must be implemented and operated with Northern Ireland's specific circumstances, constitution, identities, and sensitivities in mind.


If the EU is unwilling to renegotiate the Protocol, then unilateral action must be taken.


Here is our summary of why the UK government believes that that international law authorises this legislation:


It is the word "Necessity" which explains why international obligations aren't always kept. International law uses "necessity" when a state can't protect a vital interest without violating another responsibility. Article 25 of the International Law Commission's 2001 Articles on State Responsibility specifies the core condition that must be met is that the activity can't injure the opposing state(s) or if the using state made the situation necessary.


As a consequence, the UK government may be able to avoid international tariffs in certain situations. The situation in Northern Ireland is very unique. Only because Northern Ireland is a difficult, complicated, and one-of-a-kind region has the government enacted these rules, which means that certain previously made responsibilities will not be honoured.


As a result, the UK government considers that failing to satisfy its responsibilities under the Withdrawal Agreement and/or Protocol is legal under international law.


Finally, Article 16 of the Protocol grants the UK the right to protect against serious economic, social, or environmental challenges that may restrict trade - that is yet to be triggered.


What did the EU say?

The EU insists on the Protocol's non-negotiability. The EU thinks lengthy talks may muddle Northern Ireland's legal position. Instead, the EU wants the UK to honour the legally binding Withdrawal and Trade agreement. After hours of line-by-line negotiations, this was the only way to protect Northern Ireland's peace process while addressing Brexit and the UK government's form of Brexit. Rather than changing the legal text, the EU wants to discuss the potential flexibilities with the UK quickly.


Concerns

The protocol allows Northern Ireland enterprises to sell in the EU Single Market - a key benefit. The UK government's actions threaten this access and opportunity for businesses in Northern Ireland. Therefore, the EU is concerned about the UK government's plan to block vital Protocol elements. One-sided behaviours damage trust.


Next Steps for the EU Commission

First, the EU Commission will examine the proposed legislation from the United Kingdom. Then it will determine whether to continue the March 2021 infringement actions against the UK (legal action was suspended in September 2021 to explore remedies, but the UK's behaviour currently violates this spirit). The Commission will also examine further measures to protect the EU Single Market from the risks that Protocol violations pose to EU businesses and EU people' health and safety. The EU will soon provide further details regarding our approach to flexible Protocol implementation, which is based on long-term Protocol solutions. This will demonstrate that there are solutions to Northern Ireland's problems within the Protocol

The EU further clarified that any amendments to the TCA could not be addressed until the Withdrawal Agreement was implemented. The UK move undermines the trust required for the EU and the UK to collaborate on the TCA.


Conclusion

So the show must go on.


The political bickering goes on.


Right now, there are no activities that firms can take.


You must, however, exercise caution. This is an opportunity for trade groups to shine by collaborating with governments to establish appropriate and friendly solutions that enable firms to deal with one another without friction in all directions.


Without a question, the UK's planned simplifications are appealing. Furthermore, Red Lane and Green Lane are ideas that are readily understood by enterprises. It is critical to reduce red tape and bureaucracy.

It is also unclear to the typical company owner why enterprises in Northern Ireland should be handled differently from those in the United Kingdom.

And, absolutely, if there are advantages in the United Kingdom that firms in Northern Ireland are not receiving, then surely, that cannot be acceptable.


So, what do we make of it at Customs Manager Ltd?


Well, just as we have requested the UK to carefully explore and collaborate with EU initiatives, we need the EU to step up and reconsider these new UK ideas as well. If it can be guaranteed that no damage is done to the EU Single Market and that red tape may be cut if you are a certified trustworthy trader, such as an AEO-accredited firm, then perhaps the Green/Red channel notion isn't that bad?


EU, could we please take this concept into consideration?


 

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