UK Northern Ireland Protocol Bill Revealed

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The UK has tabled new legislation, called the Northern Ireland Protocol Bill, aimed at unilaterally altering the Northern Ireland Protocol. UK Government contends that the Protocol has placed a political barrier between N. Ireland and the rest of Great Britain, and is also disrupting trade between the two.

The bill would allow the UK to override the terms of the treaty of the UK-EU negotiated Northern Ireland Protocol. We looked at why the proposal has been contentious in this article.

Key Proposal on Goods.

The proposed bill would remove the need for checks on goods travelling GB-NI, whilst maintaining full checks on EU bound goods. The propozsal introduces two coloured lanes at port to indicate which goods are destined for Northern Ireland (Green) or for the EU (Red).

The UK has provided a streamlined graphic of the proposed solution on goods below:

The proposal would based on a Trusted Trader system and shared data compliance, with fiscal penalties for those breaching the system, however the details on how this would operate, and work for non-commercial goods, is still unclear.

Major contention surrounds the use of a “Dual Regulatory” regime. UK Government argues businesses trading solely with Northern Ireland should not have to comply with EU law, and instead companies should have the choice of whether they comply with UK, EU or both, by using a UKCA, CE or both stamps.

Certain industries, such as dairy, have warned this would cause disruption on the Island if the components from one side, grain, do not meet the standards of the other, their produce, milk, will be barred market access.

In addition to this, the UK will seek to end European Court of Justice oversight, particularly on the “green lane” goods in Northern Ireland, while applying full EU law to “red lane” goods. UK Ministers will claim the ability to refer UK decisions to ECJ.

On VAT, the Treasury would be able to apply tax measures unilaterally in N. Ireland, in line with the rest of Great Britain, which it was unable to under the protocol.

A full debrief of the Northern Ireland Protocol Bill, and its impact, can be seen in this Institute for Government guide.

Wider Impact
EU leaders have already said they’re planning legal action against the UK if it unilaterally acts on Northern Ireland, urging UK negotiators to return to and find a negotiated outcome. However, if the UK acts unilaterally, the EU could impose tariffs on all exports from the UK to the EU.

It is unclear what the Bill would end up saying. This piece from the UK Trade Policy Observatory (UKTPO) suggests the Bill is part of a negotiation strategy to find compromise with the EU before taking unilateral action.

However, the Northern Irish Chambers of Commerce stated businesses want trade confidence and “anything other than a negotiated outcome is sub-optimal”.

The Chamber will try to keep members updated on this dynamic situation, and support where possible. The British Chambers are in regular contact with Government, if you have any comments or questions, please contact [email protected]

Article 16: Brexit Spectre

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Throughout this year’s Conservative Party Conference, there have been numerous references made to ‘Article 16’ of the Northern Ireland Protocol, at fringe events, in media interviews or on the main stage. Most notably, Lord Frost, Minister of State in the Cabinet Office and the man most responsible for implementing the new UK-EU relationship, claimed that triggering Article 16 may be necessary to change the elements of the Brexit deal that affect Northern Ireland, and that the UK is not afraid to take such an action.

But what exactly is Article 16 and what does it mean?

What is Article 16?

‘Article 16’ can be found within the Northern Ireland Protocol, the part of the UK-EU Withdrawal Agreement that dictates trade between Great Britain, Northern Ireland and the Republic of Ireland. The ‘Protocol’ means that following Brexit, Northern Ireland remains within the European Single Market, but within the same customs territory as the rest of the United Kingdom. This was presented as a workaround in 2019, in order to prevent a hard border on the island of Ireland, between the North and the Republic.

Article 16 of the Protocol explains that if the significant changes to GB-NI-RoI trade presented by the Protocol were to result in “serious economic or environmental difficulties that are liable to persist, or to diversion of trade”, then either the UK or the EU are permitted to take unilateral measures to safeguard against this. This could be seen as some form of an insurance policy, to reassure both parties that the Northern Ireland Protocol won’t impact ‘that much’, and if it does then you can protect against it.

Tensions have already been rising, as the EU restricts the movement of chilled meats entering the Single Market from non-EU members . There was a grace period on EU Exit for GB-NI chilled meats, to allow adjustment, but this was to end on June 30th. The UK-EU agreed and extension to September 30th 2021, and have been in limbo since then…

Unfortunately, there are no concrete definitions for what classes as “serious economic or environmental difficulties”, or diversion of trade, leaving the issue ambiguous. The UK Government is increasingly of the opinion that the Protocol has led to a significant diversion of trade between Great Britain and Northern Ireland, while the EU does not believe that the threshold for safeguarding measures has currently been reached.

What happens if Article 16 is triggered?

If the UK does decide that the trade diversion has reached a critical point, and decides to trigger Article 16, then under the Protocol the UK Government will be required to notify the EU of its intentions to unilaterally implement safeguarding measures.

Both parties would then have to try and find an agreement to avoid these measures, but if no agreement can be found then the UK could unilaterally implement measures that make trade between Great Britain and Northern Ireland easier.

Government laid out its position on the future of the Protocol in a ‘Command Paper’ earlier this year, including the desire to reduce requirements for certain certificates for food products moving between Great Britain and Northern Ireland.

In response, the European Union could challenge the UK’s Article 16 actions and could then be permitted to respond with ‘rebalancing measures’. These could theoretically include withdrawing benefits of the EU-UK Trade and Cooperation Agreement (TCA) and result in new tariffs being applied to UK goods being imported to Europe.