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While the new arrangements are yet to be set in stone, in our ‘Unpacking the Windsor Framework’ series we will look at the joint declaration in more detail. In Part 1, our Regulatory Team look at some of the practical impacts of the proposals on the cross-border supply of goods across the Irish Sea, and what the changes might mean for regulatory alignment between Great Britain (GB) and Northern Ireland (NI) in relation to consumer goods.
We should point out that the Windsor Framework includes a number of proposals for simplified or revised rules relating to other issues such as medicines, VAT and pets, but these are not covered in this note.
All goods moving from GB to NI which are destined to be used or consumed in NI (i.e. ‘not at risk’ of moving to the EU) will be able to benefit from the new “green lane”.
Green lane goods will be subject to fewer checks and controls as they will automatically be treated as internal UK movements for tariff purposes (with no rules of origin requirements) which should significantly speed up the process of moving goods into NI; only normal commercial paperwork will be required, and paperwork checks will be minimal.
For businesses involved in moving goods that will be used for processing or manufacturing, as before, there is a turnover limit to be able to use the “green lane” (subject to some exceptions), but this has been quadrupled from the previous rules – see more below.
Any goods destined for the EU will use “red lanes”, which will apply normal EU border processes. In practice this means that suppliers who supply both NI and the Republic of Ireland (ROI) will need to split goods into different loads depending on their intended destination to be able to feel the benefits of the speedier “green lane”.
The “green lane” is available to those that are part of the new UK Internal Market Scheme.
For traders already on the existing UK Trader Scheme, the government has assured that the process will be simple – you’ll automatically be moved across once the new scheme is up and running.
New traders not part of that existing scheme will be able to register online and will have to provide information about the goods they move and their operations.
It should be noted that, as a result of the simplification of procedures and processes, the scheme will be made more robust; there will be additional requirements for trusted traders to prove that they are of good financial standing, that they have a clear understanding of their obligations under the scheme and that they are able to correctly identify the goods they move to NI.
As mentioned above, there is a turnover threshold for businesses involved in processing, but this has been increased from £500,000 to £2million, which should bring a lot more manufacturing and processing companies within scope of the new simplified scheme. There are also exceptions to this turnover rule if the goods are for use in the animal feed, healthcare, construction and not-for-profit sectors.
In contrast to the previous rules, under the proposed new rules all UK-based traders should be eligible to apply to the UK Internal Market Scheme and benefit from the “green lane”. That means you will no longer have to have a physical premises in NI. However, while the current UK guidance on the Windsor Framework appears to be silent as to any such requirement, the EU guidance says that GB-based traders will still need a customs representative in NI.
Under the NI Protocol, EU conformity markings continue to be used to show that goods meet EU rules meaning the CE marking remains valid in NI. Traders supplying goods to the NI market are therefore required to use the CE mark for most products. The UKNI mark must also be displayed alongside the CE mark if the trader has used a UK Conformity Assessment body (rather than an EU one) to test their products.
It is expected that this will continue to apply under the new Windsor Framework.
‘Not for EU’ labels will be required on various levels for agri-food retail goods that are intended for sale to consumers in NI, to inform consumers that these good are not for the EU.
This will be required at all levels from individual product packaging to shelf signs and posters.
As with all labelling requirements, the devil will be in the detail, but the current guidance from the EU says: “from 1 October 2023, prepacked meat and fresh milk will be individually labelled. Goods sold loose need only to be labelled at box level (e.g. apples) and easily visible signs would need to be placed next to the price tag on the shelves in the supermarkets.”
Labelling requirements are planned to be introduced gradually, with a current target overall deadline of 1 July 2025. Visual identification processes for lorries carrying such goods are expected to reduce in line with the labelling deadlines, with a 95% reduction in inspections expected from 2025 when labelling requirements are fully in place.
We await further practical guidance as to how these requirements will apply in practice.
The new arrangements have been welcomed by those that have distribution agreements that cover the whole of the UK. On 10 March 2023 a number of business leaders (including Coca-cola, Amazon UK and Diageo, amongst others) signed an open letter from the CBI to the Prime Minister backing the deal for the positive contribution it will make for trade flow between GB and NI.
While the Windsor Framework clearly does not address all of the complexities involved in NI-GB trade, the relaxation of some of the rules may prompt suppliers/ distributors to reflect on the way they structure their distribution agreements. For example, this may make it more practically feasible for some distributors to take on a territory that comprises the whole of the UK, rather than carving out NI due to the logistical difficulties that distributors experienced under the existing NI Protocol.
This is an emergency brake lever that can be pulled by the Northern Ireland Assembly to suspend proposed changes to EU customs, goods and agriculture rules (within the scope of the original NI Protocol). However, it can only be used where there is something significantly different about the new rule and where it can be shown that this will have a significant impact specific to everyday life for the people of NI.
The aim of this measure is to give NI a democratic safeguard to ensure that only changes that are necessary to ensure the privileged access to the EU market will apply in NI.
The EU has emphasised that this should be used under the most exceptional circumstances, as a matter of last resort. It is expected that substantive discussion will be had, and consideration given to other routes to resolution, before the Brake is triggered.
At a very high level, the Stormont Brake is expected to work as follows:
The EU will have the ability to take appropriate remedial measures in the event that the UK and EU cannot agree on a way forward that ensures the proper functioning of the NI Protocol.
In the event of a dispute between the UK and EU over the use of the Brake, the ECJ has no power – therefore, it would have to be resolved through independent arbitration according to international law (not EU law).
The Institute for Government has produced a useful flowchart on how the Stormont Brake mechanism is currently expected to operate, which can be found here.
It depends – if the rule is within scope of the NI Protocol and the Stormont Brake is applied successfully (vetoing those rules from application in the UK), then traders will not need to comply with any such changes.
However, as noted above, the Brake is only designed to apply in exceptional circumstances and is intended to protect the “people of NI” rather than the commercial interests of traders who may, for example, incur additional costs as a result of future regulatory divergence between GB and NI. While it remains to be seen how the Brake will be applied in practice, we’d suggest that traders cautiously work on the assumption that most new EU rules (or changes to existing rules) on matters such as product safety, standards and labelling will need to be complied with by UK traders in order to continue to supply their goods to the NI market.
The Stormont Brake can only be applied to new or amended EU goods rules, meaning those EU rules that are in force right now will still apply in NI and will need to be complied with in order to supply into that market.
It’s also important to note that as the Stormont Brake only applies to new or amended EU rules, it wouldn’t apply to changes made at UK level that result in regulatory divergence between GB and NI. An example would be if the UK Parliament chooses to revoke elements of EU law that were in force in the UK prior to Brexit but which, under the NI Protocol, must remain in force in NI. In such cases, the divergence from EU law would need to be confined to GB.
We can therefore still expect to see increased regulatory divergence between NI and GB over time, irrespective of whether the changes are driven by Brussels or Westminster.
Nothing is set in stone, but the UK and EU have jointly committed to implement all solutions expeditiously and in good faith.
As things stand, the deal is still subject to the necessary approval processes on both the UK and EU side. Once these processes have been finalised, the changes are expected to be implemented in a variety of ways: these include non-legally binding unilateral declarations and recommendations to be made by the EU-UK Joint Committee, but also amendments to the Protocol itself to be made through binding Joint Committee decisions, as well as proposals to change EU law.
More information as to what happens next can be found on the UK Parliament website.
Assuming that the deal goes through the UK Parliament, it has been agreed that the UK’s proposed Northern Ireland Protocol Bill will be dropped. In turn, the EU has agreed to drop its seven infringements proceedings against the UK, which relate to its implementation of the NI Protocol.
Authors: Richard Collie, Molly Efford
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.
21 March 2023
Insights 30 MAY 2023