The Windsor Framework, a new Protocol on Ireland and Northern Ireland trade relations
Publication date: March 01, 2023
This week, on February 27th 2023, the European Commission and the Government of United Kingdom had reached an agreement. The Windsor Framework, as it is named, is a new way forward for the Protocol on Ireland and Norther Ireland and is aimed to protect the Good Friday Agreement of 10 April 1998, including its subsequent implementation agreements and arrangements, in all its dimensions and in all its strands.
This new way forward rests primarily on new data sharing agreements, arrangements on customs, agri-food, medicines, VAT and excise, State aid / subsidy control, as well as specific instruments designed to ensure that the voices of the people of Northern Ireland are better heard on specific issues particularly relevant to the communities there. This new way forward differentiates between goods that are at risk of moving to the EU Single Market, and goods that are destined for final consumption in Northern Ireland. Building upon this distinction, the new way forward sets up two ways for goods to move from Great Britain to Northern Ireland. From this perspective, goods at risk of entering the EU Single Market will remain subject to full EU customs and Sanitary and Phyto-sanitary (SPS) procedures.
Alternatively, for goods staying in the UK, trusted traders will be able to use new arrangements to move goods from Great Britain to Northern Ireland smoothly. This is in particular made possible by new data sharing arrangements, mostly based on standard commercial and transport data. Therefore, in most instances, controls would only be performed if a risk is assessed or abuse detected. Deliveries of consumer parcels are part of the overall solution.
This new approach will resolve the practical challenges faced by business and citizens.
What are actions that have been agreed?
Customs/Movement of goods
In this matter, with an expansion of trusted trader scheme, the Agreement is to dramatically simplify procedures related to the movement of goods. Goods moved by trusted traders from Great Britain to Northern Ireland that are not at risk of entering the EU Single Market are the benefited of this measure. Both freight and parcels will benefit from this action, but even more in parcels between consumer-to-consumer because it will benefit from a waiver of essentially all customs requirements. To benefit from these customs facilitations, traders must become trusted traders. For this, traders must register with the relevant UK authority, fulfilling all relevant conditions, while also providing a detailed list of the products they usually transport. Also this option had been granted to not only North-Irish-companies but to Great-Britain-Companies.
On the other hand, goods destined or with risk of entering the EU will be subject to full customs checks and controls.
To protect the EU Single Market in the customs area some safeguards will be imposed. The EU will have near real-time access to the relevant UK customs databases and IT systems used to record movements of goods between Great Britain and Northern Ireland. In case of risk goods can be stopped and checked. EU can suspend the entire scheme in case of the trusted trader scheme is seriously mismanaged or if EU has no longer access to such databases and IT systems. This system is expected to be in place around September 2023 for customs.
Agri-food
As well as with customs, new and simplified rules and procedures for the entry into Northern Ireland from Great Britain of certain agri-food goods for final consumption in Northern Ireland had been agreed. First, use of a general single certificate for mixed loads of agri-food goods. The identity checks are going to be drastically reduced, down to 5% when all safeguards are in place. UK public health standards are going to be applied to goods moved for end consumption in Northern Ireland. Some goods, such as chilled meats, are now allowed. Certificates for organics and wine will be removed. Also the possibility to move international goods to Northern Ireland through Great Britain when UK conditions are identical to EU ones.
For certain plants for planting and agricultural or forestry machinery to move to Northern Ireland from other parts of the UK, the Commission and the UK government have agreed to use a special plant health label. The previously prohibited seed potatoes can now be moved from Great Britain bearing a plant health label, be dispatched by authorized operators and be subject to inspections.
Several safeguards have been agreed to protect the integrity of the EU Single Market:
- UK is constructing operational SPS Inspection facilities and provide EU representatives with access to relevant UK IT databases, SPS deployment is going to be gradual: 1 October 2023 for the delivery of enhanced facilities and 1 July 2025 for the delivery of final facilities;
- Labelling “not for EU” will ensure that products remain in Northern Ireland, labelling at different levels: individual, box, shelf signs and posters. The labelling is going to be gradual but as for 1 July 2025 all retail goods will be individually labelled except those not subjected to official controls at border control posts in the EU;
- Monitoring of the movement of retail goods, traceability and listing of the dispatching and receiving authorized establishments;
- Possibility to suspend partly or fully the facilitations to address specific problems or systematic failures of compliance with the new arrangements.
While UK public health standards will apply to goods entering Northern Ireland from Great Britain, EU requirements for animal health and plant health remain fully in place.
Pets
Only a simple pet travel document and a declaration by the owner that the pet will not go to the EU will suffice.
VAT and Excise
The Commission and the UK government have agreed that the UK can apply reduced VAT rates on goods supplied and installed in immovable property located in Northern Ireland. UK can also apply reduced VAT rates to a higher number of categories of goods than allowed under EU law. However, UK does not need to apply the special EU VAT scheme for small enterprises in Northern Ireland. When the UK applies its own VAT exemption scheme for small enterprises, they will still need to respect EU rules on the annual turnover threshold. Respecting the EU rules on the annual turnover threshold will ensure that larger enterprises in Northern Ireland cannot be considered as small enterprises and thereby benefit from VAT exemptions.
In the excise area UK may be able to tax all alcoholic beverages based on their alcoholic strength in Northern Ireland but UK will not be able to apply any duty rate below the EU minima. The UK will also be able to apply its own small producer’s scheme for alcoholic beverages in Northern Ireland. The respect for EU minima rates has a central role in this area.
Furthermore, signatories have agreed to establish an Enhanced Coordination Mechanism. This mechanism will review new EU acts in the areas of VAT and excise and their application in Northern Ireland. The mechanism is set up pursuant to Article 164(5)(c) of the Withdrawal Agreement and Article 8 of the Protocol.
State Aid
In this matter, the Commission and the UK government have agreed a Joint Declaration setting out an understanding of the implications of subsidies granted by UK authorities on trade between Northern Ireland and the EU. The EU can only give subsidy when it has a real foreseeable effects on trade between Northern Ireland and EU, not merely hypothetical or presumed.
Tariff rate quotas
Northern Ireland companies will now be able to use the EU’s TRQs for steel, providing them access to UK-origin steel in these categories. This will allow them to avoid having to pay the 25% tariff linked to the EU safeguard measures currently in place for steel imports into the EU.
Governance
Concerning the governance a new emergency mechanism has been created, the Stormont Brake. The Stormont Brake will allow the UK government, at the request of 30 Members of the Legislative Assembly in Northern Ireland, in the most exceptional circumstances, carry out a unilateral UK Declaration to stop the application of amended or replacing provisions of EU law. The precise conditions under which the Members of the Legislative Assembly can trigger the process are outlined in the UK unilateral declaration on involvement of institutions of the 1998 Good Friday (Belfast) Agreement and in the new Article 13(3a) of the Protocol.
After the UK has notified the EU that the brake has been triggered, an exchange of views will take place in the Joint Committee on the implications of the amended or replacing act for the proper functioning of the Protocol. If the Parties cannot agree either to add an amended or replace act or to other measures to ensure the proper functioning of the Protocol, the EU can take appropriate remedial measures, as is the case under Article 13(4) of the Protocol.
Stakeholder engagement
The Commission will introduce enhanced measures to deepen engagement with people and businesses in Northern Ireland. In particular, the Commission will be guided by the Commission Work Programme to identify specific Protocol-relevant measures for which space for intensified engagement with Northern Ireland stakeholders will be created.
In order to strengthen engagement between authorities, it has also been agreed to set up new structured sub-groups to support the work of the Joint Consultative Working Group to discuss aspects of relevant measures. Stakeholder input will be crucial to inform any discussions in the structured sub-groups. Thematic sub-groups will support the Joint Consultative Working Group. They will be composed of officials of the European Commission and of the Government of the United Kingdom.
Medicines
The new arrangement will ensure that novel medicines will be authorized and placed on the market in Northern Ireland in accordance with UK rules and UK authorization procedures only. A special labelling “UK only” will be placed on individual packs of all medicines on the Northern Ireland market to monitories and be sure that this medicines do not end up on the market on any EU Member State.
In resume
In conclusion, this Agreement has clearly been made to make life easier for the people of Northern Ireland. These measures are intended to avoid a return to the situation before the Good Friday Agreement and to avoid creating a hard border between the two parts of the island. Perhaps this protocol could be used as an example for a hypothetical agreement on Gibraltar.
In any case, and following the dynamics of the Agreement itself, it should be taken with a pinch of salt. Many measures have been put in place in case the other party does not respect the agreement. Perhaps this denotes a high degree of mistrust between the two sides, despite the goodwill that may exist. We will keep an eye on how the matter unfolds and whether the agreed deadlines and methods are met. If so, it will make life in the region much more normal and create a predictable framework in which business can flourish.
