What the government is proposing to remove trade barriers from the Irish Sea
The UK has tabled national legislation to unilaterally overturn parts of the Northern Ireland Brexit Protocol that introduced trade barriers in the Irish Sea. Here is what the government is planning:
Under the protocol, goods transported from Britain to Northern Ireland are subject to additional checks and formalities, regardless of their final destination.
The government now intends to create green and red channels to differentiate goods that remain in Northern Ireland from those destined to move across the Irish border into the EU.
Goods arriving through the green lane would move without customs or regulatory formalities, while the requirements of the protocol would continue to apply to products in the red lane.
Goods prohibited under the protocol, such as certain types of plants and seeds, would be allowed to travel into NI through the Green Channel, as long as they remained in the region.
Red channel goods shipped to NI should still apply EU customs codes and, where applicable, undergo single market agri-food checks.
The government would verify these customs and regulatory processes and share the data with the EU.
In order to use the green channel, a business would need to join a Trusted Trader Scheme (TTS) established in the UK.
All businesses would be eligible for the program provided they provide enough information to help track their operations and supply chains.
HMRC would audit and assess compliance with the TTS and provide this monitoring data to the EU in real time.
The legislation will also provide “severe” penalties, both civil and criminal, for abuse of green lane provisions.
Certain goods deemed to be more at risk will still be subject to checks whether or not they remain in Northern Ireland. This category includes live animals – but that was the case even before Brexit, with the island of Ireland long treated as one entity on certain biosecurity issues.
The UK proposes the creation of a new biosecurity assurance framework to facilitate EU/UK cooperation on high risk goods.
Non-commercial goods such as post and parcels, which require customs documentation under the protocol, would automatically go through the green channel under the UK plan.
– Dual regulatory framework
Under the protocol, Northern Ireland remains in the EU’s single market for goods, meaning products sold in the region must comply with the bloc’s regulations. Any future changes to EU regulations apply in Northern Ireland, but not the rest of the UK.
The government is proposing a new framework under which goods can be sold in Northern Ireland if they meet UK rules or EU rules, or both.
Products destined for the EU single market will still have to comply with applicable EU standards.
However, the government wants to ensure that products made to UK standards can be sold in Northern Ireland, even if they do not comply with EU rules.
Under this plan, products made in NI could be sold freely in the rest of the UK, whether they apply EU or UK standards.
– Changes to tax and expense rules
Under the protocol, Northern Ireland is treated differently to the rest of the UK when it comes to certain state aid and VAT rules.
This means that government grants paid in Northern Ireland must remain within the limits set by the EU.
While Northern Ireland continues to be part of the VAT and excise territory of the UK, policies in the region must comply with EU single market rules on goods.
This means that government changes to VAT and excise in the rest of the UK do not necessarily apply to NI.
A recent example saw residents of Northern Ireland unable to benefit from a scheme announced by the Chancellor offering £300 in VAT relief for the installation of solar panels.
The government wants to remove these restrictions on tax and spending rules in Northern Ireland.
Both the EU and the UK have made subsidy control commitments as part of the wider Brexit trade deal, with the UK’s commitments enshrined in the Control Act 2022 grants.
The government wants Northern Ireland to be covered by this law, rather than EU rules, so that state aid policies can be developed across the UK.
While the Government wants to retain the general principles of the VAT and Excise Protocol, it wants to add flexibility to allow it to adapt or remove the rules to ensure Northern Ireland is covered by changes to UK-wide politics.
– New methods of governance
The role of the European Court of Justice (ECJ) in monitoring the protocol has proven controversial.
The government says it is unfair that the final arbiter in any future protocol-related trade dispute is the ECJ.
The UK wants to change the terms of dispute settlement, removing the ECJ as the final arbiter and replacing it with an independent international arbitration mechanism.
The government also wants UK courts to oversee the operation of the protocol regime in Northern Ireland.
He still envisions a referral procedure in which the CJEU would retain a role for issues specific to EU law.