Boris Johnson’s government is on a collision course with Brussels over implementation of the post-Brexit deal for trading arrangements in Northern Ireland.

Last July London set out its demands for a series of reforms to the so-called Northern Ireland Protocol, but six months of negotiations after the European Commission tabled fresh proposals last October have failed to break the deadlock.

The UK government has now threatened to bring legislation to suspend parts of the protocol unilaterally if the EU does not get much closer to meeting its demands. Here we look at the central disagreements between the two sides.

The movement of goods 

To avoid a return to a hard border on the island of Ireland, it was agreed under the protocol that all goods going from Great Britain to Northern Ireland should follow the rules of Europe’s single market, including disruptive bureaucracy to ensure food products comply with EU rules.

The UK says these controls divide the UK’s internal market by creating an unacceptable bureaucratic border in the Irish Sea.

To simplify this, it has proposed that all goods destined for Northern Ireland should be allowed through a “green lane” with much-reduced checks and without the need to submit EU customs codes. At the same time, the UK accepts that goods ultimately heading for the Republic of Ireland should enter a “red lane” and face full checks.

In response, Brussels has offered some easements that it claims will reduce paperwork by 50 per cent and food-related checks by 80 per cent, but it stopped short of accepting UK proposals to submit only industry-based data on goods heading for Northern Ireland alone.

The EU has also refused to relax controls over parcels going from Britain to Northern Ireland, arguing that these must be submitted to checks because they are a known route for smugglers. The UK says this leaves consumers in the region unable to order some products from mainland Britain.

The UK also wants the EU to waive biosecurity rules that prevent Scottish seed potatoes, for example, from being exported to Northern Ireland, as well as some plants. Brussels has offered to reduce paperwork for lower-risk categories of plant, but this was rejected as insufficient by London.

The EU says it could discuss more far-reaching easements if the UK provided better-quality, real-time trade data on goods travelling from Britain to Northern Ireland. It also wants the UK to complete the building of border control posts at Northern Ireland’s ports.

However, almost all solutions to managing the border rely on the two sides trusting one other to implement the agreement in good faith. Both acknowledge such trust is in very short supply.

State aid and subsidies

The protocol required the UK government to get prior approval from Brussels for any subsidy decision that had an impact on Northern Ireland’s goods market — even if it principally affected the market in mainland Britain.

That clause in the deal, the UK government says, was conceived before the EU and the UK had reached an agreement on shared principles for subsidy control policy in their Trade and Cooperation Agreement.

But now that the TCA is in place and the UK has passed a subsidy control act, London argues that this part of the protocol can be substantially relaxed and rewritten. However, the EU disagrees and has not yet tabled proposals in this area.

Medicines

The UK complained in mid 2021 that rules in the protocol meant medicines approved for use by authorities in the UK would potentially not be equally available to patients in Northern Ireland.

The EU responded in April by unilaterally passing legislation that recognised the validity of UK-tested medicines, which Brussels said addressed the issue. Privately, UK officials told the Financial Times they were satisfied with the solution.

However Boris Johnson again raised medicines in a newspaper article ahead of a visit to Belfast on Monday. UK government officials say there are outstanding issues on some cancer drugs, and insist the EU solution is time-limited and not sufficiently comprehensive.

EU rulemaking and the European Court of Justice

The UK says it is unacceptable that the protocol is policed by the European Court of Justice, and insists that it cannot accept the EU’s top court deciding disputes between Brussels and London.

Instead the UK wants the EU to adopt a similar system to that used in the TCA, in which disputes ultimately go to international arbitration if the two sides cannot resolve them.

The commission, whose Brexit negotiating team is led by vice-president Maroš Šefčovič, argues that since the protocol leaves Northern Ireland subject to EU laws for goods trade, the bloc’s top court must be the final arbiter. Brussels has until now not been willing to formally address the question of the role for the ECJ in enforcing the deal.

A compromise solution is likely to involve the UK accepting the ECJ must give binding rulings on matters of EU law, as part of a broader dispute-resolution mechanism where both sides have equal standing.

VAT

Under the protocol, Northern Ireland follows the EU’s value added tax regime. This means that if the UK government cuts VAT — say on fuel bills to address the cost of living crisis, or on green technology as in the chancellor’s Spring Statement — citizens in Northern Ireland cannot enjoy the same benefits.

London wants to be able to set VAT rates for the whole of the UK, while trying to avoid creating distortions with the Republic of Ireland. The EU has not ruled out some new flexibilities in this area, but they fall short of UK demands.



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