Written by William Bain - Head of Trade Policy, British Chambers of Commerce
Trading on Trust
The Windsor Framework will have significant impacts for firms sending goods between GB and NI (and some impacts on NI-GB goods movements), which, if converted into domestic and EU legislation, will require several transition points between this spring and summer 2025.
The Protocol on Ireland/Northern Ireland is that part of the EU-UK Withdrawal Agreement which provides the legal basis for NI-GB, GB-NI and NI-EU trade and is required to maintain an infrastructure-free land border on the island of Ireland.
One of the ways in which this was maintained was to provide NI firms with friction-free access to the EU Single Market, avoiding customs and VAT barriers whilst retaining NI’s role within the UK VAT and customs territories.
Over 300 specific pieces of EU law were given effect in NI via the Protocol, to ensure that many of the industrial and agri-food goods made in NI and sold in the EU Single Market would be produced in accordance with EU legislation, thereby avoiding the requirement for any checks.
In doing so, the EU was prepared to extend to NI one of its four Single Market freedoms – free movement of goods – as the minimum policy measure to sustain an open land border and NI-ROI trade in many sectors.
The Issues
The issues which emerged were in relation to the resulting checks and paperwork required on goods moving from GB to NI as a result of the application of EU VAT law, the Union Customs Code, and particularly EU food safety, hygiene and marketing rules.
Problems emerged in several areas:
The requirement for supplementary customs declarations on GB to NI goods movements.
An export health certificate being sought for each individual product of animal origin or plant product, potentially running to hundreds of EHCs per vehicle and preventing some GB food products from being marketed in NI at all (such as chilled sausages).
Customs declarations being required for each postal packet or parcel being sent either from businesses or consumers in GB to customers, firms, friends or family in NI.
A bar on the marketing of UK-alone authorised medicine products in NI.
Potential restrictions on the supply of GB sourced steel in NI.
The application of UK VAT and Excise policy to reduce the cost of certain goods in hospitality and Net Zero transition sectors.
The scope of EU rules on permitting subsidies within the GB subsidy regime also being applicable in NI.
Discussions on all these areas were held over many months between the UK Government and the European Commission.
A complex sequence of bilateral and in some cases UK unilateral easements reduced the impact of these GB-NI trade requirements, but the need for a durable solution to provide certainty for GB and NI businesses was seen as a priority, not least by the British Chambers of Commerce, and the Northern Ireland Chambers of Commerce and Industry.
Apart from a few cases mainly in connection with VAT, the Windsor Agreement does not remove the EU legislation applicable in NI, but it creates a balanced method of overlaying new requirements on how it will operate in practice between GB and NI, through a mixture of amendments to relevant EU law, to the Protocol itself, and various Joint and Unilateral Declarations from both sides.
Timings are to be confirmed, but the EU could begin making the necessary changes to its legislation (eg. on the UCC, and SPS) by the end of April, with the Joint Committee (under the Withdrawal Agreement) likely to support the other key changes involving both sides, and taking note of any Unilateral Declarations being made.
One of the main ways in which trade will be facilitated across the Irish Sea is through real-time EU access to HMRC data on products and consignments moving from GB to NI. Monitoring of this data, and the ability of the European Commission to request real-time action by HMRC in respect of specific questionable consignments, fulfils the need of the EU to be able to control those goods at risk of entering the Single Market.
This is achieved by the creation of a green lane (with minimal checks and paperwork) for goods destined for end usage or consumption in NI, and those goods at risk of entering the EU Single Market, which will pass through the red lane and undergo full EU customs and SPS checks.
Trusted Trader Schemes
There are 3 forms of trusted trader schemes involved in the Windsor Framework proposals.
1. Customs processes for goods sent from GB to NI by haulage or freight.
The first scheme is due to be in place by September 2023 and will involve a reduction in the number of information fields on transaction documents for customs purposes, down from 80 to around 20. The requirement for supplementary customs declarations will be removed from goods moving by haulage or freight from GB to NI. Neither will safety and security certificates be required when the deal is fully implemented. The Trader Support Service (TSS) will continue to support some traders in NI; however we also expect that the reduced requirement will be able to be accessible to the freight forwarding and customs brokers in GB that support traders moving goods to NI.
This first trusted trader scheme will be open to GB based companies in good (financial) standing with HMRC. For example, traders with a duty deferment waiver and authorisations for special procedures should be eligible.
2. Arrangements for authorised GB operators in the courier, parcel delivery or online platform sectors to send goods with minimal paperwork to customers in NI.
The second scheme is intended to apply to B2C and B2B despatch of postal packets and parcels from GB to NI. It will apply to approved fast parcel operators, online platforms, courier and postal services. Individual firms will supply reduced levels of information to these approved operators when sending goods by these means and the operators will engage with HMRC regarding the necessary data to be sent.
3. Checks on plant products or products of animal origin (meat, fish, eggs, composite, or dairy products) being sent over from GB for consumption by end users in NI only.
The third scheme is a permanent form of the STANMI easements, which applied since the introduction of the Protocol in early 2021. It will cover approved firms who apply for a reduction in the level of paperwork and checks accompanying movements of SPS goods (plant products and products of animal origin) between GB and NI.
Firms in this scheme will need to prove the provenance and traceability of their SPS goods and attest to the meeting of UK public health standards for goods destined for end use consumption in NI. Goods will have to be marked, and by July 2025, all retail products other than loose fruits and vegetables will have to be individually labelled "Not for EU,” signifying that they will only be used or consumed in NI.
At the same time, the frequency of identity checks on these goods will be reduced to risk-based levels of around 5% of consignments. A single certificate will be able to cover mixed loads of many SPS items in trucks and lorries moving from GB to NI.
Documentary checks of these certificates will be performed electronically for users of the trusted trader scheme. This means the same products on sale by GB-based retailers will be able to be sold in NI retail establishments.
We are eagerly awaiting detailed guidance from HMRC and Defra on the operation of these schemes and their introduction timelines.
Further Changes
A further customs change is that the requirement for Exit Summary Declarations on goods moving from NI to GB will be removed for qualifying goods under the “unfettered access” promise for NI manufactured goods moving into other parts of the UK Internal Market. Further details will be provided by the UK Government on the decisions required in terms of West-East trade across the Irish Sea.
Additional changes include the removal of NI from forthcoming small business changes in EU VAT rules, the application of UK VAT and excise rates to certain beers served in hospitality premises, and to green goods sited on immoveable property (eg. heat pumps). Amendments to certain consequences from EU State Aid law in NI broaden the range of permissible subsidies which the UK Government can make in respect of NI.
NI will also have access to the EU Tariff Rate Quota on steel which should facilitate movement of steel products from GB to NI without running the risk of 25% tariffs being applicable to these goods.
Finally, the issue in relation to access by NI citizens to medicines authorised by the UK regulatory system should be met by the terms agreed by both sides.
In conclusion…
The deal is complex, and its implementation in a business-friendly way will be crucial.
Several political steps must be resolved before all the legislative and policy decisions involved come into force.
Keep in close contact with Chamber Customs, British Chambers of Commerce and your local Chambers over the next few months to ensure you have the right information to help your business trade with customers in NI.