This short briefing looks at some of the cross-cutting themes that are causing supply chain disruption in the UK, how UK businesses are being affected, and the Government’s response.
Documents to download
The movement of goods between Great Britain and Northern Ireland (721 KB , PDF)
The Northern Ireland Protocol
Following the UK’s decision to leave the EU, the two sides drew up a Withdrawal Agreement (WA) that set out how the UK’s exit would work. This Agreement came into force on 31 January 2020.
The WA is separate from the UK-EU Trade and Cooperation Agreement (TCA) that sets out the UK-EU future relationship. The WA will continue to apply regardless of any future changes to the TCA.
The Northern Ireland Protocol (the Protocol) is an integral part of the WA. The Protocol sets out Northern Ireland’s post-Brexit relationship with both the EU and Great Britain (the rest of the UK). Its principal purpose is to maintain an open land border between Ireland and Northern Ireland (NI). The Protocol enables the seamless movement of goods between NI and Ireland and the rest of the EU.
Trade in goods under the Protocol
The Protocol states that NI remains part of the UK customs territory and so NI will be included in UK free trade agreements. UK authorities are responsible for implementing the Protocol in both GB and NI.
However, more significantly the Protocol states that NI must follow the EU’s rules for bringing goods in and out of the EU (the customs code) and many EU single market rules for goods, while GB will set its own customs and regulatory rules.
This approach necessitates implementing new checks and controls for goods moving both from Great Britain to Northern Ireland but also, to a lesser extent, from Northern Ireland to Great Britain. This often referred to as “putting the border in the Irish Sea”.
Consent for the Protocol from the Northern Ireland Assembly
Under what is known as the “consent mechanism”, the parts of the Protocol relating to the movement and labelling of goods, as well as VAT, State Aid, and the electricity market, will cease to operate if the Northern Ireland Assembly doesn’t give its regular consent. Its first opportunity to do so will be in late 2024.
Article 16 purpose
Article 16 is an emergency brake that allows either party to suspend parts of the Protocol in order to deal with serious difficulties.
The text of the Protocol provides more precise details. Article 16 (1) states that if the application of the Protocol leads to “serious economic, societal or environmental difficulties that are liable to persist”, or to “diversion of trade” then either side can impose “appropriate safeguard measures”. These measures, however, need to be targeted in scope and duration to directly address the problems they are trying to fix.
Article 16 process
The process that a party triggering Article 16 measures must follow is set out in Annex 7 of the Protocol. It describes a five-step process:
- Step 1: Notification: When the EU or UK are considering undertaking safeguard measures the proposing side must inform the other side through the Joint Committee “without delay”.
- Step 2: Consultation. Both parties must immediately enter into consultations in the Committee to try and find “a commonly acceptable solution”.
- Step 3: Implementation. If no solution is found the proposing side cannot implement them until one month after step 1, unless the step 2 discussions have concluded before that.
- Step 4: Provide information. The proposing side must “without delay” notify the other what measures they are putting in place and “all relevant information”.
- Step 5: Ongoing consultation. Every three months, the safeguarding measures will be discussed in the Joint Committee, with a focus on ending them and/or limiting their scope.
There is a significant exemption to this process, however, “when exceptional circumstances requiring immediate action exclude prior examination” occur, the proposing side can implement measures immediately.
How the other party can respond
Article 16(2) states that if the safeguard measures create “an imbalance between the rights and obligations under this Protocol,” the other side may take “proportionate rebalancing measures” that are “strictly necessary” to remedy the imbalance. They should prioritise measures that will “least disturb the functioning” of the Protocol.
The side introducing “rebalancing measures” must also use the five-step process above but could also use the “exceptional circumstances” clause.
Both sides could also ask the independent arbitration panel, set up under the Withdrawal Agreement’s dispute settlement process, to provide a ruling if they thought this process was being misused or misapplied.
EU Coivd-19 vaccine measures and Article 16
On 29 January the European Commission released new rules controlling the export of Covid-19 vaccines out of the EU.
Alongside this announcement, the EU said it would also trigger Article 16, to prevent vaccines potentially being sent to Northern Ireland from the EU, and then onto Great Britain.
After condemnation of this move by all of NI’s major political parties, the UK and Irish Prime Ministers, the European Commission took down the original proposal, and clarified that they would no longer plan to trigger Article 16, describing the move as an “oversight”.
Calls to trigger Article 16
Some Northern Ireland Unionist politicians were already calling for Article 16 to be triggered in early January, to stop customs controls and checks on goods moving from GB to NI that are causing disruptions to the flow of goods.
Experts have suggested such measures are not a quick fix for these problems. The EU’s aborted attempt to impose its own measures seem to have given further impetus to these calls with Arlene Foster, Northern Ireland’s First Minister, then calling for it to be triggered.
Grace periods and easing of NI trade
Joint Committee decisions and grace periods
The WA set up an EU-UK Joint Committee (Committee), to oversee its implementation. The Protocol also left some decisions on the trading of goods up to the Committee, including how and under what conditions goods could enter NI tariff-free.
In December 2020 the Committee set out a series of decisions on how the Protocol would operate in the long term.
The Committee also responded to UK requests to temporarily relax some rules that were meant to apply to NI under the Protocol. These are often referred to as “grace periods”.
The following relaxations/grace periods were agreed:
- Export declarations. Most goods being sent by firms from NI to GB, will now not require pre-departure and/or export declarations. Instead HMRC will collect “equivalent” information from sources such as shipping manifests.
- Supermarket Agri-food imports. Supermarkets and their suppliers bringing agri-food products into NI, were given a three-month grace period before they must comply with the EU’s full Sanitary & Phytosanitary (SPS) regime.
- Chilled meats. Supermarkets were given a six-month grace period before having to comply with EU SPS rules for bringing in certain types of chilled meats, such as sausages, from Great Britain to Northern Ireland, subject to conditions on labelling, certificates and transport.
- Medicines. NI was granted a year-long grace period for implementing in full the EU’s rules on testing and selling human and veterinary medicines.
Separate to these declarations, on 31 December a three-month grace period for online retailers sending parcels into NI was announced.
Despite these grace periods, there have been issues with the trade in goods between Great Britain and Northern Ireland. Part of the reason was the Committee decisions and grace periods were only announced a few weeks before the Protocol came fully into force on 1 January 2021.
Some of these disruptions, however, arise from the Protocol’s placing of checks “in the Irish Sea”, rather than at the land border between Ireland and Northern Ireland.
UK requests for further easing
After the EU’s Article 16 “oversight”, the Chancellor of the Dutch of Lancaster, Michael Gove, and UK Co-Chair of the Joint Committee, sent a letter to the EU Committee Co-Chair, Maroš Šefčovič, asking for further easing of rules for NI to help deal with delays and other problems UK firms were facing sending goods to the region. Mr Gove asked for the EU to agree to the following steps:
- Extending the grace period for supermarkets and their suppliers in time and scope, so it extends until at least 1 January 2023, and is widened to include “all relevant local businesses and services” as authorised traders, as well as a “proportionate, risk based long-term solution” for retailers;
- find a permanent solution for movement of chilled meat products from GB to NI that will be prohibited at the end of the grace period, with an extension of the grace period until at least 1 January 2023 while this is negotiated;
- extend the grace period for parcels until at least 1 January 2023 to allow for time for a “light-touch permanent solution” for parcels to be agreed, and widen this extended grace period to deal with regulations affecting the delivery of items such as organic foods and plants;
- extend the grace period for medicines for a further year at least to 1 January 2023 and sort out other issues on the movements of medicine into NI;
- find a solution to restrictions on the amount of steel that can be imported into NI tariff-free (so called Tariff Rate Quotas); and
- negotiate a bilateral arrangement to deal with barriers on pet travel between GB, NI and Ireland.
Mr Šefčovič, responded to Mr Gove’s letter with his own. He suggested that the UK was not implementing the Protocol fully, giving several examples:
- The Border Control Posts (BCPs) or Entry Posts were not yet fully operational, and that they were not performing a sufficient number of physical checks;
- packaging is not being labelled and consignments not monitored at their destination, and goods are entering without declarations or valid certificates;
- the EU had not been given full access to the UK’s customs data and systems that the Protocol requires; and
- the UK was not implementing the decision on NI firms giving “equivalent information” rather than filling out customs declarations properly.
On the requests from the UK, Mr Šefčovič stated the following:
- The EU would look at solutions to steel and tariff rate quotas;
- for chilled meats, agri-food and parcels, the grace periods would not be extended, and were offered on the basis that firms would use the time to prepare for complying with EU rules, though they could look at “pragmatic solutions”; and
- for issues with pet travel and the movement of items like seed potatoes and plants, any flexibility would require the UK to align with EU rules in these areas.
A more permanent solution to controls on animals and plants, known as Sanitary and Phytosanitary (SPS) checks, would be for the UK and EU to sign a veterinary agreement, similar to the one between the EU and Switzerland, or the EU and New Zealand.
Such an agreement would remove a large percentage of the physical and documentary checks required on live animals and agri-food products. This would be achieved, however, by dynamically aligning Great Britain to the EU’s agri-food and SPS standards. That means Great Britain would have to keep its rules the same, and accept new EU regulations and updates to existing ones. A veterinary agreement would also remove similar frictions for trade moving between Great Britain and other EU countries.
An EU-UK veterinary agreement has been advocated by NI Alliance MP Stephen Farry. While Unionist parties the UUP and DUP oppose the Protocol, members of both parties have expressed an interest in this solution. The Ulster Farmers’ Union have also said they support the idea.
It’s not entirely clear whether such a proposal would be acceptable to the UK Government or not.
Documents to download
The movement of goods between Great Britain and Northern Ireland (721 KB , PDF)
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