How the Windsor Framework is changing trading arrangements in Northern Ireland

After months of secret negotiations, the UK and the EU released the text of their new deal on Monday to refine post-Brexit arrangements for Northern Ireland.

Over 100 pages in total, the agreement – known as the Windsor Framework – sets out ways to improve the functioning of the so-called Northern Ireland Protocol, which has soured relations between the EU and the UK and destabilized politics in the region.

While Northern Ireland continues to comply with EU rules on trade in goods, the new Implementation Agreement sets out processes for trade, state subsidies and value added tax policies to reduce the impact of the Irish Sea trade border created by the original agreement.

While Northern Ireland remains subject to EU law in areas where it applies in the region, the deal takes steps to address concerns expressed by the mainly Protestant union community that the protocol has undermined the UK’s constitutional integrity.

The new framework aims to improve the functioning of the protocol in five key areas:

Trading business: red-green stripes

Goods imported from the UK into Northern Ireland will now be divided into two classes: those destined for Northern Ireland (green belt) and those destined for Ireland and the EU single market (red belt).

The EU said businesses that sign up for the Trusted Trader Program and take advantage of the green belt will see an “unprecedented reduction” in customs formalities. Goods in the red belt will have to go through full customs, food and animal health checks.

For agri-food products, the most controlled commodities, the EU will accept UK public health standards, meaning fresh meat and other goods will be allowed to enter Northern Ireland. They have to wear “not for the EU” labels.

As the labels will be introduced between now and 2025, the percentage of parcels subject to identity checks will drop to 5%. The UK has agreed to share customs data with the EU in near real time so that it can detect evidence of fraud and take corrective action if necessary.

UK Prime Minister Rishi Sunak said the changes “removed the sense of border in the Irish Sea”, while an EU official spoke of a “dramatic reduction in the number of checks”.

Parcels to friends or family and online deliveries from the UK will not require customs formalities, ending another major source of nuisance for Northern Ireland residents. Businesses using approved parcel carriers will have simplified customs procedures.

Importers of certain types of UK-produced steel in Northern Ireland have had to pay tariffs since last year when the EU changed its quota rules. The agreement also addresses this issue in particular for steel.

A diagram showing the Windsor framework for trading

State aid and VAT

According to Art. Pursuant to Article 10 of the Protocol, any subsidy decision by the United Kingdom which may affect trade in goods in Northern Ireland must be submitted to Brussels for approval. Britain considered this an unnecessary violation of its sovereignty.

While Article 10 remains in effect, the UK government has said “rigorous testing” will now apply, effectively removing 98 per cent of Northern Ireland subsidies from the risk of being sent back to Brussels. “This excludes all but the largest subsidies and those where companies do not have a material presence in Northern Ireland,” the UK said.

Another area of ​​difference that irritated British ministers was that Northern Ireland could not accept domestic VAT rate changes, which Sunak said was unacceptable when he was chancellor.

These will now be extended to Northern Ireland, including political charm items: some alcohol duty cuts will now apply across the UK, including beer discounts in pubs.

However, with the exception of immovables such as home solar panels, the UK is not allowed to undercut EU minimum VAT rates for now. The two sides agreed to draw up a list of goods on which the UK could impose lower rates over the next five years.

For the Commonwealth of Northern Ireland, the prospect of the region having to automatically implement large amounts of new or updated EU rules in the future, as set out in the Protocol, has long been a source of tension.

The deal aims to address this by imposing an “emergency brake” on Northern Ireland’s Stormont Legislative Assembly, which can be applied under “exceptional circumstances” if 30 out of 90 members from at least two parties vote to block the adoption of the updated EU Single Market Rule.

Under this ‘Stormont brake’, the provisions that are being challenged will not be applied until discussed by Brussels and London. If the UK decides not to implement the measures the EU still considers necessary at the request of the Northern Ireland Assembly, the bloc could take targeted “countermeasures”.

London said it would pass a law to ensure that the Westminster government would heed Stormont’s demands if and when it applied the emergency brake.

Experts have said that the circumstances in which it can be used are very specific. “It’s progress, but the new system only works when the brake is on,” said Catherine Barnard, a professor of EU law at the University of Cambridge. “The rest of the time it’s just business.”

Feel part of the Union

EU rules have created a series of bureaucratic hurdles that unionists say have cut them off from the rest of the country.

Pets had to be microchipped and passported to travel from the UK to Northern Ireland – the same rules were needed to travel to the EU. Under the agreement, pets will only need a simple travel document.

Medicines approved for use in the UK can also be sold in the region, even if they have not yet been approved in the EU.

Finally, seed potatoes and plants that are prohibited from being imported because they can transmit diseases can now move freely into Northern Ireland with a special plant health label.

Constitutional dimension: the role of the ECJ

Leading Brexiteers and trade unionists demanded an end to the jurisdiction of the European Court of Justice over Northern Ireland and the role of the ECJ as the enforcer of the Protocol.

The agreement does not achieve this; nor does it create a new dispute resolution mechanism involving international arbitration, as some leading Brexit supporters have wanted.

The UK government has argued that the new “green way” trading scheme has significantly narrowed the scope of EU law applicable in Northern Ireland, meaning that the 1,700 pages of EU law that were enforced in the original deal will no longer apply in the region.

The government added that only 3 per cent of EU rules currently apply in Northern Ireland. According to the command document: “The rules that apply are there only and only to the extent strictly necessary to maintain the unique ability of Northern Irish companies to sell their goods on the EU market.”

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