The Windsor Framework Summary
The British Irish Chamber of Commerce has welcomed the publication of the new post-Brexit arrangements for Northern Ireland commonly known as the Windsor Framework. The Chamber held the view that specific arrangements for Northern Ireland were always needed to ensure that no physical border on the island of Ireland would be erected for customs purposes. Equally we were very aware of the practical flaws of the Northern Ireland Protocol, and we believed it was appropriate that pragmatic changes be made. In our view, the Windsor Framework alleviates the greatest trade impositions between Northern Ireland and Great Britain. While Northern Ireland will continue to follow EU rules for goods, the new framework outlines the new process for GB- NI trade, State Aid Regime and VAT. In addition, the Framework significantly addresses the ‘democratic deficit’ associated with the Northern Ireland Protocol.
- The Agreement and Legal Texts can be found
- The Questions and Answers guide from the European Commission can be read
- The Chamber’s Press Release can be read
The key areas of change outlined in the Framework include:
- Great Britain to Northern Ireland Trade (Green and Red Lanes)
As expected, goods coming into Northern Ireland from Great Britain will now be divided into two separate trading lanes. The Red Lane will apply to goods that will move beyond Northern Ireland or at risk of doing so. Goods that go through the red lane will have to adhere to full customs procedures. If companies retrospectively show that their goods did not move to the single market, then they will be able to avail of a new tariff reimbursement scheme.
A Green Lane is to be established for goods moving from Great Britain to Northern Ireland only. A new Trusted Trader Scheme (UK Internal Trade Scheme) open to all British Businesses will be established. Businesses who register with this scheme who are selling goods from GB to Northern Ireland will no longer (with minimal exceptions) be required to provide customs codes or supplementary declarations, only standard commercial information will be required. To qualify as a trusted trader, traders must register with the relevant UK authority, fulfilling all relevant conditions, while also providing a detailed list of the products they usually transport.
The UK has agreed to share live data with the EU on movements of goods from Great Britain to Northern Ireland. This real-time customs data is necessary for the EU to carry out a proper risk assessment and, if necessary, request the UK authorities to carry out specific control measures on that good.
People from Northern Ireland who order parcels and deliveries from Great Britain will no longer require customs paperwork. Instead, the UK has agreed that authorised parcel operators will manage a process of sharing data, in batches, to monitor and manage any risks of smuggling into the EU market. This will mean Northern Ireland citizens will uniquely be able to receive parcels from both the UK and EU without burdens.
- State Aid Regime
Under Article 10 of the Protocol, any UK subsidy decision that would impact on Northern Ireland’s goods trade giving Northern Ireland an undue advantage must be referred to the EU Commission for approval. Although Article 10 is still in place, there are now a stringent set of tests before it could be referred to the Commission. Based on past trends only 2% of subsidies would be required to be referred to the Commission.
- VAT Regime
- The UK can now apply reduced VAT rates on goods supplied and installed in immovable property located in Northern Ireland (as currently applied in Great Britain), even if the applicable UK VAT is below EU minimum rates.
- The UK does not need to apply the special EU VAT scheme for small enterprises in Northern Ireland.
- The Commission and the UK government have agreed to explore the establishment of a list of goods not being at risk of entering the EU and which would not be subject to EU VAT rules.
- Excise Regime
- The UK may now be able to tax all alcoholic beverages based on their alcoholic strength in Northern Ireland and to apply reduced excise duty rates to all alcohol and alcoholic beverages served for immediate consumption in hospitality venues.
- The UK will have to respect EU minimum duty rates.
- A specialised committee (the ’Enhanced Coordination Mechanism’) will review the application in Northern Ireland of new EU VAT and excise laws.
Through this Framework, the EU has agreed that UK public health and safety standards will apply to retail food and drink within Northern Ireland. In essence, this means if the product is available in Great Britain, then it will be available in supermarkets in Northern Ireland. These products must phase in labels by 2025 stating that a product is ‘not for EU’.
The bureaucratic burden associated with agri-trade has also been significantly reduced with the use of a single certificate for mixed loads of agri-goods, moving away from multiple certificates and veterinary inspections. Physical checks are to be carried out on an ‘at risk’ approach and standard intelligence approach. Only 10% of lorry’s will be subject to visual inspection by 2023 and 5% by 2025 when labelling requirements are fully in place. According to the EU Commission “There is no dual regulatory regime. While UK public health standards will apply to goods entering Northern Ireland from Great Britain, EU requirements for animal health and plant health remain fully in place. This is necessary to prevent any risk of transmissible diseases on the island of Ireland and such diseases spreading to other parts of the EU Single Market”.
In terms of safeguards to protect the Single Market, the UK is constructing operational SPS Inspection facilities and will provide EU representatives with access to relevant UK IT databases.
Plants and Seeds
Instead of full EU certification, all plants and seeds will now move under the already existing UK-wide plant passport scheme. Previously banned seed potatoes will once again be available from other parts of the UK while remaining prohibited in Ireland. They will be labelled and dispatched by authorized operators.
- Addressing the Democratic Deficit
The framework has increased powers for the Northern Ireland Assembly, allowing it to pull an emergency brake on new EU customs, goods, and agriculture rules that are to be applied in Northern Ireland within the scope of the original Protocol. Under what is being referred to as the “Stormont Brake”, should 30 MLAs from two or more parties vote to block the application of a law, the matter will be referred to the UK and the EU for further talks. Should the UK decide that the law should not be implemented in Northern Ireland, against the wishes of the EU, the EU can take counter measures.
The scope for the brake to be pulled is narrow; MLAs must state their reasonings for using the mechanism and it should only be used if it is to cause “a significant impact specific to everyday life that is liable to persist”.
The role of the ECJ has been maintained under the Windsor Framework, however the UK Government has highlighted that with the new Green-Lane/Red-Lane approach, the number of EU laws that apply in Northern Ireland are far less than before.
The “Stormont Break” will be subject to international arbitration rather than the ECJ.
Existing structures exist under the protocol for the EU and UK to settle disputes before they are referred to the ECJ.
- Horizon Europe
The UK has been blocked by the EU from associate status to Horizon Europe, the €100bn research funding programme, due to disputes over the protocol. The Chamber has consistently called for the EU to allow the UK’s associate status, including being a signatory to the ‘Stick-to-Science’ campaign, urging the EU to separate politics from science.
Though not included in the text of the Windsor Framework, in the press conference announcing the deal President von der Leyen stated that “the moment it’s implemented, [she would be] happy to start immediately – right now – work on an association agreement, which is the precondition to join Horizon Europe”.
- What happens now.
The framework will be approved by the EU-UK joint committee in March, following which both the UK and the EU must enact legislative measures to enact it into law. This will include a vote in the House of Commons in the UK and aspects of the framework must be approved by the European Parliament and the 27 member states.