Brexit Update: 20th March 2020

23 March 2020

Cian Hassett, Global Graduate London, Bord Bia – The Irish Food Board

On Friday March 13th,the European Commission’s DG SANTE – DG for Health and Food Safety, organised an Advisory Group on the Food Chain and Animal and Plant Health in relation to the withdrawal of the United Kingdom from the EU. The meeting focused on the Protocol surrounding Ireland and Northern Ireland. Since 1st February 2020, the UK has been a third country. The Protocol IE/NI provides a legally operational solution to avoid a hard border on the island of Ireland while safeguarding the integrity of the Single Market and it is not open for renegotiation. The protocol enters in application at the end of the proposed transition period. According to the Protocol, Northern Ireland will remain aligned to a limited set of rules that are essential for avoiding a hard border between Ireland and Northern Ireland, such as The Union’s Customs Code (UCC) and other customs legislation, EU rules on VAT and excise in respect of goods, EU rules on product standards and sanitary and phyto-sanitary rules and EU state aid rules.

While Northern Ireland will remain part of the customs territory of the UK, customs checks and controls will apply for goods moving from Great Britain to Northern Ireland. That ensures that no customs checks or controls are required between Northern Ireland and the Republic.

The deal sets out the conditions under which goods can move tariff-free between Great Britain and Northern Ireland and at the same time move without customs controls between Northern Ireland and the Republic. The Joint Committee will decide on detailed criteria for what goods are “at risk” of being shipped on to the EU and will therefore have to pay the EU tariff. The definition of “at risk”, which will be agreed during the transition, will determine the volume of GB–NI trade where checks are required.

Some of the key takeaways were:

  • According to Article 5 of the Protocol, no customs duties shall be payable for a good brought into Northern Ireland from another part of the United Kingdom by direct transport unless that good is at risk of subsequently being moved into the Union, whether by itself or forming part of another good following processing.
  • Likewise, goods from third countries entering Northern Ireland will be subject to the UK tariff unless they are at risk of being moved to the EU. For goods deemed “at risk”, the EU tariff will be applied. If the UK tariff is lower, and those goods are proved to have stayed in Northern Ireland, the UK can reimburse traders.
  • If the UK and the EU agree an FTA, and assuming that it covered all goods, this would eliminate the need for tariffs on GB exports to NI. However, it would not fully eliminate the need for customs checks. In a UK-EU FTA, only goods originating in the UK would qualify for duty-free access to the EU.
  • In order to avoid the need for regulatory checks in Ireland, Northern Ireland will have to stay in line with EU standards.
  • All goods departing from Northern Ireland to Great Britain or a third country will have to undergo the same procedures as exports from Member States.
  • All goods produced and marketed in Northern Ireland will have to comply with EU standards.

Border Operating Model Update

On Tuesday March 17th, HMRC and the UK’s Border Delivery Group had a call to discuss the UK’s Border Operating model. Below are the key takeaways that came from this call.

A Level 1 border operating model is due to be published at the end of March.  The Border Delivery Group (BDG) are waiting for a definite slot for launch but it is still likely to be end of March.

The model will cover the policy and process requirements for GB-EU trade. It will not cover the NI border. The model will cover the core requirements for importing, including:

  • Customs declarations
  • Duties
  • VAT
  • Facilitations
  • There will be process maps detailing what needs to be done at the border.

There will also be some digital products to help businesses go through the end-to-end process of importing/exporting. These will be tested with industry in coming weeks. A representative of freight forwarders during the meeting said that the government should consider using existing models that traders are already familiar with, such as transit. The release of the UK Global Tariff should provide more clarity on these issues once it is released.

Brexit transition deadline in doubt as talks called off.  The next round of Brexit negotiations has been cancelled as expectation grows in Brussels and London that the standstill transition period will be extended beyond its December 2020 deadline owing to coronavirus disruption. In a statement on Tuesday, the British government said: “we will not formally be convening negotiating work strands” on Wednesday as planned, although it intended to publish a draft free trade agreement “in the near future”. Boris Johnson is publicly committed to winding up the transition period at the end of the year — his government would have to change UK law to extend it — but negotiators on both sides believe a delay is coming. EU diplomats said that as well as negotiations being disrupted — starting with planned talks next week — the pandemic would make it hugely difficult for Britain to prepare for new trading conditions. Even an agreed “Canada-style” trade deal would require British companies to prepare for a new era of extra costs and complex paperwork from January 1st, 2021, just as they were struggling to cope with effects of the virus.

Key Dates

18th-19th June 2020: UK/EU summit to discuss progress on trade deal

30th June 2020: Deadline for the UK and EU to extend the transition period

31st December 2020: If a trade deal has been agreed by this date, new relationship with EU starts. Otherwise, the UK exits transition period without a trade deal.

31st December 2022: Last date to which transition period can be extended

Source: Bord Bia