The United Kingdom left the European Union on 31 January 2020. A transition period commenced immediately, which is due to last until 31 December 2020. During the transitional period, the United Kingdom remains subject to all EU rules as before with no apparent difference whatsoever. The principal difference is that the UK no longer participates in the EU institutions which govern it and make its laws.
The transition period can be extended by a joint decision of the EU and UK made by 1 July 2020. However, the UK has firmly committed not to extend the transitional period and has even written this principle into its laws. Therefore, the effective date of Brexit after which the UK is no longer subject to EU laws 11 pm 31 December 2020.
The Northern Ireland Protocol was agreed between the EU and UK in October 2019. It is designed to avoid customs tariffs, customs declarations and customs controls in trade between Northern Ireland and the European Union, in particular the Republic of Ireland. Effectively Northern Ireland is subject to EU rules on customs and on the regulation of goods.
The Northern Ireland Protocol necessitates checks and customs controls on goods entering Northern Ireland from Great Britain. To a lesser extent, it necessitates some controls on goods leaving Northern Ireland and going to Great Britain. The exact extent of both such checks and controls are to be agreed in an EU UK joint committee in the course of 2020.
The Protocol is due to last for four years i.e. Until the end of 2024. It may be renewed successively every four years, by democratic consent in Northern Ireland. Consent is to be expressed by a simple majority of the Northern Ireland Assembly. If consent is renewed with cross-community support, it holds for an eight-year period. The UK government has published an alternative framework for consent if the Assembly is not sitting.
If the renewal of the Protocol is rejected, then there is to be a two-year standstill period during which the Protocol continues. In this period alternative arrangements are to be found and agreed between the EU and UK in order to avoid a hard land border between Ireland and Northern Ireland.
It is likely in such an event that alternative arrangements of the type discussed prior to the Withdrawal Agreement in 2019 might be put in place. This might involve checks away from the land border. Conceivably technology to ease the process may have been developed. However, regardless of the easements that may be available, such a change would lead to significant barriers to North-South trade.
The Northern Ireland Protocol takes effect on 1 January 2021 regardless of whether there is a trade agreement between the United Kingdom and the European Union. It covers several issues affecting Northern Ireland. For present purposes, the most important is that relating to trade in goods. Its principal purpose is to avoid a customs or regulatory border on the island of Ireland.
The effect of the Protocol is that Northern Ireland remains within the scope of the European Union rules in relation to customs and regulations affecting goods. The key rights to trade with Northern Ireland and the right of Northern Ireland traders to trade with the EU are preserved in relation to goods. Accordingly, any restrictions and hidden barriers to such trade are automatically invalidated.
Goods entering Northern Ireland from Great Britain which are at risk of moving on to the European Union (in particular the Republic of Ireland), will be subject to EU tariffs and import controls. It is likely that either in 2020 or later there will be an EU UK agreement removing all tariffs so that the requirement would be limited to EU import control. This will relate largely to issues of origin and verification of compliance with various EU rules.
Where goods coming from Great Britain are not at risk of moving out of Northern Ireland, then any tariffs that may apply may be refunded. The joint committee mentioned below is to set out criteria in respect of such goods which is likely to impact on the procedures applicable to their movement from Great Britain to Northern Ireland.
The Protocol confirms that Northern Ireland is to have unfettered access to be Great Britain market. The EU customs and regulatory rules require some elements of procedures and verification in relation to goods exiting the EU, which are likely to apply to some extent, to goods moving from Northern Ireland to Great Britain. It appears that there will be no controls, declarations, tariffs or restrictions on goods entering Great Britain from Northern Ireland.
Northern Ireland will continue to be part of the United Kingdom’s customs and regulatory area for most purposes. It may have the benefit of more favourable trade agreements entered with third countries. Northern Ireland traders may sell the goods in the United Kingdom notwithstanding that equivalent EU goods might be subject to controls and restrictions. For most purposes, UK law will apply to the marketing and sale of goods in Northern Ireland.
The EU UK joint committee is to make the implementing rules in 2020, which would involve adaptation of the EU rules to reflect the requirements of the Withdrawal Agreement. If there is an EU UK trade agreement, the Protocol implementing rules are likely to be agreed upon. It appears that the EU and UK will take very different views as to how extensive the controls and procedures should be. If there is no deal, there may be a dispute about what rules are required, and they may not be made in time for the start of 2021. The UK may make and apply unilateral rules
The Northern Ireland Protocol also covers some important nontrade issues. The continued provision and implementation of the Common Travel Area are confirmed. The existing areas of North-South cooperation are confirmed. The UK is to continue to ensure that the minimum civil and human rights obligations in the Good Friday agreement continue to apply.
The Withdrawal Agreement provides for the Northern Ireland Protocol as a matter of international law. International law does not automatically take effect within the United Kingdom until translated into and made part of domestic law. Legislation has been passed by the UK Parliament which allows the detail rules to be made by ministerial order.
The Northern Ireland Protocol specifies that a long list of EU legislation being principally the legislation in relation to customs VAT, the regulation of goods and good standards is to apply to Northern Ireland. Such legislation is not capable of taking immediate direct effect by its terms as it is framed in the context with the UK as a member state which is no longer the case. It is to be updated from time to time and further adopted through the joint committee.
Upfront and on an ongoing basis, the UK is obliged to implement the provisions of the Protocol on Northern Ireland. EU officials are entitled to be present during relevant activities and request control measures to be carried out in individual cases for stated reasons which the UK authorities agree to implement.
The Northern Ireland Protocol is enforceable in the same way as EU law. Therefore, it is directly enforceable by businesses and citizens against the UK government, even after Brexit. Actions and decisions of EU agencies and bodies are to have the same force and effect as under EU law. Cases can be referred to the European Courts whose decisions are binding.
The detailed rules to give effect to the Northern Ireland Protocol on Northern Ireland are to be agreed in the joint committee of the European Union and the United Kingdom in the course of 2020. It is implicit that the rules are to be agreed and in place well before the end of 2020.
It seems clear that the rules require the creation of facilities for customs and phytosanitary and other regulatory checks and controls at Northern Ireland ports and airports. In the area of agriculture and food, border inspection posts and facilities would be required. As of early 2020, it appears the UK intends to take no steps to put such facilities in place, and its political statements emphasise that there will be ‘no border down the Irish Sea’.
The Protocol states that the relevant EU legislation is to apply under the conditions set out in the annex to the United Kingdom in respect of Northern Ireland. The EU regards incorporation of the customs code and other EU goods regulation as clearly requiring the checks and controls provided for in that legislation, albeit prospectively modified within the scope of the Protocol in the circumstances.
The UK may regard the creation of infrastructure as giving away something that might be bargained in negotiations. For its part, the EU may regard the failure to commence arrangements for customs and phytosanitary checks as bad faith. Historically the UK has complied with international law obligations and would undoubtedly wish to maintain some basis in the Withdrawal Agreement for its actions.
The Withdrawal Agreement declares that Northern Ireland is part of the UK customs union while specifying that the EU customs and other goods rules are to apply to it as if it was a member of the EU. The United Kingdom may seek to argue on what the EU would regard as very thin grounds and a pretext, that something significantly less than the requirements of the EU legislation would satisfy its obligations.
There are a number of risks in relation to the Northern Ireland Protocol taking effect and being fully effective. The Protocol and its implementation could get caught up in disputes in relation to the negotiation of the EU UK trade agreement. The Protocol cannot become effective in domestic NI and UK law, unless and until the implementing rules are agreed well before the end of 2020, and the appropriate port and airport infrastructure is put in place.
The United Kingdom is obliged under the Withdrawal Agreement to undertake the relevant checks and arrangements, and EU officials can verify compliance. There might be a dispute as to what is required and about ongoing implementation, which takes a prolonged period to go through the dispute resolution mechanism.
If the UK refuses to enforce the Protocol to the extent the EU deems necessary, the dispute would be in the international sphere at state to state level. Even if the EU is vindicated following completion of the dispute resolution mechanism, the only permitted action is by way of countermeasure taking away equivalent benefits under the agreement.
Under the Withdrawal Agreement, in common with most trade agreements, there are circumstances under which any part of it can be suspended where there is severe economic or political dislocation. These grounds may be available to the UK to justify deviation from the provisions of the Withdrawal Agreement.
Questions have been raised as to the validity of the power under which the Protocol was agreed. Noted European Union law experts have mentioned the possibility of a legal challenge on the basis that it was made under the Withdrawal Agreement power, but that is in the nature of a permanent trade agreement that should have been given effect under a different power and procedure. Even if a challenge was not successful, it could take some time to go through the courts during which, there might be doubt about the application of the Protocol.
If there is no agreement in relation to what rules the NI Protocol requires in respect of NI to GB trade and GB to NI trade , UK would have an obligation at a minimum under international law to put the measures which it interprets the agreement to require to be put in place. The EU would argue that as the EU customs code is clearly referred to, that those measures must meet the standards and requirements of the customs code itself. The UK might argue that something far less or a refined light-touch version, would suffice. The matter might then go to dispute resolution and arbitration under the Withdrawal Agreement.
The implementation of the Northern Ireland Protocol would be much more difficult if there is no trade agreement between the EU and UK in relation to goods. If there is no EU UK trade agreement in 2020, there is a distinct possibility that no agreement with been reached on the formulation of the rules to implement the NI Protocol. The issue could become part of an EU UK dispute generally around the collapse of talks with the failure to reach an agreement.
If there was an agreement on a future EU UK trade agreement, then the implementation rules required to give effect to the Northern Ireland Protocol, which are a pre-condition, are thereby likely to have been agreed. In such circumstances, there is likely to be multiple mitigation measures and concessions to ease potential difficulties in respect of areas not covered by the agreement.
The Protocol relates principally to trade in goods. If any agreement is entered between the EU and UK in 2020, it is likely to relate principally to trade in goods, for the reasons set out in other chapters. It would almost certainly eliminate tariffs on all or nearly all goods. This would simplify and reduce considerably many of the risks and matters with which the procedures and controls by the Protocol would be required to deal. In these circumstances, the degree of administration and burden of checks required in relation to goods moving between Great Britain and Northern Ireland would be significantly less.
There may be short-term mitigation if there is an agreement on goods where the reason why a more comprehensive agreement is not entered is the absence of time before the end of 2020. In addition, the Common Travel Area will mitigate some of the more significant changes, including critically those in relation to immigration for the Republic of Ireland citizens in the United Kingdom. A significant issue, however, is that many businesses involved in cross-border trade use EU 26 employees.
The existence of tariffs would make GB to NI trade more onerous. More detailed “import” declarations would be required, if there was an obligation to either pay or account for tariffs (unless it could be shown that the goods were not at risk of moving onto the EU.) In some cases, duties may be payable and refunded, which will involve significant administration and tracking. A relatively greater degree of checks and interventions at ports would be likely to be required.
In contrast, in circumstances where there was a trade agreement, the principal focus of Great Britain and Northern Ireland customs procedures would relate to the origin of the goods and regulatory compliance issues. These are issues which could be certified by the manufacturer in most cases.
The Northern Ireland Protocol is limited to trade in goods. For absolutely all other purposes, Northern Ireland leaves the European Union. It is unlikely that there will be an agreement between the EU and the UK in relation to issues other than trade in goods in 2020. Therefore, in respect of those other areas, the most likely scenario is that there will be no comprehensive agreement to cover them in place by the end of 2020.
If there is a thin EU UK agreement in respect of areas within EU competence, in particular in relation to goods, it may be expected that some short-term facilitations may be agreed to cover the position in relation to services until a longer-term agreement is put in place. In this context, there would not have been a breakdown in relations, and there would be likely an intention to work towards a longer-term agreement to cover issues other than trade in goods.
Any short-term relieving measures and even any longer-term EU UK trade agreement in relation to services, would at best substitute much weaker rules than those that would still apply in Northern Ireland in relation to goods. The general EU rights to establish a presence and provide services cross-border will be at best replaced by much weaker rights which are not directly enforceable by traders.
Traditionally, the United Kingdom has been very open to international trade, and most services are not specifically regulated. Most areas of business, including important services sectors such as IT and digital services, are not subject to formal or legal licensing qualifications regimes. Even in heavily regulated areas such as financial services and transport many subcontractors such as thin tech providers are not directly regulated
The EU single market and services are not as developed was that in goods. Although the EU has taken many measures in the area of services, it is still necessary in many cases, to form a base in the host country in order to provide services. There are often local licensing and qualification requirements which must be met. Therefore, in many sectors, the degree of rupture may not be as dramatic as in others.
Significant regulation does apply in some sectors and areas, and its removal without any replacement would be disruptive. This is the case in most parts of the financial services sector road transport aviation and broadcasting. In these cases, and unlike the case before Brexit, it may not be possible for the business to provide services in the other jurisdiction without establishing a base there.
Even outside of regulated areas, there is a significant possibility of disruption in particular sectors and businesses. Many of the common making business rules which make it easy to do business across borders, will cease.
People are usually a critical factor in services. Irish citizens and UK citizens will continue to have the right to travel to live and work in each other’s jurisdiction. More significant risks apply to EU 26 employees based in Ireland who are not frontier workers but who work in the UK from time to time. They will ultimately be subject to UK Visa requirements under its new immigration system.
The rules on procurement will be, at best, replaced by a much weaker WTO derived procurement agreement. This will be of significance to businesses with public sector contracts in Northern Ireland as well as in Great Britain. Although the WTO procurement agreement is weaker than the EU rules, it is significantly stronger than other WTO rules in that it makes some provision for non-discrimination and requires traders have a direct right of complaint to court or arbitration to enforce breaches against the government and government bodies.
The Common Travel Area applies between the Republic of Ireland United Kingdom Isle of Man and the Channel Islands. It is not legally enforceable as such. It does not give individuals direct rights, enforceable in court unless and until they are reflected in domestic Irish or UK law and practice.
The Common Travel Area is not underpinned by an international agreement or convention between Ireland and the United Kingdom. It has grown-up as a matter of practice over the last hundred years dating from Ireland’s separation from the United Kingdom. The Common Travel Area has been recognised in the EU treaties and in the Withdrawal Agreement, and it is permissible even though it would otherwise be discriminatory as regards other EU citizens.
Traditionally the UK has been very open to trade to persons and businesses in the Republic of Ireland. Many legal rules and regulations are broadly similar. Although the same guarantees against barriers and restrictive practices that may impede trade that underpin the pre-Brexit position will not apply, it is likely that in many sectors there may be a minimal direct impact on doing business by way of a substantial change in licensing or direct regulation.
Ireland and the UK signed a memorandum of understanding in May 2019 in relation to the scope of the Common Travel Area. It confirms citizens have immediate settled status on arrival in the other state. They have complete freedom of movement and immediately enjoy many civil economic and political rights in the other jurisdiction.
No documents or registration is required. A passport may be required in some cases to prove qualifying citizenship. Movement is free, and no visa is required. There is an unconditional right to reside. There are rights of access to social security and social assistance. There is a right to work as an employee or on a self-employed basis. The UK and Ireland agreed to instruct their various authorities to work on recognising qualifications of the other, on the same basis as before Brexit.
Ireland and the UK signed a convention on Social Security in 2019. This reinstates the EU Social Security arrangements as between Ireland and the United Kingdom after Brexit. Accordingly, it would be possible to accrue social insurance credits in both jurisdictions during an individual’s working life and to enjoy social insurance benefits in one or other in the manner defined.
The Northern Ireland Protocol may give traders in goods in Northern Ireland an advantage relative to their competitors in the Republic of Ireland. It is intended that Northern Ireland traders will have full access to both the European Union market in goods and the Great Britain market in goods.
Republic of Ireland traders will be subject to tariffs (in the event of a no-deal) and to more stringent customs controls and declarations on sales to and purchases from Great Britain relative to their Northern Ireland counterparts. There will be import and export declaration requirements in Great Britain and the Republic of Ireland on each occasion.
In contrast, Northern Ireland traders are guaranteed unfettered access to the Great Britain market, perhaps with minimal and controls. Imports into Northern Ireland which are intended to be moved into the EU principally the Republic of Ireland are to be subject to tariffs and controls, but they are likely to be much lighter than those applicable to direct imports from Great Britain to the Republic of Ireland.
The Northern Ireland Protocol is asymmetrical. While the Protocols applies controls and possibly tariffs in the event of a no deal exit to goods coming into Northern Ireland from Great Britain intended for the EU, there is no equivalent provision for goods coming from the EU (notably the Republic of Ireland into Northern Ireland) intended for Great Britain.
It is likely however that there would be some rules which prevent the artificial diversion of trade which would be subject to customs controls (and tariffs (in the event of no-deal) on a direct sale from the Republic of Ireland to Great Britain, where it is routed through Northern Ireland. Genuine trade is unlikely to be affected by such rules so there may be scope for Northern Ireland becoming a link in the distribution chain for trade, which now goes directly from the EU and Ireland to Great Britain and vice versa.
Northern Ireland traders first will obtain the financial benefit of any favourable third country trade agreements which the UK secures under which there are lower tariffs or no tariffs relative to those that apply in trade with the EU. The additional EU tariffs may be waived or refunded to Northern Ireland traders in relation to imports from such countries. Republic of Ireland traders would not have the same advantage.
The Northern Ireland Protocol provides for level playing field rules for Northern Ireland in respect of state aid (aid to industry by governmental bodies) and competition law. However, there are no level playing field rules specific to the Northern Ireland Protocol for standards in relation to employment law, health safety and welfare of work, environmental law and general regulatory rules.
It is intended that these level playing field rules are to apply under the EU UK trade agreement which may not be in place at the end of 2020 or may not be put in place at all. Level playing field rules are already proving contentious in early 2020 so that the rules that will be ultimately put in place are likely to be much less strict than the EU would ideally wish to have.
The consequence of less strict level playing field rules subject to government to government enforcement only, might be to provide an advantage to Northern Ireland traders in some sectors where the EU rules are more onerous or restrictive. This may happen, for example, in relation to general environmental standards.