How the disagreement over the NI Protocol has affected EU-UK relations

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On 13 June, the UK Government introduced the Northern Ireland Protocol Bill which, it says, “aims to fix parts of the Northern Ireland Protocol, to restore stability and protect the Belfast (Good Friday) Agreement”.  If enacted, the Bill would lead to elements of the Northern Ireland Protocol (agreed as part of the Withdrawal Agreement which sets out the terms of the UK’s departure from the EU) being disapplied unilaterally by the UK Government.   The Institute for Government has provided a helpful summary of the Bill.

This blog looks at the negotiations between the EU and the UK on the implementation of the Northern Ireland Protocol, the response of the European Commission to the new Bill and the possible impact of the Bill on operation of the Trade and Cooperation Agreement.

The Northern Ireland Protocol

The Ireland and Northern Ireland Protocol was agreed as part of the EU-UK Withdrawal Agreement which managed the terms of the UK’s exit from the EU.  It came into force on 1 January 2021.  As a result of the Protocol, from a customs perspective, Northern Ireland remains part of the UK customs territory.  However, the Protocol requires that there will be no customs checks or controls on the island of Ireland and no customs declarations, tariffs or quantitative restrictions for the trade in goods between Northern Ireland, Ireland and the rest of the EU.

The Protocol also means that Northern Ireland will also effectively remain part of the EU’s Single Market in goods.  As a result, all goods entering or exiting Northern Ireland have to comply with EU product regulations and other technical regulations.  This also means that certification, authorisation, assessments, registration and approval for Northern Ireland products are all affected.

The EU and the UK initially agreed to phase-in the terms (and as a result the required checks) of the Protocol through a series of grace periods.  However, as Professor Katy Hayward has highlighted, these grace periods were supposed to be conditional on border control posts being constructed at Northern Ireland entry points and the UK Government providing the EU with data on the movement of goods across the Irish Sea (from Great Britain to Northern Ireland) and full and real time access of European Union representatives to the  UK IT systems in order to carry out their monitoring duties properly.  As discussed below, the European Commission’s view is that these conditions have yet to be met. 

UK Government calls for changes to the Protocol

In July 2021, a UK Government Command Paper (Command Papers are government papers that convey information or decisions that the government think should be drawn to the attention of Parliament) called for the renegotiation of the Northern Ireland Protocol claiming it needed to be implemented in a different way.  The UK Government sought changes to the Protocol including in the following areas:

  • customs procedures on goods entering Northern Ireland from Great Britain
  • sanitary and phytosanitary (SPS) checks and controls on goods entering Northern Ireland
  • further discussions about the approach to the goods which at that time were covered by grace periods – such as human and veterinary medicines and chilled meats
  • governance of the Protocol specifically focusing on the jurisdiction of the EU’s Court of Justice as the final arbiter in the eventuality of disputes between the UK and EU over interpretation of EU law under the Protocol.

In March 2021 the UK Government chose to unilaterally extend the grace periods in relation to the requirement for export health certificates on all animal products, and on parcels entering Northern Ireland from Great Britain which should have required customs declarations.  This led to the European Commission starting legal action against the UK Government.  At the time the Command Paper was published, the UK Government requested a suspension of the legal action and agreement that the other grace periods previously agreed should remain in place whilst talks continued.  This approach was agreed to by the European Commission as both sides sought to find solutions to the impasse.

As Professor Katy Hayward has highlighted, these discussions involved the UK Government proposing a re-negotiation of the Protocol whilst the European Commission focused on attempts to make the Protocol as negotiated work better. 

The European Commission response

In October 2021, the European Commission published four papers outlining proposals it said would help to make the Protocol work better.  These papers focused on:

  • SPS checks
  • flexible customs formalities to facilitate the trade of goods between Great Britain and Northern Ireland
  • enhanced engagement with Northern Ireland stakeholders on operation of the Protocol
  • uninterrupted security of supply of medicines from Great Britain to Northern Ireland. 

Publishing the papers, the European Commission wrote:

“Today’s package proposes further flexibilities in the area of food, plant and animal health, customs, medicines and engagement with Northern Irish stakeholders. It proposes a different model for the implementation of the Protocol, in which the flow of goods between Great Britain and Northern Ireland – in respect of goods destined to stay in Northern Ireland – is facilitated to a significant extent. This facilitation is enabled by a series of safeguards and increased market surveillance to ensure the goods do not move into the EU’s Single Market.”

However, the Commission’s proposals did not make any proposals in relation to the role of the European Court of Justice in enforcing the Protocol or in areas such as State Aid and VAT rules in Northern Ireland.

The Northern Ireland Protocol Bill

Negotiations between the UK and EU have continued since the publication of these Commission papers, but with no practical progress appearing to have been made.  The lack of substantive progress in discussions led to the UK Government publishing the Northern Ireland Protocol Bill on 13 June 2022.  Announcing the introduction of the Bill, Foreign Secretary Liz Truss said:

“This is a reasonable, practical solution to the problems facing Northern Ireland. It will safeguard the EU Single Market and ensure there is no hard border on the island of Ireland. We are ready to deliver this through talks with the EU. But we can only make progress through negotiations if the EU are willing to change the Protocol itself – at the moment they aren’t. In the meantime the serious situation in Northern Ireland means we cannot afford to allow the situation to drift.”

According to the UK Government, the Bill proposes solutions in four key areas:

  1. Green and red channels to remove unnecessary costs and paperwork for businesses trading within the UK, while ensuring full checks are carried out for goods entering the EU.
  2. Businesses to have the choice of placing goods on the market in Northern Ireland according to either UK or EU goods rules, to ensure that Northern Ireland consumers are not prevented from buying UK standard goods, including as UK and EU regulations diverge over time.
  3. Ensure Northern Ireland can benefit from the same tax breaks and spending policies as the rest of the UK, including VAT cuts on energy-saving materials and Covid recovery loans.
  4. Normalise governance arrangements so that disputes are resolved by independent arbitration and not by the European Court of Justice.

The UK Government also published a paper setting out its position that the legislation is lawful under international law. 

The EU legal action

The European Commission responded to the introduction of the Northern Ireland Protocol Bill by indicating it would seek to ensure continued implementation of the Protocol as agreed in the Withdrawal Agreement.  In addition, Commission Vice-President Maroš Šefčovič indicated the Commission would take “proportionate action” in response to the UK Government’s approach .

On 15 June 2022, the European Commission announced that the previously suspended legal action that it had taken against the UK Government as a result of the UK’s unilateral action to extend grace periods would be resumed.  In addition, the Commission announced that a new case has been brought against the UK Government over the alleged failure of the UK to build and staff border control posts at Northern Ireland ports and an alleged failure by the UK to provide real time data on the movement of goods between Great Britain and Northern Ireland.  The European Commission also highlighted its own proposals to reduce the burden of the Protocol which it published last October. 

Announcing the European Commission’s response, Vice-President Maroš Šefčovič, said:

“Trust is built by adhering to international obligations. Acting unilaterally is not constructive. Violating international agreements is not acceptable. The UK is not respecting the Protocol. That is why we are launching these infringement proceedings today. The EU and the UK must work together to address the practical problems that the Protocol creates in Northern Ireland due to Brexit. I am still convinced that with genuine political will to make the Protocol work, we can reach our objectives. I call on my UK counterparts to engage in good faith and explore the full potential of the solutions we have put forward. Only joint solutions will create the legal certainty that people and businesses in Northern Ireland deserve.”

What might happen next?

The disagreement over implementation of the Northern Ireland Protocol has also led to other negative effects on the EU-UK relationship.  The Trade and Cooperation Agreement (TCA) included provision for the UK to continue to participate in the Horizon Europe programme (which supports research and development programmes across Europe) subject to negotiation of the terms of UK participation.  However, the European Commission has refused to make a final decision about UK participation in Horizon as the dispute over the Northern Ireland Protocol has continued.  At the start of June there were reports that the UK Government was considering abandoning plans to participate in Horizon as a result.   

At this stage, it is not clear whether there is scope for a negotiated solution to the impasse over the Northern Ireland Protocol.  If the UK and the EU cannot jointly agree an approach to implementation, it is possible that the EU may seek to disapply elements of the TCA, potentially leading to a worsening of the trading relations between the EU and the UK.  In theory it is also possible that the EU could seek to terminate the whole TCA by giving 12 months’ notice of its intention to do so.  In the event this happened, the EU and the UK would revert to trading under World Trade Organisation rules and there would potentially be very little cooperation in other areas covered by the TCA such as air and road transport and fisheries. 

Iain McIver, SPICe Research