Professor
Steve Peers,
University of Essex
Photo by David Iliff - License:
CC BY-SA 3.0
Introduction
After
many months of on-off negotiations and three Prime Ministers on the UK side,
the UK and EU have agreed another Brexit deal: the so-called Windsor
Framework, which amends the controversial Northern Ireland protocol (or as we must soon call it, the Protocol Formerly Known as Northern Irish), and
includes a number of other legal texts. This blog post is in two parts: this
first post is an overview of the Windsor Framework as a whole, while a second part looks in more detail at a specific issue: the ‘Stormont Brake’ on
amendments or replacements to EU legislation within the scope of the protocol.
Background
At present, the current Northern Ireland protocol is attached to the withdrawal agreement (which I summarised here; I have updated my summary of the protocol for this section of this blog post). (On the current legal framework overall, see also my working paper on the withdrawal agreement, and the Yearbook of European Law article based on that working paper).
The Protocol is the one part of the withdrawal agreement that was changed after the UK
Parliament refused to ratify it; among other things the provisions emphasising that the Protocol is meant to be temporary were dropped
from the version
of the protocol which had been negotiated by Theresa May and the EU.
However, the possibility of replacing the Protocol by future UK/EU trade
arrangements was maintained.
Article 1 of the Protocol refers to the UK’s territorial integrity; it
is clear that the EU has not ‘annexed’ Northern Ireland, as some have claimed. Next,
Article 2 and 3 of the Protocol refer to equality/existing rights and the
common travel area between the UK and Ireland. These issues were never
controversial, and the existing rights provisions have since been litigated:
see Colin
Murray’s analysis of the first judgment.
The current Protocol then dropped the previous UK-wide customs union
backstop found in the Theresa May version. This text had linked to Annexes on:
a) trade in goods between EU/UK/non-EU states; b) customs cooperation; and c) a
‘level playing field’, which meant some degree of continued harmonisation of
law relating to tax, the environment, labour law, state aid, competition, and
public companies/monopolies.
In place of the UK/EU customs union backstop, in the current Protocol
Article 4 first specifies that Northern Ireland is part of the UK’s customs
territory for international trade purposes. Article 5 then regulates trade
between Great Britain and Northern Ireland. No customs duties are charged on
goods moved from Great Britain to Northern Ireland, unless there is a risk that
the goods may be sold in the EU. The further definition of what that means had
to be worked out by the Joint Committee established by the withdrawal agreement
by the end of the transition period, ie the end of 2020. In practice, the Joint
Committee agreed
several measures to implement the protocol by the end of that year. There
is an exemption for personal property.
An Annex applies a long list of EU laws on customs, trade and goods
regulation to Northern Ireland – although in the previous version some of these
laws would have applied to the whole UK. The Protocol also includes provisions
on the UK internal market, as well as lists of specific EU laws that apply in
Northern Ireland: product regulation, VAT and excise tax, a single electricity
market, and State aids.
The institutional provisions of the Protocol include the proviso that EU
bodies, including the CJEU, have competence to apply or interpret certain provisions
of the Protocol. It is also possible for the UK to object to new (as
distinct from amended or replaced) EU laws becoming applicable in
Northern Ireland; this will be discussed along with the new provisions in the
Windsor Framework on objecting to amended or replaced EU laws in part 2 of this
blog post.
A provision on ‘consent’ specifies that the Northern Ireland Assembly
can, under certain conditions, terminate the customs and other economic
provisions of the Protocol. There’s also a unilateral UK declaration related
to this. (The absence of a power to end the previous backstop unilaterally had
been controversial). This is the only part of the withdrawal agreement subject
to the possibility of unilateral termination by one side; on the issue of
terminating the agreement generally, see my discussion here.
The UK government’s implementation of the consent provisions had formed
the basis of a legal challenge by unionist politicians and others which in
effect tried to argue that the very existence of the protocol was unlawful in
the UK. This challenge lost at every level including (recently) the UK Supreme
Court (on that judgment, see Colin
Murray and Anurag
Deb).
Finally, the Protocol included a safeguard clause, Article 16:
1. If
the application of this Protocol leads to serious economic, societal or
environmental difficulties that are liable to persist, or to diversion of
trade, the Union or the United Kingdom may unilaterally take appropriate
safeguard measures. Such safeguard measures shall be restricted with regard to
their scope and duration to what is strictly necessary in order to remedy the
situation. Priority shall be given to such measures as will least disturb the
functioning of this Protocol.
There are provisions for the other party to retaliate proportionately if
one party used Article 16, and an annex which sets out procedural rules. In the
event, despite much discussion, neither party has invoked Article 16; the EU
Commission reversed its intention to use it to provide for possible restriction
of vaccine exports before that law entered into force, and a legal challenge to
the Commission on this point was unsuccessful,
because in effect there was nothing to challenge.
Despite pitching the withdrawal agreement as an ‘oven ready deal’, it
soon became apparent that the UK government – like the unionist community in
Northern Ireland – had huge objections to the deal that it had championed,
approved in Parliament, and ratified. The government first tabled an Internal
Market Bill that they admitted would have been a breach of the protocol,
although the offending clauses of that bill were dropped once the UK and EU
reached agreement on Joint Committee decisions implementing the protocol in
December 2020 (as referred to above).
Subsequently, in 2022 the government tabled another bill – the Northern Ireland protocol bill
– which would arguably breach the protocol, although the government claimed
that any breach would be justified by the ‘doctrine of necessity’ in
international law (for a criticism of this defence, see Professor Mark
Elliott’s analysis;
see also Colin Murray’s analysis
on this blog). For its part, believing that the UK was not fully implementing
the protocol in practice, the EU Commission began infringement
proceedings against the UK (on the basis of the provisions in the protocol
which give the CJEU jurisdiction over much of it).
The Windsor Framework
Joint Committee decision
The core of the new Brexit deal is a draft
Joint Committee decision, which would first of all amend the Protocol
itself. This would be done on the basis of the Joint Committee powers, set out
in the withdrawal agreement, to:
except in relation to Parts One, Four and Six,
until the end of the fourth year following the end of the transition period,
adopt decisions amending this Agreement, provided that such amendments are
necessary to correct errors, to address omissions or other deficiencies, or to
address situations unforeseen when this Agreement was signed, and provided that
such decisions may not amend the essential elements of this Agreement;
The amendments to the protocol entail first an amendment to Article 6(2)
of the protocol, concerning UK internal trade (new provision underlined):
Having regard to Northern Ireland's integral
place in the United Kingdom's internal market, the Union and the United Kingdom
shall use their best endeavours to facilitate the trade between Northern
Ireland and other parts of the United Kingdom, in accordance with applicable
legislation and taking into account their respective regulatory regimes as well
as the implementation thereof. This includes specific
arrangements for the movement of goods within the United Kingdom’s internal
market, consistent with Northern Ireland’s position as part of the customs
territory of the United Kingdom in accordance with this Protocol, where the
goods are destined for final consumption or final use in Northern Ireland and
where the necessary safeguards are in place to protect the integrity of the
Union’s internal market and customs union. The Joint Committee shall keep the application of this paragraph
under constant review and shall adopt appropriate recommendations with a view
to avoiding controls at the ports and airports of Northern Ireland to the
extent possible.
This is not so much a substantive change in itself, as a description of
the changes made elsewhere in the Joint Committee Decision (see discussion
below), although it might address any argument that might be made that those
changes in the Decision are incompatible with the Protocol.
Secondly, an amendment to Article 13 of the protocol will add the "Stormont brake" on amended or replaced EU
law. An annex to the Joint Committee decision will set out the text of a
unilateral UK government statement on this process. As noted already, I will
discuss the Stormont brake in part 2 of this blog post.
Next, as regards VAT and excise taxes, Article 8 of the protocol
will not be amended. It reads as
follows:
The
provisions of Union law listed in Annex 3 to this Protocol concerning goods
shall apply to and in the United Kingdom in respect of Northern Ireland.
In
respect of Northern Ireland, the authorities of the United Kingdom shall be
responsible for the application and the implementation of the provisions listed
in Annex 3 to this Protocol, including the collection of VAT and excise duties.
Under the conditions set out in those provisions, revenues resulting from
transactions taxable in Northern Ireland shall not be remitted to the Union.
By
way of derogation from the first paragraph, the United Kingdom may apply to
supplies of goods taxable in Northern Ireland VAT exemptions and reduced rates
that are applicable in Ireland in accordance with provisions listed in Annex 3
to this Protocol.
The
Joint Committee shall regularly discuss the implementation of this Article,
including as concerns the reductions and exemptions provided for in the
provisions referred to in the first paragraph, and shall, where appropriate,
adopt measures for its proper application, as necessary.
The Joint Committee may
review the application of this Article, taking into account Northern Ireland's
integral place in the United Kingdom's internal market, and may adopt
appropriate measures as necessary.
However, the Joint Committee decision will amend Annex 3 to the protocol, which is referred to in Article
8 and which sets out the UK’s current obligations as regards VAT and excise tax
in Northern Ireland in more detail. In particular, a new note added to that
annex will set out several derogations from the EU’s main VAT
Directive: a) for ‘goods supplied and installed in immovable
property located in Northern Ireland by taxable persons’,
there can be a reduced rate, a rate below 5%, or an exemption; b) the UK can
have more reduced
rates or rates lower than 5% or an exemption than EU Member States are
allowed, going beyond a recent
amendment to EU law to give more flexibility on reduced rates; and c) the
UK can apply different rules on small businesses.
As regards excise tax, Annex 3 will be amended to state that the
UK, as regards Northern Ireland, is exempt from certain rules in the Directive
on the structure of alcohol tax, a) so it ‘may therefore apply excise
duty rates on alcohol and alcoholic beverages always on the basis of alcoholic
strength and may apply reduced duty rates to alcoholic beverages packaged in
large draught containers served for immediate consumption in hospitality venues’,
and b) ‘may therefore define small producers and set reduced duty rates to
alcohol and alcoholic beverages produced by small producers, provided that such
reduced duty rates are in no case, even after any applicable relief’, although
in each case the minimum duty calculated under the Directive must still be
charged. There are no exemptions added to the Directives on taxation of tobacco
and petrol.
The
Joint Committee also refers to the possibility of adding more notes to indicate
how VAT and excise tax laws will apply in Northern Ireland, provided that those
‘notes shall ensure that there is no negative impact on the Union’s internal
market in the form of fiscal fraud risks nor any potential distortion of
competition.’
The biggest part of the Joint Committee decision will replace a previous
Joint Committee decision. This is the part that will reduce checks on goods
going from Great Britain to Northern Ireland, by setting out new rules
indicating when a good is at risk of going to the EU as distinct from staying
in Northern Ireland (following the distinction set out in the Protocol). It
first defines what goods do not raise that risk because they will not be subject
to commercial processing, including goods to be used in construction in
Northern Ireland, the sale of food to a consumer in the UK, provision of food
as part of health or care services in Northern Ireland, or animal feed. Unlike
the previous Joint Committee decision, which only permitted several of these
exemptions if the good was used by the importer, the new Decision allows the
exemptions if the importer sells the good once to one other entity. Also a
smaller business exemption has been widened from £500k to £2 million in
turnover; the UK government states that this will bring about 80% of
manufacturing and processing companies in Northern Ireland that trade with
Great Britain within the scope of the exception. A new provision adds parcels
to the list of goods movements which do not pose risks of further movement to
the UK.
As for the rest of the Decision, there are new provisions on
consultation as regards VAT and excise tax. Some of the new provisions will not
apply until September 2023 or September 2024, in order (among other things) to
ensure that the UK is supplying data, and (in the latter case) to give time for
the EU to pass unilateral legislation (discussed below) relevant to the
protocol – although those dates could be brought forward.
Other parts of the Windsor Framework
The other parts of the Framework are a mix of unilateral or joint
measures which are mainly non-binding ‘soft law’. Crucially, though, there are
also unilateral proposals for EU law, discussed further below.
A Joint
Declaration states that the whole protocol should be called the ‘Windsor
Framework’ from now on. There is a Joint
Committee recommendation and a Joint
Declaration on what happens if the UK pulls the Stormont brake and arbitrators
rule against it (to be discussed in part 2).
The only other binding measure jointly agreed is a change
to the rules of procedure of a working group, to involve more stakeholders
from Northern Ireland in discussions. Along the same lines, there is a joint
declaration on involving stakeholders in the work of the committees.
There is then a unilateral
UK declaration on review of the ‘consent’ process on the future existence
of the protocol (Article 18 of the protocol, discussed above); but this does
not alter the consent process as such.
Next, a recommendation
of the Joint Committee and a unilateral
declaration by the UK address the issue of ‘market surveillance and
enforcement’ – ie the prospect of cross-border smuggling.
A unilateral
declaration by the UK addresses when export rules of EU law will apply to
goods moving from Northern Ireland to Great Britain – although it should be
recalled that most of the rules in the protocol apply to the movement of goods
the other way around, because of the EU’s concerns about goods entering its
internal market via Northern Ireland to Ireland without being checked. (The UK
is obviously less bothered about the parallel prospect as regards its own
internal market).
Another unilateral
UK declaration concerns parcels moving from Great Britain to Northern
Ireland, and is applicable until the new Joint Committee decision fully takes
effect. A Joint
Declaration notes the possibility of negotiating further amendments to VAT
law in future, as regards reduced rates and refunds.
Finally, on two further controversial issues, the law stays the same. First,
this applies to the current rules on State aid – where EU State aid rules apply
to Northern Ireland, as enforced by the Commission – although there is now a joint
declaration interpreting this provision of the protocol.
The law also stays the same as regards the jurisdiction of the CJEU on
the protocol, although the effect of the Windsor Framework is to reduce the
application of EU law in practice to Northern Ireland, therefore in principle
reducing the number of possible cases where the CJEU might be asked to rule
because EU law applies. (In practice, the CJEU has not yet exercised its
jurisdiction as regards the protocol).
Finally, a joint
political declaration of the EU Commission and the UK summarises the
contents of the agreement, and includes commitments to drop the Northern
Ireland protocol bill on the UK side, and the infringement proceedings pending
on the EU side on the other. (Each had been paused pending negotiations). They
also agreed that the Joint Committee would meet soon to adopt the legal
texts.
EU unilateral measures
The EU Commission has also tabled proposals for EU legislation as
regards medicine,
food
and animal checks (including movement of pets), and tariff
quotas, as well as a secondary Commission measure on ‘high-risk
plants’, and position papers on customs,
food
and animal checks, and on engagement
with Northern Ireland stakeholders. In effect this legislation, while not
explicitly disapplying the application of EU law to Northern Ireland in
accordance with the protocol, will create a special regime (lex specialis) as regards the movement
to or sale of many products there.
Other stuff
Not exactly part of the Windsor Framework package, but worth noting, are
(on the UK side) a UK government command
paper which summarises and defends the package, along with a statement
of the UK government legal position (which pours cold water on the proposed
Northern Ireland protocol bill). On the EU side, there is a press
release and a list of Q
and As on the deal that indicate what the EU’s interpretation of it is. The
explanatory
memorandum to the proposal for the EU Council to agree the EU’s support for
the Joint Committee decision also includes some background on the EU
Commission’s views. The UK government has also announced an intention to
amend the Northern Ireland Act; the content of that amendment remains to be
seen.
Comments
The Windsor Framework does not alter the fundamental legal framework of
the Northern Ireland protocol. However, it does address its implementation in
practice – notably by simplifying somewhat the movement of products between
Great Britain and Northern Ireland, taking together the new Joint Committee
decision and proposed EU legislation. It also scales back – again without fully
disapplying as such – the application of EU tax law to the UK, in order to
permit some recent changes to UK law to apply fully to Northern Ireland. So
while it is technically inaccurate for the UK government to claim that the
agreement ‘scraps’ 1700 pages of EU law from applying to Northern Ireland, it is
fair to say that in many cases that law will no longer apply de facto, even if it applies de jure.
Some of the changes in the package will be implemented by unilateral
acts by the EU, rather than jointly agreed text as between the UK and the EU,
raising the possibility either that the proposals might not be adopted as
proposed by the Commission, or that the EU might unilaterally amend or repeal
them later – although presumably the Stormont brake would kick in if the latter
happened. Likewise some of the changes depend on the EU side trusting the UK’s
application and implementation of its own legislation – although there are
possibilities of the EU side reacting in the event of UK failure to do so. It
might also be queried whether the Joint Committee decision goes outside the
limits set by the withdrawal agreement on the capacity of the Joint Committee
to amend that agreement, and of whether the changes to the annexes on tax are
consistent with the provisions of the protocol requiring consistency with what
Ireland does on VAT.
On these points, it might have been simpler to amend the protocol in the
ordinary way, which would also have provided an opportunity to amend the rules on
State aid (there being little reason for the original rules, now that the Trade
and Cooperation Agreement has rules on subsidies, plus the UK has passed a
Subsidy Control Act), as well as curtailing the rule of the CJEU – limiting it
to being asked questions about EU law by dispute settlement arbitrators, which
is the minimum implicitly required by prior CJEU case law.
It is striking that the agreement is focussed very much on specific
issues that have been the subject of day-to-day concern for businesses and
consumers in Northern Ireland – the movement of plants such as trees and seed
potatoes, pets, products for supermarkets, and parcels, for instance – as well
as the application of specific changes in UK tax law. Its critics sometimes
depict the EU as saying “that’s fine in practice, but will it work in theory?”
But those who object that the new agreement will still retain the application
of EU law in principle, even though it will more often not apply in practice,
have fallen into the same trap.
With this pragmatic problem-solving approach, the Prime Minister conveys
an image of being a competent manager brought in to save a failing hotel – who
immediately assesses the need to wash the towels before the guests arrive and
have hot rolls ready to eat with breakfast in the morning, and swiftly
negotiates with staff and suppliers to get it done. Such sensible managerialism
might sound dull – until you remember the Fawltyesque chaos when the previous
hotel manager was in charge. And the less said about the interim hotel
manager, who nearly bankrupted the whole hotel chain during her six week stint in between the two,
the better.
Further reading: other analyses of
the Windsor Framework
Viviane Gravey and Lisa Claire Whitten (on goods movement)
Alexander
Horne (also for UK
in a Changing Europe)
Harry Gillow, for Conservative Home
John Larkin KC, for Centre for the Union
Richard Bullick (thread with links to different analyses)
Graphic on the Windsor Framework, by Simon Usherwood
House of Commons Library analysis
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