Brexit & Beyond newsletter
9 October 2023
Welcome to the 9 October 2023 Brexit & Beyond newsletter
Elements of the Windsor Framework red and green lanes began operating last weekend. The Northern Ireland Human Rights Commission has issued a legal challenge to the UK Government over its Illegal Migration Act. Today’s newsletter also includes an update on EU legislation and its implications for Northern Ireland and the rest of the UK, including the Carbon Border Adjustment Mechanism and EU deforestation regulations.
Windsor Framework
The News Letter reports that the Consumer Council is aware of 100 businesses who have not resumed shipping goods from GB to NI after Brexit. New figures are expected to be published soon. Previously in May 2022, the Consumer Council was aware of approximately 119-132 businesses not delivering to Northern Ireland.
The News Letter also reports about concerns from companies who are excluded from the UK Internal Market Scheme because they exceed the £2million turnover threshold, although they do not sell goods outside the UK.
The Northern Ireland Customs and Trade Academy, part of the Trader Support Service (TSS), established to help businesses who trade GB-NI, has published information on the Windsor Framework and the new processes in operation since 1 October.
The Movement Assistance Scheme, which supports traders moving agri-food from GB-NI, has been extended until 30 June 2025. It helps traders understand the regulations for moving goods, and reimburses some associated costs.
Labour leader Sir Keir Starmer spoke to the BBC about his approach to trade relations with the EU, should he become the next Prime Minister. He said, “I'm not interested in a deal that puts the UK in a position of being a rule taker. Our rules must be made in Westminster, according to the national interest of the UK as a whole.” He said the Windsor Framework “was a step in the right direction, which is why we said we would support it. So it's quite clear that there can be improvements and I think in Northern Ireland in particular, there will be a lot of interest in whether we cannot have some measures which take away some of these still remaining tensions that are very obviously there."
The UK in a Changing Europe has published an explainer on the implementation of the Windsor Framework.
Article 2 legal challenge
The Northern Ireland Human Rights Commission has issued a legal challenge to the UK Government over its Illegal Migration Act, which it views as incompatible with obligations in Article 2 of the Windsor Framework, as well as with the European Convention on Human Rights and other international standards. In Article 2 of the Windsor Framework (previously the Protocol), the UK Government committed to ensuring that there would be “no diminution of rights, safeguards or equality of opportunity” (as set out in the Good Friday Agreement) as a result of the UK leaving the EU. This is the first challenge the Commission has taken under Article 2. The BBC reports that the government “regards the claim as speculative and will argue there is no basis for asserting that the act has diminished any of the rights under Article 2.”
The Commission had previously advised the Government that the Bill was incompatible with Article 2. Chief Commissioner of the Northern Ireland Human Rights Commission, Alyson Kilpatrick, said, “Exercising our legal powers now is a measure of last resort, but a necessary step to protect those who are most vulnerable and prevent the violations of human rights that will undoubtedly follow if this law remains in place.” The Commission has published a factsheet explaining why it decided to bring this challenge.
A ‘dedicated mechanism’ was established to monitor the Article 2 commitment: the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland are tasked with overseeing and reporting on the commitment. The Commissions have powers to initiate legal proceedings in respect of a possible breach of Article 2 and have published a working paper on their assessment of its scope.
‘Emerging risks’ of EU legislation
While eyes were on the commencement of the Windsor Framework green/red lanes last weekend, 1 October also saw the beginning of the transition phase of the EU’s Carbon Border Adjustment Mechanism (CBAM). The CBAM is part of the EU’s green deal and designed to address ‘carbon leakage’ – where companies move carbon-intensive production to countries with less rigorous climate policies. The CBAM will initially apply to imports of certain carbon intensive goods which are most at risk of carbon leakage - cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
A report from the House of Lords European Affairs Committee found, “There could be serious risks in terms of trade diversion and damage to mutual UK-EU trade if their respective CBAMs on third country trade were to diverge substantially.” In a debate on the report, Minister of State in the Cabinet Office Baroness Neville-Rolfe said, “We are following developments on the CBAM closely ahead of the transitional reporting phase…and engaging with the Commission to discuss technical considerations relevant to UK manufacturers.” The Government responded to the Committee’s report, saying it has “ambitious carbon pricing through our [Emissions Trading Scheme] ETS and Carbon Price Support mechanism. We expect the EU Carbon Border Adjustment Mechanism (CBAM) to take account of this in its implementation…we remain open to cooperating with the EU on carbon pricing, and to consider linking our respective systems.” Earlier this year, the Government launched an ‘exploratory consultation’ on potential policy measures to mitigate carbon leakage, including a CBAM. It is to issue a response in due course.
CBAM and Northern Ireland
The BBC has reported on the interactions of the CBAM with Northern Ireland and the Windsor Framework. The Centre for Inclusive Trade Policy has published a blog, 'The Complexity of the EU CBAM in Northern Ireland'. Its analysis finds that the implementation of the EU’s CBAM in Northern Ireland “will adversely affect Northern Ireland’s imports in all but one scenario: where the UK and the EU link their ETS and the UK has an EU-style CBAM.” It explains that goods entering Northern Ireland, which are ‘at risk’ of entering the EU, “will suffer unnecessary CBAM measures at Northern Ireland ports. The Windsor Framework, which reduces customs procedures and removes EU customs tariffs, will not solve this issue as these goods have to go through the red lane (i.e., are subject to EU customs tariffs)”. It concludes, “Assuming the EU wants to implement the CBAM in Northern Ireland to prevent carbon leakage and the Joint Committee of the Withdraw Agreement agrees to do so, it’s going to have a significant economic impact on Northern Ireland.”
While there is no publically available evidence of a formal request from the EU to add the CBAM to the Windsor Framework, the EU indicated in the Joint Consultative Working Group in 2021 that it considered the CBAM to be new legislation within the scope of the Protocol. The UK was expecting the EU to notify it through the Joint Committee once the CBAM regulation was adopted. New acts can be added to the Windsor Framework through UK-EU agreement in the Joint Committee. In the Windsor Framework (Democratic Scrutiny) Regulations, the UK Government set out a new role for the NI Assembly in this regard: only if an ‘applicability motion’ is approved with cross-community consent can the UK agree to the addition of the new EU act. (There are exceptions to this: the Government can agree to add the legislation to the Framework (regardless of the outcome of the applicability motion) if the institutions are not functioning or if the new Act would not would not create a new regulatory border between Great Britain and Northern Ireland.)
Deforestation regulations
Meanwhile, the Financial Times reports that supermarkets are urging the UK Government to align with new EU rules on deforestation-free products. The EU regulation will require any trader who places commodities such as cocoa, palm oil, soya, beef, coffee and wood (as well as certain derived products like chocolate, leather and printed paper) on the EU market to be able to prove that the products do not originate from recently deforested land. In the 2021 Environment Act, the UK Government also pledged to make it illegal to use commodities linked to “illegal deforestation”, but has yet to introduce the secondary legislation for this. The Lords Sub-Committee on the Protocol has corresponded with the Government on the EU regulation. In its last update, the Minister for Biosecurity, Marine and Rural Affairs stated the Government is conducting a full analysis of how this legislation will interact with the Windsor Framework and is seeking clarification from the European Commission about the requirements and potential implications of the regulation. Previously the Minister had stated that UKG’s view was that the regulation “goes well beyond” the European Union’s Timber Regulation, which currently applies in Northern Ireland. The Government was waiting for the final regulation to determine whether the regulation should automatically apply to Northern Ireland (subject potentially to the Stormont Brake), or be considered as a new Act (subject potentially to an ‘applicability motion’).
Andrew Opie, Director of Food and Sustainability at the British Retail Consortium told the Lords Sub-Committee that an emerging risk “will be on divergence in regulation and how that applies to the goods [they] sell in Northern Ireland”. He said the deforestation regulations are an “immediate potential challenge…and whether they would apply to products we sell in Northern Ireland. They are quite onerous in requiring traceability against the deforestation problems of various commodities.”
Other news
- As part of the Government’s programme of Smarter Regulation and deregulation, it has announced a review into all regulators in the UK. It will seek to “capitalise on [our] post-Brexit freedoms to bring about Smarter Regulation to the economy…[and] ensure regulators are working efficiently and delivering on reforms needed to help grow the economy and protect consumers.” Kemi Badenoch, Secretary of State for Business and Trade, said, “I want us to use our Brexit freedoms to scrap unnecessary regulations that hold back firms and hamper growth. It’s clear that the regulators that enforce the rules can also sometimes be a blocker to businesses, so our review will seek to root out the bad practices with the aim of making companies’ lives easier and reducing costs for consumers.”
- The Trade Specialised Committee on the Level Playing Field for Open and Fair Competition and Sustainable Development met on 4 October. The EU and UK discussed subsidy control/state aid matters, the Retained EU Law (Revocation and Reform) Act, EU and UK labour policies, and climate policies. The body was established in the EU-UK Trade and Cooperation (TCA) to monitor the ‘level playing field’ commitments - this refers to common standards to prevent businesses undercutting their rivals in the other bloc/country.
- The Northern Ireland Human Rights Commission has published a research paper, ‘Frontier Workers and their Families: Rights after Brexit’. It recommends that all citizens’ rights entitlements covered by the Withdrawal Agreement, including for frontier workers, be codified. It also calls for the UK and Ireland to make the Common Travel Area domestically enforceable.
- The newly appointed Shadow Northern Ireland Secretary of State Hilary Benn met with political parties in Parliament Buildings last week.
- The Scottish Parliament Research team has published a new intergovernmental activity hub.
- The EU-UK Trade Specialised Committee on Sanitary and Phytosanitary Measures is meeting on 11 October. Discussions will include the UK’s Border Target Operating Model, UK’s plans in relation to retained EU legislation on SPS measures, and EU and UK policy developments regarding new genomic techniques and precision breeding.
- In a debate on the protection of Scottish Parliament powers, the Parliament voted for a motion calling for “the repeal of the Internal Market Act (IMA) and for the UK Government to stop taking back control to the UK Parliament of policy decisions that should be made in Scotland.” Minister for Independence Jamie Hepburn highlighted the UK Government’s Genetic Technology (Precision Breeding) Act 2023, saying, “Despite that legislation not applying in Scotland, the 2020 [Internal Market] Act could allow gene-edited food and feed products coming from England to be sold in Scotland, unlabelled and unauthorised.” He said the Scottish Government believes that the common frameworks process “can provide a forum in which Governments can work together on matters of regulatory divergence, with principles of equality and respect. However, that relies on a system of working with mutual respect.” In June, the Scottish Government published a paper on the impact on devolution of UK Government actions since Brexit.
- Politico reports that PM Rishi Sunak and US President Joe Biden are working to conclude a “foundational” UK-US trade agreement before elections in both countries in 2024.
