Brexit & Beyond newsletter

5 June 2023

Welcome to the 5 June 2023 Brexit & Beyond newsletter

Parliament returns from a short recess today, and tomorrow Kemi Badenoch - the Minister responsible for the Retained EU Law Bill - will appear before the European Scrutiny Committee. The Lords will consider the Commons amendments to the REUL Bill. The European Scrutiny Committee has published its report on the Windsor Framework. The UK Trade and Business Commission has published 114 recommendations for improving the UK’s post-Brexit trade policy. The UK’s trade deals with Australia and New Zealand entered into force.  The UK Government has granted a partial exemption to its internal market rules for the Scottish Government’s Deposit Return Scheme.

 

European Scrutiny Committee reports on the Windsor Framework

On 30 May, the Commons European Scrutiny Committee published a report on the Windsor Framework (external link). It covers the revisions to the Protocol made by the Framework, including the Stormont Brake, customs, the green lane, VAT and state aid, medicines, and SPS measures. The report considers the legislation, procedures, and requirements the Framework brings about, and seeks further clarity from the Government in a series of letters. In its letter to the Foreign Secretary, the Committee states that the Government’s timings meant they were unable to carry out scrutiny before the Joint Committee agreed the legally binding texts and commitments. It notes that previous decisions were “agreed in haste and without adequate scrutiny by Parliament, [and] led to some of the difficulties with the operation of the Protocol that the Windsor Framework is intended to resolve and that the lack of scrutiny of those Decisions did not serve the UK well.”

The Committee asks whether the Government supports greater transparency of the Joint Consultative Working Group (JCWG) through the publication of agendas and minutes. The JCWG is the forum where the EU informs the UK about EU legislation which may apply to Northern Ireland. Read more about the JCWG on our website.

The Committee also questions why the Stormont Brake only applies to some of the EU laws in the Protocol, and asks whether EU tertiary legislation (delegated and implementing acts) is within its scope.

The Committee notes that the EU SPS rules set out in the Protocol will still apply to the production of those goods in Northern Ireland. It states, “While NI businesses will be able to access the EU Single Market, the provisions also mean that NI businesses may be at a competitive disadvantage compared to businesses in GB if rules evolve differently”.

 

UK Trade and Business Commission publishes recommendations

On 1 June, the UK Trade and Business Commission, a cross-party group of MPs and business leaders published a report with 114 recommendations to improve the UK’s post-Brexit trade policy. Paul Girvan (DUP), Claire Hanna (SDLP) and Stephen Farry (Alliance) are members of the Commission.

 Hilary Benn, Co-Convenor of the UK Trade & Business Commission

Hilary Benn, Co-Convenor of the UK Trade & Business Commission | Source: UK Parliament / Attribution 3.0 Unported (CC BY 3.0)

It states that the UK should “adopt a general policy of regulatory alignment with EU standards and regulations unless it is not in the UK’s interests to do so”. It recommends that the UK Government establishes a new regulatory cooperation council with the EU “to maintain an open dialogue and forum to discuss regulatory alignment.” The report states that the UK should negotiate a new Sanitary and Phytosanitary (SPS) and veterinary equivalence agreement with the EU. This would reduce these checks and controls between the EU and UK. The Windsor Framework did not include a solution for veterinary medicines supply to Northern Ireland – there is currently a grace period for this in place until the end of 2025. The British Veterinary Association has suggested some solutions to this issue and says a failure to reach a permanent solution “could see Northern Ireland lose access to 51% of the veterinary medicines it currently receives”. A veterinary agreement with the EU was the subject of some discussion around the time of the conclusion of the EU-UK Trade and Cooperation Agreement (TCA) – read more information about the topic in this Commons Library paper.

The Commission recommends that a UK Carbon Border Adjustment Mechanism (CBAM) should align with the EU CBAM. The Lords European Affairs Committee has been told that an EU CBAM applying to Northern Ireland under the terms of the Protocol could “thicken the sea border” by introducing additional friction to trade between NI and GB, and it could also “constitute a significant barrier for companies in Northern Ireland wishing to trade with the Republic of Ireland”. The Lords report notes that it is not yet clear how the Windsor Framework may impact this.

Various changes to the UK’s immigration regime are proposed, including a youth mobility scheme, a cultural worker visa programme and improvements to short-term worker visas. The Commission also recommends that the UK re-join the Erasmus Programme, the EU’s youth mobility scheme. The UK Government decided to no longer participate in Erasmus and set up an alternative programme, the ‘Turing Scheme’.

The Commission recommends enhanced parliamentary scrutiny of the UK Government’s trade policy: “elected representatives, including MPs and devolved assemblies, should be involved in meaningful discussions and voting on trade policy decisions”. Specifically, it recommends that the UK should seek provisions in trade agreements “to allow Northern Ireland to take full advantage of new export opportunities by allowing for all-Ireland input to count as originating from the UK”. Read more about NI's access to free trade agreements on our website.

 

UK trade deals with Australia and New Zealand enter into force

The UK’s free trade agreements (FTAs) with Australia and New Zealand entered into force at midnight on 31 May 2023. These are the first trade deals the UK has negotiated ‘from scratch’ since leaving the EU. The UK Government ‘rolled over’ FTAs covering over 60 countries, which it had previously had access to as a member of the EU.

 UK Prime Minister Rishi Sunak with the Prime Minister of Australia Anthony Albanese in 10 Downing Street

UK Prime Minister Rishi Sunak with the Prime Minister of Australia Anthony Albanese in 10 Downing Street | Source: Simon Walker / No 10 Downing Street

The deals remove tariffs on all UK goods exports to Australia and New Zealand, increase market access for services, and remove barriers to digital trade and work visas. The Government said the respective deals could increase trade by 53% with Australia and 59% with New Zealand. From 1 July 2023, the age limit for UK applicants going to Australia will go from 30 to 35 years old, and from 1 July 2024, British citizens will be able to stay in Australia for up to three years without having to meet specified work requirements. Business and Trade Secretary Kemi Badenoch said it was a “historic moment…Businesses up and down the country will now be able to reap the rewards of our status as an independent trading nation and seize new opportunities, driving economic growth, innovation and higher wages.”

However, when the UK Parliament debated the Australia and New Zealand trade deals last November, Former Secretary of State for Environment, Food and Rural Affairs George Eustice said he no longer had to “put such a positive gloss on what was agreed” from his position on the back benches. He said the Australia Free Trade Agreement (FTA) is “not actually a very good deal for the UK.” He said, “We did not need to give Australia or New Zealand full liberalisation in beef and sheep—it was not in our economic interest to do so, and neither Australia nor New Zealand had anything to offer in return for such a grand concession.” The National Farmers’ Union has strongly criticised the trade deals because they remove tariffs on agricultural products. NFU President Minette Batters states, “It’s clear that UK farmers have very little to gain from these two deals; instead we are pushing the government to focus its trade efforts on opening up markets where there’s a genuine opportunity for UK agriculture.”

Previously, in written evidence to the International Trade Committee on the Australia FTA, the NI Department for the Economy stated that the interaction between UK FTAs and the Protocol “are complex and create uncertainty” regarding how far NI importers and consumers can benefit from the agreement, and the effect on the competitiveness of NI suppliers. While the department welcomed potential opportunities created for NI’s financial and cyber security sectors, it stated, “The agriculture and food processing sectors in Northern Ireland are a significant element of our local economy...There are concerns that given the commitment by the UK Government that trade deals must work for all parts of the UK, it did not seek a different outcome on agriculture which would have avoided a negative impact on Northern Ireland.”

The UK in a Changing Europe has published a trade tracker, considering the UK’s recently signed FTAs and ongoing negotiations.

 

Scotland’s Deposit Return Scheme

The Scottish Government is seeking to establish a Deposit Return Scheme (DRS). The scheme would add a surcharge onto certain single-use products (such as bottles and cans), which would be refunded when they are recycled. However, the UK’s Internal Market Act (IMA) – which was passed post-Brexit and aims to prevent internal trade barriers within the UK – means that regulations in one part of the UK must not discriminate against goods from another part. Therefore, to establish the scheme, the Scottish Government had to seek an exclusion to the IMA market access principles through the process for considering IMA exclusions in Common Framework areas. The Scottish Government previously requested an exclusion in order to ban certain single use plastics, which was granted by the UK Government.

The UK Government published a policy statement on 27 May, saying it would grant a temporary exclusion for the Scottish DRS, but not for glass. It states, “The inclusion of glass would add cost and complexity to the schemes in particular to hospitality and retail sectors, as well as adding consumer inconvenience.” The UK Government intends to roll out its own DRS by 2025. The Scottish Minister for Green Skills and Circular Economy told the Scottish Parliament on Tuesday, “we are now being forced to examine whether the deliberate sabotage by the UK Government leaves us something that we can make work.” The UK in a Changing Europe considers the dispute between the UK and Scottish Governments and the BBC has more details on the developments.

 

 

Other news

  • On 30 May, the EU Council adopted three regulations to implement aspects of the Windsor Framework – on SPS issues, medicines, and steel products. The three regulations will enter into force after they are published in the EU’s Official Journal.
  • Professor Simon Usherwood has published an article on the implementation of the Windsor Framework, including a diagram setting out the phased application of its various elements, such as labelling requirements, facilitations for parcels, and medicines.
  • Stuart Anderson, head of public affairs at NI Chamber, writes in the Belfast Telegraph that the business community needs clarity as soon as possible on the new arrangements in the Windsor Framework. He states, “The Windsor Framework will not fix all the problems…[but] Ultimately, this agreement means that Northern Ireland now has a confirmed USP. We are the only jurisdiction in the world where business can sell into GB and the EU free of customs and regulatory barriers. From a business perspective, that’s very significant.” He notes that regulatory divergence will continue to be “a principal challenge with the operation of the framework.”
  • The engagement period for the UK Government’s draft Border Target Operating Model ended on 19 May. The model sets out the UK’s planned post-Brexit security and sanitary/phytosanitary (SPS) controls at its borders. The Government will now analyse the feedback and “develop further detail” for inclusion in the final version. Politics Home reports on the impact these checks may have on food prices: Chief Executive of the Cold Chain Federation Shane Brennan said that the introduction of the first phase of checks on 31 October (for medium-risk animal products, and plant and plant products) will make meat and dairy products “slower to reach shelves, more expensive and less accessible”.
  • QUB’s Post-Brexit Governance NI project has published an article on the Single Electricity Market and the Protocol on Ireland/Northern Ireland. It discusses the implications for the Single Electricity Market from changes to the EU’s Emissions Trading Scheme and its new Carbon Border Adjustment Mechanism, and the UK Government’s Retained EU Law Bill.
  • UK Prime Minister Rishi Sunak attended the second meeting of the European Political Community in Moldova. The summit brings together leaders from 47 European countries.
  • The Inter-Ministerial Standing Committee, made up of ministers from the four governments of the UK, met on 17 May. Officials from the Northern Ireland Civil Service attended the meeting in an observational capacity. Ministers considered the status of Common Frameworks and the Retained EU Law Bill. They also discussed the agreed process for seeking an exclusion to the UK Internal Market Act.

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