Brexit & Beyond newsletter

19 June 2023

Welcome to the 19 June 2023 Brexit & Beyond newsletter

Today’s newsletter covers views on the EU-UK relationship, particularly regarding trade. The European Parliament’s ENVI Committee has published a report on the UK-EU agreements, raising some areas for concern and attention. The European Commission has published legislation on customs and parcels as part of the Windsor Framework. Ping-pong continues on the Retained EU Law Bill – it will return to the Lords this week. The Office for the Internal Market gave evidence to a Senedd committee on its new role.

Views on the EU-UK relationship

European Commission Vice-President Maroš Šefčovič gave a speech on 12 June at the EU-UK Forum Annual Conference. He said priority now is the “timely and faithful implementation” of all parts of the Windsor Framework. On the wider EU-UK relationship, Šefčovič warned that trade cannot be as frictionless and dynamic as it was pre-Brexit, saying this “inevitably means additional costs for businesses on both sides. Over time, increased divergence may bring even more cost and will further deepen the barriers to trade between the EU and the UK. This is regrettable but must be accepted.”

Šefčovič said the EU continues to have concerns about the UK’s Retained EU Law Bill and Brussels is following the legislation “extremely closely”. He remarked that it's “very difficult” to achieve more seamless trade and less friction “if the decision is to just simply go for more divergence or if, let's say, the law which we've been building together for many, many decades and underpins some of the fundamentals of the Withdrawal Agreement and TCA [Trade and Cooperation Agreement] would be thrown into the shredders…if we are in a situation where there will be more divergences, clearly there will be more obstacles and it has a negative impact on trade."

UK Foreign Secretary James Cleverly and European Commission Vice-President Maroš Šefčovič signing the Windsor Framework in March 2023 | Source: European Union, 2023 EC - Audiovisual Service

UK Foreign Secretary James Cleverly also addressed the conference. He said the Windsor Framework “marks the beginning of new era for UK-EU relations”, emphasising “trust and respect between the UK and EU”. He said they have delivered stable structures for future cooperation, which “will deliver for the people and businesses of Northern Ireland.” Cleverly’s remarks focused on improving cooperation with the EU on security matters, stopping illegal migration, and working together on energy and climate policy.

A new research paper examines Brexit’s impact on UK trade. The authors write for the UK in a Changing Europe, that the TCA “kept trade between the EU and UK tariff and quota free but was less effective at preventing non-tariff measures (NTMs) from increasing…The major challenge remains reducing new barriers to EU-UK trade and keeping value chains between the EU and UK live and competitive.”

View from the European Parliament

The European Parliament Committee on the Environment, Public Health and Food Safety has adopted an opinion on post-Brexit arrangements with the UK. It welcomes the Windsor Framework “as an opportunity towards a new chapter of friendly bilateral cooperation” and calls on the European Commission “to fully exploit the untapped potential of the Trade and Cooperation Agreement (TCA).”

Regarding the SPS arrangements in the Windsor Framework, the Committee underlines that “the solutions put forward will require proper and effective implementation and monitoring and are conditional, among other things, on the UK authorities completing fully-functioning and well-resourced Border Posts and access and compatibility between the Union and UK databases.” It stresses that the Commission needs to “monitor the implementation and application of the safeguards as set out in the Windsor Framework and [should]…stand ready to make full use of the dispute resolution tools available in the Trade and Cooperation Agreement, the Withdrawal Agreement and the Windsor Framework in the event of non-compliance by UK authorities.” The UK Government has committed to certain measures in relation to the protection of the EU single market, including building SPS inspection facilities in Northern Ireland, sharing data with the EU on the movement of goods GB-NI, and labelling medicines and certain food products as “UK only” or “not for EU”.

Pascal Canfin MEP (Renew), Chair of the Committee on the Environment, Public Health and Food Safety | Source: European Union 2023 - EP

The Committee emphasises the need to monitor UK regulatory divergence and relevant commitments; it suggests consideration be given to linking the UK Emissions Trading Scheme (ETS) with the EU’s ETS and calls on the Commission to monitor the UK’s Carbon Border Adjustment Mechanism (CBAM) policy and “explore opportunities for co-operation in order to raise the level-playing field and climate protection globally.” The Committee highlights some environmental concerns regarding air and water quality, stating, “given their transboundary nature, divergence in environmental protection in these areas could jeopardise air and water quality in the EU”.

The Committee notes the UK Parliament passed the Genetic Technology (Precision Breeding) Act and that the Scottish and Welsh Parliaments did not grant legislative consent to the Bill. It is “highly concerned” about regulatory divergence in this area, which it says “could result in the entry of genetically modified products into the EU with disparate safety controls or without proper labelling.” In a paper from March 2023 on the Genetic Technology Bill, the Food Standards Agency reflected on its impact across the UK. Under the Windsor Framework a range of retail products from Great Britain, including food, may be brought into NI. The FSA stated “further work will be undertaken as we develop policy to understand the trade and enforcement aspects, including how the Windsor Framework and UKIMA [UK Internal Market Act] will operate in practical terms.”

Implementation of the Windsor Framework

Last Friday (9 June), the European Commission published further legislation to implement the Windsor Framework for simplified customs formalities for trusted traders and for sending parcels into Northern Ireland from another part of the United Kingdom. This makes provisions for the arrangements whereby goods “not at risk” of moving into the EU can provide simplified customs data. The new arrangements for parcels moving GB-NI are to be in place from 30 September 2024: there will be simplified requirements for B2C parcels if moved by authorised carriers, and customs formalities for C2C parcels are to be waived. The UK Government states it is working with operators to develop the parcels arrangements and will issue further guidance by 30 September this year.

The Commission previously published legislation on SPS measures and on medicines to implement the Windsor Framework, which were passed by the EU Council and European Parliament. Now the Commission proposes these should be added to the annex of the Protocol/Windsor Framework as  they relate to the EU internal market for goods and “hence fall within the scope of the Windsor Framework and should be added to its Annex 2”. This is not subject to the new arrangements for an applicability motion in the Northern Ireland Assembly, as the legislation is part of implementing the Windsor Framework. (See Windsor Framework Regulations Part 4 - 18.4)

Former Director for International Relations in The Executive Office, Andrew McCormick has written a paper for the Centre for Cross Border Studies on ‘What the Windsor Framework will mean in practice for the institutions of government in Northern Ireland.’ McCormick writes that the Windsor Framework “addresses the reality that, following the TCA [EU-UK Trade and Cooperation Agreement], it is not possible for there to be a free flow of goods between Northern Ireland and both Ireland and Great Britain. Its implications are complex and will require detailed technical work to understand and manage the precise implications of the evolution of the regulation of goods, as UK and EU law evolve”.

Retained EU Law (REUL) Bill

The Retained EU Law Bill returned to the Commons on 12 June as parliamentary ping-pong persists. The Commons has disagreed with a revised Lords amendment on environmental protection, as it doesn’t consider it necessary in order to maintain protections in this area. The Solicitor General stated, “It is simply not necessary for this commitment to be on the face of the Bill, especially not in a way that would make it more difficult to achieve any meaningful reforms that benefit the UK.” Justin Madders (Labour) said, “Given that the Government are supposedly committed to maintaining the highest environmental standards, one might think that those conditions are uncontroversial; they are the actions I would expect any Government committed to maintaining high standards would want to undertake. That view is shared by a range of experts, including, but certainly not limited to, the Government’s own watchdog, the Office for Environmental Protection.”

Another amendment by peers was also rejected; this would provide for greater parliamentary scrutiny to ensure the Government cannot use its new powers on REUL without prior scrutiny by a Commons committee, which could draw “special attention” to a regulation, which must then be debated and voted upon in both Houses. The Solicitor General called the amendment “not only novel and untested; it is unnecessary because there are already measures within the Bill.” The Commons “consider the scrutiny procedure imposed by the Lords Amendment to be inappropriate.” Caroline Lucas (Green Party) said the amendment is “to rein in what is quite simply an Executive power grab, with the Bill handing Ministers enormous powers to review legislation with little to no scrutiny and replace it with provisions that they consider to be “appropriate””.

The Bill returns to the Lords tomorrow, 20 June.

The Office for the Internal Market and intra-UK divergence

The Senedd Legislation, Justice and Constitution Committee held an evidence session with the Office for the Internal Market (OIM) on 12 June. The OIM was established in the Internal Market Act (IMA) to assess whether the UK internal market is operating effectively. The purpose of the IMA is to preserve the UK’s internal market, as powers previously exercised at EU level have returned to the UK Government and devolved Governments.

The OIM was allocated new responsibilities in the Windsor Framework to “monitor any impacts for Northern Ireland arising from relevant future regulatory changes…[and] in cases where Northern Ireland authorities (whether as an Executive or as individual departments) request that the OIM specifically investigates concerns around any future UK regulatory change, we [the Government] will provide a full response to any OIM report on the concerns raised, taking into account the real-world impacts that the OIM identifies.” The Foreign Secretary has suggested the OIM could become a “repository and…clearing house for any divergence” between NI and GB.

James Waugh, Director of the OIM, noted that the Protocol/Windsor Framework itself and relevant regulations to implement it are outside the scope of the OIM’s formal role. He said nothing in the Windsor Framework itself directly changes the OIM’s statutory remit. Waugh told the committee that they have met with the NI civil service on one aspect of the WF and this week will meet with MLAs “to get their questions and views”. He stated, “it's a bit early to say, but we recognise that it's [the Framework’s] going to have quite a big impact on trade in the UK.”

Asked about likely areas for regulatory divergence, Waugh pointed to devolved areas e.g. environment, food, agriculture, and animal welfare policy. He noted the developments on single-use plastics, deposit return schemes, and the Genetic Technology (Precision Breeding) Act 2023. Waugh also highlighted “overarching potential drivers of divergence”, including the Retained EU Law Bill, which they think “could potentially be quite a significant driver of divergence”, the Scottish Government’s commitment to effectively stay aligned with EU law in many areas, and the potential implications of the Windsor Framework. He concluded, “whilst there's not been that much regulatory divergence to report on today, we can also see some specific and more general factors that might lead to greater divergence in the future.”

Other news

• The BBC reports on UK Government plans for an investment conference in Northern Ireland on 12 and 13 September. This was promised by the Prime Minister following the Windsor Framework. Trade Minister Lord Johnson told the BBC that the conference would aim to attract 150 businesses and to showcase opportunities for infrastructure, property investment, and job creation.
• The Specialised Committee on the implementation of the Windsor Framework is to meet on 23 June. The last meeting was held on 27 April.
• The British-Irish Council met on Friday 16 June in Jersey.
• The UK Government published proposals to charge a fixed inspection fee of up to £43 on each shipment of food from the EU, as part of its post-Brexit border controls. The Financial Times quotes Nichola Mallon, head of trade at Logistics UK and former NI Infrastructure Minister, who says the charge is “very concerning” given current price pressures. “It is too high and, if introduced, will add to inflationary pressures and is likely to lead to market distortion in the movement of goods,” she stated. The consultation on the charging arrangements will close on 9 July.
• The European Commission is consulting on the reporting obligations in its Carbon Border Adjustment Mechanism (CBAM). The transitional phase will begin on 1 October until the end of 2025. The CBAM is a tax on carbon-intensive imports. It was adopted on 16 May and could apply in Northern Ireland under the terms of the Protocol/Windsor Framework. In this regard, the UK Government expects the EU to notify it in the Joint Committee about the CBAM’s adoption.
• The BBC reports on concerns from the Northern Ireland mushroom industry about a shortage of workers – the UK’s post-Brexit immigration rules make it harder for EU citizens to come to the UK for low-paid work.
• City A.M. reports on the reduction in UK citizens working in EU holiday jobs. The industry has called on Government to address the Brexit-related challenges in this area; Mark Tanzer, Chief Executive of the ABTA, the Association of British Travel Agents, has called for an EU-UK mobility scheme.
• The Secretary of State for Northern Ireland has responded to the Lords Sub-Committee on the Protocol’s report on the PEACE PLUS programme for 2021-27.
• The Procurement Bill (which originated in the House of Lords) was debated in the Commons on 13 June. The Government says the “transformative new rules…rip up bureaucratic EU regulations for public sector procurement [and]…will make it easier for small businesses to win more of the £300bn of goods and services that the government buys each year.”
• The Senedd begins its inquiry on UK-EU governance today, which will consider post-Brexit arrangements, including the governance of the EU-UK Withdrawal Agreement and Trade and Cooperation Agreement, and the role of the devolved governments in these.
• The Telegraph reports on planned changes to EU rules on the fruit content for jam. The paper reports that the EU wants to increase the fruit content which would increase costs for some jam makers in the UK which export to the EU.