Out-Law News 2 min. read
01 Mar 2023, 11:08 am
The EU and the UK must continue to work in good faith after reaching agreement over trade, subsidy and constitutional arrangements in Northern Ireland if they are to rebuild trust, according to one legal expert.
Dr Totis Kotsonis of Pinsent Masons said the Windsor Framework (29 pages / 2.48MB PDF) is a “hugely important development” that “breaks the deadlock over the implementation of the Northern Ireland Protocol and removes a major stumbling block in the post-Brexit normalisation of UK-EU relations.” It contains a number of new arrangements, including on customs checks and the application of VAT, as well as instruments designed to give the Northern Ireland Assembly greater influence over the application of future EU rules in Northern Ireland.
But Kotsonis warned against premature celebration from either side. “Some caution is in order as this is an agreement in principle which will require further steps to be taken jointly – and separately – by the EU and the UK. It will take up to 1 July 2025 for the framework to be implemented fully,” he said.
According to the agreement, announced on Monday, the scope of the existing ‘trusted trader’ scheme will be broadened, making it easier for many more businesses to move goods from Great Britain to Northern Ireland when the goods are not intended to then move into the EU. The change will mean that, once all the relevant arrangements are fully in place, just 5% of retail goods consignments travelling from Great Britain to Northern Ireland will need to be checked by customs officials, according to the UK government. Underpinning the measures is the UK’s agreement to put the required inspection facilities and labelling arrangements in place, as well as to grant the EU access to relevant UK customs databases and IT systems.
Separately, the agreement clarifies the UK’s and EU’s common understanding of the Protocol's provisions that trigger the application of EU state aid rules to certain UK subsidies. In their joint statement, the two sides said that, in order for a UK subsidy to be deemed to have an effect on trade in goods between Northern Ireland and the EU, the subsidy must have a genuine and direct link to Northern Ireland – with a foreseeable and material effect on that trade. Kotsonis said: “While these some contentious provisions remain, the clarification should be expected to limit further the circumstances in which these might be triggered.”
Once the framework is implemented fully, the proportion of EU rules that still apply in Northern Ireland will be reduced to less than 3%, according to the UK government, although the European Court of Justice (CJEU) will remain the final arbiter in disputes involving these rules. Separately, a new measure will allow the Northern Ireland Assembly to object to any new EU legislation which seeks to amend or replace certain EU rules that also apply to Northern Ireland by virtue of the Windsor Framework. The so-called ‘Stormont Brake’, which can be triggered if 30 MLAs from two or more parties sign a petition, is intended as a last resort mechanism and is reserved for new EU rules that are "significantly different" to those that already apply by virtue of the Protocol.
Once the UK informs the EU that the brake has been triggered, the relevant EU rule cannot be implemented in Northern Ireland until both sides agree to a resolution. The brake will not be overseen by the CJEU, with disputes instead being resolved through independent arbitration. If the parties are unable to resolve their differences over the issue, the EU will have the right to take "appropriate remedial measures" against the UK.
Kotsonis said: “Ultimately, the framework has been achieved as a result of the goodwill shown by both parties. Its full implementation will now require the UK and the EU to continue to work in good faith as trade partners and allies. This should then help make up for a more constructive relationship and help rebuild fully the trust between the two sides that has been so badly damaged by the dispute over the implementation of the previous Northern Ireland Protocol.”
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