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Freshfields Risk & Compliance

| 3 minutes read

UK announces bill to amend Northern Ireland Protocol

When we last looked at the Northern Ireland protocol saga the UK was looking at invoking Article 16 of the protocol to suspend some if not all of its provisions. The UK has nevertheless continued negotiations with the UK with the EU and has not invoked Article 16 (yet).

The EU has taken the view that operational improvements can be made to the protocol and indeed made proposals to that effect in October. However, it has consistently rejected the UK’s requests for amendment or renegotiation of the protocol. This has been at the cost of the resignation of at least one UK Brexit minister, Lord Frost. The elections in Northern Ireland this month which have placed nationalist Sinn Fein as the largest party in Stormont, the Northern Ireland Assembly, have given the matter renewed urgency since the DUP have indicated that they will not resume power-sharing with Sinn Fein unless concerns surrounding the protocol are addressed.

With the Foreign Secretary Liz Truss taking over responsibility for relations with the EU, there has been a renewed focus on a negotiated settlement with the EU – although progress has been limited, prompting this latest move by the UK Government. Liz Truss – in announcing the intention to introduce enabling legislation – made clear the main UK ask is formal amendment of the protocol, notably to make significant changes to the way in which movement of goods is monitored under the protocol (e.g. green and red channels for goods, a trusted trader scheme and simplification of SPS/veterinary rules moving from the UK mainland to Northern Ireland) and to introduce more flexibility in the way VAT rules can apply in Northern Ireland. However, many of the details will have to wait until the proposed bill is published.

It seems implicit that the UK Government believes announcing its intention to introduce this legislation will inject some renewed vigour into the negotiations, indeed there are many conciliatory words in Truss’ statement, which suggest a negotiated settlement is still within reach (and desired). Truss says the UK is committed to keeping parts of the Protocol that work: “We will cement those provisions which are working in the Protocol, including the Common Travel Area, the Single Electricity Market and North-South cooperation, whilst fixing those elements that aren’t: on the movement of goods, goods regulation, VAT, subsidy control, and governance.”

Truss says in her statement “The Government is clear that proceeding with the Bill is consistent with our obligations in international law”; although noteworthy in this sentence is the reference to “proceeding” with the Bill, rather than using the powers contained in it. UK Attorney General Sue Braverman has already expressed the opinion that the Good Friday Agreement between Ireland and Northern Ireland is a “primordial” agreement which must take precedence over the protocol and that the EU has applied the protocol “disproportionately”, thereby providing the justification for the UK in taking powers to change the operation of protocol unilaterally.

Regarding “governance”, the UK seems to be proposing to remove or anyway limit the jurisdiction of the ECJ but there are conflicting rumours as to whether this would relate to the protocol as a whole or only to the state aid provisions, now that the EU-UK Trade and Cooperation Agreement is in force, with its relatively detailed state aid provisions, and the UK has adopted its own state aid regime.

Concessions to the EU include a proposal to tighten penalties for traders who attempt to bypass or contravene the protocol; and a commitment that the UK would never introduce hard border controls between Northern Ireland and the Republic of Ireland.

The statement in response from the European Commission was overall rather conciliatory – again suggesting a negotiated outcome may be possible in the coming weeks. We recall that in 2020 the EU Commission asserted that the UK Internal Market Bill was “by its very nature” a breach of the good faith provisions of the UK Withdrawal Agreement and in full contradiction with the annexed Northern Ireland Protocol. As a result, the offending provisions were removed before adoption as an Act of Parliament. So far, no mention of the good faith provisions this time around, but Vice President Šefčovič warns that if the UK does proceed with the legislation “the EU will need to respond with all measures at its disposal”.

You can read more of our Trade blogs here, and you can read more about our work in this area and meet our Trade team here.