The UK Government has now published its draft Northern Ireland Protocol Bill (“the Bill”) which is intended to provide powers to disapply parts of the Northern Ireland Protocol attached to the UK’s EU Withdrawal Agreement (“the Protocol”).
The UK Government had previously indicated that it was considering invoking the emergency provisions of Article 16 to suspend parts the Protocol. In the event of the relevant provisions being commenced, the legislation now proposed would provide powers to disapply specified parts of the Protocol, rather than seeking to suspend them. In contrast to the stance it took on the 2020 Internal Market Bill, which it acknowledged was in breach of international law (see our previous note), the government now says this new legislation is “necessary” – and thus justified in international law – to safeguard essential interests in Northern Ireland. The necessity justification has been widely condemned by commentators, since Article 16 has not been invoked first, and indeed the European Commission immediately announced that it would reactivate legal proceedings against the UK for non-compliance and non-implementation of the Protocol, which it said was a clear breach of international law. At the same time it announced that it is bringing two additional infringement actions on the UK’s obligations under the EU's sanitary and phytosanitary (SPS) rules and for failing to provide the EU with certain trade statistics data in respect of Northern Ireland, as required under the Protocol.
So where are we?
The European Commission put forward proposals to improve the workings of the Protocol as long ago as last October and further detailed proposals on customs and SPS rules on 15 June 2022. Negotiations between the EU and the UK have been suspended since February, and now the UK has instead proposed a unilateral solution. Besides addressing the recognised problems of trade friction, the bill also seeks to impose unilateral changes for certain matters (such as State aid, VAT, and the role of the European Court), which the EU has already rejected out of hand. The bill is also supposed to facilitate the resumption of power-sharing in the Northern Ireland Assembly, but it has already been rejected by a majority of MLAs (Members of the Northern Ireland Legislative Assembly), albeit not by DUP MLAs. Nor is it clear that the trade provisions are welcomed by business across the board. The EU side is playing down the risk of a trade war but given the controversy surrounding the Northern Ireland issue it is quite possible that this bill will not reach the statute book, or not in this form, and the Commission has announced legal action against the UK and some further detail on its own Protocol proposals. Whatever the case, the bill itself provides that once adopted it will come into force on a date decided by ministers – so it will not come into force automatically upon adoption.
What does the bill do?
The bill disapplies specific areas of the Protocol in domestic UK law and provides powers to the disapply further areas for specific purposes and to make new law related to the Protocol. So which parts of the Protocol could be disapplied?
1. Movement of goods
Clause 4 of the bill disapplies the bulk of Article 5 of the Protocol which is the basis for EU customs and related legislation to apply to trade with Northern Ireland. As the government says, the result will be that goods moving between Great Britain and Northern Ireland including animals will not face the requirements placed on them under the Protocol. This clause provides the basis for the government to administer a so-called red and green channel regime providing different channels and requirements for goods, depending on whether they are destined for the EU or for Northern Ireland. It must be said that the EU was already moving towards a simplification of its requirements here in its proposals of last October, and there are mechanisms under the Protocol to make amendments to the Article 5 regime – indeed the Commission’s 15 June papers on customs and SPS rules are designed to do this.
2. Regulation of goods: option to choose between dual routes
Clause 7 of the bill allows for the option to choose compliance with a UK regulatory route or the EU regulatory route, or both, for regulated classes of goods otherwise covered by Annex 2 of the Protocol which details the provisions of EU law which are applicable to and in the UK in respect of Northern Ireland. Currently all goods supplied in or to Northern Ireland have to comply with EU regulations even if not destined for the EU.
3. Subsidy control
Clause 12(1) of the bill suspends the State aid provisions of the Protocol, i.e. Article 10 and Annexes 5 and 6. At the same time subsection 2 has the effect of extending UK subsidy control rules to Northern Ireland once Article 10 is disapplied and the bill comes into force.
4. European Court of Justice
Clauses 2 and 3 of the bill clarify that the excluded provisions of the Protocol do not apply in UK domestic law and limits the requirements of the UK’s EU Withdrawal Act 2018 (“EUWA”) which would otherwise require domestic courts to interpret domestic law in light of the Withdrawal Agreement and related Swiss agreements (“WA”). Clauses 13 and 14 go further and quite generally disapply the effect in domestic law of provisions relating to the implementation and enforcement of the Protocol and implementing rules. Any provision is disapplied which confers jurisdiction on the European Court of Justice in relation to the Protocol or related provisions of the WA. Any provisions governing the way in which the UK is supposed to implement the Protocol are also disapplied, by clause 14.
Finally, in relation to the European Court, clause 20 makes it clear that UK courts and tribunals are not bound by future decisions of the European Court in relation to the Protocol and cannot refer any matter to the European Court. Nevertheless, the clause makes provision for future regulations which might allow courts and tribunals to refer questions of EU law to the European court as to a question of interpretation of EU law.
Wider powers granted by the bill
Clause 15 of the bill provides a general power to make changes and exceptions to the provisions of the Protocol which are to be disapplied or, in the terminology of the bill, to be made an “excluded provision”, and clause 16 provides power to make new law where an additional “excluded provision” has been made under clause 15. These are very wide powers and clause 15 imposes two safeguards. In the first place, the power can only be for a “permitted purpose”, including: safeguarding the social or economic stability in Northern Ireland; ensuring the effective flow of trade; safeguarding the function of the Belfast agreement; and safeguarding animal, plants or human welfare or health, as well as safeguarding the integrity of the EU internal market. In addition, the power may not be used to disapply Article 2 (right of individuals), Article 3 (common travel area) and Article 11 (other areas of North-South cooperation). By implication, however, all other provisions of the Protocol can be targeted with these powers. One obvious area where the provisions of the bill do not seem to be fully developed is in relation to the European Court, and settlement of disputes under the Protocol.
In case these powers aren’t deemed wide enough, clause 18 enables a minister of the Crown to engage in conduct in relation to any matter dealt with in the Protocol if they consider it appropriate to do so in connection with one or more of the purposes of the Act. The explanatory notes clarify that this is intended to relate to “sub-legislative activity, such as producing guidance”.
Finally, clause 19 provides powers to implement any relevant agreement amending or replacing the Protocol. These powers can be exercised by regulation, thus bypassing any need to obtain an Act of Parliament and also, incidentally, bypassing the parliamentary procedures laid down for ratification of treaties by the Constitutional Reform and Governance Act 2010 (“CRAG Act”).
VAT and customs duties excise duties
Clause 17 is a freestanding provision (i.e., not expressed as disapplying provisions of the Protocol), giving power to make regulations on VAT or excise duty or any other tax considered appropriate in connection with the Protocol and notably to lessen, eliminate or avoid the difference between taxes in Northern Ireland and in Great Britain.
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.
