Talks continue between the EU and UK to break the deadlock on issues around implementing the Northern Ireland Protocol with some signals that the UK may trigger Article 16 of the Protocol.
This Institute this week said that triggering Article 16 will not address the current trade challenges because it was designed as a last resort clause. If it is executed, it will cause significant upheaval for businesses that are already trying desperately to keep goods moving, particularly in the run up to Christmas. Read our comments.
It is a safeguard clause that either side can execute if they believe the Protocol has caused “serious economic, societal or environmental difficulties” or the “diversion of trade.” What constitutes “serious economic, societal or environmental difficulties” is not defined in the Protocol.
Why has the UK signalled that it may trigger Article 16?
Broadly, the UK says that the current requirement for goods moving from Great Britain to Northern Ireland to follow certain rules of the EU’s Single Market has caused considerable friction both in terms of trade supply and customs administration.
The UK has said that the rules have caused much greater disruption than anticipated at the time the Protocol was agreed.
What parts of the Protocol have the UK signalled that it would like changed?
There are six main areas that the UK would like changed and these were set out in a command paper issued in July.
The UK wants goods from Great Britain that are destined to be consumed in Northern Ireland to be able to move freely without paperwork, tariffs, or checks. For goods that move through Northern Ireland from Great Britain into Ireland (or the rest of the EU), full customs checks, and EU SPS checks, would be conducted by UK authorities.
No certificates or checks for agri-food to be consumed in Northern Ireland would be required. For live animals and certain plants, checks would still be required on entering Northern Ireland from Great Britain; however, the UK is seeking an “appropriately designed SPS agreement… setting out where UK and EU SPS legislation provided for the same high standards.”
An international arbitration system would be put in place to replace the authority of the European Court of Justice in Northern Ireland.
For medicines, the UK argues that the most straightforward solution may be to remove medicines from the scope of the Protocol.
The UK is also seeking more flexibility to set its own VAT and excise rates and rules in Northern Ireland.
For more on our analysis of the command paper read here.
Has the EU responded to these demands?
Yes. In October, the European Commission put forward “bespoke arrangements” in response to the difficulties under the Northern Ireland Protocol. Further flexibilities were proposed in the areas of food, plant, and animal health (SPS checks), customs, medicines, and engagement with stakeholders in Northern Ireland with an 80 percent reduction in SPS checks and a 50 percent reduction in customs paperwork put forward for goods that would be consumed in Northern Ireland.
What would happen if Article 16 is triggered?
While the legalities of what would happen are reportedly being investigated by the EU, Annex 7 of the Protocol sets out that if either side is considering such unilateral action, it must notify the other party as soon as possible through the EU-UK Joint Committee, the body tasked with overseeing the implementation of the Protocol. Both the EU and UK would then immediately enter into formal discussions to find a solution.
Any unilateral or “safeguard measures” cannot come into force for a month except under “exceptional circumstances”. If exceptional circumstances are deemed to exist, “protective measures strictly to remedy the situation” can be introduced immediately.
If negotiations fail and either party adopts unilateral measures, the other may take “proportionate rebalancing measures”. This means the UK, for example, could introduce safeguard measures but must notify the EU which can, if it wishes, respond with balancing measures.
Such safeguard measures will be reviewed by the Joint Committee every three months from the date of their adoption “although either side can request a review at any point”.
It’s a case of wait and see. Talks continue between the EU and UK on working through the issues and for now Article 16 remains untriggered. Brexit minister, David Frost told the House of Lords this week told the EU to “stay calm” and the triggering of Article 16 is “not inevitable”.
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