border challenges

Customs preparations: UK's approach to the Northern Ireland Protocol

Another milestone in May for Brexit customs preparations was the release of the UK approach to the Northern Ireland Protocol. It brought details and questions.

UK & EU Brexit compromise: The Northern Ireland Protocol

May has turned out to be quite a month for Brexit progress. At least in terms of announcements. A completed round of UK-EU negotiations, the release of the UK Global Tariff (UKGT), and also: the published paper on "UK's approach to the Northern Ireland Protocol". 

As a reminder: This protocol is a compromise between the UK and the EU for passing the revised Brexit withdrawal act back in January. A compromise was crucial to achieve at the time to proceed with the UK exit on January 31, 2020. Since then, the Brexit transition period is in effect. Preserving Northern Ireland's place in the UK and above all, the peace process and the Good Friday Agreement, are central goals.

So, the protocol represents a practical solution to avoid a hard border in Ireland while making sure that the entire UK can leave the EU. As a result, several provisions only apply to Northern Ireland (NI), which is why it requires consent of the people of NI. A vote on such consent can take place every four years as long as the protocol is in effect, the first one in 2024. With this, only alignment provisions of the protocol that are flexible and adaptable are expected to endure. 

This new UK policy paper is an important update for traders, and we have summarized the key facts in the following chapters. They focus on the four key commitments that guide the UK approach. But ultimately, the published new policy paper is more about guiding principles rather than specific details. 

It is 19-pages long and signed by Michael Gove, MP Chancellor of the Duchy of Lancaster. It's a milestone, but more important will be the actual details of implementation – still to come. Because that is where the challenge lies and meeting the emphasized threefold objective will be a tough task:

  • Protecting the complete UK customs territory 
  • Ensuring the integrity of the EU single market
  • Establishing required procedures that are "as easy as possible and not too burdensome" for businesses

Go to the official publication of "The UK's approach to the Northern Ireland Protocol" of May 20, 2020

UK's approach to the NI protocol: 4 central Brexit points

The new paper sets out how the UK will meet its obligations under the NI protocol. For trade operations and customs experts, however, the details are not sufficient to be included in actual implementation preparations. 

It is more about "what", less about "how" – and prompted many questions. A business engagement forum has been established and the UK government said it is committed to considering all proposals for making maximum use of this protocol. Companies and trade associations alike are pushing for clarity. 

The paper states that "although there will be some new administrative requirements, these processes will be streamlined and simplified to the maximum extent." Fingers crossed. At this point, the following four commitments are most important for traders to note. The UK's approach to the planned implementation is based on them:

UK market access

  • Producers in Northern Ireland will have "unfettered" access to the entire UK market. New legislation to ensure this will be delivered by the end of the year.

UK customs tariffs

  • No tariffs will be paid on goods that move and remain within the UK customs territory. This includes movements to Northern Ireland from the rest of the UK.

Customs infrastructure

  • New processes will need to apply to the flow of goods to Northern Ireland from the rest of the UK. But a new customs infrastructure is not planned for this. 

Trade agreements

  • After the transition period, UK trade agreements will apply to Northern Ireland as to the rest of the UK. Expected benefits include lower tariffs – once agreed. 

The details of the implementation framework and involved procedures in line with these commitments will be a challenge. You can find out more about some of the things this entails in the next chapters. 

How many UK trade agreements are signed? Status as of May 23, 2020

Brexit Tool Kit for Traders

Tariffs on goods that move from the UK to Northern Ireland and on to Ireland are not the only thing that will change after the Brexit transition period. Get supply chain checklists, customs guides, official references, and much more in AEB's tool kit for traders.

Devil in the detail: Customs challenge for UK and EU

Point 20 of the UK policy paper states that "self-evidently goods being sent away from the [EU] single market cannot create a back door into it; and any such goods subsequently leaving the UK would be subject to both exit and entry checks anyway en route to their new destination". 

This alone creates a wealth of questions around the "how" this will be achieved. We know that it will not be based on a new customs infrastructure but on new processes that will be streamlined and simplified. The level of detail provided, however, does not satisfy trade and customs experts at this point. 

Some of the listed measures further prove this point, as they shed further light on the involved complexity:

  • No import customs declarations as goods enter the rest of the UK from NI
  • No entry summary (‘safety and security’) declaration as goods enter the rest of the UK from NI
  • No tariffs applied to NI goods entering the rest of the UK in any circumstances
  • No customs checks
  • No new regulatory checks
  • No additional approvals required for placing goods on the market in the rest of the UK
  • No requirement to submit export or exit summary declarations for goods leaving NI for the rest of the UK

Some exceptions, of course, will apply. And while this refers to the integrity of the UK customs territory as a whole in this context, it is unclear how exactly the EU single market will be protected at the same time. What exactly are the supporting processes for this? We don't know yet. A bit more about currently known plans in the last chapter. 

UK and EU technology, customs data, and compliance

It is also unclear how the new administrative processes will harmonize meeting everyone's objectives while monitoring compliance and keeping impacts on supply chains to a minimum. But what the UK approach to the protocol's implementation gives away is this: 

  • There will be "sophisticated data on trade flows for goods entering Northern Ireland and will of course work with the Irish authorities to clamp down on any attempts to exploit these provisions for the purposes of smuggling and serious organized crime more broadly". 
  • And there is commitment "to using the latest technology, risk and compliance techniques as part of this. The Government will also work closely with the Northern Ireland Executive and businesses to develop these proposals. We will produce full guidance to business and third parties before the end of the transition period".

No further details on such methods, required data sets, and systems integrations are available at this point. Brexit may be out of the media headlines for now. But it surely has not lost any of its aspects of suspense for companies involved in trade across UK borders. 

So, we will need to stay tuned on this one, too. In the meantime, sign-up to our newsletter to get regular updates on developments. And visit our Brexit tool kit to check if you have prepared for everything you can at this point.