The last of the Brexit customs milestones in May brought some details and even more questions: The UK published its approach to 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:
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:
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
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.
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:
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.
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:
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.
