EU exit watch — Happy birthday Brexit

Although it continued to observe most of the Union’s rules and regulations until the start of 2021, the UK formally left the EU on 31 January 2020. To mark the two-year anniversary, Prime Minister Boris Johnson announced a new “Brexit Freedoms” Bill.

This would, he said, end the special status of EU law and ensure that it can be more easily amended or removed. “These reforms will cut £1 billion of red tape for UK businesses, ease regulatory burdens and contribute to the Government’s mission to unite and level up the country,” the Prime Minister explained.

Brexit benefits

As the Bill was announced, the Government published a policy document, The Benefits of Brexit: How the UK is Taking Advantage of Leaving the EU setting out how it is using new freedoms to transform the UK into “the best regulated economy in the world”. The 108-page document, available here, includes a chapter on trade which highlights work to put the UK in the centre of a network of deals spanning the Americas and Pacific. It highlights that the Department for International Trade (DIT) is supporting businesses to take advantage of the UK’s Free Trade Agreement (FTA) programme to export to new markets and access a greater range of products at competitive prices.

The paper confirms that, in 2022, the UK will start updating FTAs with Israel, Canada and Mexico so they are tailored to the UK’s economic strengths and will launch negotiations with the six Gulf Co-operation Council countries. In addition, the Government plans to bring forward the Developing Countries Trading Scheme which will apply to 70 countries and will include lower tariffs and simpler rules of origin requirements for countries exporting to the UK.

Delays at Dover

One of the benefits highlighted in the Government paper was that Brexit had ended free movement and meant that the UK had taken back control of its borders. Unfortunately, a number of trade groups pointed out that this claim appeared as lorry drivers were finding themselves queuing for miles outside Dover as one of the side effects of leaving the EU’s single market. In December, HM Revenue & Customs (HMRC) had reminded traders that some of the temporary Customs and VAT easements introduced on 1 January 2021 for goods moving between Great Britain and the EU were to be removed on 1 January 2022.

Current customs arrangements for goods moving from Ireland and Northern Ireland to Great Britain will be extended for as long as discussions between the UK and EU on the operation of the Northern Ireland Protocol are ongoing. This means that full customs controls were introduced as planned on 1 January 2022 for goods moving between the rest of the EU and Great Britain, and for goods exported from Great Britain to Ireland. Changes included the requirement for full customs import declarations for all goods at the time businesses or their courier/freight forwarder bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain;

With customs controls at all ports and other border locations and a requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if they are using the zero tariffs agreed in the UK’s trade deal with the EU, paperwork has become a real problem for traders and hauliers.

More to come?

While the Government has frequently dismissed problems at the UK’s borders as teething problems, the British Ports Association (BPA) has suggested that the recent changes were in fact fairly straightforward and that most UK ports with European trade are more focused on the introduction of checks on animal and plant-based products, expected in July. “This is where there will be significant changes to borders processes with the likelihood of interventions, delays and even extras costs for British importers,” BPA Chief Executive Richard Ballantyne warned.

The BPA represents ports which facilitate 86% of port traffic and include all the main Roll-on Roll-off (Ro-Ro) gateways. Referring to the January changes, Mr Ballantyne said: “This is another milestone for those involved in trade between Britain and Europe and we are hopeful importers will be ready to follow the new rules.”

Parliament wants answers

Members of both the Lords and Commons have been looking into the ramifications of the UK leaving the EU, with the House of Lords Sub-Committee on the Protocol writing a six-page letter to the Foreign Secretary seeking clarity on the EU proposals for medicine supply to Northern Ireland. The sub-committee reminded Ms Truss that their November 2021 letter on this subject sent to her predecessor, Lord Frost, remains unanswered and asks for the Government’s detailed analysis of the EU’s proposals on provision of medicines to Northern Ireland published on 17 December.

Meanwhile the Commons’ European Scrutiny Committee has queried why there has still been no movement on the question of the UK becoming an associate member of the EU’s R&D programme, Horizon. The Government has replied that it sees no reason why the UK should not take up associate membership but that there have been “persistent delays” by the EU. Now called Horizon Europe, the programme has an overall budget of €1.38 trillion. As recently as December 2021, the Commission said that “UK universities, research centres, scientists, innovative businesses and industry can participate in the first calls for proposals of Horizon Europe”.

Chambers of Commerce unhappy with UK-EU trade

One of the bodies contrasting the Government’s optimistic forecasts with the sight of long lorry queues at Dover, the British Chambers of Commerce (BCC) has called for urgent action to improve trade with Europe. With 60% of the UK exporters it surveyed in November 2021 reporting difficulties trading with the EU, it has insisted that urgent action is needed. Head of Trade Policy, William Bain, said that the problems at Dover were the latest in a string of issues with the trade deal that speaks to the wider problems of interpretation, inconsistent application and glaring gaps in its coverage.

The BCC’s proposals for improving trade with Europe can be found here.

It argues that a supplementary deal is needed with regard to export health certificates as they are too expensive and take up too much time. With some companies being asked to register in multiple EU States for VAT in order to sell online to customers there, the BCC also wants a supplementary deal to exempt the smallest firms from the requirement to have a fiscal representative. It points out that CE marked industrial and electrical products will not be permitted for sale on the market in Great Britain from January 2023/24 (nor will components and spares). The Government must, it argues, help businesses with these timelines.

Protocol talks continue

The departure of Lord Frost and his replacement as chief Brexit negotiator by Foreign Secretary Liz Truss seemed to herald a slight warming in relations between the two sides. Instead of the usual round of meetings in either London or Brussels, Ms Truss invited her opposite number, Commissioner Maroš Šefčovič, to visit her at Chevening, the country house to which she enjoys access as Foreign Secretary.

Although their joint statement noted that the meeting then took place in a cordial atmosphere, it said only: “We share a desire for a positive relationship between the UK and the EU underpinned by our shared belief in freedom and democracy.” Within days, however, speaking at Prime Minister’s Questions in the House of Commons, Mr Johnson accused the EU of implementing the Northern Ireland Protocol in an “insane and pettifogging” way.

Meanwhile Ireland’s Central Statistics Office has revealed that exports of goods from Great Britain to Ireland have dropped by 20% since the UK left the single market. This was matched by a major increase in trade between Northern Ireland and the Republic with imports from Northern Ireland up by 64%, compared to the first 11 months of 2020, while exports to Northern Ireland from the Republic rose by 48%.

Protocol problems

Opposition from Northern Ireland’s Democratic Unionist Party (DUP) to the imposition of border checks as part of the Protocol has been growing in recent months and has now reached the point where it looks likely to collapse the Northern Ireland government. The DUP launched a two-pronged attack on the Protocol with Agriculture Minister Edwin Poots ordering a stop to Brexit checks in the Irish Sea just before First Minister, Paul Givan, resigned, This latter move has brought the government in Stormont to a halt as the power-sharing agreement requires Michelle O’Neill, his Sinn Fein deputy, to also leave office.

Mr Poots said that SPS (sanitary and phytosanitary) checks at the border require approval from the Northern Ireland Executive, which they do not have, and therefore he had been told that he was within his legal rights to suspend them. For the UK Government, Northern Ireland Secretary Brandon Lewis said that it will not intervene in this decision. A spokesman for Boris Johnson confirmed that he wanted checks to continue, adding that the Government was reviewing the legal position. It wants to find solutions through ongoing negotiations with the EU, the spokesman said. Responding for the EU, Commissioner Mairead McGuinness said: “I’m not sure what the purpose of this move is. It’s an absolute breach of international law.”

DUP leader Sir Jeffrey Donaldson has told both the EU and the UK that if the Protocol issues are not resolved by the time of the May elections it will be difficult to form a government in Northern Ireland.