Last reviewed 7 January 2022
In a New Year’s Eve speech on Brexit, Prime Minister Boris Johnson put returning the crown stamps to pint glasses and scrapping a ban on selling goods in pounds and ounces in his list of the “key successes” since the UK left the EU.
He did not speak about the Northern Ireland Protocol, which continues to pose major trade problems, nor did he mention the resignation of his chief negotiator with the EU. Lord Frost announced that he was frustrated with the lack of progress in the negotiations and also had growing doubts with regard to the Government’s Covid policies (particularly the decision to move to Plan B) and its proposed tax increases.
He had been planning to stay in post until January 2022 but decided to leave immediately once the news of his departure was leaked. The Prime Minister announced that his replacement would be Foreign Secretary Liz Truss, despite her having said, before the 2016 referendum: “I am backing remain as I believe it is in Britain's economic interest and means we can focus on vital economic and social reform at home.”
Next in line
Ms Truss becomes the fifth person to take up the position of chief Brexit negotiator for the UK, following not only Lord Frost but also David Davis, Dominic Raab and Stephen Barclay. Her main problem is that she takes over just at the point where trade with the Union faces further problems as checks and processes that have been deferred during transitional periods came into force on 1 January with more to follow later in the year. And, of course, the Northern Ireland question remains the unsquarable circle with the EU demanding protection for its single market and the UK insisting that it will not allow the checks on goods moving between Great Britain and Northern Ireland that are an inherent part of the Protocol it signed in December 2020.
This seems to be the main reason for Lord Frost’s departure as he had consistently taken a hard line in the talks, threatening to use Article 16 of the Protocol to change the rules unilaterally and refusing to countenance EU demands that its Court of Justice (CJEU) should be the final arbiter on trade disputes resulting from the Protocol. As the new year starts, Ms Truss has had very little to say about her new responsibilities other than (not unexpectedly) to state her firm belief in the Government’s standpoint.
She said: “The UK position has not changed. We need goods to flow freely between Great Britain and Northern Ireland, end the role of the ECJ as the final arbiter of disputes between us, and resolve other issues. We must pick up the pace on talks in the New Year. Our preference remains to reach an agreed solution. If this does not happen, we remain prepared to trigger Article 16 safeguards to deal with the very real problems faced in Northern Ireland and to protect the Good Friday Agreement in all its dimensions.”
What exactly changed on New Year’s Day? HM Revenue and Customs (HMRC) has explained to transport operators that they will now need to check to see if they need to report for an inspection when arriving at the Port of Dover, Eurotunnel or Holyhead. Guidance as to the new procedures can be found at GOV.UK.
This includes information about what hauliers now need to include when they present a goods movement reference at an “arrived export” location using the Goods Vehicle Movement Service (GVMS), and when they present a goods movement reference at other locations as part of a pre-lodged export declaration using the GVMS. If drivers are arriving into the Port of Dover or Eurotunnel, they will need to attend an Inland Border Facility (IBF) to have the necessary checks carried out. In some cases, they may also be stopped by Border Force officers within the port to have checks performed on their vehicle or load. If this happens, they must still attend an IBF to complete customs functions if they have received instructions to do so.
The goods must be taken to an IBF directly and must be in the same condition as they were at the time of importation. A penalty of up to £2500 may be imposed on anyone failing to follow HMRC instructions. Details of how to register for the GVMS are available at GOV.UK. A new leaflet published by HMRC, which can be found at https://assets.publishing.service.gov.uk, gives a step-by-step guide on what to expect and how to prepare.
EU moves on medicines
Although talks continued between the two sides in December, there was, as Lord Frost pointed out, a frustrating lack of progress. However, in one respect at least, there were positive signs as a bespoke arrangement for the supply of medicines to Northern Ireland was put forward. It means, according to the Commission, that everyone in Northern Ireland will have access to the same medicines at the same time as elsewhere in the UK, while ensuring that the integrity of the EU single market is protected.
It’s the law
A statement made in the House of Commons by the Government’s Paymaster General on 9 December, on behalf of Lord Frost, received little publicity but has significant long-term implications. Available at https://questions-statements.parliament.uk, it concerns planned reviews of the many hundreds of items of European legislation which still apply in the UK in the form of “retained EU law”.
The statement recognises that the EU legislation had to be brought into UK law as so many areas — from the environment to consumer protection — depended on the rules which the UK had absorbed over its long membership of the EU. There simply had not been time to introduce, to quote one example, detailed laws on the safety of chemicals so “UK REACH” was effectively the EU system under a new name.
Lord Frost makes clear, however, that “many laws that were retained are not necessarily right for the UK as an independent country, and there are anomalies and uncertainties which remain over the precise status of ‘retained EU law’ as part of the UK’s domestic law”. It is possible that these reviews will survive Lord Frost’s departure, so changes to the basis of these laws, including the concept of the “supremacy of EU law” and the role of the CJEU in its interpretation, seem likely at some point in the future.
Is the Trade Agreement working?
Setting aside arguments about the intricacies of retained EU law, most traders face more direct problems including, in particular, whether the UK-EU Trade and Cooperation Agreement (TCA) is doing its job insofar as facilitating trade between the two sides is concerned. The simple answer, according to the British Chambers of Commerce (BCC), is not really. A survey of nearly 1000 businesses which it carried out found that 45% were reporting difficulties adapting to changes in rules for buying or selling goods brought about by the TCA.
The Trade and Cooperation Agreement: One Year On: The Experiences of UK Businesses, which can be found at www.britishchambers.org.uk, explores the experiences of businesses with the new trade relationship over the past year and ways in which it could be improved in the short, medium and long term. The figures show rises in the proportion of firms reporting difficulties with the various changes brought about to UK-EU trade compared to when the BCC last asked the same questions in January 2021. The report highlights that UK exporters were more likely than firms overall to report difficulties. For buying and selling goods, 60% faced difficulties; for buying and selling services, 30%; for moving people, 24%; and for transferring data, 11%.
The BCC has urged the Government to reach an agreement on VAT co-operation with the EU to reduce the number of UK companies requiring a fiscal intermediary to conduct cross-border trade — similar, for example, to the situation in Norway. In addition, it says that the two sides must reach an agreed compromise on the Northern Ireland Protocol, ideally early in 2022, to ensure certainty for businesses in Northern Ireland and for the overall UK-EU trading relationship.
Meanwhile, a leading House of Lords Committee has reported that the TCA’s burdens have fallen particularly heavily on smaller and medium-sized businesses (SMEs). It warns of problems ahead as, from 1 July 2022, a number of new requirements for products subject to Sanitary and Phytosanitary controls will be introduced.
More problems for the EU?
December also saw a reminder that the UK is not the only cloud on the Union’s horizon as it heads into 2022. The Brexit negotiator, Commission Vice President Maroš Šefčovič, has another problem in his in-tray in the shape of the EU’s relationship with Switzerland. Tied to the Union by a complicated series of more than 100 bilateral accords and agreements, the Swiss have resisted the idea of formalising these arrangements into a Treaty with the EU. Now Mr Šefčovič has warned that Switzerland must give assurances that it will continue to abide by EU internal market rules if the existing agreements are to be renewed.