The UK Government's pre-announced and much-awaited Northern Ireland Protocol Bill 2022 (the Bill) was published and introduced into the House of Commons on 13 June 2022. It is a legally complex public international law and constitutional law document with provisions which take an aim at the effects of EU law in Northern Ireland. The EU has strongly discouraged such a legislative step, issuing warnings for a trade war with the UK.
In a nutshell, the legal purpose of the Bill is to remove the prevailing effects of EU law on trade and economic governance in Northern Ireland, by disapplying a number of key provisions (named "excluded provisions") triggering those effects and contained in the Protocol on Northern Ireland (the Protocol) and the Withdrawal Agreement 2020. By removing most EU law effects, the Government intends to bring back UK's legislative authority and its constitutional and legal remedies system into Northern Ireland.
In the UK Government's view, the Protocol in its current form does not fulfil some of its main political objectives, relating to keeping peace and stability, agreed between the UK and the EU when the Protocol was negotiated. The Bill is therefore intended to honour the Belfast ("Good Friday") Agreement of 1998, and to preserve the social and economic wellbeing of the people of Northern Ireland. However, the Government says that the effects of EU law in Northern Ireland have led to loss of trade and business within the UK's Single market, leading to social and economic hardship that is likely to have negative political consequences for the implementation of the Good Friday Agreement.
The legal changes brought about by the Bill are far-reaching and significant, attracting attention and criticism, notably from the EU.
Trade, subsidy control and governance
The general provisions of the Bill remove the direct effect and applicability of most EU law provisions relating to trade in goods, subsidy control and governance in the Protocol. They also remove the obligation of UK courts in Northern Ireland and the rest of the UK to look into EU law and to defer to the EU Court of Justice when interpreting related matters before them. In parallel, the Bill empowers UK Ministers of the Crown with significant legislative and implementing powers in matters concerning the Protocol. Any gaps that would appear following the disapplication of EU law would be replaced by new UK legislation and regulations concerning trade in goods, subsidy control and governance.
The provisions of the Bill relating to trade in goods and customs disapply most key provisions of the Protocol on Northern Ireland concerning trade, including the concept of products "at risk" of being moved into the EU. The Bill instead provides the legal basis for more flexible routes, such as those discussed in the Government's Command Paper "Northern Ireland Protocol – the Way Forward" of July 2021. The Bill introduces the foundations of a dual system of trade in goods with and in Northern Ireland. Under such a dual system, producers and traders of goods (industrial products, medicines and agri-food products) would be able to choose whether to comply only with UK law and regulations, or both UK and EU law, depending on whether the goods are intended for use in the UK, or are destined for the EU. Accordingly, there would be "green" and "red" channels of trade with Northern Ireland, depending on the intended destination of goods, as well as on "qualifying movements". For example, the "green channel" would be available only to those movements which meet certain criteria, such as trade by operators enjoying trusted trader status.
For the purposes of consumer safety, biosecurity, and public health, the Bill provides for the adoption of secondary legislation adapting the dual system to such special requirements.
In matters of subsidy control, the Bill provides for a single system in Northern Ireland, governed by the new UK Subsidy Control Act 2022, and removes the current dual system applying elements of EU State aid control.
With respect to governance, the Bill removes the mandatory jurisdiction of the EU Court of Justice over the Protocol and over the related provisions in the Withdrawal Agreement. UK judges would be able to refer questions on EU law to the Court of Justice only if they themselves consider this necessary.
The Bill also disapplies a number of interlinked provisions - references in the Protocol on Northern Ireland to the Withdrawal Agreement, which in turn refer to EU law. This element of the Bill intends to remove a number of EU law triggers in the Withdrawal Agreement, which underpin EU law enforcement in Northern Ireland. For instance, under such interlinked provisions, Northern Ireland falls within the EU customs territory for matters regulated by the Protocol, which provides customs enforcement powers to the EU (this is triggered by a reference in the Protocol to a territorial definition provision in the Withdrawal Agreement).
Under the Bill, Ministers are given the power to disapply further elements of the Protocol for specified general purposes, such as ensuring the free flows of trade within the UK, safeguarding animal, plant or human welfare or health, or removing the difference between taxes or customs duties in Northern Ireland and Great Britain. Ministers are also given significant legislative freedom in reinstating and adjusting the effects of EU law in Northern Ireland.
In matters of VAT and excise, the Bill provides Treasury with powers to ensure that UK VAT, excise and other tax policy can be applied to the entirety of the UK, including adjustments and ensuring the same level of taxation in Northern Ireland as in the rest of the UK.
The UK Government has stated that a preferred solution to complaints regarding the Protocol is a new agreement with the EU, suggesting the Bill may be a leverage intended to provoke a shift in EU's standstill position in ongoing negotiations.
However, the EU considers the Bill as a unilateral measure which in their view breaches existing bilateral agreements. In that respect, the EU may decide to retaliate, similarly triggering unilateral mechanisms, such as suspending the whole or parts of the Withdrawal Agreement or even Trade and Cooperation Agreement between the UK and the EU. This could potentially escalate to a trade war, such as removing duty-free benefits in trade and imposing punitive tariffs or other dissuasive measures under recent EU legislation.
If you want to know more about the UK Government's Northern Ireland Protocol Bill, the relevant publications are made with references to Bill12 and Bill 12-EN. Should you have any concerns how this could affect your business or need more information or clarification please contact the authors of this summary article.