The Windsor Framework: Key takeaways for traders

UK and EU flags billowing in the sky

Prime minister Rishi Sunak yesterday (27 February) announced the new ‘Windsor Framework’ arrangement for goods moving between Great Britain (GB) and Northern Ireland (NI) alongside European Commission president Ursula von der Leyen.

Politicians and business leaders are now digesting the details of the deal, which will amend the Northern Ireland Protocol if passed into law.

Trade and customs experts at the Institute of Export & International Trade (IOE&IT) have already looked through the new framework and below share their initial key takeaways.

The IOE&IT Daily Update will be continuing to post updates about the implications of the deal in the coming weeks and months, as well as how the IOE&IT will continue to support you with your NI trade through webinars, training and consultancy.

What is it replacing?

The Windsor Framework amends the NI Protocol – the agreement signed between the UK and EU to ensure that a hard border was avoided on the island of Ireland following Brexit.

The protocol effectively kept NI within the EU’s single market for goods trade. As a result of this, businesses moving goods between GB and NI were required to comply with new customs and sanitary and phytosanitary (SPS) requirements, including the completion of declarations.

Other EU regulations – including product safety standards – were also due to be introduced for GB goods headed to NI, while certain agrifood goods, such as seed potatoes, were prohibited entry to NI under EU rules.

The UK government established the Trader Support Service (TSS) to support traders with these new requirements. The IOE&IT is part of the consortium running TSS.

The UK and EU also agreed multiple ‘easements’ and ‘grace periods’ to postpone the introduction of certain rules and checks that were due to be introduced under the protocol, including for parcel movements and SPS goods.

Key takeaways from the Windsor Framework

1: How the ‘green lane’ model removes declarations as we know them

Under the new Windsor Framework, the customs declarations currently required for goods movements from GB entering NI will no longer be required.

A new internal market system will be established in the UK in which GB goods bound for sale or use in only NI will travel along a ‘green lane’ and will be “freed of unnecessary paperwork, checks and duties.” This will involve businesses being required to submit a reduced amount of data for their goods, “using only ordinary commercial information rather than customs processes.”

The exact format in which this reduced set of data will be submitted has not yet been announced.

Goods deemed ‘at risk’ of entering the EU (including the Republic of Ireland) will travel along ‘red lanes’ and will continue to be subject to the same EU customs controls that apply for GB trade into the EU.

When will this happen? The UK government will be consulting with businesses on the implementation of these new rules in the “coming months,” but it is expected that the rules will come into force in the autumn, according to Politico.

In the meantime, traders should continue to complete declarations for GB-NI goods movements as they have been doing.

2: Declarations to be scrapped for NI-GB goods

According to the UK government’s command paper for the new framework, the requirement for export declarations for NI goods movements entering GB was in place due to there needing to be “equivalent information” for NI-GB goods movements as for GB-NI movements. However, this settlement “risked significant and unacceptable frictions for trade” and had “in turn been a source of dispute between the UK and EU.”

The paper says that the new deal “resolves those issues by removing any requirement to provide export declarations, or any equivalent information, for businesses moving goods from Northern Ireland to Great Britain.”

The new framework will ensure “unfettered access for NI’s businesses to the UK market on a permanent basis, with controls applied only where strictly necessary to manage our international obligations, such as for movements of endangered species.”

When will this happen? The UK government will legislate unfettered NI-GB trade through provisions in the UK Internal Market Act, which will be reinstated after being dropped in 2020. Once this act is passed into law, export declarations will no longer be required.

3: New Internal Market Scheme

A new scheme will be set up to allow traders to declare goods as ‘not at risk’ of entering the EU, further underpinning the green lane model.

According to the command paper, this will include “data-sharing arrangements to monitor and manage risks, with internal UK traders able to move goods without tariffs, on the basis of ordinary commercial information, and without physical checks unless there is a specific risk or intelligence basis, such as to prevent smuggling or other criminality.”

The new Internal Market Scheme will be built upon the existing UK Trader Scheme (UKTS) and will be “underpinned by the existing Trader Support Service (TSS).”

The application criteria will be expanded by:

Removing the requirement for applicants to have physical premises in NI
Increasing the turnover threshold from £500,000 to £2m
Introducing new exemptions on the turnover threshold to include goods used in animal feed, health care, construction and not-for-profit sectors

Businesses currently using UKTS will be re-authorised on the new scheme when it is launched.

Other schemes will also be expanded or replaced as part of the new framework. This includes the current Scheme for Temporary Agri-food Movements to NI (STAMNI), which will be replaced by a new mechanism for SPS goods called the NI Retail Movement Scheme (see below).

When will this happen? It is understood that the new schemes will be introduced from the autumn and traders should continue to use existing schemes until this point.

4: New reimbursement scheme

The framework includes a “new, comprehensive tariff reimbursement scheme” that will be established for firms who have moved goods into NI but were not sure of the end-destination for their goods at the time.

This delivers “on a key priority for businesses and trade organisations,” the command paper says.

When will this happen? The paper says that this will be introduced “in the coming months.”

5: ‘Dramatic reduction’ of SPS checks

An EU official told Politico that the deal delivers a “dramatic reduction” in the number of SPS checks that will need to be conducted, except those that are “essential” to avoid the risk of regulated agrifood goods entering the EU single market via NI from GB.

A new scheme - the NI Retail Movement Scheme - will be behind this reduction and will lead to traders no longer needing to provide officially signed documents such as export health and phytosanitary certificates.

The UK command paper notes that “all traders moving agrifood goods for the final consumer in NI can become members of the UK-run scheme - including retailers, wholesalers, caterers and those providing food to public institutions like schools and hospitals.”

A single document will need to be provided showing the goods are bound for NI only; this will be “electronically and remotely processed, without being physically checked.”

However, the command paper states that, to protect the “single epidemiological area” of the island of Ireland, a subset of high-risk products such as meat, dairy and composite products “will be labelled at a product-level on a phased basis through to 2025”. These requirements will be introduced on meat and fresh dairy from October 2023, though the government will provide reimbursement during the first phase of their being introduced.

EU prohibitions on goods deemed ‘high risk’ for the EU single market – including certain trees, shrubs, seed potatoes, Lincolnshire sausages, Scottish Haggis, pigs in blankets and black pudding – will be lifted.

When will this happen? The agreement behind this reduction will “remove more than 60 EU food and drink rules in the original protocol covering well over 1,000 pages of law”. The framework is not definitive on when these changes will be introduced, but the IOE&IT Daily Update will update readers as and when announcements are made.

6: No declarations for parcel movements

The requirement for customs declarations on private parcel movements under the NI Protocol never came into force due to a grace period unilaterally imposed by the UK.

However, under the new agreement, the EU’s customs code has been removed for these movements – something which the UK paper says is “unprecedented.”

For e-commerce movements, “authorised parcel operators will manage a process of sharing data, in batches, to monitor and manage any risks of smuggling into the EU market.” NI citizens will therefore “uniquely” be able to “receive parcels from both the UK and EU without burdens.”

When will this happen? The current grace period on private parcel movements will continue until new arrangements are in place from October 2024. These new arrangements will cover both private parcel and e-commerce-related movements.

7: Medicines

Under the NI Protocol, medicines sold in NI had to follow EU rules and authorisations as set out by the European Medicines Agency (EMA). The Windsor Framework will allow the UK’s Medicines and Health Products Agency (MHRA) to approve drugs for all the UK, including NI.

When will this happen? No dates have been given yet, but the government has said it will “consult and work with business over the coming months ahead of implementing any changes required by these arrangements.”

8: VAT and Excise

Under the protocol, EU VAT and excise rules applied to goods traded in NI, preventing the UK government from introducing UK-wide VAT reforms in the region. The new framework, however, restores UK VAT and excise rules in the region,

When will this happen? The move can be introduced straight away, on parliamentary approval for the framework, through changes to Annex 3 of the original protocol, as indicated within the new deal.

9: The ‘Stormont Brake’

Under the protocol, a wide range of EU goods rules were applied in NI to avoid the need for a border on the island on Ireland.

The ‘Stormont Brake,’ included in the new framework, allows the NI Assembly to object to new EU rules. If 30 Members of the Legislative Assembly (MLAs) from two or more parties sign a petition, a vote will be held on the new rule.

If the NI politicians vote against the new rule, the UK will tell the EU that the brake has been triggered and that the rule cannot be implemented in NI. To be applied in NI, the rule will need support from both unionists and nationalist representatives.

The brake cannot be used for “trivial reasons” and is reserved for where “significantly different” rules are being introduced, the BBC reports. The process will not be overseen by the European Court of Justice, but the court will have a final say on whether NI follows certain EU single market rules.

When will this happen? This new arrangement would be introduced with the passing of the Windsor Framework into law.

10: State aid

Currently, EU state aid rules are applied in cases where subsidies provided to companies would ‘affect trade’ in goods or electricity between NI and the EU.

Although the intention of the protocol was for EU rules to be “applied narrowly,” there was a risk of the rules actually having a much wider application in practice. The new framework “further constrains the limited circumstances” in which the original protocol concept applies.

“This addresses the risks of 'reach back' and chilling effects on trade between GB and NI, providing more certainty for both beneficiaries and aid granters in GB, and supporting trade within the UK internal market with NI,” the command paper states.