Committees

Traders may not understand tariffs under Northern Ireland protocol

16 February 2021

The European Scrutiny Committee considers approved and draft EU legislation and policy documents deposited in Parliament by the Government.

Background to the report

The Committee examines the legal and political significance of the documents deposited, including for the UK, and where appropriate asks further questions of the Government about their implications.

In most cases, documents are accompanied by an Explanatory Memorandum from the relevant Minister.

The Committee also has the power to recommend documents for debate.

Key findings

Department for International Trade—Northern Ireland Protocol: application of EU preferential rules of origin 

This EU Commission Implementing Regulation is legally and politically important because:

  • It seeks to clarify whether goods imported into Northern Ireland (NI) from a country that has concluded a preferential trade agreement with the EU (including the UK) qualify, within the framework of the NI/Ireland Protocol, for preferential (lower) EU tariffs or Most Favoured Nation (higher) EU tariffs.
  • However, when read alongside other rules concerning the operation of the Northern Ireland Protocol and "at risk" goods—goods which are at risk of moving from NI into the EU Single Market and are subject to EU customs duties—the Committee concluded that many traders would struggle to understand the processes involved. 
  • The Committee has therefore written to the Minister of State for Trade Policy (Rt Hon Greg Hands MP) asking him to clarify the practical implications. 

The Committee has studied the Regulation, alongside a related Withdrawal Agreement Joint Committee Decision adopted in December, in some depth and has been struck by their complexity.

The Committee’s focus has been to understand how the various rules will affect traders importing goods into NI and whether the processes involved will be readily understandable. 

The questions addressed to the Minister, set out in full in the attached report, relate to issues including:  

  • the rules of origin procedures that apply to goods qualifying for a preferential EU tariff when imported into Northern Ireland
  • the role of the European Commission in deciding whether EU preferential tariffs are available for goods imported into Northern Ireland
  • how the rules will affect traders importing goods into Northern Ireland and the tariffs that they will be required to pay

Department for Environment, Food and Rural Aaffairs—Chemicals Strategy [Commission Communication] 

This EU document is legally and politically important because:  

  • EU policy changes in the chemicals sector will have to be applied in Northern Ireland and may have policy implications across the United Kingdom
  • Under the UK/EU Trade and Cooperation Agreement (TCA) which came into force 31 December 2020, the two parties agreed to "non-regression" on matters of environmental protection, including for chemicals, as well as potential "rebalancing" if significant divergences arise

The European Commission has set out a strategy for maintaining safety in the chemicals sector—including those substances used in items such as toys and cosmetics—as well as policies promoting sustainability of supply, investment and innovation in the sector, which the UK Government broadly agrees with.

The TCA does not require the UK as a whole to align with future changes to EU chemicals policy, but Northern Ireland must do so.

As a consequence, there may be implications for the UK internal market if Northern Irish rules diverge from those applicable in Great Britain.

In the event of significant divergence between the EU and UK affecting trade and investment, the EU or UK would be able to adopt "rebalancing" measures.

Such measures are not defined, but may involve tariffs or partial suspension of the TCA.

The Committee therefore expects the Government to monitor developments in EU policy in the chemicals sector very closely.

The Committee will also monitor the extent to which companies are able to register substances on the UK’s domestic replacement for the EU chemical database. 

Further information

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