Further Border Control Delays (UK)

The UK government recently announced that movement of goods from GB to Northern Ireland (occurring under the grace arrangements in the Northern Ireland Protocol – NIP) would continue in the current manner indefinitely.

The UK government also recently announced that CE marked goods would continue to circulate in GB for the entire 2022. CE marked goods circulate in Northern Ireland by virtue of the NIP. This was included in the August Email Alert.

This morning, the UK government confirmed – here

• The requirement for pre-notification of agri-food imports will be introduced on 1 January 2022 as opposed to 1 October 2021.

• The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022.

• Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022.

• The requirement for Safety and Security declarations on imports will be introduced as of 1 July 2022 as opposed to 1 January 2022.

The timetable for the removal of the current easements in relation to full customs controls and the introduction of customs checks remains unchanged from the planned 1 January 2022.

FTA UK & Iceland, Liechtenstein, Norway (UK)

Thursday 8th July, trade ministers from Iceland, Liechtenstein and Norway signed a free trade agreement (FTA) with the UK. Conclusion of negotiations on an FTA had been announced on 4th June, and Norway had published the text (English language starts at page 105).

The UK trade minister made a statement to Parliament (8th July) – here.

Norway’s minister of trade and industry remarks at 4th June press conference on the matter – here, Norway’s press release (4th June) here.

The signed legal text will be published in the UK shortly, along with the Explanatory Memorandum that is a statutory requirement under the Constitutional Reform and Governance (CRaG) Act.

The Explanatory Memorandum provides the context, explaining what the new treaty is meant to achieve, what legislation (if any) will be needed to implement it, when it will take effect, the financial implications, and the territorial application of the agreement.

I will blog post again when the further documents are published.

EU announcements re NI Protocol (Northern Ireland)

The Protocol on Ireland and Northern Ireland (often referred to in the UK as the Northern Ireland Protocol), as an integral part of the EU-UK Withdrawal Agreement, was agreed jointly and ratified by both the EU and the UK. It has been in force since 1 February 2020 and has legal effects under international law.

The EU has announced the following re Northern Ireland (as respects the NI Protocol):

(1) the EU extends the non-application of third country rules (grace period) for meat products to 30th September (1st October is the date when the UK will apply its own ban on chilled meat imports) – the EU declaration is here – the UK declaration is here.

This will mean that meat products can continue to move from Britain (a third country in EU terms) to Northern Ireland (a part of the UK subject to the NI Protocol).

This temporary solution is subject to strict conditions. For example, the meat products that are subject to the channelling procedure referred to in the United Kingdom’s unilateral declaration must remain under the control of the Northern Ireland competent authorities at all stages of that procedure. These meat products must be accompanied by official health certificates issued by the UK competent authorities, can exclusively be sold to end consumers in supermarkets located in Northern Ireland, and must be packed and labelled accordingly. (EU declaration)

(2) the EU will change its own rules so that regulatory compliance functions for medicines authorised by the UK for the Northern Ireland market, in accordance with the NI Protocol, may be located in Britain, subject to specific conditions ensuring that the medicines concerned are not further distributed in the EU Internal Market – the European Commission will put forward a legislative proposal in the early autumn (the grace period runs out at the end of 2021)

(3) the EU will facilitate the movements of guide dogs accompanying persons travelling from Britain to Northern Ireland – this is communicated to the UK authorities and it is for the Northern Irish competent authorities to define the details for its implementation on the ground

(4) the EU waives the obligation to show the motor insurance Green Card for drivers from the UK – applicable for Northern Irish motorists crossing the border into Ireland (not for British motorists travelling to Ireland)

(5) the EU has removed the need for re-tagging when animals move multiple times between Britain and Northern Ireland during their life – the European Commission adopted an implementing act to that effect on 29 June 2021 (Commission Implementing Regulation (EU) 2021/1064).

The EU also announces the European Commission is working on a regulatory solution to facilitate the swift return of livestock to Northern Ireland from exhibitions or trade fairs in Britain, so that the animals concerned will not have to wait for a minimum residency period in Britain – the relevant delegated and implementing acts will be adopted in October 2021.

The EU also announces work is ongoing on a solution regarding the risk control of scrapie, to facilitate the movement of sheep and goats between Britain and Northern Ireland.

Carbon Border Adjustment Mechanism (EU)

In March, the European Parliament adopted a resolution on a WTO-compatible carbon border adjustment mechanism (CBAM). WTO rules mean an imported product cannot be subject to tougher measures than products produced domestically. The EU’s March CBAM Resolution is here.

The EU’s CBAM would be part of a broader EU industrial strategy and cover all imports of products and commodities covered by the EU ETS, adding a carbon tax to the import of these products or adding a mechanism mirroring the EU ETS. The preference is for a mechanism mirroring the EU ETS – importers would buy permits for imports of certain goods – with countries of similar carbon price e.g. Norway, Liechtenstein, Iceland, and possibly Switzerland, exempted.

By 2023, and following an impact assessment, the Resolution calls for CBAM to cover the power sector and energy-intensive industrial sectors like cement, steel, aluminium, oil refinery, paper, glass, chemicals and fertilisers.

Specifically in para 10, the Resolution –

10. Reiterates that the introduction of a CBAM should be part of a package of legislative measures to ensure the swift reduction of GHG emissions deriving from EU production and consumption, in particular by scaling up energy efficiency and renewable energies; stresses that the CBAM should be coupled with policies aimed at enabling and promoting investments in low-carbon industrial processes, including through innovative financing tools, the new Circular Economy Action Plan and a broader EU industrial policy that is both environmentally ambitious and socially fair, with a view to steering a decarbonised reindustrialisation of Europe to create quality jobs at a local level and ensure the competitiveness of the European economy, while fulfilling the EU’s climate ambition and offering predictability and certainty to secure investments towards climate neutrality;

And at para 16, the Resolution –

16. Considers that in order to address the potential risk of carbon leakage [competition from countries with lax climate rules] while complying with WTO rules, the CBAM needs to charge the carbon content of imports in a way that mirrors the carbon costs paid by EU producers; stresses that carbon pricing under the CBAM should mirror the dynamic evolution of the price of EU allowances under the EU ETS while ensuring predictability and less volatility in the price of carbon; is of the opinion that importers should buy allowances from a separate pool of allowances to the EU ETS whose carbon price corresponds to that of the day of the transaction in the EU ETS; underlines that the introduction of the CBAM is only one of the measures in the implementation of the European Green Deal objectives and must also be accompanied by the necessary measures in non-ETS sectors as well as an ambitious reform of the EU ETS to ensure it delivers meaningful carbon pricing that fully respects the polluter pays principle, and to contribute to the necessary GHG emissions reduction in line with the EU’s updated 2030 climate target and 2050 net zero GHG emissions target, including by addressing the linear reduction factor, a rebasing of the cap and assessing the potential need for a carbon floor price;

And at para 32, the Resolution –

32. Acknowledges that the CBAM could be implemented either as an extension of the current regime of customs duties or as a complementary scheme within the existing EU ETS framework; emphasises that both approaches could be entirely consistent with an own resources initiative;

The European Commission is expected to present a legislative proposal on a CBAM in July 2021 as part of the European Green Deal.

In early June, the first draft of the EU’s CBAM legislative proposal became public (it ‘leaked’ essentially).

Under the current draft, importation of products covered by the CBAM would be carried out by “authorized declarants” who would lodge “CBAM declarations” annually. These declarations would reflect direct and indirect GHG emissions embedded in the imported products. Regulated entities (importers) would then surrender a corresponding amount of “CBAM certificates.”

The proposal identifies a preference for the declaration of an actual installation-specific value of the specific embedded emissions of an imported good rather than using default values. Each authorized declarant would ensure that the declared embedded emissions are verified by an independent verifier. In the situation where actual GHG emission values could not be verified—for example, as a result of the authorized declarant’s failure to submit the required information—default values would be used to determine the number of CBAM certificates to be surrendered. Default values are proposed to be set at a relatively high level corresponding to the emissions of the 10 percent worst performing sites in the EU for each of the processes involved in the production of goods.

The proposal provides for the possibility of offsetting the cost compliance with the CBAM against a carbon price paid in the country of origin of the imported good. Declarants would apply for compensation—i.e., a reduction in the number of certificates to be required—if a carbon price had already been paid in the country of origin for the embedded emissions in the imported goods.

Further details are in this Mayer Brown explainer – here, which also notes that the actual legislative proposal might be significantly altered.

I will post again when the legislative proposal is issued.

Northern Ireland 100 Years (Northern Ireland)

Today (3rd May 2021) is the centenary of the political entity known as “Northern Ireland”, and 100 years from the date of connected customs and other border controls.

The UK House of Commons Library published today a briefing paper on the origins and development of the Northern Ireland borders. This paper is here.

Key points are set out below –

(1) Claims by England over the island of Ireland and its peoples date from the 12C.

(2) The Government of Ireland Act 1920 (UK) – Royal Assent on 23 December 1920, created devolved parliaments in “Northern Ireland” and “Southern Ireland”. An administrative boundary was to divide the two.

(3) The separate parliaments of Northern and Southern Ireland were given legal basis (UK) by Order in Council under the 1920 Act on 3 May 1921 (hence 100 years as respects Northern Ireland).

(4) The Anglo-Irish Treaty signed 6 December 1921, allowed Northern Ireland to “opt out” of coming under the jurisdiction of the declared Irish Free State (Ireland), which it did on 7 December 1922. This triggered a Boundary Commission, which was to revise the boundary between NI and the Free State.

(5) In the interim, a customs frontier was erected along the Northern Ireland/Free State border on 1 April 1923. This “hardened” the boundary for the first time. Cross-border roads were identified as “approved” or “unapproved”; duties were payable on many commercial goods.

(6) The Tripartite Boundary Agreement of 3 December 1925 confirms the existing border.

(7) The 1937 Constitution (Ireland) formally renames the ‘Southern Ireland’ state Ireland.

(8) 26 counties of Ireland explicitly become a Republic under the terms of the Republic of Ireland Act 1948 (Ireland), definitively ending membership of the British Commonwealth on 18 April 1949, further strengthening the border as an international frontier. The Ireland Act 1949 (UK) subsequently confirms that the “consent” of the NI Parliament is required to end or alter partition.

(9) When the IRA launch “Operation Harvest” in 1956, the border is “securitised” for the first time, with “unapproved” routes cratered or spiked. This happens again in August 1970 as a response to “The Troubles”:

(10) Both Ireland and the UK accede to the then European Economic Community on 1 January 1973. As a result, the border between the two becomes softer, but customs checks remain in place, as does the Common Travel Area (that exists between the UK and Ireland).

(11) Following the Single European Act of 1986, customs checks cease at what the UK HM Customs & Excise call the “Northern Ireland Land Boundary” at midnight on 31 December 1992. Only the border’s security aspects remain.

(12) The Belfast/Good Friday Agreement is endorsed in a referendum (Northern Ireland) on 22 May 1998. A referendum is also held on the same day in Ireland. Although the Belfast/Good Friday Agreement does not explicitly rule out a “hard” border in Ireland, it does commit the UK Government to removing security installations.

(13) On 1 January 2021 the Northern Ireland Protocol (under the EU-UK Withdrawal Agreement) comes into effect. This avoids “customs and regulatory checks or controls and related physical infrastructure at the border between Ireland and Northern Ireland” by creating an “Irish Sea border”.

Under the Protocol, Northern Ireland remains aligned to a number of European Union rules, as set out in the Protocol’s Annexes. These include the Union Customs Code and the Official Controls Regulation on food and animal products. As a result, traders moving most commercial goods from Britain to Northern Ireland (but not from Northern Ireland to Britain) are required to meet certain customs requirements and – in the case of products of plant or animal origin – various Sanitary and Phytosanitary (SPS) requirements.

To do this, traders are required to make customs declarations, and in some cases pay tariffs. Traders must also provide Export Health Certificates (EHCs) for agri-food goods. These documents, and the goods themselves, may also be subject to checks. The UK-EU Joint Committee (provided for by the EU-UK Withdrawal Agreement) has (to date) agreed a number of exceptions whereby these requirements could be reduced for certain authorised traders: for example, the so- called “grace periods” during which supermarkets and their suppliers are permitted to move food products into Northern Ireland without an EHC, provided certain other conditions are met.

Under the terms of the EU-UK Withdrawal Agreement, the 90 members of the Northern Ireland Assembly have the periodic power (after 31 December 2024) to decide whether to terminate or continue the Protocol arrangements. If the former, then the Joint Committee is obliged to make alternative proposals to the UK and EU in order to avoid a hard border on the island of Ireland.

SPS Export Health Certificates from April 21 (EU)

I posted before about the new EU Animal Health Law (Regulation (EU) 2016/429) that comes into force on April 21. This document is here.

The new EU Animal Health Law (AHR) is a large and complex Regulation designed to consolidate, update and replace a number of existing Regulations.

The main change is the new model export health certificates (EHCs) in use from April 21. EHCs are required for third country import into the EU.

AT THE SAME TIME, April 21 is the date for new rules for entry into the EU of composite products.

Including those for composites, a total of five new EHCs are needed from 21 April. These include three new products of animal origin (POAO) EHCs, two new composite EHCs and a private attestation document for composites exempt from certification. In the UK, private attestations do not need to be signed by an Official Veterinarian (OV) or Food Competent Certifying Officer (FCCO).

The three new POAO EHCs include meat of certain wild game and farmed large game and mechanically separated pork meat.

The two new composite product EHCs are –

a. Entry into the EU (or Northern Ireland) of not shelf-stable composite products and shelf stable composite products, containing any quantity of meat products (except gelatine, collagen and highly refined products) and intended for human consumption; and,

b. Transit through the EU to a third country either by immediate transit or after storage in the Union of not shelf-stable composite products and shelf-stable composite products containing any quantity of meat products and intended for human consumption.

Article 12 of Commission Delegated Regulation (EU) No 2019/625 (delegated rules to a DIFFERENT Regulation (EU) No 2017/625, the Official Controls Regulation) establishes three categories of composite products (applicable from April 21):

(1) non shelf-stable composite products,

(2) shelf-stable composite products that contain any quantity of meat products, except gelatine, collagen and highly refined products, and

(3) shelf-stable composite products that do not contain meat products, except gelatine, collagen and highly refined products.

Note: the EU Official Controls Regulation itself has applied since 14 December 2019.

With a view to smoothen the transition, Article 35 of Commission Implementing Regulation (EU) No 2020/2235 introduces a period of six months (to 20 October 2021) for the imports of composite products during which the old certificate will be accepted to enter the Union. Where no certificate was required prior to 21 April 2021, then the new relevant certificate or private attestation must be provided.

What is not a composite product?

The addition of a product of plant origin during the processing defined in Article 2(1)(m) of Regulation (EC) No 852/2004 of an animal product does not automatically mean that the resulting food falls within the definition of composite products. If such addition does not modify the main characteristics of the final product, the latter is not a composite product. It can be to add special characteristics or necessary for the manufacture of the product of animal origin (Article 2(1)(o) of Regulation (EC) No 852/2004).

For instance, a cheese to which herbs are added or a yogurt to which fruit is added remain dairy products. Similarly, canned tuna to which vegetable oil is added remains a fishery product. These foodstuffs must be produced in approved establishments in accordance with Regulation (EC) No 853/2004.

What percentage of a processed product of animal origin makes a food subject to the rules applicable to composite products?

What makes foodstuff subject to the rules applicable to the composite products is the fact that it is made by both products of vegetable origin and processed products of animal origin. The percentage of processed product of animal origin included in the composite product is irrelevant.

The above is taken from the EU Q&A on composite products – here.

These changes create a high impact on food trade between the UK and the EU.

From April 21, any composite product containing meat products (except gelatine, collagen and highly refined products) is subject to EU Border Control Post (BCP) (or Points of Entry (PoE) for Northern Ireland) checks and requires an EHC.

Chilled/frozen composite products containing processed dairy/egg/fish require EU BCP/PoE checks and an EHC.

Shelf stable composite products containing processed dairy/egg/fish (where the dairy or egg components meet certain heat treatment requirements) require a private attestation and EU BCP/PoE checks unless they are on the EU’s list of lower risk products.

The UK has updated its composites products guidance – here.

APHA (a DEFRA agency) has produced guidance on the April 21 changes – here.

It will be noted that guidance in the EU and the UK is not yet updated in all areas.

The EU is yet to publish the final EHCs for live animals and germinal products that will be used under the AHR. All EU EHCs and Notes for Guidance are being updated to reflect the new rules by August 2021. Only those needed for use by traders from 21 April will be available from April on EHC Online (EHCO), with the remainder uploaded and available by August 2021.

COVID-19 Employer Testing Duty (UK)

Employers employing more than 50 employees (including agency workers), are required to take reasonable steps to facilitate employees to take COVID-19 tests when they travel across international borders.

DHSC guidance stipulates ‘reasonable steps’ to facilitate the taking of tests might be:

• establishing workplace coronavirus (COVID-19) testing or providing employees with home testing

• supporting access and signposting employees to testing outside of the workplace.

Further (extensive) details are here.

UK updates to the TCA (Britain)

A little while ago, the Government announced (unilateral) new dates for the grace periods applying to GB goods movement to Northern Ireland under the IRl/NI Protocol. The Brexit Guidance was then updated.

The Government has now announced (unilateral) new dates for the grace periods applying to EU imports into Britain under the TCA (the UK-EU FTA). The Brexit Guidance will be updated.

We are announcing today a clear revised timetable for the introduction of controls, as follows:

• Pre-notification requirements for Products of Animal Origin (POAO), certain animal by-products (ABP), and High Risk Food Not Of Animal Origin (HRFNAO) will not be required until 1 October 2021. Export Health Certificate requirements for POAO and certain ABP will come into force on the same date.

• Customs import declarations will still be required, but the option to use the deferred declaration scheme, including submitting supplementary declarations up to six months after the goods have been imported, has been extended to 1 January 2022.

• Safety and Security Declarations for imports will not be required until 1 January 2022.

• Physical SPS checks for POAO, certain ABP, and HRFNAO will not be required until 1 January 2022. At that point they will take place at Border Control Posts.

• Physical SPS checks on high risk plants will take place at Border Control Posts, rather than at the place of destination as now, from 1 January 2022.

• Pre-notification requirements and documentary checks, including phytosanitary certificates will be required for low risk plants and plant products, and will be introduced from 1 January 2022.

• From March 2022, checks at Border Control Posts will take place on live animals and low risk plants and plant products.

Traders moving controlled goods into Great Britain will continue to be ineligible for the deferred customs declaration approach. They will therefore be required to complete a full customs declaration when the goods enter Great Britain.

Controls and checks on Sanitary and Phytosanitary goods are of course a devolved matter and we continue to work closely with the Devolved Administrations on their implementation, in particular with the Welsh Government on their timetable for completing supporting Border Control Post infrastructure in Wales.

The written statement is here.

GB goods movement to the EU is unaffected, i.e. the TCA applies in full.

Customs Red Tape (Ireland)

There is a lot of chatter about the new processes required for goods movements between Ireland (north and south) and its neighbour, Britain. This blog does not focus on Customs, Tariffs or VAT.

Irish Revenue information on Imports from Britain is here. Note the requirement for an Entry Summary Declaration (ENS). The ENS is a safety and security entry summary declaration needed for moving goods on ‘roll-on, roll-off’ lorries and other goods vehicles.

An emergency code (number) was supplied initially by Irish Revenue to allow importers temporarily bypass some of the documentation rules on border controls. This is a facilitation and is temporary.

Further information is accessed from this Irish Revenue location – here.

The Irish Times reports again this morning re the rules of origin matter (Peppa Pig etc) –

Government officials have raised queries with the European Commission Commission about Brexit “rules of origin” restrictions that are disrupting supply chains of foods and other products coming from mainland Europe to Ireland.

Rules of origin are designed to prevent a UK company buying cheap products from a non-EU country and repackaging and rebranding them and then selling them into the EU tariff-free.

The restriction is, however, preventing some products moving between two EU countries where the products are repackaged in UK distribution centres before being supplied into the Irish market.

Under the EU-UK trade deal, signed before Christmas, goods that are unpacked and repacked in the UK – and not subject to further manufacturing – face customs taxes, or tariffs, when reimported back into the EU.

The rules have led to severe disruption in supply chains and food shortages and empty shelves in Irish retail outlets of UK supermarket chains, in the Republic and Northern Ireland, and delayed the shipment of other goods.

The Irish Times notes – government officials warned a fix was unlikely

Government officials have made “technical inquiries” with officials within the commission “to see what the possibilities are”, said one Government source, though they warned that finding a fix for the issue was unlikely.

“This is Brexit. The UK has left the single market and the customs union. They are a third country. That is the problem,” said the source.

“If a good comes through England, that doesn’t mean that it should come under these rules, but if they are repackaged, there is a problem. That is not transit.

“This is an issue which was unforeseen or not foreseen to the extent to which it should have been.”

My Peppa Pig blog post concerns re-distribution. But even then, EU Commission clarification would be required,

Customs Solution to ‘Percy Pig’ tariffs (Ireland)

This blog does not focus on customs, tariffs, or VAT. But this story from the Irish state broadcaster RTE, caught my eye. Here

Percy Pig are popular sweets, sold by the UK retailer Marks & Spencer widely in Ireland and Europe. They are made in Germany and imported to the UK for onward re-distribution to Ireland and Europe without further processing.

It was thought under the EU-UK trade and cooperation agreement such import into the UK and re-distribution back to the EU without further manufacture or processing in the UK would attract a tariff.

But a partner in Customs and International Trade at (the accounting firm) BDO Ireland thinks she has a possible solution, which she is running by the authorities for verification. It utilises a Returned Goods Relief in existing EU customs rules.

[others may also have located Returned Goods Relief or other facilitations in the EU customs rules]