5.In December 2016 we published our first substantive report in the wake of the 2016 referendum, on the implications of Brexit for UK-Irish relations, warning that closer UK-Irish relations and stability in Northern Ireland must not become “collateral damage” of Brexit. We pointed out that shared EU membership had been an integral part of efforts to maintain peace on the island of Ireland, and that “the Belfast/Good Friday Agreement assumes that the co-guarantors are both Member States of the EU”.2 Since 2016 we have continued to place Northern Ireland front and centre in our scrutiny of the Brexit process, visiting Belfast, Dublin and the border region, and publishing several reports and substantive correspondence addressing issues affecting Northern Ireland. A list of relevant Select Committee work (which does not include the work of sub-committees on related issues, such as agri-food or customs) is given in Box 1.
6.A key aspect of shared EU membership was the participation of both the United Kingdom and Ireland in the EU’s ‘customs union’, under which a common external tariff is imposed on all goods imported from third countries. This requires the existence of a ‘customs border’ at points of entry into the EU, but the corollary is that once goods have entered the EU there are no internal controls on their movement within the EU Single Market. Our 2016 report underlined how important the absence of such controls between the United Kingdom and Ireland had been to the peace process in Northern Ireland: “Common EU membership laid the groundwork for the development of the peace process, as the border diminished both visibly and psychologically.”11
7.Brexit thus presented a unique challenge. As we formulated it in 2016, “The only way to retain the current open border in its entirety would be either for the UK to remain in the customs union, or for EU partners to agree to a bilateral UK-Irish agreement on trade and customs.” But those options were soon ruled out: in January 2017 the UK Government (in the then Prime Minister Rt Hon Theresa May MP’s Lancaster House speech) ruled out full customs union membership, while the March 2017 European Council, setting out the EU’s negotiating position, affirmed that “there will be no separate negotiations between individual Member States and the United Kingdom on matters pertaining to the withdrawal of the United Kingdom from the Union”.12
8.The Joint Report of December 2017,13 the first post-referendum political agreement reached by the UK and the EU, following difficult negotiations, stated that “the achievements, benefits and commitments of the peace process will remain of paramount importance”, and that the 1998 Belfast/Good Friday Agreement “must be protected in all its parts”. But it dodged the issue identified in our 2016 report. Paragraph 45, for instance, asserted both the United Kingdom’s commitment to respecting Ireland’s membership of the EU and the customs union, and its commitment to “preserving the integrity of its internal market and Northern Ireland’s place within it”. The difficulty of squaring these commitments, of both upholding Northern Ireland’s place within the United Kingdom and avoiding a hard border on the island of Ireland, has bedevilled UK-EU negotiations ever since.
9.The first iteration of the Protocol, the so-called ‘Backstop’, sought to avoid the establishment of a customs border either on the island of Ireland or in the Irish Sea by keeping the whole United Kingdom within the EU customs union for an indeterminate period. The Backstop would also have denied the United Kingdom the ability to pursue an independent trade policy, and its repeated rejection by the House of Commons precipitated Theresa May’s resignation and her replacement as Prime Minister by Rt Hon Boris Johnson MP in July 2019.
10.The second iteration of the Protocol, agreed in October 2019, by applying the EU customs code only to Northern Ireland, frees the rest of the United Kingdom to pursue an independent trade policy, but in so doing embodies the same contradictions as the Joint Report. The recitals restate the Joint Report’s commitments, for instance that “nothing in this Protocol prevents the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to the rest of the United Kingdom’s internal market”. They also confirm that “Northern Ireland is part of the customs territory of the United Kingdom”, while underlining the “firm commitment” of both the UK and EU to ensuring “no customs and regulatory checks or controls and related physical infrastructure at the border between Ireland and Northern Ireland”.14
11.These inherent contradictions were not hidden away: they were apparent from the outset, not just in the recitals, but in the substantive articles. In January 2020, in a report published prior to ratification of the Withdrawal Agreement, we clearly set out the “Janus nature” of the Protocol, concluding that “there is tension at the heart of the customs provisions of the Protocol”.15
12.On 1 June 2020 we published a follow-up report, providing a more detailed analysis of the tensions at the heart of the Protocol.16 The following paragraphs reflect some of the key findings in that report.
13.Following on from the recitals, Article 1 of the Protocol sets out its objectives. It states that the Protocol:
14.Our report on the Protocol rehearsed these objectives, and continued:
“While not listed as an explicit objective in Article 1, the Protocol is also designed to achieve these aims while protecting the integrity of the EU Single Market. Setting these principles down on paper is one thing; delivering a solution that successfully holds them in balance is quite another. The Protocol must ultimately be viewed through the lens of the peace process, and therefore judged by the impact it has on the people, communities and economic prosperity of Northern Ireland and Ireland.”17
15.Articles 5(3) and 5(4) of the Protocol apply EU customs legislation, including the Union Customs Code, to Northern Ireland. To avert what would otherwise be a requirement to pay EU customs duties on all goods entering Northern Ireland from non-EU countries (including Great Britain), Article 5(1) makes it clear that “no customs duties shall be payable for a good brought into Northern Ireland from another part of the United Kingdom by direct transport … unless that good is at risk of subsequently being moved into the Union”.
16.A logical consequence of Article 5(2), as we stated in our June report, is that “the default position is that all goods, with specific exemptions set out in the Protocol, will be deemed to be ‘at risk’ of moving into the EU Single Market (and therefore subject to customs processes), unless the Joint Committee agrees otherwise”.18 The exemptions are either that the good “will not be subject to commercial processing in Northern Ireland”, or that it fulfils certain criteria. These are not defined in the Protocol, but Article 5(2) places a requirement upon the Withdrawal Agreement Joint Committee, before the end of the transition period, to establish them, taking into account, among other things, the final destination and use of the good; its nature and value; the nature of the movement; and the incentive for undeclared onward movement into the EU, including incentives resulting from any difference in the duties payable on goods destined for Northern Ireland and those destined for the EU.
17.The Union Customs Code also implies a requirement to complete exit summary declarations on goods moving from Northern Ireland to Great Britain (or third countries), as a ‘Safety and Security Declaration’, which the EU uses to help enforce its international restrictions and prohibitions.
18.There has been longstanding uncertainty over the Government’s interpretation of this requirement for exit summary declarations—an uncertainty dating back to the then Secretary of State for Exiting the EU, Rt Hon Stephen Barclay MP’s appearance before the Committee in October 2019, when he first denied and then confirmed that exit summary declarations would be required.19 Subsequently, in its May 2020 Command Paper on The UK’s Approach to the Northern Ireland Protocol, the Government argued:
“It makes no sense for Northern Ireland businesses to be required to complete an export or exit summary declaration as they send goods directly to the rest of the UK. Self-evidently goods being sent away from the Single Market cannot create a back door into it; and any such goods subsequently leaving the UK would be subject to both exit and entry checks anyway en route to their new destination. We believe that this pragmatic approach is a sensible one and should be agreed between the UK and the EU in the Withdrawal Agreement Joint Committee.”20
19. In our June report we concluded as follows:
“Articles 5(3) and 5(4) apply EU customs law, including the Union Customs Code, to Northern Ireland. This includes a requirement for the completion of exit summary declarations on goods moving from Northern Ireland to Great Britain. We therefore concluded in our January 2020 report that ‘exit summary declarations are likely to be required for goods moving from Northern Ireland to Great Britain, unless and until the parties agree alternative arrangements to facilitate the movement of such goods.’”21
20.The report acknowledged the concern of Northern Ireland stakeholders over this potential administrative burden, and concluded:
“The Government now argues that Northern Ireland businesses should not be required to complete an exit summary declaration as they send goods directly to the rest of the UK. Given the concerns of Northern Ireland businesses, the EU should take this argument seriously, but the Government in turn needs to explain how such an exemption can be reconciled with the EU’s international obligations under the Union Customs Code. The Government also needs to explain how it will in practice distinguish between goods originating in Northern Ireland, or in Ireland and the rest of the EU, for the purposes of exit summary declarations … The EU also, as part of its wider commitment to support Northern Ireland, has a duty to ensure that these processes do not place an intolerable burden upon businesses. If exit summary declarations cannot be eliminated, the Joint Committee should consider means to streamline and simplify the process, in particular in the context of declarations for multiple consignments on a single load.”22
21.Several provisions of the Protocol develop the reference in Article 1(2) to the “territorial integrity of the United Kingdom”, highlighting Northern Ireland’s continuing place within the UK’s customs territory and internal market. Article 4 states that “Northern Ireland is part of the customs territory of the United Kingdom”, and that nothing in the Protocol “shall prevent the UK from including Northern Ireland in the territorial scope of any agreements it may conclude with third countries”. Article 6 states: “Nothing in this Protocol shall prevent the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom’s internal market.”
22.Our report on the Protocol highlighted the “apparent contradiction at its heart”, between Article 5 (which applies the EU Customs Code in Northern Ireland) and Article 6. The Committee called on the Government “to explain how this will be resolved in practice”.23
23.Our report noted that Article 10 of the Protocol binds Northern Ireland to a range of the EU’s State aid rules, as set out in Annex 5 to the Protocol. The mechanisms permitting the UK to reimburse customs duties or waive customs debt are also subject to State aid provisions, although, in taking decisions under Article 10, the Commission “shall take the circumstances in Northern Ireland into account as appropriate”. Where the Commission examines information regarding a measure by the UK authorities that may constitute unlawful State aid, it shall ensure that the UK is kept fully informed of the progress and outcome of the examination of that measure.
24.George Peretz QC, Monckton Chambers, in evidence to our Internal Market Sub-Committee, noted that Article 10, read in isolation, appears to imply that any UK measure that has an effect on trade in goods between Northern Ireland and the EU (and Ireland in particular) could be “subject to the full panoply of the EU State aid regime from the end of transition onwards”. Mr Peretz also suggested that in agreeing to Article 10 the Government “did not quite understand what they were signing up to … because it applies to any UK measure”.24 Dr Sylvia de Mars and Colin Murray, in evidence to the Select Committee, offered a similar view.25
25.Our report on the Protocol therefore concluded:
“Article 10 and Annex 5 of the Protocol apply EU State aid rules to the United Kingdom in respect of Northern Ireland. Article 5(6) places a requirement on the Commission, in taking decisions under Article 10, to take the circumstances in Northern Ireland into account as appropriate. It will therefore be for the Commission to show sufficient flexibility in its application of State aid rules to ensure that reasonable measures to support the Northern Ireland economy can be taken.
“The effect of Article 10 and Annex 5 is also to apply EU State aid rules to the UK in any instance in which the support at issue affects trade in goods between Northern Ireland and the EU27. Our expert witnesses agree that this could mean that a UK State aid provision applying to the UK in general, which is above the minimum threshold provided by EU law, would be subject to the application of EU State aid rules under the Protocol, and potentially to EU intervention and judicial review.
“The only certain way for the UK to avoid EU intervention in its State aid decisions would be to ensure that its independent State aid policy does not allow for the level of support available to industry to exceed that available under the EU regime.”26
26.As we have outlined, the Protocol embodies various legitimate, but potentially conflicting, objectives. On the UK side, there is the objective of maintaining the territorial integrity of the United Kingdom, and its internal market—objectives which the United Kingdom Internal Market Bill seeks to achieve. On the EU side, there is an equally legitimate objective to maintain the integrity of the Single Market and the customs union. And on both sides, there is a genuine determination to maintain prosperity and peace in Northern Ireland—a determination embodied in Article 1(3) of the Protocol, which places a duty on the UK and EU to implement the Protocol in such a way as to protect the Belfast/Good Friday Agreement in “all its dimensions”.
27.As we therefore concluded in our report on the Protocol, published on 1 June 2020:
“It is incumbent on all parties, including the UK Government, the EU, the Irish Government, and the political parties in Northern Ireland, after the divisions of the past four years, to work in a common endeavour to prioritise and urgently address the interests, stability and prosperity of the people and communities of Northern Ireland.”27
28.The key governance body within which these issues are to be addressed is the Joint Committee, established under Article 164 of the Withdrawal Agreement. This body is co-chaired by a member of the European Commission (Vice President Maroš Šefčovič) and a Government Minister (the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP). It meets at the request of either the UK or the EU, by mutual consent. Its decisions and recommendations are also to be made by mutual consent, and are binding upon both the UK and the EU, having the same legal effect as the Withdrawal Agreement itself.
29.Of particular relevance are the four sets of decisions that the Joint Committee is tasked with taking, before the end of the transition period, with regard to the implementation of the Protocol:
30.The Joint Committee has met four times: three scheduled meetings in March, June and most recently on 28 September, and an extraordinary meeting on 10 September, which was requested by the EU following the Government’s publication of the United Kingdom Internal Market Bill. We have repeatedly called for greater transparency around meetings of the Joint Committee, but to little avail. What is clear, however, is that progress has been slow, and this lack of agreement in the Joint Committee lies at the heart of the Government’s explanation for the introduction of Part 5 of the United Kingdom Internal Market Bill, and also its plans to address the issue of tariffs on the movement of goods from Great Britain to Northern Ireland in the forthcoming Finance Bill.
31.A key difference between the two iterations of the Protocol was the introduction in October 2019 of a consent mechanism, under which, before the end of the “initial period” of four years, the UK Government will have to seek the Northern Ireland Assembly’s views on extension of the trade aspects of the Protocol (Articles 5–10). If a majority of Members of the Assembly vote in favour of continued application of these aspects of the Protocol, they will be extended for a “subsequent period” of four years. If the Assembly’s decision in addition reflects cross-community support, then they will be extended for a further eight years. If the Assembly withholds its consent, Articles 5–10 will cease to apply to Northern Ireland two years after the initial or subsequent period.29
32.Whatever the tensions inherent in the Protocol, it is an integral part of the Withdrawal Agreement. It therefore shares in the unique status of that Agreement in UK law.
33.This status is set out in Article 4, which states that the Agreement should have the same effect as in EU Member States, including “direct effect”. Article 4(2) also ensures the primacy of EU law where it has been made applicable under the Agreement (see Box 2). In our report on the revised Withdrawal Agreement, we noted that the effect of Article 4 was that the UK would be required to allow domestic courts to disapply any other domestic legislation which was incompatible or inconsistent with the Agreement.
The long-established principle of direct effect, first enshrined by the Court of Justice in the judgment of Van Gend en Loos in February 1963, enables individuals immediately to invoke applicable provisions of European Law before their national courts. This principle only applies to European laws that fulfil the relevant criteria set down by the Court across many judgments.
The Court has long argued that EU law not only imposes obligations on the Member States, for example not to charge tariffs on imports, but also introduces rights for individuals, such as the right not to be charged a tariff—it is not necessary for the Member State concerned to adopt the European act concerned into its internal legal system via national legislation for a right to be created.
Individuals may therefore take advantage of these rights and directly invoke them before national courts. In this way the individual plays a central role in the policing and enforcement of the application of EU law.
The primacy of European Union law, previously referred to as the supremacy of EU law, is another long-established principle of EU law first set down by the Court of Justice in Costa v ENEL in 1964. The principle holds that where there is conflict between European law and the law of a Member State the European law should prevail and the national law set aside.
The principles of direct effect and primacy are mutually supportive and inter-dependent.
34.The Withdrawal Agreement was implemented in UK law by the European Union (Withdrawal Agreement) Act 2020. Among other things, the 2020 Act introduced a new provision (section 7A) into the European Union (Withdrawal) Act 2018, to implement Article 4 of the Withdrawal Agreement. Section 7A, using a formula similar to section 2 of the European Communities Act 1972, provides that all rights under the Withdrawal Agreement are “without further enactment to be given legal effect or used in the United Kingdom” and that the “rights, powers, liabilities, obligations, restrictions, remedies and procedures concerned are to be—(a) recognised and available in domestic law, and (b) enforced, allowed and followed accordingly”.
35.Notwithstanding section 7A, the 2020 Act also contains a freestanding provision asserting parliamentary sovereignty (section 38). The Constitution Committee stated that section 38 had “no legal effect”,30 and in our own report on the revised Withdrawal Agreement, published in January, we concluded: “It is not clear what would happen if the UK Parliament were subsequently to repeal [section 7A], although if the UK sought to resile from its obligations under the Agreement, this would probably be a breach of international law.”31
36.Article 5 of the Withdrawal Agreement states that the UK and EU will, “in full mutual respect and good faith, assist each other in carrying out tasks which flow from this Agreement”. It affirms that the parties shall “take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising from this agreement and shall refrain from any measures which could jeopardise the attainment of the objectives of this Agreement”.
37.Article 16 of the Protocol states that, if its application leads to “serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade, the Union or the United Kingdom may unilaterally take appropriate safeguard measures”. It also states that if such safeguards create an imbalance between the rights and obligations under the Protocol, the other party may take proportionate rebalancing measures. Annex 7 to the Protocol sets out the procedures for such safeguarding and rebalancing measures.
38.This is supplemented by Article 168 of the Withdrawal Agreement, which contains an ‘exclusivity clause’: “For any dispute between the Union and the United Kingdom arising under this Agreement, the Union and the United Kingdom shall only have recourse to the procedures provided for in this Agreement.” Under Article 170 of the Withdrawal Agreement, if a dispute arises in the Joint Committee, and if no mutually agreed solution has been reached within three months after a written notice has been provided to the Joint Committee in accordance with Article 169(1), the EU or the United Kingdom may request the establishment of an arbitration panel. Under Article 174, the arbitration panel must refer issues raising questions of EU law to the Court of Justice of the European Union (CJEU). If the ruling of an arbitration panel is not complied with, then temporary remedies can be granted, including the payment to the complainant of a lump sum or penalty payment. Under Article 178, continued non-compliance or non-payment would entitle the complainant, having notified the other party, to suspend relevant obligations under the Withdrawal Agreement.
2 European Union Committee, Brexit: UK-Irish relations (6th Report, Session 2016–17, HL Paper 76), paras 167 and 178
3 See oral evidence taken before the European Union Committee, 27 October 2015 (Session 2015–16), QQ 28–40 (HE Dan Mulhall).
4 See Northern Ireland Assembly Committee for the Office of the First Minister and deputy First Minister, Oral evidence taken on 26 November 2016: http://aims.niassembly.gov.uk/officialreport/minutesofevidencereport.aspx?AgendaId=16072&eveID=9076 [accessed 13 October 2020].
5 European Union Committee, Brexit: UK-Irish relations (6th Report, Session 2016–17, HL Paper 76)
6 European Union Committee, Brexit: devolution (4th Report, Session 2017–19, HL Paper 9)
7 See letter dated 27 February 2018 from Lord Boswell of Aynho, Chair of the European Union Committee to Rt Hon Karen Bradley MP, Secretary of State for Northern Ireland: https://old.parliament.uk/documents/lords-committees/eu-select/UK%20Irish%20relations/27-02-18-Lord-Boswell-letter-to-Secretary-of-State-for-Northern-Ireland.pdf [accessed 13 October 2020].
8 European Union Committee, Brexit: the Withdrawal Agreement and Political Declaration (24th Report, Session 2017–19, HL Paper 245)
9 European Union Committee, Brexit: the revised Withdrawal Agreement and Political Declaration (1st Report, Session 2019–21, HL Paper 4)
10 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66)
11 European Union Committee, Brexit: UK-Irish relations (6th Report, Session 2016–17, HL Paper 76)
12 Notwithstanding the EU’s position on “no separate negotiations”, the United Kingdom and Ireland have successfully concluded a number of bilateral agreements since the referendum on matters pertaining less directly to UK withdrawal, including a Convention on Social Security, a key component of the Common Travel Area. See European Union Committee, Scrutiny of international agreements: treaties considered on 5 March 2019 (32nd Report, Session 2017–19, HL Paper 306).
13 Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom’s orderly withdrawal from the European Union, 8 December 2017: https://ec.europa.eu/commission/sites/beta-political/files/joint_report.pdf [accessed 12 October 2020]
14 Withdrawal Agreement (19 October 2019), Protocol on Ireland/Northern Ireland
15 European Union Committee, Brexit: the revised Withdrawal Agreement and Political Declaration (1st Report, Session 2019–21, HL Paper 4), paras 149–150
16 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), para 330
17 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66)
18 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), para 108. The Committee’s examination of the question of goods at risk is set out at paras 99–112 of that report.
20 Cabinet Office, The UK’s Approach to the Northern Ireland Protocol, CP 226, (27 May 2020), para 20: https://www.gov.uk/government/publications/the-uks-approach-to-the-northern-ireland-protocol/the-uks-approach-to-the-northern-ireland-protocol [accessed 7 October 2020]
21 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66)
23 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), para 172
24 Oral evidence taken before the EU Internal Market Sub-Committee, 5 March 2020 (Session 2019–21) Q 17 (George Peretz QC)
26 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), para 193
27 European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), para 330
28 See European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), Chapter 12
29 For a more detailed analysis of the consent mechanism, see European Union Committee, The Protocol on Ireland/Northern Ireland (9th Report, Session 2019–21, HL Paper 66), Chapter 13.
30 Constitution Committee, The European Union (Withdrawal Agreement) Bill (1st Report, Session 2019–21, HL Paper 5), para 126
31 European Union Committee, Brexit: the revised Withdrawal Agreement and Political Declaration (1st Report, Session 2019–21, HL Paper 4), para 44