Questions & Answers: Joint Committee formally adopts a set of implementation measures related to the EU-UK Withdrawal Agreement
Introduction
What did you decide in today's Joint Committee meeting?
Today's meeting covered all main issues related to the implementation of the Withdrawal Agreement, i.e. the Protocol on Ireland and Northern Ireland, citizens' rights, the finalisation of the list of arbitrators who will serve as members of an arbitration panel under the Withdrawal Agreement, as well as financial provisions, other separation issues, and the Protocols on Gibraltar and on Sovereign Base Areas in Cyprus.
The Joint Committee endorsed five formal decisions and other practical solutions related to the implementation of the Withdrawal Agreement, applicable as of 1 January 2021. It follows a political agreement in principle between the co-chairs of the EU-UK Joint Committee - European Commission Vice-President Maroš Šefčovič and the UK Chancellor of the Duchy of Lancaster, Michael Gove - announced on Tuesday, 8 December 2020.
Protocol on Ireland / Northern Ireland
In order for the Protocol on Ireland and Northern Ireland to be fully operational as of 1 January 2021, a number of decisions needed to be taken before the end of the transition period. The decisions taken today are the following:
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-A decision related to the practical arrangements regarding the EU's presence in Northern Ireland when UK authorities implement Union law in Northern Ireland, including checks and controls under the Protocol;
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-A decision determining criteria for goods to be considered “not at risk” of entering the EU when moving from Great Britain or the rest of the world to Northern Ireland;
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-A decision concerning the exemption of agricultural and fish subsidies from State aid rules;
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-A decision to correct some technical errors and omissions in Annex 2 of the Protocol.
As the UK is not fully ready for the end of the transition period - in particular regarding the import of food products from Great Britain to Northern Ireland - the EU and UK have agreed a number of unilateral declarations to provide time-limited solutions in a number of areas (for example relating to the import of meat products or medicines, amongst other things). These temporary solutions are subject to strict conditions to ensure that all relevant stakeholders will be in a position to fully comply with the Protocol in the course of 2021.
The Commission intends to publish two notices to clarify the application of EU rules regarding the import of meat products from Great Britain into Northern Ireland, as well as the supply of medicines.
Citizens' rights
The Joint Committee endorsed the second Joint Report on the implementation of residence rights drawn up by the Specialised Committee on Citizens' Rights.
The second Joint Report provides not only an update on residence schemes EU Member States and the United Kingdom operate, but also two dedicated sections. The report describes in detail communication and awareness raising measures that reach out to resident beneficiaries of the Withdrawal Agreement, but also other important stakeholders, such as employers. It also provides information on support to vulnerable persons and assistance services (phones and e-mails) resident beneficiaries of the Withdrawal Agreement can use to get information about the changes and their impact and get support with the residence applications.
The first Joint Report was adopted by the Withdrawal Agreement Joint Committee on 19 October 2020 and is available here.
The Joint Committee also decided to set the date as of which the social security protection for EU, UK and EFTA nationals guaranteed by the Withdrawal Agreement is extended to cross-border situations involving the EU, UK and EFTA countries (so-called ‘'triangulation''). This date is 1 January 2021.
Arbitration panel
The Joint Committee today took note of the list of 25 persons, including 5 chairpersons, who will serve as members of an arbitration panel established under the Withdrawal Agreement dispute settlement mechanism, and confirmed its imminent adoption. The dispute settlement mechanism should start operating as of 1 January 2021.
The list is composed of persons whose independence is beyond doubt, who possess the qualifications required for the appointment of the highest judicial office in their respective countries, or who are legal professionals of recognised competence, with specialised knowledge of Union law and public international law. These persons are not members, officials or other servants of EU institutions, of the government of a Member State, or of the government of the United Kingdom.
What does your agreement on Northern Ireland mean?
Today's meeting of the Joint Committee means that the Withdrawal Agreement, and the Protocol on Ireland and Northern Ireland in particular, will be operational on 1 January 2021. The Protocol ensures that there will be no hard border on the island of Ireland and that the integrity of the Single Market will be protected.
Given that the UK will not be fully prepared for the end of the transition period, a number of temporary solutions have been found to help businesses and citizens in Northern Ireland adapt to the new situation in the first few months of 2021.
All stakeholders in Northern Ireland should continue, however, to prepare for the changes that will occur during the course of 2021.
What about VAT?
From 1 January 2021, imports of goods from Great Britain to an EU Member State will be subject to VAT in the Member State concerned, at the rate that applies to the supplies of the same goods in that Member State and will generally be payable to customs authorities at the time of importation.
Goods being exported to Great Britain will generally be exempt from VAT, though companies must be able to prove that the goods have left the EU. Member States generally base this proof on the certification of exit given to the exporter by the customs office of export. A company established in Great Britain carrying out taxable transactions in a Member State of the EU may be required by that Member State to designate a tax representative as the person liable for payment of the VAT in accordance with the EU VAT rules.
EU rules will continue to apply in Northern Ireland. Goods sold and transported to/from Northern Ireland to/from an EU Member State will be treated the same as goods traded cross-border within the EU. Goods entering or leaving Northern Ireland to/from a non-EU country, including the rest of the UK, are subject to EU VAT rules.
What have you decided about the “EU presence” in Northern Ireland?
Under the Protocol on Ireland and Northern Ireland, the EU has the right to be present during any activities related to its implementation, such as customs and veterinary checks carried out by UK authorities.
The EU's overarching objective was to have in place a set of practical, operational arrangements that will enable EU representatives to effectively carry out their tasks under the Protocol. The Joint Committee formally adopted today the concrete working arrangements for this.
While today's decision does not amount to the establishment of a permanent EU office in Northern Ireland, the solution found will provide the EU with the necessary capabilities to monitor that the Protocol is implemented correctly by the UK authorities in Northern Ireland, thereby protecting the integrity of the EU Single Market.
In practice, this means that the EU can be physically present at places where goods and animals enter or exit Northern Ireland through ports or airports. The UK has agreed to provide adequate equipment and facilities, as well as continuous, real-time access to their relevant IT systems and databases, both on the ground and remotely.
The exercise of these rights is notably not limited to the territory of Northern Ireland, but relates to any activities carried out by United Kingdom authorities in the implementation of the Protocol irrespective of their location.
What about medicines?
The EU is determined to ensure not only a high level of public health protection, but also an undisrupted supply of medicines to Northern Ireland and other small markets historically dependent on medicines supply from or through Great Britain.
These considerations are of particular importance given the exceptional circumstances of the Covid-19 pandemic.
Given that the UK is not fully prepared for the end of the transition period, the EU has agreed that for the 12 months following the end of the transition period, temporary solutions will apply for the import of medicinal products into Northern Ireland from Great Britain, as well as into other small markets historically dependent on medicines supply from or through Great Britain.
This approach, which will be set out in a Commission Notice in more detail, will ensure an undisrupted supply of medicines through Great Britain, without lowering the standard of public health protection, to all markets concerned and put all stakeholders concerned on track to achieving full compliance in the course of 2021.
The solution consists of three elements:
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-A temporary removal of the obligation to decommission safety features applied to medicinal products supplied to the United Kingdom by a wholesaler in the Union.
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-A consideration of small markets historically dependent on medicines supply from or through Great Britain as “justifiable cases” allowing for quality control testing in Great Britain during a limited time
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-An abstention from sanctioning certain breaches of Union law arising due to the absence of manufacturing authorisation holders in Northern Ireland
By applying this approach for a period of up to 12 months after the end of the transition period, the EU aims to give all relevant stakeholders sufficient time to adapt to the United Kingdom's withdrawal and to establish new supply routes where necessary, while providing for undisrupted supply of medicines and a high level of public health protection.
What did you decide on “goods not at risk” of entering the Single Market? Can you explain the Trusted Trader scheme?
The Union Customs Code will apply to all goods entering or leaving Northern Ireland from 1 January 2021. This will avoid any customs checks and controls on the island of Ireland.
As far as customs duties are concerned, EU customs duties will apply to goods entering Northern Ireland if those goods risk entering the EU's Single Market. No customs duties will be payable, however, if goods entering Northern Ireland from the rest of the United Kingdom are not at risk of entering the EU's Single Market.
The Joint Committee has today established the conditions for considering that a good brought into Northern Ireland is not at risk of moving into the EU and will not be subject to commercial processing in Northern Ireland.
A good will not be considered to be subject to commercial processing where:
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-the importer had a total annual turnover of less than £500,000 in its most recent complete financial year; or
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-the processing is in Northern Ireland and is for the sole purpose of:
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-(i) the sale of food to an end-consumer in the United Kingdom;
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-(ii) construction, where the processed goods forms a permanent part of a structure that is constructed and located in Northern Ireland by the importer;
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-(iii) direct provision to the recipient of health or care services by the importer in Northern Ireland;
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-(iv) not for profit activities in Northern Ireland, where there is no subsequent sale of the processed good by the importer, or
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-(v) the final use of animal feed on premises located in Northern Ireland by the importer.
A good will not be considered to be at risk of entering the Single Market if:
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-in the case of goods brought into Northern Ireland from another part of the United Kingdom by direct transport,
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-(i) the duty payable according to the Union Common Customs Tariff is equal to zero, or
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-(ii) the importer is a recognised “Trusted Trader” who is importing that good for its sale to, or final use by, end-consumers located in the UK.
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-in the case of goods brought into Northern Ireland by direct transport from outside the UK or EU,
(i) the duty payable according to the Union Common Customs Tariff is equal to or less than the duty payable according to the customs tariff of the United Kingdom, or
(ii) the importer is a Trusted Trader who is importing that good for its sale to, or final use by, end-consumers located in Northern Ireland (including where that good has been subject to non-commercial processing before its sale to, or final use by, end-consumers), and the difference between the duty payable according to the Union Common Customs Tariff and the duty payable according to the customs tariff of the United Kingdom is lower than 3% of the customs value of the good.
How do you qualify as a “Trusted Trader”?
Traders that want to use the trusted trader scheme must submit an application to the UK competent authorities and provide evidence that they comply with the requirements established in the Joint Committee Decision. Once verified and authorised by the UK authorities, traders must continue to comply with the conditions or risk their authorisation being suspended or revoked.
In view of the short preparation time, the agreement foresees the possibility to start the trusted trader regime based on provisional authorisations, granted under certain conditions. Traders can request a provisional authorisation during the first two months after the date of entry into force of the Joint Committee Decision.
According to the decision on Union presence, the EU will have access to the list of trusted traders and will be able to monitor the scheme's implementation closely.
How long will this “goods not at risk” solution last for?
These provisions regarding “goods not at risk” will cease to apply from 1 August 2024, unless the Joint Committee decides before 1 April 2024 to continue their application. If this situation were to occur, the Joint Committee is tasked with finding an alternative solution as of 1 August 2024.
If either the EU or the UK considers there is significant diversion of trade, or fraud or other illegal activities, it can inform the other Party in the Joint Committee by 1 August 2023, and the Parties shall use their best endeavours to find a mutually satisfactory resolution.
What will happen regarding the import of meat products from Great Britain into Northern Ireland? What have you done about sausages?
In order to avoid a hard border on the island of Ireland, certain EU rules will continue to apply in Northern Ireland. This is the case for EU rules regarding food safety, which protects the health and safety of citizens. One of the consequences of Brexit is thus that the import of a certain category of meat products from Great Britain to Northern Ireland will be prohibited.
Given that the UK is not fully prepared for the end of the transition period, the EU has agreed to allow the import of certain chilled meats from Great Britain to Northern Ireland for a period of six months only. These products would be subject to a number of strict conditions. This includes ensuring that these products are fully aligned with the corresponding EU legislation, that they are subject to checks and controls when entering Northern Ireland,that they are only made available to end consumers in Northern Ireland, while properly labelled, and that they cannot be transported into the EU.
All stakeholders are expected to use this time effectively to adapt supply chains for chilled meats sold in Northern Ireland.
What about health certification for food products?
Given that the UK is not fully prepared for the end of the transition period, the EU has agreed that for a period of three months, the import of certain food products into Northern Ireland from Great Britain would not need to be accompanied by simplified certificates, so long as certain strict conditions are met. These conditions will ensure that a certain level of control could be exercised over these imports and support stakeholders in establishing new supply chains for food products.
Will export declarations be needed for goods exported from Northern Ireland to Great Britain?
According to the Protocol, EU customs rules and procedures will continue to apply in Northern Ireland. Great Britain will no longer belong to the customs territory of the EU from 1 January 2021.
This means that the customs formalities required for movements of goods between Northern Ireland and Great Britain are the same as those that apply to movements of goods to/from any EU Member State to a non-EU country.
However, for certain goods, the requirements, including data or export declarations, can be provided to customs authorities using alternative means, notably ferries. While facilitating their delivery, the information stemming from these requirements must be equivalent to export declarations.
What does the Withdrawal Agreement arbitration panel do and how did you agree on the list of arbitrators?
In the event of a dispute regarding the interpretation of the Withdrawal Agreement, the EU or the UK can refer the dispute to binding arbitration. In those cases where the dispute involves a question of EU law, the arbitration panel has an obligation to refer the question to the Court of Justice of the European Union (CJEU) for a binding ruling.
The decision of the arbitration panel will be binding on the Union and the United Kingdom. In case of non-compliance, the arbitration panel may impose a lump sum or penalty payment to be paid to the aggrieved party.
Background
The United Kingdom left the European Union on 31 January 2020. It is no longer a Member State of the European Union.
A time-limited transition period was agreed as part of the Withdrawal Agreement, and will last until 31 December 2020. Until then, EU treaties and EU law still apply in the United Kingdom.
The Protocol on Ireland and Northern Ireland, which forms an integral part of the Withdrawal Agreement, also entered into force on 1 February 2020. Most of its substantive provisions only become applicable after the end of the transition period, i.e. as of 1 January 2021.
For More Information
More information on the UK's withdrawal from the European Union and the Withdrawal Agreement