EU Infringements against UK: is trade at risk?

New UK Regulations: What to Expect and Timeframe to Comply

July 21, 2022

Update: New 2022 Version of Blue Guide Released

August 4, 2022

Last week the EU Commission announced it launched four infringement procedures against the UK, for non-compliance with the Northern Ireland Protocol. These include:

- Failing to comply with the applicable customs requirements, supervision requirements and risk controls on the movement of goods from Northern Ireland to Great Britain
- Failing to notify the transposition of EU legislation laying down general EU rules on excise duties

The UK has two months to reply, e.g., initiate joint discussions on how to restore implementation of the Protocol.

If the UK does not offer an adequate reply, the EU Commission will take further action. This includes taking the UK to the Court of Justice of the European Union. Per Art. 12(4) of the Northern Ireland Protocol, the Court of Justice has full powers under the Treaties, and could impose a lump sum or penalty payment against the UK.

The link to the EU Commission’s Infringement statement is: HERE

The link to further FAQs related to the NI Protocol and reason for infringements is: HERE

Background

The United Kingdom is made up of four countries: England, Scotland and Wales (collectively ‘Great Britain’) and Northern Ireland.

Great Britain currently accepts CE Marking, but once the transition period ends, devices must be UKCA marked to continue to be placed onto Great Britain. Northern Ireland requires CE Marking and does not, and will not, recognize UKCA marking.

The reason for this?

During Brexit negotiations, the UK and EU Commission developed the ‘Northern Ireland (NI) Protocol’ to allow goods to freely move between Northern Ireland and Ireland (aka Republic of Ireland). This is important to protect the 1988 Good Friday (Belfast) Agreement.

The NI Protocol applies to medical devices, but also to a broad scope of goods, including consumer, industrial, foods, medicines, etc.

To execute the Protocol, Northern Ireland was included into the EU Single Market. And, instead of border checks between the UK/EU border of Northern Ireland and Ireland, border checks would occur between Northern Ireland and Great Britain.

Under the Protocol, Northern Ireland is responsible for:

- Performing the necessary checks and controls for all goods entering Northern Ireland
- Ensuring EU customs duties are appropriately applied for products that may have further intent/possibility of being placed onto the EU, from any non-EU country – including Great Britain

Post-Brexit, the UK struggled to meet the requirements in the NI Protocol. As a result, the UK government proposed a bill that would override core sections of the NI Protocol. Including, to bypass checks and controls for goods from Great Britain, which are intended for no further distribution beyond Northern Ireland. Meaning, the UK would no longer require customs verification for goods that will (purportedly) circulate only within the four UK countries, and will not further enter Ireland/EU.

From the EU Commission’s perspective, the UK’s proposed bill:

1. Directly conflicts with the mutually agreed upon and ratified Withdrawal and Trade & Cooperation Agreements.
2. The lack of proper checks, including for necessary sanitary controls (e.g., CE Marking), puts EU citizens at risk.
3. Increases the chance for smuggling, putting the EU at finanical risk.

The Commision’s May 2022 response to the UK’s proposal was:

“Should the UK decide to move ahead with a bill disapplying constitutive elements of the Protocol as announced today by the UK government, the EU will need to respond with all measures at its disposal.”

Now, two months later, the EU Commission is formally proceeding with the Infringements against the UK.

How does this announcement impact you?

In the short-term, it does not. While the EU Commission has launched infringements against the UK, its first hope is to come to terms with the UK outside of formal actions.

However, if the UK is not interested in collaborating with the EU Commission, and honoring the NI Protocol, then the worst-case scenario is that the EU Commission removes Northern Ireland from the EU Single Market. This would result in a hard border between Northern Ireland and Ireland, which would in turn put at risk the 1988 Good Friday (Belfast) Agreement. Not to mention a host of other political, legal and financial issues.

What happens now?

The EU Commission has stated several times that they will not renegotiate the NI Protocol. However, they have requested to jointly find solutions on ways to effectively implement the Protocol and ease burdens, including simplifying customs paperwork.

The UK has two months to respond, so we are currently in a ‘wait and see’ situation.

The market does not need more confusion and complexity around regulatory requirements. So, we sincerely hope the two economic powerhouses come to a satisfactory resolution and prevents further burden onto industry and end users.

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