ADS Brexit Bulletin- 15 November 2021

16 November 2021

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Brexit Bulletin - 15 November 2021

This bulletin covers the latest discussions on aviation safety, a UK trade policy update, a customs and border update, as well as information on ongoing consultations and Government helplines available.

Our In-Focus feature centres around recent developments concerning the Northern Ireland Protocol. Tensions between the UK and the EU are ongoing and rising again over the implementation of the post-Brexit trading arrangements for Northern Ireland, with talks on possible reforms reportedly deadlocked. Ireland’s foreign minister Simon Coveney warned last week that the entire EU-UK Trade and Cooperation Agreement could be terminated if the UK followed through on its threats to trigger Article 16 and fundamentally rewrite the Protocol. Read more below.

To keep up to date on the latest issues, please check out our Brexit Hub

At the time of writing (11 November 2021), there remains significant uncertainty and tension regarding the potential triggering of Article 16 by the UK. Article 16 is a special measure that allows either the UK or the EU to take unilateral action if they believe the arrangements for Northern Ireland are causing serious economic harm. For months, the UK’s Chief Brexit Negotiator, Lord Frost, has argued that the conditions and operation of the Northern Ireland Protocol are serious enough to warrant a triggering of Article 16.

How we got here

Earlier in the year, following the publication of the UK Command Paper which put forward recommended changes to the Northern Ireland Protocol, the EU had ruled out any renegotiation of the Protocol. Last month however, the EU published its response to the issues highlighted by the UK. The EU proposals contain some concessions and ways in which the current operations of the Northern Ireland Protocol could be amended with bespoke Northern Ireland-specific solutions, including reduced customs documentation.

Talks continue

Late into the second week of November there is continued speculation and media reporting that if talks fail the UK will trigger Article 16, meaning all aspects of the Protocol would be suspended.

Four weeks of talks have centred on the set of EU proposals designed to make the Protocol more manageable for citizens, businesses, and stakeholders in Northern Ireland.

Technical negotiators have, as always, been working to make sense of the challenges being faced by businesses and remedy them. However, political backing will be required to implement any changes. ADS understands that EU member states are aligned on the need for unity on this issue and that the UK Government is still considering when or whether to trigger Article 16.

Impact on ADS members

In practice, nothing has changed for the way businesses operate for now and they must continue to meet the requirements of the Northern Ireland Protocol. However, for ADS members who are in or trade with Northern Ireland, this ongoing uncertainty is not welcome.

Although the Northern Ireland Protocol is far from perfect, there are many elements that present opportunities for manufacturers and businesses in Northern Ireland who should have easier access to both UK and EU markets.

Both the UK and EU need to overcome political challenges to implement a solution that works for citizens and businesses in Northern Ireland. In the meantime, businesses can work on the practical and operational elements of the Northern Ireland Protocol, as they have been for many months, including the full migration to the new Customs Declaration Service (CDS) and the phased implementation of further import controls.

ADS members supporting other ADS members.

Several members based in Northern Ireland have been in touch with ADS and are offering to share experiences in navigating the new requirements.

Pinnacle Growth Group has a lot of experience in advising companies on the intricacies of using the Trader Support Service (TSS) and can also help SMEs to access funding from InterTradeIreland. Additionally, they can also help companies to access funding from Invest NI. To secure support and guidance from Pinnacle, members can contact Judith Neil, Head of Business Growth.

Similarly, ADS member Speedlink has been working to set up a team to handle the CDS requests. If any ADS members are struggling with CDS requests, they are invited to contact the Belfast team using the belfast@speedlink.ie.

If you have any other questions or concerns regarding the Northern Ireland Protocol or its implementation, please do not hesitate to get in touch with us.

Aviation Safety - Maintenance Annex

ADS continues engagement with the UK Government on the importance of negotiating an additional Aviation Maintenance Annex to the Trade and Cooperation Agreement (TCA). Last month ADS wrote to the Secretary of State for Transport, Grant Shapps, to highlight concerns that a Maintenance Annex was not currently being planned under near term discussions. ADS highlighted the consequences of the decision impacting the UK and the EU, who both have an interest in negotiating a Maintenance Annex.

Latest insights suggest that there will likely be no movement between the UK and EU on this due to wider and ongoing political issues between the UK and EU resulting from the Withdrawal Agreement and TCA. ADS will continue to update members on the progress of the development of a Maintenance Annex as it evolves, and if you have any further input into this topic, please reach out to our Aerospace Policy Adviser, Andy Phillips.

UK Trade Policy Update

A comprehensive trade agreement was agreed last month between the UK and New Zealand after 16 months of talks. UK-New Zealand trade was worth £2.3bn last year and the Government projects that to grow under the deal. The deal will remove barriers to trade and deepen access for advanced technology and services companies, while making it easier for smaller businesses to break into the New Zealand market. UK workers will benefit from improved business travel arrangements and both sides have also committed to a mobility dialogue outside the trade agreement that will consider how people-to-people links can be deepened further.

Last month, Anne-Marie Trevelyan, the International Trade Secretary called on the world’s leading democracies to work together to build global resilience in critical supply chains as she welcomed the G7 Trade Ministers to London. Shipping costs have increased fivefold since the start of the year, while air cargo has seen prices rise and capacity reduced. The Secretary of State argued against protectionism and instead advocated measures such as better monitoring and cooperation to quickly identify and address bottlenecks where they arise.

Lastly, the UK has announced the start of discussions on a new export and investment partnership with Italy aimed at boosting trade between the two countries. The dialogue is intended to boost exports for companies in both countries, including in high-performing sectors like defence and security. It will also promote inward investment, including in low-carbon industries such as hydrogen and carbon capture storage, where the UK’s research and development strengths can help support Italian scale-ups.

Customs and Border Update

National Audit Office Report

At the start of the month, the National Audit Office released its latest report on the UK Border following the end of the UK-EU transition period. The report finds that the current overall operating model for the EU–GB border is not sustainable, and more work is needed to put in place a stable operating model. ADS has written a blog about the report, including costs incurred since its implementation, some of the successes, and the ongoing challenges.

Plastic Packaging Tax

Ahead of the implementation of regulation for plastic packaging tax, the Government is seeking views on how the tax should operate and be administered. At the last meeting of the ADS Customs Group (UAICG), this was discussed at length with businesses working through the steps they need to take to generally reduce plastic consumption as a first step.

The Government is now welcoming views on the technical application of these regulations ahead of the introduction of Plastic Packaging Tax from 1 April 2022. This consultation closes at 11:45pm on 1 December 2021.

Consultations

ADS has responded to two consultations related to Brexit recently. Firstly, an inquiry into trade in goods by the House of Lords European Affairs Committee and secondly, a call for evidence on the UK’s new border arrangements by the Public Accounts Committee. ADS reiterated that industry had welcomed the agreement between the UK and EU to ensure tariff-free trade from 1 January 2021 and regulatory cooperation in key areas such as aviation safety but noted that the Trade and Cooperation Agreement (TCA) had not achieved everything our sectors require.

ADS highlighted that the TCA could have gone further to minimise the significant non-tariff barriers being faced by businesses. For our members, this is particularly apparent in the areas of aviation safety, rules of origin, and chemicals, as well as the subsequent agreement on data adequacy by the EU. ADS stated that it is vital that the UK and EU continue to work together to overcome obstacles presented by the change in trading arrangements, as well as to deepen the relationship and strengthen regulatory cooperation in the medium to long-term for our collective prosperity and security.

Internal Market

The Office for the Internal Market (OIM) has launched its new ‘Report a UK Internal Market Issue’ service. The service is designed for businesses and other stakeholders to report issues faced when buying or selling goods or services between different parts of the UK, or difficulty using a professional qualification awarded in one part of the UK to work in a different part of the UK. The OIM advises the UK Government and the devolved administrations on how specific laws, rules and regulations affect the movement of goods and services between different parts of the UK and reports on how well the UK Internal Market is working. For further information, please see About the OIM.

HMRC is providing a range of support to customs and international trade customers. ADS has collated a series of slide packs provided by government as part of our useful resources page on the ADS Brexit Hub and gov.uk also has a page dedicated to webinars and videos for organisations that trade with the EU.

Customs & International Trade Helpline – 0300 322 9434

The helpline is the main route in for customers with general customs queries. Capacity has been scaled up following the end of the transition period.