Windsor Framework sets out Northern Ireland trade rules
Posted 01/03/2023
Prime Minister Rishi Sunak has signed an agreement with European Commission president Ursula Von Der Leyen to introduce the Windsor Framework, subject to parliamentary approval, which will replace the Northern Ireland Protocol.
The framework will remove some of the barriers to trade, including free access to trade medicines, plants and some foodstuffs, including sausages. It will replace over 1,700 EU laws with UK laws, meaning the people of Northern Ireland will benefit from the same tax policies, medicines and trade as the rest of the UK.
The agreement will introduce ‘free-flowing’ trade between the UK and Northern Ireland through two new routes for goods.
There will be red and green routes for inbound trade depending on whether goods are destined for Northern Ireland only or for the EU.
Products which are travelling through Northern Ireland straight to the Republic of Ireland will go through a red lane, meaning businesses will face customs processes and other checks at ports.
But products which are set to stay in Northern Ireland will go through a green lane, which will remove the current paperwork, checks and duties.
UK VAT and excise changes will also apply in Northern Ireland, rather than EU VAT rules. This means that the installation of energy-saving materials like solar panels can now be VAT-free in Northern Ireland, just like the rest of the UK.
Under the previous agreement, EU rules for VAT and excise applied to goods in Northern Ireland, meaning that certain UK tax changes which were not compatible with EU rules could not be introduced. However, the deal will allow Westminster, not Brussels, to set VAT rules in Northern Ireland.
It will also be able to apply reduced VAT rates to a higher number of categories of goods than allowed under EU law.
In addition, the SME VAT Directive will no longer apply in Northern Ireland, saving nearly 2,000 businesses from VAT registration. It will also reduce accounting and reporting burdens on the UK and Northern Ireland trade.
A settlement has also been agreed on medicines, meaning drugs approved for use by the UK’s medicines regulator will be automatically available in every pharmacy and hospital in Northern Ireland.
It is also expected that the agreement will open up an opportunity for the UK to re-enter the Horizon scientific research programme, which ended after Brexit.
There is still some details to be thrashed out, pending approval by the Northern Irish political parties, with calls for the sanitary and phytosanitary scheme (SPS) rules on processed foods, for example, to be simplified.
MPs will have a vote on the deal, although the date of this has not yet been confirmed.
The Winsor Framework can be found at https://www.gov.uk/government/publications/the-windsor-framework
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