The European Commission has set out a proposal that would determine which goods moving from Britain to Northern Ireland should attract a tariff, and which would not, after 1 January, RTÉ News has learned.
Under the Northern Ireland Protocol, goods moving from Britain to Northern Ireland will be deemed as being at risk of crossing the border into the EU’s single market, unless it can be shown otherwise.
The “goods at risk” issue has proven highly sensitive and the UK is expected to introduce fresh legislation that would give British ministers the power to unilaterally decide which goods going to Northern Ireland should face customs duties.
The Joint Committee, created by the Withdrawal Agreement and made up of senior British and EU figures, has been tasked with working out a system defining exactly what “goods at risk” are.
The European Commission proposal would involve working out the differential between an EU tariff and the corresponding UK tariff on a product as a way of determining whether or not that product was at risk of crossing the land border into the EU single market after arriving in Northern Ireland.
The higher the EU tariff compared to the equivalent UK tariff, the more likely it would be that that good would be smuggled across the border and into the Republic, according to senior sources cited on the proposal.
As such, the Commission believes that where there is a significantly higher EU tariff then those goods should be deemed “at risk”.
Sources say that, what matters is where there is a clear incentive to circumvent a higher EU tariff.
It is understood the European Commission produced a seven-page paper on the idea and shared it with the UK negotiating team before the summer.
The paper followed a series of technical meetings between officials, during which both sides looked at the principles involved and how the system would work technically.
One source briefed on the work told RTÉ News: “The Commission produced a draft decision. It could have gone down various avenues, but the route they chose was the tariff differential route. Where EU tariffs would be considerably higher than UK tariffs, there would be considerable financial gain in getting something quietly across the border.”
However, the proposal has been complicated by the fact that the future trade negotiations will have a bearing on how the “goods at risk” part of the Protocol would work.
If there is no free trade agreement concluded by the end of October, the Northern Ireland Protocol remains legally binding, as it is already part of an international treaty.
However, in that scenario, a full range of tariffs would apply on goods going from Great Britain to Northern Ireland. It is understood that trying to predict the full range of tariff lines, and tariff differentials, with that in mind proved difficult.
Alternatively, if a free trade agreement is reached, then there would be no tariffs on any goods moving between the EU and UK, so that part of the Protocol would be made dramatically easier.
Discussions also took place on the implications for goods that came into the UK from other parts of the world, then moved across the Irish Sea to Northern Ireland.
Sources say that post-Brexit the UK schedule for tariffs on goods from overseas would not be dramatically different from the EU’s schedule. That would mean the tariff differentials would be small, and the goods would not, therefore, be regarded as prone to the risk of smuggling.
However, London has been cool on the Commission’s idea. A UK source confirmed the idea of a tariff differential approach was discussed in July, along with other ideas. The source said the Commission proposal was “unacceptable”.
British sources have consistently argued that large swathes of trade flows from Great Britain to Northern Ireland are, by their very nature, not at risk of crossing the border south.
However, EU officials argue that, unless safeguards are in place, then the market will adapt over time, and the single market will be at risk of lower tariff goods being smuggled across the border because they are cheaper.
Getting agreement at the level of the Joint Committee on the “goods at risk” issue is an important aspect of the Protocol. According to the European Commission, the Protocol holds that if agreement is not reached by the end of the year, then the default is that all goods are at risk of crossing the border, and would thereby attract tariffs.
It is understood that a forthcoming UK finance bill will, like the Internal Market Bill, give the UK the unilateral right to determine which goods face tariffs when moving from Britain to Northern Ireland.
Following publication of the Internal Market Bill, British Prime Minister Boris Johnson appeared to conflate the goods at risk issue with the allegation – strongly denied – that the EU was threatening to block GB food imports from entering Northern Ireland.
Writing in the Daily Telegraph on 11 September, Mr Johnson said: “We are now hearing that, unless we agree to the EU’s terms, the EU will use an extreme interpretation of the Northern Ireland protocol to impose a full-scale trade border down the Irish Sea.”
EU sources insist that the tariff differential idea is still being discussed, among other ideas. The issue is expected to be taken up by the technical working group, known as the Specialised Committee, next week.
“Technical work is continuing on this matter, building on the work over the summer. It is for the Specialised Committee to continue this now and then revert to the Joint Committee,” said an EU official.
“The default is that on 1 January all goods are at risk [if no agreement is reached by the Joint Committee]. In approaching the discussions in the Joint Committee/Specialised Committee, the protection of the integrity of the Customs Union will be essential,” the official said.
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