Where will the Windsor Framework improve trade - and where does it fall short?

Brexit | | MIC Customs Solutions |

A new report has warned the imminent implementation of the Windsor Framework will actually create more red tape for some traders.

Earlier this year, the UK government and the EU agreed a significant update to post-Brexit trading rules focused on Northern Ireland. This promised to greatly simplify rules for moving goods between Great Britain and Northern Ireland, while still maintaining a customs regime for items entering the EU.

At the heart of this are the 'green lane' for goods intended for use in Northern Ireland and the 'red lane' for those set to move on into the Republic of Ireland. The aim is that traders will be able to avoid additional paperwork when using the green lane, thereby improving the flow of goods across the Irish Sea, while retaining Northern Ireland's position in the single market.

However, while the revised protocol, known as the Windsor Framework, is set to be implemented from October this year, what it will look like in practice remains to be seen, and there have been warnings that despite its goal to reduce bureaucracy for traders, there could still be challenges ahead. So what should businesses expect when the agreement goes into operation?

New report warns of more red tape

A recent report from the UK Parliament has stated that in certain cases, the Windsor Framework will actually increase red tape for firms - particularly those outside the retail sector. It suggested this is primarily because companies may find themselves needing to use the red lane when shipping goods from Great Britain once grace periods when the Northern Ireland Protocol is not being fully implemented expire.

The report, from a House of Lords committee, observed that some traders will not be able to meet the requirements for the green lane, even if they intend for their goods to remain in Northern Ireland. Sectors that are likely to be affected by this include manufacturing goods and agricultural products such as meat and dairy, as well as items where there is uncertainty about the final destination.

Chair of the committee Lord Jay of Ewelme commented: "For some businesses, processes will be more burdensome under the Windsor Framework than under the Protocol as it operates now. And where there is uncertainty, the red lane, with its more complex procedures, may have to be used."

A particular concern was raised about issues related to 'groupage', where goods that have been dispatched by several different companies are shipped together on the same truck.

The report warned that if just one pallet within such a load is destined for the Republic of Ireland, this could mean the contents of the entire truck would have to be inspected and processed using the red lane. Logistics groups told the committee that this was an issue that had been overlooked in the original Protocol and the new framework does nothing to provide clarity.

Framework 'an improvement' but work to be done

Despite the reservations, the committee found that overall, the Windsor Framework will be a significant step forward from the previous Protocol. For instance, it noted that the introduction of the green lane will benefit a range of retail businesses, with both large enterprises and smaller companies able to take advantage of streamlined procedures.

A government spokesperson said the framework "cuts paperwork and checks compared to the old Protocol, lifts the bans on products like seed potatoes and provides a durable, sustainable basis for the future."

Other areas where there is set to be a positive impact include pharmaceuticals, with the industry welcoming proposed solutions to ease issues with the supply of medicines to Northern Ireland

Lord Jay said: "Though the Windsor Framework is a clear improvement over the original Protocol, it is highly complex. Businesses need clarity. The government and the European Union both need urgently to explain what the Windsor Framework means in practice for businesses."

What future risks could be in store?

Looking forward, the report warned that future regulatory divergence between the EU and the UK could be one of the biggest threats to the smooth operation of the framework. 

Businesses responding to the committee expressed worries that should rules continue to differ between the two sides, this could leave Northern Ireland in a "no man's land" that requires traders to satisfy two separate regulatory environments. This could harm the competitiveness of firms in the religion and put already-complex supply chains in further jeopardy.

The UK government has therefore been urged to provide greater clarity on a number of issues, including further details on how the Windsor Framework will function in practice. Given the limited time before implementation, this should be regarded as a matter of urgency.

Lord Jay concluded: "The government and the European Union need to remain closely in touch with each other. But they must also ensure that Northern Ireland stakeholders are closely engaged throughout.”