Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020

Lord True Excerpts

Monday 30th November 2020 Grand Committee

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[Lord True]

That the Grand Committee do consider the Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020.

Relevant document: 31st Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, the statutory instrument that we are discussing concerns the establishment of a definition of “qualifying Northern Ireland goods”, or QNIGs, as it says here in brackets; people come up with an acronym for everything these days. That definition is established for the purposes of delivering unfettered access for Northern Ireland goods moving to the rest of the UK market from the end of the transition period. The statutory instrument should be seen in its wider context of this Government’s clear commitment to deliver unfettered access for Northern Ireland goods to the rest of the UK market, and to guarantee this in legislation by the end of this year. This commitment was made in both the 2019 Conservative manifesto and the New Decade, New Approach deal, which restored power-sharing in Northern Ireland. This instrument is fundamental to delivering on that commitment.

Unfettered access is based on several fundamental tenets: first, that there will be no customs and regulatory checks and processes for qualifying Northern Ireland goods moving from Northern Ireland to Great Britain; secondly, that there will be no additional authorisations or approvals required for placing those goods on the market in the rest of the UK; and, finally, that those goods can continue to be sold throughout the UK market.

We intend for the United Kingdom Internal Market Bill to put the building blocks in place for unfettered access for the long term. The measures that we propose in that Bill will enshrine in primary legislation that qualifying Northern Ireland goods will benefit from mutual recognition—enabling goods to continue to be placed on the whole UK market, even where the protocol applies different rules in Northern Ireland—and prohibit new checks and controls as goods move from Northern Ireland to the rest of the United Kingdom.

These are significant and robust protections. They will be subject only to the most limited possible exceptions, such as to ensure that the UK can comply with its international obligations, for example regarding endangered species movements. Although this House regrettably removed those important protections in its consideration of the Bill in Committee, the Government will ensure that these measures are reinserted to provide the certainty that the Northern Ireland Executive and Northern Ireland businesses have called for.

All these elements flow from there being a definition in law of what are the qualifying Northern Ireland goods that benefit from unfettered access. This is the purpose of this statutory instrument.

It is important to be clear that the policy of unfettered access will be given effect in two phases. The first phase is focused on avoiding disruption and maintaining continuity for the first half of next year, in line with the broader approach that we are taking for GB-EU movements. That is what this instrument is concerned with. In order to avoid any disruption, it takes a necessarily broad-based approach, outlining that goods will qualify where they are in free circulation in Northern Ireland, on the basis that they are not under customs supervision—excepting any supervision arising from the good being taken out of Northern Ireland or the EU—and where they are a good that has undergone processing operations in Northern Ireland under the inward processing procedure and incorporates inputs only from Great Britain, or was in free circulation in Northern Ireland.

Those are some quite technical descriptions, but in practice they will mean no change to how Northern Ireland businesses move goods directly to the rest of the UK from 1 January 2021 compared with now. This is an important first step to make sure that Northern Ireland traders can continue to move their goods in an unfettered way from the end of the transition period, meeting the Government’s clear commitment under the New Decade, New Approach deal. Although this first phase will be comparatively brief, it is none the less important to guard against the possibility that its provisions are abused. That is why the phase one approach will be accompanied by anti-avoidance measures to be contained in legislation to be brought forward by colleagues in the Treasury in due course to enable us to take action in those cases.

That will be the first phase of the regime. We recognise that this is only a bridge to the more durable and permanent arrangements in phase two, which will focus the benefits of unfettered access solely and exclusively on Northern Ireland businesses. This will ensure that they have a competitive advantage over other traders on the island of Ireland and will ensure that goods moving from Ireland or the EU are subject to full third-country checks and controls. That regime, which will take effect in the course of 2021, is being finalised at pace, working with Northern Ireland business and the Northern Ireland Executive. We are also working with the devolved Administrations more broadly on its operational implications. We will provide further details on the specific approach and its timing as soon as possible. In the meantime, we consider that it is right to proceed in a pragmatic way that maintains continuity for business, which our phased approach would do. Should both Houses approve this instrument, it will enable us to bring forward clear guidance for businesses to ensure that they are ready for the end of the transition period.

I would again like to assure Members of the Committee that this instrument is part of our clear and unequivocal commitment to unfettered access, ensuring that businesses can continue to trade as they do now and protecting Northern Ireland’s place in the UK internal market. Those are and will remain our overriding priorities as we take forward the important work here in the weeks ahead. I commend the regulations to the Committee.

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[Lord True (Con)]

The fundamental response to the noble Baroness is that Northern Ireland by the will of its people is an integral part of the United Kingdom of Great Britain and Northern Ireland. Therefore it behoves the United Kingdom Government to secure that position, and we will seek to do so. I would be surprised if the other devolved Administrations actually wished or intended to place obstacles in the way of the movement of goods from Northern Ireland. I would be astonished to think that that would be the political intent or desire of any Government within these islands.

I repeat that this regulation, as the noble Baroness and several other noble Lords have alluded to, and as I said in my opening speech, is part of a programme or set of measures that includes the UKIM Bill. I know what the noble Baroness said—that, if the UKIM Bill returned, attempting to provide a guarantee of unfettered access, she would advise your Lordships simply not to discuss it again but to throw it out. In my humble submission, it is not part of the role of the revising Chamber, which your Lordships’ House is, to simply throw things out that are sent to us by the elected House without even considering them or considering detailed amendments in Committee. To do it once is bad, but to do it again on something as important as unfettered access would be strange.

I was asked a number of questions. We got straight into sausages, which seemed very much a subject of concern. I remember the first time I ever went to Londonderry-Derry, so long ago that Doherty’s sausages were all the rage in those days, and I enjoyed them. I had long experience at university of sausages made in Northern Ireland. To answer the question on definition, which is what this statutory instrument is about, in this first phase, any good such as a sausage in free circulation in Northern Ireland will qualify. We are working closely with Northern Ireland traders and the Executive, as I said, on the second phase definition. That will focus the benefits of unfettered access specifically on NI traders.

I do not know how to stop this phone ringing, but if noble Lords can bear the sound, I will continue. The first-phase approach provides certainty for businesses at the end of the year, which is what they have been asking for.

On circumvention, we are bringing forward anti-avoidance provisions that will deter traders from routing their goods via Northern Ireland to GB. I will come back to this point, which was raised by a number of noble Lords.

I turn to goods that are simply packaged in Northern Ireland, when the product is from the EU. Again, this definition is about providing certainty to NI traders and guaranteeing unfettered access to their largest and most important market at the end of this year. So, in the first phase, these goods will qualify—but we are, as we have discussed, working on the second-phase approach, to be introduced in 2021, which will focus the benefits of unfettered access on Northern Ireland businesses. The noble Lord, Lord Dodds, asked when we will have that further definition. I can say to him that it will be brought forward “very early in 2021”; that is what I am advised.

I was asked whether I could confirm that the approach we have taken is intended to align with the broader phased approach to the EU-GB border. Again, I hope that this will be the case, but I have not had any firm advice on that. The new anti-avoidance measures will come this year via a finance Bill that will be brought forward in the coming weeks.

I turn to enforcement and accept what a number of noble Lords have said: that goods will move. Enforcement mechanisms will be behind-the-border compliance and monitoring, which will in no way disrupt NI-GB trade.

The point about goods routed via the Republic of Ireland to GB from Northern Ireland was made by the noble Lord, Lord Dodds, and others, including the noble Baroness, Lady Ritchie. We do recognise that the priority remains having a regime in place that focuses its benefits on Northern Ireland traders and ensures that they enjoy those benefits, however they move their goods, whether directly or via the Republic. So, from 1 January, we will ensure that tariffs will not be due on qualifying goods moving via Ireland. Anyone can move qualifying Northern Ireland goods from Northern Ireland via the Irish Republic to Great Britain without needing to pay customs duties on entry to Great Britain, and goods will not need to be moved under transit for this to be the case. I should note that of course, it is not for the UK Government to say what processes the Irish Government should choose to apply in those circumstances.

I was asked about engagement with the Northern Ireland Executive. We have engaged extensively, including at First Minister and Deputy First Minister level, and they are supportive and understanding of the phased approach. There have also been extensive discussions at official level, and via ministerial engagements such as in JMC (EN) and the quad talks, led by my right honourable friend the Paymaster General.

I was asked how in the agri-food area “Northern Ireland processors” would be defined and what would happen when a GB business moved, say, a carcass from Great Britain to Northern Ireland for deboning and processing under customs supervision, therefore not needing to comply with full import formalities on entry into Northern Ireland, before being returned to Great Britain to be placed on the market there. The product will not be in free circulation in Northern Ireland, so it would not meet the definition in Section 3(1)(a)—but it would clearly be a good that should benefit from unfettered access protections. That is why the second limb of the qualifying Northern Ireland goods definition ensures that these goods are able to return to Great Britain, enjoying unfettered access during that movement.

I was asked about the role of HMRC, which will administer the anti-avoidance provisions and compliance regime, along with Border Force, as the authorities with responsibility in that space. As I have said, this will not involve disruption to NI-GB trade but will be entirely behind-the-border compliance activities. No new infrastructure is required in Northern Ireland to administer unfettered access or the qualifying regime.

I was asked more than once by noble Lords why we are phasing. The first-phase definition, as I sought to explain in my opening remarks, is focused on minimising disruption on 1 January: that is what Northern Ireland traders have asked for. As I have said, the second-phase definition will be brought forward early in 2021 and will focus on the benefits of unfettered access for Northern Ireland traders, in line with their expectations.

The Government have acknowledged, and I have acknowledged, that the process is taking a good time, and noble Lords will know—this has been referred to in our discussion—that negotiations and contacts are still taking place this week in the Joint Committee. We all fervently hope that those discussions will have issue soon, but, clearly, we are seeking to keep Northern Ireland traders and the Northern Ireland Executive alongside, so far as we can.

I repeat the fundamental point that I began with: the undertaking for unfettered access was given by Her Majesty’s Government. It is subscribed to by the European Union, as the noble Lord, Lord Dodds, said, and it is enshrined in the New Decade, New Approach document. Surely, we should all agree. I have heard agreement in this debate on the principle of unfettered access, so I look forward—hopefully—to all noble Lords present lending their support to that commitment in the UKIM Bill when it returns. I commend these regulations.

Motion agreed.