- On Monday, leaders from the United Kingdom and the European Union announced the Windsor Framework, a trade proposal that would alter the rules of the Northern Ireland Protocol within the Brexit withdrawal agreement.
- The Framework would establish a two-lane system for goods being exported from Great Britain in which tariffs and trade barriers would be eliminated on goods traveling to Northern Ireland but EU single market requirements would remain for goods at-risk of entering the Republic of Ireland and beyond to the greater European Union.
- The Framework will ease and expand trade between Great Britain and Northern Ireland, maintain Northern Ireland’s status in the EU single market, and calm tensions on the Irish border.
Three years after Brexit, United Kingdom Prime Minister Rishi Sunak and President of the European Commission Ursula von der Leyen announced the Windsor Framework. The plan would modify the Northern Ireland Protocol, the current trade rules that were agreed upon in the Brexit withdrawal agreement. The Protocol established EU compliant custom checks for products traveling from Great Britain to Northern Ireland due to Northern Ireland’s shared border with the Republic of Ireland. The Windsor Framework would instead establish two lanes for goods traveling from Great Britain to Northern Ireland, one lane for goods remaining in Northern Ireland and another lane for goods traveling to the Republic of Ireland and beyond. The two-lane plan would incentivize and deregulate trade among Great Britain and Northern Ireland, while maintaining Northern Ireland’s participation in the EU single market.
Brexit and the EU Single Market
The United Kingdom (England, Scotland, Wales, and Northern Ireland) and the Republic of Ireland were among the twelve nations that founded the European Union. Among numerous cooperatives in domestic and international policy, the European Union created a “single market” among its member states and associated allies. The EU single market eliminates tariffs and non-tariff barriers on goods, services, capital, and human movement across the entire region.
In 2016, the United Kingdom voted by referendum to leave the European Union. When the United Kingdom officially left the European Union in 2020, they subsequently exited the EU single market. Since then, imports to the United Kingdom from the European Union dropped over 25% more than the rest of the world. Subsequently, the United Kingdom is now heavily lagging in total trade as a share of GDP compared to the G7.
The Northern Ireland Protocol
Many in the international community were concerned that Brexit would bring longstanding political undercurrents on the island of Ireland to the forefront. Since the Belfast “Good Friday” Agreement and the end of the “Troubles,” the island has seen great economic and diplomatic cooperation between Northern Ireland and the Republic of Ireland. To ensure stability on the island, the United Kingdom and the European Union included the Northern Ireland Protocol within the Brexit withdrawal agreement. The Protocol maintained Northern Ireland’s status in the EU single market to avoid the presence of a physical border or customs check at the Irish border. Thus, goods and services have been subject to custom checks when traveling from Great Britain to Northern Ireland, but not when crossing the Irish border into the Republic of Ireland.
The United Kingdom has faced immense criticism from many in Northern Ireland who feel that relations with the European Union are being prioritized over their membership in the United Kingdom. Some express dismay over still being beholden to European laws and regulations. One party in Northern Ireland, the Democratic Unionist Party, has been particularly aggravated at the Protocol and has refused to form a government until reforms are made.
Two Lanes of Trade
In a press conference on Monday, United Kingdom Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen announced the Windsor Framework, a proposal to modify the existing Protocol.
The proposal includes a “two lane system” in which goods and services would be designated either “green” or “red” when leaving Great Britain.
- Green: If the final destination is Northern Ireland, products are not sent through customs checks and the trade barrier across the Irish Sea is removed. Green lane products will receive “Not for EU” stickers.
- Red: If the product is going to travel further than Northern Ireland to the Republic of Ireland or elsewhere in the European Union, it is subjected to customs checks at the ports of Northern Ireland to ensure EU single market compliance. This is the current procession of all trade from Great Britain to Northern Ireland, as agreed to in the Northern Ireland Protocol.
The two-lane system would streamline the customs process for goods traveling to the EU and eliminate customs on over £125.8 billion ($133.9 billion) in total trade between Great Britain and Northern Ireland.
Restoring Sovereignty – The Stormont Brake
To appease sovereignty concerns from Protocol critics in Northern Ireland, the Windsor Framework includes a unilateral power-sharing provision. Named for the likeness of the Northern Ireland Parliament, the “Stormont brake” would allow the parliament to block the application of new EU single market laws in Northern Ireland. A third of lawmakers in the Northern Ireland Parliament are needed to activate the “brake.” But for the mechanism to be used, the Democratic Unionist Party (DUP) would have to form a government and convince other pro-British lawmakers to join the request. The DUP currently holds 25 seats out of the 30 required to use the brake.
The Windsor Framework also includes the transfer of value added tax procession from the European Union to the United Kingdom for particular sectors. Included are small and medium-sized enterprises and immovable goods.
Now that the Windsor Framework has been introduced, Sunak will now have to whip votes among euro-skeptic members of the United Kingdom Parliament, particularly the Democratic Unionist Party in Northern Island and the Tories. Von der Leyen will now take the agreement to the Council of the European Union, where a qualified majority (55%) is needed for ratification. Immediate reactions among all involved parties demonstrated cautious optimism. For now, it appears both Sunak and Von der Leyen were able to successfully walk a political tightrope through their cooperation in the Framework.
While Brexit was unquestionably harmful for economic growth in both the United Kingdom and the European Union, the ability for both parties to cooperate on this deal is promising for their post-Brexit relationship in Ireland and beyond. Through deregulation and ease of trade, the Framework will likely increase the amount of trade within Northern Ireland, and the entire United Kingdom, while also maintaining Northern Ireland’s place in the EU single market.
While no agreement between the United Kingdom and the European Union can repair the economic damage of Brexit, these leaders should be applauded for resolving trade at the forefront while navigating an incredibly sensitive issue.