What the Windsor Framework really means for food businesses

No comments

An agreement has finally been thrashed out, involving a new lanes system for goods arriving in Northern Ireland. Has it solved the puzzle of the Northern Ireland protocol?

After many months of secret negotiations, the latest post-Brexit arrangements for Northern Ireland have finally landed, in the greatest attempt yet to try to smooth trade across the Irish Sea.

The new ‘Windsor Framework’ totals more than 100 pages and addresses some of the shortcomings of the Northern Ireland protocol implemented as part of the original Brexit deal.

The greatest evolution for food and drink businesses is the concept of red and green lanes, an idea that many have requested ever since the border sprang up between Great Britain and Northern Ireland.

The idea is quite simply that when goods arrive in Northern Ireland, they will travel through a green lane if they are destined to stay in Northern Ireland, or a red lane if moving on to the EU.

In the red lane, all goods will face the full customs processes and checks required to enter the EU. In the green lane, each lorry will require just a single general certificate for its entire contents, including complex mixed loads made up of products from numerous suppliers.

This one certificate will “certify that all the retail goods of different types, classes or descriptions in the consignment transported by the same lorry comply with applicable union animal health, plant health, animal by-products rules,” according to EU documents.

Who said what

Rishi Sunak: “[The deal] delivers smooth-flowing trade within the whole United Kingdom, protects Northern Ireland’s place in our union and safeguards sovereignty for the people of Northern Ireland.”

Former NI minister Steve Baker: “The PM is on the cusp of securing a really great deal for everyone involved.”

M&S chair Archie Norman: “The new proposals… solve the Rubik’s Cube of the protocol… and will reduce burdensome checks and controls.”

Sainsbury’s CEO Simon Roberts: “This means that our customers in Northern Ireland will once again be able to access the full range of products as customers in Great Britain – and at the same great prices.”

For now though, it is unclear who will be responsible for completing it. Some suspect the haulier moving the load will have to vouch for its customers that they are meeting EU rules – an idea not too popular with hauliers themselves – so exactly how this works in practice will need to be worked out.

It is one of several questions to have emerged from the plan. Another is how hauliers will know which lane to go in. “How do you know what’s green and what’s red? Marks & Spencer does, Tesco does. It’s a full load, it’s going to Tesco Newry. It’s green,” says Rob Hardy, founder and CEO of customs agency EORI UK.

“But when it’s groupage or part loads, nobody knows. Because you’ve never had to ask the question before. Now you’ve got to ask the question on every movement.”

It is understood that if a haulier can’t be sure of the end destination, they will have to use the red lane, though a tariff reimbursement scheme is thought to be in place for cases when goods can be later shown not to have entered the EU.

In practice, many businesses have already split their supply chains into separate routes for Northern Ireland and the Republic, meaning this problem is unlikely to be too severe, particularly for supermarkets. For others, it could now be a process of trying to group loads together to try and avoid any truck containing a mix of red and green lane products wherever possible.

The final crucial question is when green and red lanes will be implemented, and here at least there does seem to be an answer. In Q&A guidance sent out by HMRC this week, certain operators were told the system would go live in September 2024. “The most interesting thing is this is still more than a year away,” said one recipient of the note.

RTSGOHZS

PM Rishi Sunak and European Commission president Ursula von der Leyen shake hands on the ‘Windsor Framework’ deal

More conditions

There are more conditions for using the green lane. The first is that any goods passing through will need to be labelled “not for EU”. This will be phased in, with meat and fresh milk requiring the label from October 2023, while other relevant products have until July 2025. Shelf-stable products like confectionery, pasta and bread will not require it.

The other condition is that any business wanting to use the green lane must register as a trusted trader under the new United Kingdom Internal Market Scheme (UKIMS), a greatly expanded system that previously excluded hundreds of businesses such as those without a presence in Northern Ireland.

While supermarkets and other large businesses will be automatically transferred onto UKIMS by September this year, for everyone else, “we’re still to see the detail on what ‘trusted trader’ means,” says Michael Bell, executive director of the Northern Ireland Food and Drink Association (NIFDA).

“How do you comply? How micro a business can be trusted? How long do you have to be in operation before you’re trusted?”

The benefit of this system is clear. There will be “super-reduced” data requirements, as the EU puts it, that will mainly just focus on commercial and transport information and can be submitted on a monthly basis. This will allow the frequency of checks by Northern Irish officials to be cut to just 5% of lorries by July 2025.

In return, the EU will gain real-time access to the data, allowing them to carry out risk assessments and monitor the integrity of the schemes. This follows a successful trial of the database over the past year that has seemingly given Brussels trust in the system.

Any easing of the bureaucracy will be good news for businesses as this has been the most burdensome impact of the protocol so far. The bonus is that the government has also committed to retaining the Trader Support Service which helps businesses complete their paperwork.

Not that it’s suddenly a perfect system. “There’s still going to be a significant amount of data entry required to maintain this system,” says Shane Brennan, CEO of the Cold Chain Federation. “But it’s going to happen in a more digital way and in a structure that happens away from the individual movements of goods.”

It’s a similar story on the volume of checks. While a reduction down to 5% has been celebrated by Rishi Sunak, the reality is that there have never really been checks anyway. “Checks have never really happened because of the political tensions,” Brennan adds.

“Every time the guys at Daera [The Department of Agriculture, Environment and Rural Affairs] stopped a lorry, they were making a political statement. That wasn’t their intention. But the effect of what they were doing was a political statement.”

Is the new Windsor Framework a ‘good’ deal? That depends on what you compare it with. It’s a long way from the friction-free trade that businesses enjoyed before Brexit. But compared with the disruption and uncertainty of the past two years, it’s a very welcome step forward.

It should also mean supermarkets can go back to a UK-wide operation rather than moving towards an island of Ireland model. Sainsbury’s, for example, made clear this week it would be reinstating all the British products it stopped shipping into Northern Ireland since the protocol came into force.

Arguably most importantly though, it is a clear sign that trust and respect has returned to the EU-UK relationship after many years of acrimony. And the benefits of that could be felt much further than across the Irish Sea.