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The European Commission has put forward a proposal that would determine which goods moving from Great Britain to Northern Ireland should receive a duty and which should not, after January 1, RTÉ News has learned.
Under the Northern Ireland Protocol, goods moving from Great Britain to Northern Ireland will be considered at risk of crossing the border into the EU single market, unless it can be proven otherwise.
The issue of “goods at risk” has proven to be very sensitive and the UK is expected to introduce new legislation giving British ministers the power to decide unilaterally which goods going to Northern Ireland should face customs duties.
The Joint Committee, created by the Withdrawal Agreement and made up of British and EU personalities, is tasked with devising a system that defines exactly what “assets at risk” are.
The European Commission’s proposal would involve calculating the differential between an EU tariff and the corresponding UK tariff on a product as a way to determine whether that product was at risk of crossing the land border into the EU single market afterwards. to get to Northern Ireland. .
The higher the EU tariff compared to the equivalent UK tariff, the more likely that product will be smuggled across the border and south, according to high-level sources cited in the proposal.
As such, the Commission believes that where there is a significantly higher EU tariff, those products should be considered “at risk”.
Sources say what matters is where there is a clear incentive to circumvent a higher EU tariff.
It is understood that the European Commission produced a seven-page document on the idea and shared it with the UK negotiating team before the summer.
The document followed a series of technical meetings between officials, during which both parties discussed the principles involved and how the system would technically work.
A source informed about the work told RTÉ News: “The Commission drew up a draft decision. It could have gone down several tracks, but the route they chose was the differential route of fares. Where the EU fares would be considerably more higher than UK rates, it would have been a considerable financial gain to do something quietly across the border.
However, the proposal has been complicated by the fact that future trade negotiations will influence the operation of the “goods at risk” part of the Protocol.
If a free trade agreement is not concluded by the end of October, the Northern Ireland Protocol remains legally binding, as it is part of an international treaty.
However, in that scenario, a full range of tariffs would apply to goods going from Great Britain to Northern Ireland. It is understood that trying to predict the full range of tariff lines and tariff differentials was difficult with this in mind.
Alternatively, if a free trade agreement is reached, then there would be no tariffs on any product moving between the EU and the UK, so part of the Protocol would be made much easier.
The implications for goods arriving in the UK from other parts of the world and then moving across the Irish Sea to Northern Ireland were also discussed.
Sources say that after Brexit, the UK’s program for tariffs on foreign products would not be drastically different from the EU’s program. That would mean that the tariff differences would be small and therefore the goods would not be considered prone to the risk of smuggling.
However, London has been comfortable with the idea of the Commission. A UK source confirmed that the idea of a differential tariff approach was discussed in July, along with other ideas. The source said the Commission’s proposal was “unacceptable.”
British sources have consistently argued that large swaths of UK trade flows to Northern Ireland, by their very nature, are not at risk of crossing the southern border.
However, EU officials argue that unless safeguards are put in place, the market will adapt over time and the single market will risk products with lower tariffs being smuggled across the border because they are more cheap.
Reaching agreement at the Joint Committee level on the issue of “goods in distress” is an important aspect of the Protocol. According to the European Commission, the Protocol holds that if an agreement is not reached before the end of the year, the default is that all goods are at risk of crossing the border and therefore attract tariffs.
It is understood that an upcoming UK finance bill, such as the Home Market Bill, will give the UK the unilateral right to determine which goods face tariffs when moved from Great Britain to Northern Ireland.
Following the publication of the Internal Market Act, British Prime Minister Boris Johnson appeared to combine the issue of products at risk with the accusation, strongly denied, that the EU threatened to block Britain’s food imports so that they will not enter Northern Ireland.
In a 9/11 Daily Telegraph article, 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 large-scale trade border. in the Irish Sea. “
EU sources insist that the idea of the tariff differential is still being discussed, among other ideas. The issue is expected to be addressed by the technical working group, known as the Specialized Committee, next week.
“Technical work continues on this matter, building on the work done over the summer. The Specialized Committee should continue this from time to time and then go back to the Joint Committee,” said an EU official.
“The default is that on January 1 all assets are at risk [if no agreement is reached by the Joint Committee]. When addressing the discussions in the Joint Committee / Specialized Committee, protecting the integrity of the Customs Union will be essential, “the official said.
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