With ongoing talk and confusion surrounding the ‘Northern Ireland backstop’ here is a guide to what it is, how it works, and what would it mean for business.

What is the backstop?

Within the Withdrawal Agreement (WA) is a protocol on Ireland/Northern Ireland designed to ensure that no hard border exists between the two – these provisions are known as the ‘backstop’.

As currently drafted, the backstop would create a special status for Northern Ireland. This could make Northern Ireland a favourable location for manufacturing and creates some changes for all UK organisations importing or exporting goods or commodities with the EU.

These provisions would come into force at the end of the proposed transition period (31 December 2020 - unless extended) if no new agreement is made and would last until they were superseded by a new trade deal.

*The backstop is permanent until it is deemed unnecessary by both the UK and the EU*

How does it work?

The backstop is focused on trade in goods rather than services.

The ‘backstop’ creates some implications for the whole of the UK:

  • There will be a single EU-UK customs territory - Avoiding the need for tariffs, quotas or checks on rules of origin between the EU and the UK.
  • A set of measures to ensure that there is a level playing field between the EU and the UK. Across the whole of the UK, there will be alignment with EU single market rules on environmental standards, workers’ rights, taxation avoidance, and competition and state aid during the backstop.

In Northern Ireland:

  • The Union's Customs Code (UCC), which sets out, inter alia, the provisions for releasing products into free circulation within the EU, will continue to apply to Northern Ireland - Ensuring that Northern Irish businesses will not face restrictions when placing products on the EU's Single Market.
  • Northern Ireland will remain aligned to a limited set of rules that are related to the EU's Single Market and indispensable for avoiding a hard border: legislation on goods, sanitary rules for veterinary controls (“SPS rules”), rules on agricultural production/marketing, and VAT and excise in respect of goods.

In England, Scotland and Wales:

  • There will be some controls on the movement of goods to and from Northern Ireland as well as the EU.

What does it mean for Northern Ireland businesses

Under the backstop, organisations would be able to manufacture and sell products in both the EU and UK with just one set of conformity tests and the same border checks and documentation as at present.

EU single market rules on industrial, environmental and agricultural goods will continue to apply in Northern Ireland.  Northern Ireland products sold in the EU would be required to be labelled as UK (NI).  This mean that products made in Northern Ireland can be freely sold across the UK and EU. 

Where certification and product approval is required, Northern Irish businesses may require authorisation from an EU27 Member State authority or body. This authorisation will also be recognised in the UK market.

Businesses will only need to seek approvals or certifications once, and will be free to sell goods both in the EU and in the rest of the UK based on that single approval or certification. 

For businesses in England, Scotland and Wales

Manufacturers in England, Scotland and Wales (i.e. Great Britain) will need to secure separate UK and EU approvals for products to sell in both markets.

For goods being exported from Great Britain to the EU, exporters will need to have evidence that the product can enter free circulation within the EU (i.e. proof that it meets all EU market requirements).

There will be some compliance checks on products from Great Britain to Northern Ireland:

  • For industrial goods, checks are based on risk assessment, and can mostly take place in the market or at traders' premises by the relevant authorities. Such checks will always be carried out by UK authorities.
  • EU VAT and excise rules will continue to apply in NI, although NI remains part of UK “VAT area”. This means NI could have different VAT rules with some VAT consequences of moving goods between NI and GB
  • For agricultural products, existing checks at ports and airports will continue, but will be increased in scale.

Planning ahead

Continue preparing for No Deal.

If (and it’s a very big if) the Withdrawal Agreement is passed, as currently worded, the backstop would become the new “worst-case scenario” for EU-UK trade arrangements. It sets the minimum barriers to trade which any future relationship would either adopt of improve upon.

However, given the issues/opportunities identified when businesses plan for a no-deal Brexit (especially for service providers), are mostly still applicable in the event of a backstop – and that we will end up with No Deal if nothing changes – No Deal is still the best scenario for planning purposes.

We are here to help – do get in touch.