My Lords, having listened to my noble friends, it is doubtful that these regulations are intra vires. They are tied umbilically to regulation 2023/1231, which, as we have seen, rather than removing the border down the Irish Sea, bestows on it an alternative set of border arrangements which, while in some ways are less demanding, remain border arrangements—and ones that, crucially, are predicated on Article 14, which gives the EU the default right to press its full rights against the border it has thrust across our country. The EU regulations consequently disrespect the territorial integrity and the essential state functions of the UK, both by dividing it with an international border and asserting the default right to control that border within our country.
This is a hugely important matter for the Windsor Framework (Enforcement etc.) Regulations 2023 because Article 1(2) of the protocol states:
“This Protocol respects the essential State functions and territorial integrity of the United Kingdom”.
It is made directly effective in UK law by Section 7A(l)(a) of the European Union (Withdrawal Agreement) Act, requiring that
“all such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the withdrawal agreement”
are applied.
How can Article 1(2) be applied if attempts are made to implement other parts of the protocol that have the effect of actively disrespecting the territorial integrity and essential state functions of the United Kingdom that it insists on respecting? I can see that, if the regulation-making power were for the purpose of giving effect to certain articles of the protocol and not others, this vires difficulty may not necessarily apply. But the regulation-making power simply references the protocol/Windsor Framework, which means that it must be taken as a whole. That means that any Act that purports to implement it cannot contradict any part of the protocol, including Articles 1 and 2.
Some might say that the power affords the Minister significant latitude. That may be the case, but the power is not a power to do anything; it is constrained by references to the protocol—now the Windsor Framework. Although the Minister may have freedom, this plainly does not extend to directly contradicting any part of the framework, which these regulations plainly do, in acting in direct opposition to Article 1(2).
The Windsor Framework enforcement regulations are also problematic because, unlike most forms of legislation that do not have an impact until they formally come into effect, businesses have been busily restructuring in preparation for the regulations, as part of the retail movement scheme—first announced as the green lane in February. For some months, Asda has started to use “not for EU” labels. This means that, unusually, we can already see something of the effect of these regulations. Moreover, their actual consequence has been plain to see since 14 June, if not before, when the EU regulation 2023/1231, to which they relate and without which they make no sense, came into effect.
Many businesses have made it clear that relying on the retail movement scheme and its enforcement mechanism, as set out in these regulations, is too complicated, and it is too expensive for the retail movement scheme to simply take over from the old and very light-touch scheme for temporary agri-food movements to Northern Ireland—STAMNI—which it replaces, such that supermarkets can continue to function on the basis of the old GB-NI supply chains that attended and defined what was the UK single market for goods until the end of 31 December 2020, giving effect to UK economic nationality.
In this context, big supermarkets I have already referred to, such as Tesco, have been restructuring their supply chains to move as much as possible of what previously came from Great Britain to Northern Ireland so that, after 1 October, it comes from the Republic of Ireland to Northern Ireland. One might respond to this by arguing that, to the extent that these regulations apply GB regulations, their enforcement component cannot have a trade diversionary effect. There are two difficulties with this assertion. In the first instance, to the extent that the deployment of these standards is through an SPS certificate—in relation to which one must have an export number and have
obtained and kept membership of the trusted trader scheme, negotiated a border control post and provided “not for EU” labels—this all amounts to costs that do not apply to goods movements in other parts of the United Kingdom. This is an increased cost compared to STAMNI.
In the second instance, the impact of the retail movement scheme in terms of enforcement regulations does not simply determine where GB regulations apply. It also determines, by implication, where they cannot apply and where EU regulations, the presence of which was obscured by STAMNI, will now take effect.
The trade diversionary implications of preparing for the Windsor Framework (Enforcement etc.) Regulations 2023, and thus EU regulation 2023/1231, without which it and the other retail movement scheme legislation makes no sense, was brought home with particular clarity in the case of Tesco, through a slide at a recent presentation to retailers. The heading was:
“Packaged Food approach. For products currently moving from GB to NI”.
It said that, under the retail movement scheme, it would be important to restructure to get as many of these goods as possible from the Republic of Ireland to avoid the green and red lanes. Under the heading “Ireland Supply Routes”, the slide said:
“1. More Direct from the EU. 2. Move all common products from the ROI to NI stores. 3. Align some range with the ROI range”.
Of course, this is not to suggest that there will be no use of the green lane but rather that, together with the red lane, the green lane, as defined by various SIs published since August, including the Windsor Framework regulations, is already driving trade diversions. The fact that one can already see that trade diversion is the straightforward result of replacing STAMNI with the retail movement scheme facilitated by the Windsor Framework enforcement regulations, even before they formally come into effect. It demonstrates that, rather than fixing the problem with the Northern Ireland protocol/Windsor Framework, these Windsor Framework regulations have actually helped to call it out, in terms that were always recognised as fatally problematic by the drafters of the protocol/Windsor Framework, such that they justify derogation from it.
Article 16 of the protocol, which is directly effective in UK law, and which many Members of the House of Lords criticised the Government for not triggering ahead of introducing the Northern Ireland Protocol Bill, represents the mechanism to use if the protocol is failing. Failure is defined by Article 16 in the following terms:
“If the application of this Protocol leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade, the Union or the United Kingdom may unilaterally take appropriate safeguard measures. Such safeguard measures shall be restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation. Priority shall be given to such measures as will least disturb the functioning of this Protocol”.
The interesting thing about the form of words employed here by the drafters is that the diversion of trade is recognised to be such a serious matter that, even if it does not lead to
“serious economic, societal or environmental difficulties that are liable to persist”,
Article 16 can still be triggered, just because it results in a diversion of trade.
Of course, that is not at all surprising, because trade flows that are definitive of a single market are definitive of the economic nationality that underpins the modern nation state. As such, they are of an entirely different constitutional effect to trade flows between economies. They could not be cut away without shaking the very foundation of the polity in question. The trade diversionary implications of the retail movement scheme, as evidenced by Tesco’s presentation, have had a clear impact on the haulage sector, which has experienced a significant reduction in goods travelling from Great Britain to Northern Ireland since the announcement of Windsor, and the replacement of STAMNI with the retail movement scheme that it is the purpose of these regulations to implement.
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Following the reduction in the operations of another haulage company servicing the UK market, Americold, the recent announcement that Morgan McLernon—it is the Northern Ireland wing of Culina, the largest UK-wide haulier of chilled and ambient products, the business of which is defined in UK terms—is to be closed, which the management blamed specifically on the implications of Brexit, provided a real-life demonstration of the reality of trade diversion, which the announcement of the replacement of the STAMNI scheme with the retail movement scheme through these regulations has accelerated. If the Government persist with these regulations, the trade diversion that they are creating will make it very difficult for them not to trigger Article 16. The Government should abandon the regulations and keep the STAMNI scheme in place.
When challenged on this point, the only defence that the Government have given is that the trade diversion resulting from the Windsor Framework, which it is the purpose of these regulations partly to effect, will be less than under the protocol. There are two difficulties with this defence. First, it does not deal with the central difficulty: Article 16 does not afford a basis for derogation if trade diversion is worse than that caused by the Windsor Framework, but simply on the basis of trade diversion. Secondly, the Government’s assertion that trade diversion under the Windsor Framework will be less than under the protocol is in any event deeply problematic. In truth, the protocol was completely unimplementable and would have caused supply chains to crash, generating a political crisis that would have, within the space of a few days, completely destroyed the credibility of the protocol such that it would have had to be abandoned and replaced with an honourable arrangement respecting the territorial integrity of the UK. Thus, its capacity to generate greater trade diversion than the Windsor Framework was entirely theoretical because it could never have lasted long enough really to create trade diversion.
Today, we need to decide whether the UK body politic is worth preserving and celebrating. I passionately believe that it is. I will certainly oppose the regulations.
Finally, can the Minister say when the European Union will inspect the border control posts to confirm that they are to its satisfaction in order for the green lane to commence on 1 October?