Share this article: Facebooktwitterredditpinterestlinkedinmail

14 January 2020

Dr Anna Jerzewska is a independent customs and trade consultant, an independent advisor with the UN International Trade Centre and also a trade policy and customs consultant for the British Chambers of Commerce.

The UK is due to leave the EU on the 31st January 2020. A new stage of the Brexit process is set to begin – the transition period and negotiations of the future relationship with the EU. At the same time, work on the Northern Irish border arrangements is far from over. A newly established Joint Committee will negotiate the practicalities of implementing the Withdrawal Agreement.

Under the Withdrawal Agreement (“WA”), Northern Ireland would stay in the UK’s customs territory but would at the same time continue applying EU’s customs legislation, tariffs, quotas and, partially, EU Single Market rules. This will avoid a border on the island of Ireland but will mean a de facto customs and regulatory border in the Irish Sea. As a result of this dual status, goods shipped from Great Britain (“GB”) to Northern Ireland (“NI”) will be subject to EU tariffs if they are “at risk of subsequently being moved into the Union, whether by itself or forming part of another good following processing”[1]. What that means has not been fully defined within the text of the Agreement. Article 5(2) clarifies that all goods will be considered to be “at risk”, and thus subject to EU tariffs unless it is established that they will not be subject to commercial processing in Northern Ireland or they are otherwise exempt. This is one of the areas where the Joint Committee will need to introduce practical ways of implementing the agreement.

The key challenge here will be the fact that the final destination of goods will be unknown at the time of crossing the Irish Sea border. Normally when goods arrive at the border, they are declared to Customs based on what happened to them previously (i.e. their origin, value etc). The shipment is declared to Customs, an appropriate amount of customs duty is charged based on the declared customs product code and goods are free to enter the country. When the origin of goods is taken into account, i.e. when goods are imported under a Canada-style free trade agreement, the origin is determined based on the product’s history (how and where it was manufactured, where did the majority of inputs come from etc).

Under the WA the situation will be quite different as the duty is related to where the goods end up rather than where they originate from. As a result, when GB goods move across the Irish Sea, it will be impossible to determine with certainty whether the goods will end up on:

  • The NI market in which case no tariffs would be due; or
  • The Republic of Ireland (“ROI”)/EU market in which case tariffs might be due.

There are some similarities here with goods that are declared to special customs procedures when crossing the border. Special customs procedures, such as Inward Processing or warehousing, are a way to suspend customs duty at the time of import. The goods are then processed or stored and the final amount of duty is calculated once it becomes clear whether the goods are re-exported or entered onto the local market.

However, special procedures require a substantial amount of additional paperwork. First of all, companies wishing to use them need to register with domestic customs authorities. Since duties are suspended, a good compliance record is required. Furthermore, special procedures come with a lot of restrictions and rules. The goods need to be ‘discharged’ from the procedure either by declaring them to customs for re-export or entry onto the local market or by completing the special procedure in another way. In many cases, companies are required to submit written statements on where each of the imported items ended up. If the goods are not properly discharged from the special procedure within a given period of time, suspended duties become due.

Based on the existing customs procedures and practices, there could be three main methods for determining which goods are at risk of subsequently moving to the Republic of Ireland. None of them is without challenges and none provides full traceability. Also, none of them is frictionless as far as businesses are concerned. While the friction does not necessarily occur at the border, additional behind-the-border paperwork would definitely be required.

  • By tariff line

Each product traded internationally needs to have one of the existing customs product codes (tariff lines) assigned. Product codes need to be included on every customs document. One way to determine ‘risk’ would be to divide goods based on their tariff lines. The Joint Committee would need to conduct an in-depth analysis of the current GB-NI-ROI trade flows and trends to determine which tariff lines are at risk of entering the Single Market (entering ROI).

There are a number of challenges with this approach. Firstly, this assessment would need to be periodically reviewed as trade flows change. Secondly, because when the Joint Committee sets the rules it’s in general terms, this would have to be done on the lowest common denominator basis. For example, if 80% of a particular tariff line currently traded between GB and NI remains in NI and only 20% is sold onwards to ROI, would that count as a tariff line posing a risk to the Single Market? What would be a cut-off point?

A degree of non-compliance would have to be built into the system as this method could only ever provide a rough estimate. It is the least exact of the three methods and would provide a limited degree of traceability. It could also lead to a significant proportion of goods being potentially subject to EU tariffs and customs formalities. On the other hand, simplicity is one of the method’s main advantages. Particularly, as out of the three proposed approaches, it one requires the least amount of additional paperwork for businesses.

  • By product or shipment

This approach would resemble current origin certification under a Canada-style trade agreement. Each time a company sends goods from GB to NI, it would have to declare (not necessarily at the border) whether they are destined for NI or ROI markets. This would need to be declared by the importer (i.e. the company responsible for bringing the goods into NI) and the importer that would need to be liable for the potential customs debt as they have the oversight of where the goods end up.

The method would provide limited traceability. Companies importing goods into NI would not necessarily have any visibility as to where the goods are sold to, beyond the first sale, which might not necessarily be the last. It would also be quite difficult to enforce given no controls between NI and ROI. What would stop a NI company from selling a product initially imported into the NI market onwards to the EU to take advantage of tariff-free access?

This approach would lead to a limited amount of additional paperwork. Even though such declarations would need to be made each time a product moves from GB to NI, it would most likely take the form of self-certification. The importer would simply provide a statement on the commercial invoice or shipping documentation as no third-party institution could verify the declaration at the point of import.

  • By company

The third method would be based loosely on current special customs procedures. Companies wishing to import goods into NI could register with customs authorities. Registered companies would be able to suspend duty when goods arrive in NI (a customs guarantee might be required). The suspension would be available for a limited period of time, as with most special procedures. After that period of time, the importer would submit a document to the customs authorities demonstrating where the goods ended up: the NI or ROI markets. Such reconciliation would be similar to the current bill of discharge used under the Inward Processing procedure. The final duties would then be calculated and collected.

As mentioned earlier, special procedures require a substantial amount of paperwork, additional controls and regulations. This method would be no different. On the upside, it would give customs authorities  better visibility of the goods’ final destination. Like with other special procedures, companies would be responsible for providing proof that goods remained on the NI market, otherwise suspended EU duties would become due. The burden of proof would fall on the importer even when the final destination might depend on its clients – in case of an onward sale of the product. This method is also quite unique in providing a possibility to transfer the responsibility for discharging the procedure to a different entity; however, not all companies might be willing to purchase products under such conditions. This option would be a significant departure from the current frictionless trade.


The three methods differ in terms of the administrative burden placed on companies and the degree of visibility and certainty they provide for customs authorities. With all three methods, there would be some degree of non-compliance as no checks would be conducted on the NI/ROI border.

As a result, the key task for the Joint Committee will be to carefully balance the need to enforce the Withdrawal Agreement’s provisions and protect the integrity of both markets with the need to limit the amount of additional administrative burden for businesses. The success of the bespoke Northern Irish customs arrangement will depend on how well this is done.

None of the above options provides an off-the-shelf solution. In practice, a mix of the above methods might be required: it might, for example, be advisable to provide one solution for larger companies which have the capacity to deal with customs formalities and a simpler one for smaller companies.


[1] Withdrawal Agreement, Protocol on Ireland/Northern Ireland Article 5(1), available here:

The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.

Leave a Reply

Your email address will not be published. Required fields are marked *