Different views show EU and No 10 aren’t quite on same page

Subsidy laws within the EU will still apply in Northern Ireland, despite the new Brexit deal being proposed by Rishi Sunak

EU documents appeared to contradict some claims made by Downing Street as the Windsor Framework was unveiled on Monday. On subsidies, VAT and excise rules, the Stormont brake, red and green lanes and whether the Protocol itself has been changed, differences have emerged.

Subsidy laws

European Union subsidy laws will still apply in Northern Ireland despite Rishi Sunak’s new Brexit deal.

Rather than repatriating state aid law to Britain, the deal merely restates and clarifies an existing Protocol agreement on when Brussels subsidy rules apply. The document says EU rules would only apply to subsidies that “have real foreseeable effects on trade between Northern Ireland and the EU.” But it adds: “Article 10(1) of the Protocol makes EU State aid rules applicable in Northern Ireland

“The Joint Declaration neither modifies the substance of Article 10(1) nor restricts its application.”

The new language was agreed to “further clarify the provisions on State aid in the Protocol.”

The Government said the “new stringent tests” would ensure “more than 98 per cent of Northern Ireland subsidies to be unaffected in practice”.

VAT and excise rules

Most EU VAT and excise rules will still apply. Launching the deal, Mr Sunak said it would “ensure we can make critical VAT and excise changes for the whole of the UK.”

This was widely reported as a repatriation of powers from Brussels but the EU document makes clear Westminster’s hands will still be tied by the Protocol. Under the deal, the UK can only apply reduced VAT on goods installed on “immovable property”, such as solar panels or heat pumps. Because they are bolted to a house, there is no risk the goods could cross the border into the Republic. Brussels and London have agreed to work on a list of other goods that won’t enter the EU’S Single Market in the future.

Concessions over excise do also not amount to a full repatriation of tax powers. They are limited to taxes on alcoholic drinks, while EU rules apply everywhere else.

Any duty cut is also not allowed to be below the Eu-wide minimum, which is unlikely but does tie the Government’s hands. This means that Northern Ireland will tax alcoholic drinks on the basis of strength, as part of reforms planned for the rest of the UK, which was not previously the case.

Brussels did agree to create an “Enhanced Coordination” mechanism, where Protocol-related issues on tax and excise on new EU law can be discussed.

Stormont brake

The Prime Minister also claimed that the new “Stormont brake” would mean that EU legislation could be stopped from applying in Northern Ireland if 30 MLAS object to it.

“If the brake is pulled, the UK government will have a veto,” he said.

But the brake can only be used under very strict conditions, and only on amendments and updates to existing EU laws, rather than entirely new legislation from Brussels.

It can only be used when “the amended or replacing EU act, or a part of it, significantly differs in scope or content from the previous one and application of such amended or replacing act would have a significant impact specific to everyday life”.

Red and green lanes

Mr Sunak said “we have removed any sense of a border in the Irish Sea” by creating the red and green lanes for goods sent from Britain to Northern Ireland.

But the EU said, “goods not at risk of entering the EU will benefit from an unprecedented reduction, although not a full eradication, of customs requirements.”

Those reductions are only available to members of a trusted trader scheme, which the EU can suspend if it loses access to a real-time trade database, or if the UK does not meet its commitments for the scheme.

In that case all goods would be treated as if they were in the red lane.

Has the Protocol changed?

Mr Sunak also declared: “We have changed the original Protocol”.

On the question of whether Brussels renegotiated the Protocol, the EU said: “The Windsor Framework has been fully carried out within the framework of the Withdrawal Agreement, of which the Protocol is an integral part.”

It said that the original treaty allowed the Joint Committee to adopt decisions to “address situations unforeseen when the Withdrawal Agreement was signed”.

“All new arrangements fall within this pre-established framework.”