Comment

Why the Windsor Framework could come back to bite Sunak

Joël Reland / May 2023

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Joël Reland analyses the impact of the Windsor Framework on UK-EU regulatory divergence and sets out the implications for Rishi Sunak. He suggests that UK companies may continue to follow EU rules, even where they don’t have to under the Framework.

For more on regulatory divergence, see the new edition of UK in a Changing Europe’s regulatory divergence tracker.

Rishi Sunak’s Windsor Framework was widely heralded as a triumph of statecraft, and a major step forwards for UK-EU relations. Yet another important question, which has received less scrutiny, is how it affects regulatory divergence between the UK and EU.

The chief pessimist in this regard is former PM Boris Johnson, who called Sunak’s deal a “drag anchor” on divergence, as EU single market regulations will still apply in Northern Ireland. That means UK divergence from EU regulation can still entail divergence with Northern Ireland, creating a growing regulatory gap which hinders trade.

It was such regulatory differences which led to the infamous ‘sausage wars’, where the EU tried to block exports of chilled meats to Northern Ireland, and the ban on exports of certain items like seeds.

Yet, upon closer inspection, Sunak’s deal clearly lightens the proverbial anchor, compared to what came before (the original Protocol negotiated by Johnson himself).

Under the Windsor Framework, it will be possible to export a much wider range of goods (food, medicines, parcels, plants) which meet UK, rather than EU, standards across the Irish Sea.

In theory, therefore, Great Britain can diverge from EU regulation in such areas – perhaps on gene-edited crops or medicines – without creating divisions within the UK’s own internal market. That said, the Sunak government has so far shown limited desire to pursue such reforms (though this could of course change with time).

The Framework also impacts ‘passive’ divergence, where the EU makes new or updated regulation that the UK does not follow. Because the EU has been a more active regulator than the UK since Brexit, this is arguably the bigger issue for Northern Ireland.

Under the original Protocol, many EU rule changes also take effect in Northern Ireland, meaning divergence with Great Britain. For example, an EU ban on the E171 food colouring would have prevented British supermarkets shipping certain baked goods to Northern Ireland on the terms Boris Johnson agreed in his Protocol.

The Framework changes this dynamic, however, because British companies will now be able to export food and other goods for consumption to Northern Ireland – via a ‘green lane’ – if they meet UK – rather than EU – standards. In theory, this limits the regulatory gap.

Indeed, Sunak himself says “the only EU law that applies in Northern Ireland under the Framework… is the minimum necessary to avoid a hard border with Ireland”.

Yet, UK in a Changing Europe’s latest divergence tracker suggests things may play out differently. There are signs that companies across the UK may continue adhering to EU rules, even where they don’t have to under the Framework.

An early test case is the EU’s new, tighter restriction on arsenic levels in items like baby food. Under the Windsor Framework, Northern Irish businesses will be able to import food from Britain which meets UK – not EU – standards.

Yet industry groups in Northern Ireland and across the rest of the UK have already said they will adhere to the new EU restrictions regardless, to be able to continue exporting their goods to the EU.

The willingness of non-EU companies to follow stricter EU regulation, in exchange for access to the single market, is known as the ‘Brussels effect’ – and in this case it trumps the freedoms secured in the Windsor Framework in shaping business decision-making. The rationale is simple enough: the EU is a market of around 450 million people, compared to 2 million or so in Northern Ireland.

And there could well be a slow drip of similar cases over time, given the EU is an active food regulator. For example, there is a forthcoming import ban on crops treated with two prevalent pesticides. It stands to reason that producers UK-wide might again change their practices as necessary, to maintain EU market access.

If so, the freedom offered by the Windsor Framework to minimise the application of EU regulation could prove rather immaterial.

There are also significant areas of policy where Northern Ireland has no freedom of choice: for example, it must remain aligned with EU rules on manufacturing standards, and animal and plant health. This may be the ‘minimum necessary’ EU regulation, but it still a fairly heavy load, which is likely to grow with time.

For example, the updated EU product safety regulation will require certain products (e.g. furniture, textiles, bicycles) to meet more stringent risk assessments and legal procedures, while the updated EU ‘ecodesign’ regulation imposes new monitoring and labelling requirements on some IT goods. Both these changes could create new administrative and financial costs for exporters, including those shipping from Great Britain to Northern Ireland.

The risk is that GB-based exporters decide that the costs of compliance with the new regulations outweigh the gains from selling into the relatively small Northern Irish market. That could lead to a shortage of certain electronics, or an increase in prices.

The new ‘Stormont Brake’ allows Northern Irish lawmakers to block very disruptive regulatory changes, but the barriers to using it are high.

It also offers no protection against another big factor, the Retained EU Law (REUL) Bill, which, even in reduced form, could see hundreds of laws inherited from the EU switched off overnight at the end of 2023. Because many of these laws will still apply in Northern Ireland, this could create a regulatory chasm in the Irish Sea.

If the Prime Minister is serious about limiting regulatory divergence with Northern Ireland, it is vital that he ensures officials focused on the REUL Bill speak to those working on the Windsor Framework, to understand the interlinkages and impacts on the ground in Northern Ireland.

For Sunak, there is a serious risk that he has overpromised with his Windsor Framework. As well as inaccurate claim that it removes “any sense of a border in the Irish Sea”, the assertion that it keeps EU law to the “minimum necessary” will ring increasingly hollow if, as the divergence tracker suggests, a significant amount of new EU regulation continues to have a bearing on Northern Ireland.

The agreement which won him so many plaudits could become a stick to beat him with.

 

The seventh edition of the UK-EU regulatory divergence tracker can be found here.

For further information visit the UK in a Changing Europe website.

 

Joël Reland

Joël Reland

May 2023

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