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October 17, 2019

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Re the "Joint Committee", you need to read the whole agreement (500+ pages): https://ec.europa.eu/commission/sites/beta-political/files/consolidated_withdrawal_agreement_17-10-2019_1.pdf

But the relevant section is Article 164 of the main agreement:

ARTICLE 164
Joint Committee

1. A Joint Committee, comprising representatives of the Union and of the United Kingdom, is hereby established. The Joint Committee shall be co-chaired by the Union and the United Kingdom.

2. The Joint Committee shall meet at the request of the Union or the United Kingdom, and in any event shall meet at least once a year. The Joint Committee shall set its meeting schedule and its agenda by mutual consent. The work of the Joint Committee shall be governed by the rules of procedure set out in Annex VIII to this Agreement.

3. The Joint Committee shall be responsible for the implementation and application of this Agreement. The Union and the United Kingdom may each refer to the Joint Committee any issue relating to the implementation, application and interpretation of this Agreement.

4. The Joint Committee shall: [and here follows a whole list of things]

The bit about the state aid rules means that what happens is that the UK has to levy EU tariffs as essentially the default BUT the UK can actually pay the tariffs itself for the importer as a form of state aid under EU state aid rules (according the whole 500+ page agreement). Apparently most small importers are unlikely to ever hit the state aid limits under these rules. Additionally large importers who might not benefit from that can reclaim the duties if they can demonstrate the good doesn't leave NI (this chart might be of interest: https://twitter.com/Usherwood/status/1185496276307197952)

Oh and to top it all off, those EU-aligned tariffs levied in NI? They don't go to the EU. The UK keeps them.

It's very similar to the deal the EU offered to the UK sometime ago but the exemptions for personal belongings, the UK keeping the duties levied and being able to waive tariffs/pay duties on behalf of NI small importers for goods coming from the rUK and allowing big importers to reclaim duties where they can show that they should have paid the lower UK duties is all new (or rather new in that the EU is okay with it, previously the UK tried to suggest this but on a UK-wide scale which was seen as completely unworkable for a territory as large and populous as the UK).

I think what this is intended overall to do (especially as the alignment of VAT rates between NI and the republic of ireland is also new) is I think to basically discourage trade diversion and smuggling from NI into the Republic of Ireland by:

1. ensuring the VAT rates are similar or the same across the island

2. ensuring that customs duties are the same at all ports of entry to the island so that persons won't have an incentive to bring in goods via Belfast bound for Cork or Dublin and escape paying duties that way.

3. ensuring that the system of exemptions is such that it is hard to take advantage of them to carry out the kind of trade diversion activity referred to in #2 above as one would likely have to provide paper work of such a nature that just as how many companies don't bother trying to prove FTA status for imports and just pay the usual tariffs because the Rules of Origin are so onerous, here they will just pay the tariff because the Rules of Destination are also so onerous.

I think we need to read Annex VIII!

The tariff rebates are a big deal! So is the VAT alignment. I should have made more of that; thank you for the information.

The other things aren't that important. Exempting personal possessions is pretty standard; I can't imagine a deal that wouldn't include that. Ditto, letting the U.K. keep the tariffs is in-line with the customs union that the E.U. has with Turkey. (See page 1 at the link.)

One thing to keep in mind is that the agreement discriminates against small enterprises, who will find the paperwork more onerous than big firms. To be fair, all FTAs face this criticism, but customs unions usually don't. (The EU-Turkey union is an exception, because it is fiendishly complicated, not unlike the EU-UK deal Boris has agreed to accept.)

You are welcome!

Interesting. Never knew that about the EU-Turkish customs union.

Indeed the VAT alignment might be a very big deal as I think currently VAT isn't aligned across the island so this might be something new (I'm not entirely sure however). VAT alignment isn't automatic however, it would be up to the UK to set the rates in NI in alignment with the Republic of Ireland if it wished.

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