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Post-Brexit Cross-border Trade in Goods between the UK and the EU

On 31 January 2020, the UK ceased to be a Member State of the EU and became a third-party State, reflecting the 2016 Referendum outcome (Freeden, 2016). The following day, after four years of negotiations and renewed extensions regulated under Article 50 TEU, the Withdrawal Agreement (WA) entered into force and provided for the beginning of the transition period, during which EU law still applied, and for goods placed on the market before the end of this period to circulate freely under EU rules until they reached the end-user. The WA also includes the Protocol on Northern Ireland and Ireland (PINI) which regulates the trade relation between Northern Ireland and the EU. On 31 December 2020, the transition period ended alongside the UK membership in the EU Internal Market, and the future relationship between the UK, excluding Northern Ireland, and the EU found its legal basis in the Trade and Cooperation Agreement (TCA), which entered into force formally on 1 May 2021 after a four-month period of provisional application. This essay will focus on how the trade in goods has changed between the UK and the EU, distinguishing between Northern Ireland’s and Great Britain’s positions.

In order to do so, we will start with a brief examination of the EU Internal Market, followed by an analysis of the current legal framework under the PINI and the TCA. The aim of this essay is to demonstrate the dual trade relation the UK has with the EU with, on the west side of the Irish Sea, an almost unchanged scenario with retention of EU law and, on the east side, aggravated burdens on the movement of goods that shadow the vain attempt to keep a liberal approach to trade in goods.

Figure 1: Brexit Timeline (Blick Rothernberg, 2020)

EU Internal Market

Since its genesis, the EU aimed at the creation of an Internal Market: an area without internal frontiers where factors of production, including goods, move freely. The aim is pursued through positive and negative integrations: the former regarding legislative harmonization and aspects such as goods’ standards and the abolition of customs formalities, and the latter entailing the prohibition of discrimination and tariff and non-tariff barriers to movement (Foster, 2021). Tariff barriers include internal taxation on goods from other States different from that imposed on national products and customs duties or charges having an equivalent effect on goods exchanged between Member States. The ECJ conceived very restrictive justifications for imposing customs duties or similar charges (Case 118/85 Commission of the European Communities v Italian Republic, 1987). Non-tariff barriers regard obstacles free of pecuniary connotations, i.e., quantitative restrictions on goods, particularly imported ones, and all measures having equivalent effect, defined by the ECJ as all “practices capable of influencing the conduct of traders and consumers”. Such measures can only be justified on specified grounds provided by the TFEU or the ECJ’s case law (Schütze, 2021). The Internal Market also entails common external tariffs for trade with third-party States, commonly referred to as the Customs Union, the precedent stage of economic integration leading to the Internal Market. The astonishing result is a free trade area in which trade is not only facilitated but increased. EU rules are subject to enforcement and supervision by EU institutions that pursue the establishment of a single market similar to a domestic market, while the ECJ has jurisdiction over their interpretation (Torino, 2017).

Figure 2: The Map of the EU Internal or Single Market (European Parliament, 2023)

The Withdrawal Agreement: Protocol on Ireland and Northern Ireland

Northern Ireland’s crucial position as the only land border between the UK and the EU arose concerns regarding the political stability of the area and the effectiveness of the 1998 Good Friday Agreement (Doyle and Connolly, 2017). As a result, the parties negotiated for the creation of a “soft border” located in the Irish Sea between Northern Ireland and Great Britain and for Northern Ireland to be given a unique position as a de facto member of the EU Internal Market, although with no active role in policy-making. In fact, despite Northern Ireland being part of the UK customs territory, it still enjoys the prohibition of discriminatory internal taxation, customs duties, and quantitative restrictions on goods traded between the EU and Northern Ireland. Furthermore, goods moving between Northern Ireland and the EU are exempted from border checks and customs formalities by virtue of Northern Ireland’s goods being subject to EU regulations and standards. This entails that checks will instead be enforced on the border between Great Britain and Northern Ireland and Great Britain’s goods will need to prove compliance with EU regulations before entering NI and eventually the EU. However, as part of the UK customs territory, Northern Ireland and Great Britain's trade relation is free from customs duties as long as goods are not at risk of being moved into the EU, meaning that they will not undergo commercial processing in Northern Ireland and fulfill criteria set out by the Joint Committee. As for trade with third-party states, UK, rather than EU, customs duties apply only if the mentioned no-risk assessment is positive. Furthermore, despite the UK’s power over border checks, EU traditional enforcement powers continue to apply, namely the EU Commission’s role in overseeing EU law implementation, the ECJ’s jurisdiction, and the direct effect of EU law (Dougan, 2020).

Figure 3: Map of the Post-Brexit Trade in Goods (Agence France-Presse, 2022).

The Trade and Cooperation Agreement

The TCA aims at the establishment of peaceful cooperation between the UK and the EU, particularly regarding the trade in goods which the TCA attempts to facilitate and keep liberalized. This explains the decision to eliminate tariff and non-tariff barriers, i.e., customs duties and quotas. However, such preferential tariff treatment can be applied only if the rule of origin is respected and stated by the exporter. The rule entails that goods must be either produced in the other Party with local materials or a maximum percentage of non-local materials if satisfying specified requirements or wholly obtained from products of the Party. Other fees or charges are still prohibited under the TCA but enjoy greater exceptions than those operating within the Internal Market. The TCA’s reference to the justifications contained in the GATT for the imposition of quotas, and equivalent measures results in a larger chance of application compared to the trade between Member States. In the current framework, each Party is free to impose its own regulations and standards and, with no principle of conformity operating, imported goods’ compliance with the other Party’s regulations must be verified (Barnard and Leinarte, 2022). Furthermore, customs formalities are now mandatory (Fusacchia, Salvatici, and Winters, 2022). Additionally, post-Brexit there is no customs union between the EU and the UK. As for its legal effect, the TCA does not enjoy the direct effect, and its interpretation is not influenced by the ECJ’s case law, making its interpretation and enforcement a matter of public international law with new mechanisms at play, in particular the creation of arbitrary panels (Craig, 2022).

The trade relationship between the UK and the EU is left almost unchanged when considering North Ireland’s position within the Internal Market and the consequential prohibition of tariff and non-tariff barriers to the free movement of goods. However, the soft border between Northern Ireland and Great Britain resulted in their trade relation being the most affected. Furthermore, EU law still retains its direct effect and entails the jurisdiction of the ECJ and supervision power of the EU Commission, while excluding any power of decision-making by Northern Ireland. As for the relation between GB and the EU, the TCA entails the elimination of tariff and non-tariff barriers on certain conditions but aggravates the movement of goods with customs formalities and possible fees. Furthermore, the TCA being an international law obligation cannot benefit from the bedded EU legislative means of enforcement and interpretation and will turn to new ones.

Bibliographical References

Barnard, C and Leinarte, E. (2022). Movement of Goods under the TCA. Global Policy 13(2).

Craig, P. (2022). Legal Structure, Rights and Enforceability. In Christopher McCrudden (ed), The Law and Practice of the Ireland-Northern Ireland Protocol. Cambridge University Press.

Doyle, J and Connolly, E. (2017). Brexit and the Northern Ireland Question. In Federico Fabbrini (ed.), The Law & Politics of Brexit. Oxford Press.

Dougan, M. (2021). The UK's Withdrawal from the EU: A Legal Analysis. Oxford Academic.

European Court of Justice, Commission of the European Communities v Italian Republic, Case 118/85 [1987] ECR I-02599.

Foster, N. (2021). Foster on EU Law. Oxford University Press.

Freeden, M. (2016). After the Brexit referendum: revisiting populism as an ideology. Journal of Political Ideologies 22(1).

Fusacchia, I and Salvatici, L and Winters, A. (2022). The Consequences of the Trade and Cooperation Agreement for the UK’s International Trade. Oxford Review of Economic Policy 38(1).

Schütze, R. (2021). European Union Law. Oxford University Press.

Torino, R. (2017). The Internal Market. Short history and basic concepts. In Raffaele Torino (ed), Introduction to European Union Law Internal Market. RomaTre Press.

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Sofia Grossi

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