After the High Court agreed that a decision to reduce tariffs on certain British sugar imports may require judicial review, the British government is facing the first major legal challenge to its independent trade policy after Brexit.
This case was brought by British Sugar plc to the Minister of International Trade Liz Truss, and it is also the first test of how controversial the “State aid” clause in the Convention is. Northern Ireland Agreement Will affect the ability of the British government to issue subsidies.
Legal experts said that the case will be closely watched by ministers and industry because it occupies a priority position in the UK’s trade and subsidy policy.
The legal challenge was raised by British Sugar in response to Truss’ decision Last December As part of the global tariff plan after Brexit, 260,000 tons of “raw cane sugar” will be unilaterally allowed to enter the United Kingdom from January 1 for 12 months without tariffs.
British Sugar, which extracts sugar from self-produced sugar beets, argued in its submission to the British High Court that the decision is equivalent to a national subsidy to its rival, Tate & Lyle Sugars, because it is the only major British cane sugar refiner. plant.
British Sugar lawyers argued that effective “subsidies” would also unfairly weaken EU sugar producers who export 500,000 tons of sugar to the UK and violate the Northern Ireland Agreement and the EU-UK Trade and Cooperation Agreement (TCA).
According to Article 10 of the Protocol, any decision on state aid by the British government that affects goods traded with Northern Ireland must be submitted to the European Commission for approval.
The British Sugar Company argued that the decision to reduce tariffs on raw cane sugar had the effect of “selectively benefiting” Taylor Sugar Company, “affecting trade or investment between Northern Ireland and the EU” and “incompatible with the two countries”. Content”. Agreement and TCA.
In its response, the government stated that British Sugar’s argument was “ambitious and counterintuitive.” It rejected the argument that the sugar tariff decision is equivalent to a subsidy that requires notification under the TCA or agreement.
“If the claimant is right, the British government will have to consider notifying the European Commission of every element of its global tariff system as potential state aid,” the government said in its submission.
Judge Foxton ordered the trial of British Sugar’s case and admitted that it would face some “huge obstacles” if it were to persuade the court.
He added that the government did not point out that the text of the protocol had caused the “elimination” of the UK sugar industry’s case, and pointed out that their complaints were not directed at all tariffs, but at those tariffs that could be said to be unilaterally and selectively applied. .
Paul Kenward, the managing director of British Sugar, stated that the decision to challenge the government was not taken lightly, adding that Truss’ decision to separate cane sugar as a special treatment “unfairly made a US company Benefited at least 12 million pounds this year”.
Gerald Mason, senior vice president of Tate & Lyle Sugars, said that the move to cut sugar tariffs clearly does not constitute a subsidy. He added: “The use of this argument by the British sugar companies to keep us restrained while they are deregulating is purely opportunistic.”
Alexander Rose, an EU competition expert at DWF Law Firm, said that this case is not only the first subsidy control case in the UK, but it will also examine when Article 10 of the Northern Ireland Protocol, which applies the EU State Aid Act, will take effect.
The agreement is part of the Brexit Agreement, which avoids the land border on the island of Ireland and establishes a trade border in the Irish Sea to ensure that all goods flowing from the UK into Northern Ireland comply with EU regulations.
“This case will not only receive the attention of lawyers, but also ministers and public agencies, as well as companies seeking to support or take advantage of tax or tariff exemptions,” he said. “As the judge pointed out, this case is by no means clear, but in any case, it will provide some clarification in an area of ??law that has been underway for seven months without any case law.”
The Ministry of International Trade said: “We do not comment on the ongoing legal proceedings.”