Why Is Everyone Talking About Brexit and Northern Ireland Again?
(Bloomberg) -- The U.K. and the European Union are embroiled in a fresh stand-off, with Britain calling for the Northern Ireland Protocol -- the crucial agreement on which the whole Brexit deal rests -- to be replaced.
In a major escalation this week, Britain’s Brexit minister David Frost called for the scrapping of the sensitive compromise with the EU that was designed to prevent a hard border emerging on the island of Ireland. Under the accord, customs checks are carried out on goods moving between the U.K. and Northern Ireland.
Frost blames the Protocol for disrupting trade and inflaming political unrest in the province. The EU -- which says there is no alternative to the agreement -- is concerned Britain is backsliding on an international treaty. In a move likely to sour relations further, Boris Johnson’s former top adviser, Dominic Cummings, said on Wednesday that the U.K. always planned to “ditch” the protocol.
Frost has proposed a new accord that would reduce the number of customs checks needed and remove the European Court of Justice’s role in policing it. The British government views the ECJ as an affront to U.K. sovereignty.
What happens next?
The EU’s chief Brexit negotiator, Maros Sefcovic, will present the bloc’s own plans for amending the Protocol on Wednesday. His proposals are likely to include a 50% cut in customs checks and an 80% drop in the number of sanitary checks on food crossing the Irish Sea.
An intensive period of talks will then kick off between U.K. and EU officials as they seek to find a compromise. Frost has said he expects the talks to last a few weeks, and he wants the issue resolved by November. Sefcovic has said he expects negotiations at least until the end of the year -- and possibly beyond.
If the talks fail to reach a solution, the U.K. has threatened to unilaterally suspend parts of the existing protocol, using the powers granted in Article 16.
What is Article 16?
Article 16 of the protocol allows either side to take proportionate, unilateral measures if trade flows are diverted, or there are other serious economic or social consequences. It is meant to be a limited provision, only permitting action that specifically addresses harms created by the protocol. It doesn’t allow one side to scrap the protocol in its entirety.
Frost argues that the imposition of customs checks on goods entering Northern Ireland from Great Britain has caused trade to decline, and so justifies invoking Article 16.
The scope of what the U.K. could choose to do under Article 16 is broad. It could, for example, suspend parts of the protocol, and stop customs checks on goods crossing the Irish Sea. Alternatively, it could be more expansive, and suspend state-aid rules and the ECJ’s role, arguing that they are creating societal difficulties in Northern Ireland.
Would the U.K. be able to act immediately under Article 16?
No. Unless there are exceptional circumstances, the protocol requires each side to give the other a month’s notice of activating Article 16, and they must then hold talks before any action can be taken.
How might the EU respond?
If Britain invoked Article 16, the EU has the right to take immediate and proportionate re-balancing measures, depending on the U.K.’s actions.
If Frost were to suspend all customs checks on goods entering Northern Ireland, he would create a major dilemma for the EU: Would the bloc be prepared to construct a border of its own between Northern Ireland and the Republic of Ireland to protect its single market? That prospect has been repeatedly downplayed by EU officials.
Could there be a trade war between the U.K. and EU?
Quite possibly. Given the major difficulty a suspension of the Northern Ireland protocol would create for the EU, the bloc may look to retaliate against the U.K. in other areas of their trade agreement. For example, it could seek to impose tariffs on sensitive industries, or dial up the intensity of customs checks on goods crossing the English Channel.
However, a tit-for-tat tariff dispute could also break the unity that EU member states upheld during the Brexit process. While some countries, including France, are talking tough to defend what was agreed in the Brexit deal, some other capitals, including Berlin, could be worried about the impact of a trade war on their companies.
What would the consequences be?
A trade war would be an unwelcome headache for businesses on both sides, which have already been battered by Covid, soaring global energy prices and a supply chain crunch. The EU is the U.K.’s largest trading partner, the destination for 43% of Britain’s exports, and the source of 52% of its imports. Companies from both sides would lose market access, and European fishermen would be cut out of U.K. waters.
If the conflict were to spiral out of control, the hard-fought peace and stability in Northern Ireland could, ultimately, be in jeopardy.
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