Financial Times insight into Brexit in Northern Ireland
Tensions between the UK and the EU over the implementation of post-Brexit trade deals for Northern Ireland are mounting again and talks on possible reforms appear to be stalled. To report it and the Financial Times.
Irish Foreign Minister Simon Coveney warned over the weekend that the entire EU-UK trade and cooperation agreement could be canceled if the UK followed through on its threats to activate Article 16 and radically rewrite the protocol on ‘Northern Ireland.
The protocol, part of the withdrawal agreement between the EU and the UK, was agreed to avoid the return of a north-south trade border to the island of Ireland.
At the same time, tensions are mounting in Northern Ireland, where unionist parties, mainly Protestant, have rejected the deal. Two buses have been set on fire in the past week, in apparent protests over the protocol.
Why Article 16 has become so controversial
And how it could affect EU-UK relations more broadly WHAT IS ARTICLE 16
This is a safeguard clause in the Northern Ireland Protocol that both parties can activate if they believe the deal caused “severe economic, social or environmental hardship” or “trade diversion”.
The UK says this threshold has already been reached due to trade frictions caused by the protocol, which requires all goods traveling from Great Britain to Northern Ireland to comply with EU rules.
Although the deal was agreed by Boris Johnson in October 2019, the UK government now says it caused far more inconvenience than anticipated at the time and needs to fundamentally be rewritten.
British ministers also argue that the unionist community has lost faith in the protocol and its continued implementation could destabilize the region’s already fragile politics. WHICH PARTS OF THE PROTOCOL DOES THE UK WANT TO CHANGE AND WHY
There are five main areas the UK wants to change, which were set out in a formal reference document published last July.
In order to reduce the friction on the Irish Sea border that the protocol created, the UK has called for an honesty box approach to controlling goods entering from Great Britain. This would mean that only goods traveling south to the Republic of Ireland would be subject to controls. London has also called for the elimination of any documents on goods traveling from Northern Ireland to Great Britain.
Furthermore, London demanded that the European Court of Justice no longer have the right to enforce the main elements of the protocol and wanted it to be replaced by a “treaty-based” arbitration mechanism. The EU rejected this request, arguing that as Northern Ireland follows EU rules and regulations for goods, only the European Court of Justice can decide on their application.
The EU has offered to reduce customs and health checks on the Irish Sea border, but the UK says this offer is not enough. WHY ARTICLE 16 WOULD BE A PROBLEM FOR THE EU
If the UK fails to maintain an effective border in the Irish Sea, and there is no north-south trade border in Ireland – as both parties agree it is necessary to preserve the 1998 Good Friday Agreement that brought peace to the island – then this creates a backdoor into the EU single market.
Brussels argues that without full legal controls on animal and plant products, Ireland’s place in the EU single market is undermined because its goods can no longer be trusted, so they may require controls when they enter the EU. The UK would therefore threaten Ireland’s economic rights as a member of the EU. This could be seen as intolerable by the other 26 Member States.
For its part, the UK says this concern is overrated. He argues that market surveillance on both sides can address concerns about any non-compliant goods entering Ireland via Northern Ireland, and that the actual risks to the EU single market from British goods are negligible. HOW ARTICLE 16 WOULD AFFECT TRADE
Once the UK notifies the European Commission of its intention to activate Article 16, including the measures it intends to take to address “severe economic, social or environmental hardships”, the two sides they immediately enter into consultations to discuss the British proposals.
These cannot go into effect for one month, except in “exceptional circumstances”, where the UK argues that immediate action is needed. Basically, Article 16 says that any action taken must be limited to what is “strictly necessary to remedy the situation”.
Brussels’ response would therefore depend on how extensively the UK used Article 16. If London identified specific problems with the protocol – for example, the ability to trade chilled meat or plant products with Northern Ireland – the EU would likely take limited measures to address fallout in those areas.
But if the UK uses Article 16 to suspend key parts of the protocol – for example, Articles 5 and 7, which form the basis for leaving Northern Ireland in the EU single market for goods – then Brussels has suggested that it could take much more draconian action.
For example, it could argue that since the EU-UK trade deal has always been based on London first addressing the Northern Irish border issue, any UK decision to undo the protocol would undermine the whole basis of the trade and cooperation agreement with the EU.
According to the TCA, both parties must give 12 months’ notice before returning to trade under the terms of the World Trade Organization (WTO). This would effectively create another ‘no deal’, during which Brussels hopes the UK will return to the negotiating table.
Alternatively, Brussels could step back and apply targeted tariff measures against the UK on sensitive products such as cars, whiskey or fish. THERE MAY BE LONG-TERM CONSEQUENCES
If the two sides fail to agree on reforms to make the protocol work, there could be a serious break in economic and political ties.
The tightening of relations could also extend to foreign affairs and cooperation on a number of fronts, from data flows to pan-EU scientific research projects.
A trade war would also cause job losses in the EU, especially in France, Belgium and the Netherlands, which still have strong economic ties to the UK. The Union has already set aside € 5 billion to compensate for governments and companies that have suffered an economic blow from Brexit.
As seen in the four years following the 2016 Brexit vote, trade on WTO terms could also discourage investment and damage business confidence in the UK.
(Extract from the foreign press review by Epr Comunicazione)
Financial Times insight into Brexit in Northern Ireland