The Northern Ireland Protocol: Is a UK-EU trade war on the horizon?

Brexit | | MIC Customs Solutions |

The British government's plans to introduce a law changing post-Brexit trading arrangements for Northern Ireland have fuelled concerns over a potential trade war between the UK and the EU.

Brexit-related tensions are once again escalating between London and Brussels, as the UK government presses ahead with plans to change trade arrangements for Northern Ireland.

UK foreign secretary Liz Truss said in the House of Commons this week that the government was planning to introduce a law changing aspects of the Northern Ireland Protocol, which is part of the wider post-Brexit Trade and Cooperation Agreement (TCA).

The EU has threatened "serious" consequences if the UK makes a unilateral decision to override elements of the agreed trading arrangements, leading to fears the disagreement could escalate into an all-out trade war.

What is the Northern Ireland Protocol?

The Northern Ireland Protocol was put in place as part of the trade deal negotiated between London and Brussels after the UK voted to leave the European Union. It reflects the fact that Northern Ireland is the only part of the UK that shares a land border with a country within the EU: the Republic of Ireland.

Since the EU imposes strict rules and checks on certain goods arriving from countries outside the bloc, it became clear that special arrangements would be necessary to allow trade to continue to flow easily across the border between Northern Ireland and the Republic of Ireland.

There was also a political element to the issue, with concerns that tighter restrictions and border posts on the island of Ireland could jeopardize the Good Friday Agreement, the peace deal signed in 1998.

The agreed solution to this was the Northern Ireland Protocol, which comprised measures including goods checks at ports in Northern Ireland, rather than on the Irish border, and an agreement that Northern Ireland would continue to adhere to EU rules on product standards.

However, the UK government has now stated its intention to change parts of the protocol, prompting warnings of retaliatory action from Brussels.

Why the UK wants to change the deal

The protocol is having political ramifications that may not have been anticipated at the time it was agreed. The Democratic Unionist Party, which supports Northern Ireland being part of the UK, has argued the deal effectively creates a border in the Irish Sea and results in Northern Ireland being treated differently to the rest of the UK.

As a result, the DUP has refused to join the devolved power-sharing government in Northern Ireland until certain changes are made to the deal.

The UK government has also argued the protocol has created problems affecting the movement of UK-made goods across the border, including "unnecessary" bureaucracy and regulatory barriers.

Speaking in the House of Commons, Ms Truss said: "To respond to the very grave and serious situation in Northern Ireland, we are clear there is a necessity to act to ensure the institutions can be restored as soon as possible."

She went on to insist the new bill the government plans to introduce is "consistent with our obligations in international law" and "in support of our prior obligations in the Belfast Good Friday Agreement".

What could the fallout be?

While the UK has said its proposed law would make only limited changes to the Northern Ireland Protocol and fix the parts of the deal it considers to be ineffectual, its steps towards unilateral action have not been well received in the EU.

Brussels said it would "need to respond with all measures at its disposal" if the UK proceeded with the legislation. Simon Coveney, Ireland's foreign affairs minister, said the course London is taking will be "damaging to trust".

As far as particular responses are concerned, Catherine Barnard, a professor of EU law at Cambridge University, told the Guardian that Brussels could consider refusing access to its waters, suspending certain trade-related aspects of the TCA, or scrapping the post-Brexit agreement altogether.

"The whole purpose of dispute resolution mechanisms is to resolve arguments, and that's why you have those provisions in the withdrawal agreement and the TCA," she added. "But instead of talking about resolution, we are talking about ratcheting up the arguments to the point of terminating the treaty. It is extraordinary."