Wednesday, January 19

Trade war looms as UK rejects EU offer on Northern Ireland | Brexit

Fears that the UK is heading into a trade war with the EU have been fueled by strong indications from the government that proposals presented in Brussels on Wednesday on Brexit deals do not go far enough.

Brexit Minister Lord Frost will use a speech in Portugal on Tuesday to say that lifting the British sausage ban will not be enough to resolve the dispute over Northern Ireland’s protocol.

The pair will call for “significant” changes to the post-Brexit deal they negotiated, including the role of the European court of law, something the EU is highly unlikely to grant.

“Without new arrangements in this area, the protocol will never have the support it needs to survive,” he warned on the eve of a significant move by the EU to resolve the dispute.

EU Brexit Commissioner Maroš Šefčovič will present four papers on Wednesday on the topic of how the Northern Ireland protocol, which he has described as “very far-reaching”, can be improved.

A proposed “national identity” exemption for British sausages will be included from the EU’s ban on prepared meat from a third country, the sources said.

But Mujtaba Rahman, managing director of consulting firm Eurasia Group, warned in a note to clients on Saturday that the absence of concessions in the ECJ will give Frost the justification to activate Article 16, the mechanism to formally dispute the protocol. from Northern Ireland. process or put it on hold by de-applying fixes entirely.

“There is a great deal of cynicism in the EU about what the real goals of the government are. Is it to solve fundamental problems in Northern Ireland or is it to keep an ideological struggle going with the EU because it serves certain sectors of the Conservative party? Rahman said.

“The French President and the German Chancellor and the President of the European Commission cannot wake up every day to a new discussion with Boris Johnson. At some point they need to send a stronger and simpler message.

“The use of a termination clause within the trade and cooperation agreement itself can be unilaterally activated and would completely suspend the zero-duty / quota trade agreement between the two parties.”

This cross-retaliation mechanism that allows for trade sanctions for breaches of the withdrawal agreement was agreed to by both parties, but others believe that the EU will not be as willing to go nuclear.

Catherine Barnard, a professor of EU law at the University of Cambridge, believes short-term, sharp shocks are more likely in the form of tariffs on iconic British goods like Scotch whiskey or salmon.

He also said that the ECJ is not a major problem in relation to merchandise trade. its annual report cites only 24 cases related to customs union laws currently pending, out of more than 1,045 in total.

Frost also told delegates at the Conservative party conference last week that the rules required the EU to be “proportionate,” but said he still hoped to exit the negotiations with a new deal.

Retaliation is unlikely until next year, and the EU is expected to respond with legal and infringement proceedings as its first response to any suspension of the Northern Ireland protocol by the UK.

The protocol, designed to avoid a hard border between the United Kingdom and the single market operating in the Republic of Ireland, placed a border in the Irish Sea, enraging trade unionists who see controls on goods arriving at NI from Britain as an attack on the integrity of the United Kingdom and its British identity.

The EU is expected to propose removing controls on goods destined to remain in Northern Ireland with controls only on those products that are destined for sale in the republic.

Both sides have said they hope to enter a period of intense negotiation, which Frost set at three weeks, after the EU’s response to the UK’s demands was released on Wednesday.

But one school of thought is that Frost and Home Secretary Priti Patel are being used to keep the Brexit pot boiling to show how the UK is taking on “EU bullies”.

Others think that the fight for Northern Ireland is more fundamental. A former Downing Street official said he had been told that Boris Johnson “was telling people they had misled him” about the protocol and that he was determined to have to rewrite it.

Frost will say on Tuesday that “the relationship between the UK and the EU is under strain”, but if the two sides can put the protocol “on a lasting basis, we will have a chance to overcome the difficulties of last year”.

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