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Analysis | Why Northern Ireland Keeps The UK and Europe at Odds: QuickTake

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Ever since the UK left the European Union in 2020, trading arrangements for Northern Ireland have remained a bone of contention. The UK government says the current regime, known as the Northern Ireland Protocol, is stifling trade between the region and Great Britain and has threatened to unilaterally rewrite the agreement. A stalemate over the issue has further polarized Northern Ireland’s fractious politics and left it without a functioning regional government. By January, it appeared that the two sides were edging closer to a workable solution. 

It’s an arrangement to keep goods moving between Northern Ireland, a region of the UK, and EU-member Ireland to the south, while making sure the border doesn’t turn into a soft target for smuggling goods into the EU. It does that by imposing physical checks on products arriving in Northern Ireland from Great Britain. The UK government says the burden of new paperwork and customs procedures has disrupted trade and effectively created an internal border within a sovereign country. It’s also unhappy that the European Court of Justice oversees large parts of the protocol. 

2. What progress has been made?

The negotiations resumed after British Prime Minister Boris Johnson — who oversaw the break with the EU — left office. Technical talks on the specifics of the protocol were taking place each week, and the UK’s Foreign Secretary James Cleverly and the EU’s Maros Sefcovic were in regular contact. The hope was that they would secure a settlement — or at least the outline of an agreement — in time for the 25th anniversary of Northern Ireland’s 1998 peace treaty in April. An important hurdle was cleared in January, when the EU agreed to use the UK’s live database tracking goods moving from Great Britain to Northern Ireland. That could lay the ground for a potential agreement to reduce burdensome customs checks. The UK and EU issued a joint statement calling the step a “a new basis for EU-UK discussions.” Further hurdles remained around taxation, sanitary checks and governance. 

3. What if the talks fail?

UK Prime Minister Rishi Sunak continues to back legislation drawn up by his predecessor Liz Truss that would allow Britain to unilaterally rewrite the bulk of the protocol if the negotiations collapse, though its progress through parliament has slowed. Under that legislation, British goods destined for Northern Ireland would be treated differently to those intended for the EU. Businesses in Northern Ireland would be allowed to choose whether to follow UK or EU product standards, or both. UK subsidy controls and tax breaks would be extended to Northern Ireland and the ECJ would be stripped of its role in settling disputes over the Brexit deal in the region, with an independent arbitration panel overseeing legal issues instead. Another option for the UK is to trigger an emergency clause known as Article 16 that would suspend part of the protocol. The EU would then have the right to take immediate and proportionate retaliatory measures. The UK insists it prefers a negotiated solution.

The European Commission has said enacting the UK legislation would breach international law and in June, Sefcovic described it as a “gun on the table” in the talks. The EU has proposed concessions to reduce the customs burden on traders but says the protocol cannot be re-negotiated, arguing the UK already accepted it was the best solution to avoid a hard border on the island of Ireland and protect the integrity of the bloc’s “single market” for goods, which ensures the same standards and rules governing areas such as food safety. The bloc launched a number of infringement proceedings last year after the UK tabled the legislation but before talks resumed and the relationship improved. It’s since put further legal action on ice to give space for talks to progress. 

5. How do people in Northern Ireland feel?

Support has been growing for parties in Northern Ireland that want to keep the protocol. The post-Brexit trading arrangements give Northern Ireland unique access to both the EU’s single market and the UK’s internal market. In elections to Northern Ireland’s assembly in May, Irish nationalist party Sinn Fein took seats from the Democratic Unionist Party, which favors close ties with Britain and has campaigned for the protocol to be scrapped as it treats Northern Ireland differently to the rest of the UK. The DUP has refused to take its place in the region’s power-sharing government since February unless the protocol is replaced. The UK’s aim is to secure a deal with the EU on the protocol, or at least show evidence of significant progress, which could persuade the DUP to re-form Northern Ireland’s government by the April anniversary. 

6. How might it all go wrong?

The risk for Sunak is that even if he strikes a deal, it might not be accepted by the DUP or Brexit-supporting members of his own Conservative party. Those MPs have insisted that the ECJ must have no jurisdiction in Northern Ireland, but that’s a red line for the EU, and it’s likely the UK will have to show some compromise on the issue. If there’s no settlement, the talks fail and the UK suspends customs checks on goods into Northern Ireland, it would create a 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 downplayed by EU officials. If the EU really wants to play hardball, it could impose tariffs on targeted goods in Britain. The most radical, and ultimately the most risky, option would be an EU decision to end the entire Brexit trade and cooperation agreement, which would further hamper UK access to the EU single market. If the dispute were to spiral out of control, the hard-fought peace and stability of Northern Ireland could, ultimately, be in jeopardy. 

–With assistance from Flavia Krause-Jackson, Stephanie Bodoni and Joe Mayes.

More stories like this are available on bloomberg.com

Written by Kristel Haire

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