Britain said on Tuesday it would move forward with a new law to effectively override parts of the post-Brexit trade agreement for Northern Ireland, escalating tensions with Europe.
Below are details of how trade rules work in Northern Ireland, its impact on the province’s politics, and what the new conflict might mean for UK-EU relations.
What is the Northern Ireland Protocol
As part of Britain’s exit from the EU, Prime Minister Boris Johnson’s government has agreed to effectively leave Northern Ireland in the EU’s sole market for goods and tariff union due to the open border with EU member Ireland.
It has created a maritime border between the rest of the United Kingdom and the province, which pro-British communities say is losing its place in the UK.
London says the attendant bureaucracy created by the Northern Ireland Protocol is intolerable and now threatens the 1998 peace agreement that ended three decades of communal violence in most provinces.
Checks and paperwork
Many checks for goods from the UK did not materialize after London’s grace period expired. Where changes have taken effect, paperwork, costs and staff demand have increased.
Britain has said it should introduce a “green lane” for products destined for Northern Ireland, avoiding full checks required by the European Union. Additional labeling will increase costs for producers.
British retailer Marks & Spencer says post-Brexit paperwork takes about eight hours to transfer goods to its stores in the Republic of Ireland and currently takes about an hour for Northern Ireland due to the grace period.
In the first year of protocol trade between the Republic of Ireland and Northern Ireland, imports increased by 65% and exports to the province by 54%, suggesting a stronger relationship between Northern Ireland and the Republic.
What Britain wants, what Brussels says
Britain has previously sought to force changes in Northern Ireland’s trade through an internal market bill that several British officials have described to Reuters as a “shock tactic”.
After the initial response, trade talks resumed. The EU proposed simplifying the rules in October 2021 but Britain said they did not go far enough and in some cases were worse than the current operation.
Government officials say when the protocol was signed, both sides agreed that some parts would have to be changed if the agreement created problems for the province.
Under the new plan, the law would simplify the movement of goods, impose the British tax system on Northern Ireland and give London more power over the laws governing the province.
The EU says the protocol is a legally binding treaty that was entered into freely by the UK government and is frustrated by the ‘groundhog day’ cycle of recurrence crisis over the issue.
Brussels has said any unilateral action is unacceptable but has repeatedly said it is willing to find practical solutions within existing structures.
What can Europe do?
The commission may reintroduce the “violation procedure” that was originally initiated by a British move to extend the grace period. They stopped for further discussion.
The Commission may immediately resume those activities for alleged violations of EU law, although it may take up to two years for a European Court of Justice to rule and impose a fine. It could avenge a broken contract.
The commission could also look at a separate dispute resolution system that was included as part of the Brexit divorce and trade agreement. This could lead to the suspension of some parts of the EU-UK trade agreement and the imposition of tariffs.
The role of unionists
The Northern Ireland Regional Assembly elections this month reaffirmed that most lawmakers are in favor of maintaining the protocol and that it should be refined in consultation with the EU. All pro-British unionist politicians are against it.
The Democratic Unionist Party, the largest pro-British party, refused to enter into a power-sharing administration until protocol was replaced, preventing the assembly from sitting.
The DUP, which fears strained relations with the British mainland, wants to remove all checks for goods from Britain to Northern Ireland or planned post-Brexit checks. It says the threat of unilateral action by the UK is not enough.
Irish nationalist Sean Fein, the province’s largest party since the assembly election, adopted the protocol aimed at the Irish unification party and wants to stay in the EU.
With small militant groups still behind some of the sporadic violence in the region, analysts say the political vacuum in Northern Ireland has never been better. But there was no big impact when the disagreement between the major parties meant the regional assembly did not sit between 2017 and 2020.
The Northern Irish Assembly is due to vote in 2024 for the first time on maintaining the protocol. If a simple majority votes against, it will cease to be enforced after two more years. However, if, as expected, lawmakers vote to retain it, the next vote will be held four years later.
Could Britain and Europe wage a trade war?
With rising inflation in Britain and the EU, a trade war would be detrimental to both sides. Johnson’s government has stepped up speeches at multiple events before softening its tone. But the issue remains unresolved.
Philip Shaw, chief economist at Investec, said the pound could potentially be responsible for further sales if Europe were to impose tariffs.
(Writing by Kate Holton; Additional reporting by James Dewey and Dhara Ranasinghe in London, Phil Blankenship and John Chalmers in Brussels; Editing by John Boyle)