The Quiet Before the Storm Over the Northern Ireland Protocol

UK Policy Prosperity

The Quiet Before the Storm Over the Northern Ireland Protocol

Commentary
Posted on: 15th October 2021
Anton Spisak
Senior Fellow, UK Policy

The saga over the future of the Northern Ireland Protocol continues. This week the EU has put forward much-awaited proposals for the protocol that governs post-Brexit trade arrangements with Northern Ireland. It is a helpful package of ideas designed to resolve real problems with the operation of an accord. Yet it seems unlikely that the EU’s proposals will be enough to avoid a more serious confrontation with the British government in the months ahead.

The latest EU proposals are a step in the right direction

The EU has proposed a set of solutions on products of animal and plant origin moving from Great Britain to Northern Ireland; medicines; customs; and engagement with Northern Irish stakeholders. Amid all the detail, it would be easy to miss the most important aspect of these proposals. The Commission previously argued that ‘EU rules are EU rules’ and they had to apply in full to Northern Ireland. With its latest proposals, the Commission has moved from the logic of general application of EU law to more bespoke ideas tailored to NI, tilting towards the risk-based approach the UK favours rather than its usual rules-based stance.

This is a helpful move by the EU. And so are many of its substantive ideas. This includes proposals for reducing – though not abolishing – the checks on sensitive goods moving from GB to NI – which, according to the Commission, would ease about 80% of checks on products of animal and plant origin. It also includes proposals for reduced customs paperwork and formalities and a new “dual licencing” regime for medicines, ensuring that medicines produced in GB and approved by UK regulators can be sold on the NI market.

How far these ideas would ease East-West trade would ultimately depend on the detail. One problem is that the Commission has done little to address a wider set of concerns over the “democratic deficit” with the Protocol – the idea that Northern Ireland has to adopt a significant body of EU rules with little consultation on those rules. While the EU has put forward ideas for engaging with Northern Irish stakeholders more regularly, they have done  little to address these concerns.

The gap between UK and EU proposals remains large and potentially irreconcilable

Despite the Commission moving some way towards the UK on the practical side, the gap between their proposals remains substantive. In its proposals from July, the UK government argued that there are bigger problems with the Protocol than practical difficulties. Most notably, it has argued that the governance of the Protocol should be “normalised” to make the Protocol look like a standard international treaty. This included proposals to move away from EU VAT and excise rules, to revisit EU state-aid rules applying to Northern Ireland and, most controversially, to limit the role for the European Court of Justice (ECJ) in enforcing the Protocol in the future.

The EU’s proposals do not address these areas. Rather, the Commission argues that it would not renegotiate the protocol  – not least because it lacks the mandate for this from EU member-states – and that their latest proposals represent a “take-it-or-leave-it” offer.

True, there are viable technical solutions that could bridge the gap between the two sides. The controversial Article 12 – which provides for the role for the ECJ in the Protocol – could be amended with an arbitration-like system with a narrower role for the ECJ only to interpret those questions that involve concepts or provisions of EU law. This model is not unprecedented; it can be found in the main dispute resolution system in the Brexit withdrawal treaty and the recently negotiated EU-Switzerland institutional agreement.

But EU officials insist that such concessions are near-impossible. They say that not would this require amending the core provisions of the Protocol, but that it would also represent a difficult political compromise for most member-states at the time when some of its own– most notably Poland – are ready to challenge the basic tenets of EU law and the role for the ECJ in enforcing that law.

What happens next?

The two sides have now entered “intensive negotiations”. It is in both sides’ interest to appear constructive, not least to demonstrate to their political constituencies that they will have done all they could to bridge the gaps. However, the reality of the present situation is that, unless one side moves on the critical question of whether the current Protocol can be amended, it will be next to impossible to reconcile their differences.

The nub of the problem is that the EU rejects any treaty amendments, while the UK has said that it wouldn’t agree to anything less. For a compromise, one side has to move. Either the EU accepts that some textual changes are necessary, or the UK accepts that the jurisdiction of the ECJ is to stay in the Protocol. Neither side seems ready to back down on this point at present.

Should the discussions fail over the coming weeks, the UK government would, in all likelihood, reach for the special ‘safeguards’ clause also known as the Article 16. Such a decision would have to be taken before the end of the year when the various “grace periods” that are currently in place expire. While such a move might be tactically desirable for Britain, it wouldn’t end the dispute. Rather, it would move it from a negotiating room to a courtroom.

There is little doubt that, in this scenario, the EU wouldn’t shy away from retaliating against Britain. EU officials say that there are ongoing discussions about how robust any such response should be. It is unlikely that the EU would retaliate in a way that could destabilise Northern Ireland; rather, they would choose measures that maintain the unity of EU27, can be easily passed through the EU Council, and have to the best chance of forcing the UK back to the Protocol.

This scenario would be deeply damaging, but it would be unwise to underestimate its likelihood. With UK officials already preparing a case under Article 16 and the Commission working through the options for retaliation, both sides are weighing up their options.

We are, therefore, at a moment of real danger that could escalate into serious confrontation and cost us many years of “normal relations” between two sides that have more in common that either would care to admit.

Landing zones for agreement exist, even on the politically sensitive questions, but they require flexibility from both sides. It would be wise for both to remember that the cost of concessions now is less than that of looming confrontation

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