EU voices 'significant concern' over UK's NI Protocol plans with businesses fearing trade dispute

Tue 14 Jun 2022
Posted by: William Barns-Graham
Trade News

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EU officials have voiced “concern” and repeated the threat of imposing trade sanctions against the UK following the British government’s publication of its plans to override elements of the Northern Ireland Protocol.

A statement from European Commission vice president Maroš Šefčovič said “the European Union wishes to have a positive and stable relationship with the United Kingdom,” but added “it is with significant concern that we take note of [the] decision by the UK government to table legislation disapplying core elements of the Protocol.”

He said: “Renegotiating the Protocol is unrealistic… The Commission will also consider launching new infringement procedures that protect the EU Single Market from the risks that the violation of the Protocol creates for EU businesses and for the health and safety of EU citizens.”

‘Brink of trade war’

Business chiefs have warned the Evening Standard that the UK is now “teetering on the brink of a trade war” with Europe.

Richard Burge, chief executive of the London Chamber of Commerce and Industry, said that such a situation would inflict “further economic pain” on the UK and argued the new plan for Northern Ireland “risks significant harm to businesses right across the whole of the UK.”

‘Gross overreaction’

Prime minister Boris Johnson has dismissed concern around the legislation introduced by the government yesterday (13 June) which includes Britain’s plans for overriding the Protocol.

He insists that the changes represent a “relatively trivial set of adjustments in the grand scheme of things,” adding that any retaliatory moves would be “preposterous” and be a “gross, gross overreaction.”

Johnson told LBC that the changes are essential if power sharing is to be re-established in Northern Ireland, and that he has to respect the “symmetry of the Belfast Good Friday Agreement.”

Difficult situation

The latest twist in the protracted Protocol negotiations puts the UK and Europe in a dangerous game of bluff, with Boris Johnson betting that Europe won’t risk hurting its own businesses and deepening its own cost of living crisis by applying punitive measures.

According to the BBC’s economics editor, Faisal Islam, Polish prime minister, Mateusz Morawiecki, said trade wars are always a "lose-lose situation,” meaning there is still uncertainty about whether the EU will pull the trigger and mount any serious reprisals.

Brexit opportunities minister Jacob Rees-Mogg has called the idea that the EU would levy tariffs as an "act of self-harm."

Dispute process

The Guardian, however, is reporting that the EU is vowing to use “all measures at its disposal.”

That said, it also comments that “imposing tariffs is not a quick action,” with the EU needing to go through a prolonged dispute-settlement process first – as outlined in the Brexit withdrawal agreement.

EU’s options

The EU has previously said it would retaliate if any part of the Northern Ireland Protocol is ripped up.

Measures at its disposal include cancelling the EU-UK Trade and Cooperation Agreement (TCA) in its entirety, or invoking article 521 of the deal which would allow it to suspend parts of it.