Post-Brexit Renegotiation of Northern Ireland Protocol Continues in EU-UK Bid to Reach Agreement

On 11 February 2022, the UK's foreign secretary Liz Truss and the European Commission’s Vice-President Maroš Šefčovič failed to reach agreement despite in-person negotiations over the existing Northern Ireland Protocol. The two sides have vowed to continue negotiations intensively, with a view to amending the existing deal.

The two politicians met each other face to face on 11 February, for a third attempt at renegotiations with each other. The deadlock continues, with Prime Minister Boris Johnson having recently warned that if a resolution is not found soon, Britain could unilaterally suspend parts of the Northern Ireland Protocol. This would, however, open up a range of unpredictable outcomes. Should the EU conclude that the UK's unilateral actions create an “imbalance” between the UK’s rights and obligations under the Protocol, then the EU can decide to take “proportionate rebalancing measures”. These are not defined and – it is felt – would largely be decided according to what the UK does. Even though the EU could impose tariffs on UK goods, this is believed to be an extreme measure, and would be considered as a matter of last resort, should all pathways to negotiating a balanced deal ultimately fail and the UK goes ahead with suspending the Protocol unilaterally.

Although Liz Truss, the UK foreign secretary, has commented that resolving the row with the EU was “an absolute priority”, it is also being reported that British ministers have been drawing up fresh contingency plans in the event that Boris Johnson were to activate the so-called Article 16 override mechanism (explained below). This in turn might plunge the UK into a trade war with the EU.

Hong Kong traders may recall that in October 2019, the UK and EU agreed on a special Brexit deal for Northern Ireland, known as the Northern Ireland Protocol. Under this deal, goods can flow freely across the border between Northern Ireland and the Republic of Ireland, leaving Northern Ireland in the EU's single market for goods. This was necessary so as to remove the threat of a hard border between the two Irelands. However, in order to protect the EU single market, goods arriving at Northern Ireland from the rest of the UK have become subject to inspections, creating, in effect, an “Irish Sea border”.

Given the precarious nature of this border, it was agreed pursuant to Article 16 of the Protocol, that if either the EU or UK concludes that the deal is leading to serious practical problems or causing diversion of trade, a process can be triggered for taking unilateral safeguard measures. Such measures would amount to suspending parts of the deal.

Thus, according to Article 16, safeguard measures can be taken if the protocol leads to serious “economic, societal or environmental difficulties” that are expected to persist. Although Article 16 is not intended to be used for temporary or minor obstacles, there is no specific guidance on what qualifies as “serious”. In July last year, Johnson’s government held the view that the threshold had been reached for using safeguards, although it decided against using them at the time.

While it is clear that both trading neighbours very much wish to bridge their differences, Boris Johnson’s warning in early February, that Britain could still unilaterally suspend parts of the Protocol, was a clear signal. Indeed, renewed “no deal” contingency planning by UK ministers is reported to have been augmented in January 2022, with officials looking at matters such as the possible disruption of medical supplies in the event of an EU trade war, along with much broader economic and trade disturbances. A month's formal notice is needed to be given before any action is taken, although immediate action is allowed in “exceptional circumstances”.

The reasons behind the re-negotiation of the Protocol is that, according to the Johnson government, the Protocol is hindering the movement of goods between Britain and Northern Ireland as well as damaging community relations. Under the Protocol, checks are required on goods coming into Northern Ireland from the rest of the UK. Since it came into force at the beginning of 2021 the Protocol has been at the centre of controversy between the UK and the EU. Rather than checks taking place along the Irish border, it was agreed that any inspections and document checks would take place between Northern Ireland and Great Britain (England, Scotland and Wales) instead. This was allowed after it was agreed that Northern Ireland would continue to follow EU rules on product standards (part of the EU's internal market rules). Inspections on British goods take place at Northern Ireland ports to make sure they comply with EU laws.

The changes which the UK is calling for amount to essentially putting an end to inspections and paperwork between Great Britain and Northern Ireland. The UK also wants to ensure that goods which are destined for Northern Ireland only, have to simply meet UK standards without also having to comply with EU law. The UK also wishes to once and for all bring to an end oversight by the European Commission and the European Court of Justice on how the Protocol functions.

Although the two sides failed to reach an agreement on 11 February, both European Commission Vice-President Maros Sefcovic and British Foreign Minister Liz Truss agreed on the need to resolve the deadlock, and issued an official statement in this regard. The statement reiterates that negotiations and discussions will continue and be delegated to officials from both teams. The parties have, according to the statement, agreed on the need for progress in their talks in the interests of the people in Northern Ireland, to stay in close touch, and ensure that officials will continue intensive discussions in the coming days.