Talks will resume this week between the British government and the European Union over how to resolve the long-running dispute over trading arrangements for Northern Ireland that soured the first year of post-Brexit relations.
Liz Truss, UK foreign secretary, will attempt to cut the Gordian knot left by her predecessor, Lord David Frost, who resigned late last year just as London began retreating from some of its stiffest demands.
Ms Truss has struck a warmer tone than Frost in initial contacts and has invited Maros Sefcovic, vice president of the European Commission, to meet at her grace-and-favour mansion in Chevening, Kent, on Thursday night, promising “constructive proposals” to break the deadlock.
But officials on both sides concede that on the substance of how to manage the new trade border in the Irish Sea, they remain far apart. What are the prospects for a deal?
The UK position
Like her predecessor, Ms Truss maintains that the Brexit deal that the UK agreed in 2019 for Northern Ireland is “not sustainable” and needs radical reshaping.
The Northern Ireland protocol left the region in the EU single market for goods to avoid bringing back a hard trade border on the island of Ireland, but this necessitated the creation of a trade border in the Irish Sea.
The British government says this trade border unnecessarily divides the UK’s own internal market and is causing a hit to traders in Great Britain, who now face high levels of bureaucracy to send goods from the mainland to Northern Ireland.
Ms Truss took a tough line in a newspaper article published over the weekend, writing that the UK wants to see “no checks or documentation for goods moving from Great Britain to Northern Ireland”.
London also wants the EU to change a section of the protocol that requires any UK government subsidy decision that could impact on the region’s goods market to be cleared in Brussels by the European Commission.
In addition, the UK wants to eliminate any requirement for businesses in Northern Ireland to notify the EU when goods are leaving the EU single market, which is required under EU law.
Lastly, the UK is looking to remove the EU’s top court, the European Court of Justice, as the “final arbiter” of future disputes over the protocol. In its place, London wants to have an arbitration mechanism, with the ECJ ruling only on matters of EU law.
If Brussels does not address these concerns, Ms Truss says she reserves the right to trigger the Article 16 safeguarding clause in the protocol, which would temporarily suspend parts of the deal while solutions are found.
She is under pressure from Conservative MPs and unionist politicians in Northern Ireland not to compromise with Brussels.
The EU position
EU officials have welcomed the warmer tone from Ms Truss, but also cautioned that this will not be enough to secure a breakthrough. “We will not be seduced by a night in a country house,” said one official close to the talks.
Ms Truss’s decision to lay out her demands in a newspaper article has also irked EU countries, with patience with the UK running thin in national capitals wanting to focus on the EU’s ambitious green agenda and Covid recovery.
“The government’s habit of speaking with Brussels through the national press shows with Truss . . . not much has changed,” said one diplomat.
On the substance of the UK demands for radically reduced checks, Brussels argues that there are limits to how far it can go. If Northern Ireland is to remain in the single market for goods, then the EU must have some oversight.
“If something is coming to the EU single market . . . we have to have an overview,” Mr Sefcovic said before Christmas.
The commission has paused legal action against the UK for failing to implement parts of the protocol while talks continue.
The EU has also unilaterally moved to introduce legal changes to ensure that the protocol does not disrupt medicine supplies, and last October proposed some measures that it claimed could reduce customs checks by “50 per cent” and checks on agrifoods by “80 per cent”.
However, the UK government disputes that assessment and says the EU offer falls far short of what is necessary to make the protocol work.
Mr Sefcovic has avoided putting a deadline on the talks but the EU wants a comprehensive deal as soon as possible, ideally before election campaigning begins in Northern Ireland in March.
The Northern Irish position
The EU-UK talks resume as the political situation in Northern Ireland becomes increasingly fractious ahead of elections on May 5th for the region’s power-sharing government, which are being seen as a referendum on the protocol.
The Democratic Unionist Party, which supports Northern Ireland’s place within the UK, is battling to retain leadership of the devolved regional government and has threatened to pull out its ministers unless London swiftly secures a deal to remove the Irish Sea border.
The DUP, which feels it has been duped by the Westminster government before, is looking to maintain pressure on Truss amid fears that the UK government could reach a deal that falls short of its demands.
Meanwhile, Dublin has urged London and Brussels to ensure that the protocol talks do not drag on past February, and Northern Ireland’s business community is demanding that both the EU and the UK bury their political differences and find flexibilities in the interests of Northern Ireland.
Aodhán Connolly, director of the Northern Ireland Retail Consortium, said the business community was “under no illusions” about the challenges facing negotiators in the next couple of months.
“This is perhaps our last and best chance at reaching an agreement between the EU and UK to allow Northern Ireland businesses to be competitive and keep choice and affordability for our households,” he said.
There are three paths open to Ms Truss, all difficult to navigate.
If she triggers Article 16, EU member states have made clear they will retaliate swiftly, including the possible suspension of the Trade and Cooperation Agreement, which allows tariff- and quota-free trade between the UK and its largest market.
If Ms Truss accepts some goods checks and ultimate ECJ oversight, the commission might allow more leeway for the UK to police the deal on its behalf.
But if she accepts this, Truss risks blowback from the caucus of more than 80 Brexiter Conservative MPs who on Sunday tweeted support for her tough opening gambit as an “unambiguous” statement of intent.
Alternatively, faced with such invidious choices, she could decide simply to keep talking, stringing out the current tensions and forcing the EU to make the first aggressive move, such as restarting the legal action against the UK that it suspended last year. – Copyright The Financial Times Limited 2022