Notwithstanding the positive sounds emanating from Monday’s meeting between Liz Truss and Maros Sefcovic, the talks between the European Commission and the UK government over the Protocol on Northern Ireland are probably heading to a major crisis in the next month. There has been no movement of the UK side, and immovable deadlines are approaching.
The UK agreed to the Protocol as part of their Withdrawal Treaty with the EU. The Protocol was an intrinsic part of the Treaty. The UK Parliament ratified the Treaty, including the Protocol, but now the UK government is trying to scrap it altogether, under a this pretence of “renegotiating “ it.
The fundamental problem is that the British negotiating strategy is being driven by old fashioned, populist, and simplistic notions about trade. The EU strategy, on the other hand, is driven by a legal imperative to protect the most advanced form of economic and commercial integration between sovereign nations that has ever been achieved. The clash is a clash of mind sets. The arguments of either side are based on fundamentally incompatible assumptions.
There is the added complication that the negotiations between Liz Truss and Maros Sefcovic are taking place in the midst of a political crisis in Britain, in which any compromise is liable to be used as a political weapon in a struggle to lead the Conservative Party.
Conservative Britain always pretended to see the EU as simple free trade area. But the rest of the EU members realized one could not have truly free trade, unless there were four other things
- common rules on the quality of products
- freedom for people and money to move from country to country,
- common trade policies vis a vis the rest of the world, and
- a shared set of political goals that facilitated day to day compromise.
A big segment of English opinion never accepted this latter concept of the EU. This makes it difficult for them to even to understand the necessary implications of the Protocol .
The Protocol makes Northern Ireland part of the EU Single market for goods produced in Northern Ireland. Meanwhile Britain has left the EU Single Market. Britain has no more than a bare bones trade agreement with the EU. This makes a big difference. But it is what the UK government and Parliament agreed.
Goods produced in Northern Ireland (NI) are being treated as EU goods, whereas goods produced in Britain are non EU goods.
In the case of goods made up of parts, ingredients or components coming from different countries, The parts, ingredients or components produced in Northern Ireland qualify, for rules of origin purposes, as “European”. Meanwhile parts, ingredients or components originating in Britain are of non EU origin.
This distinction can be very important in deciding whether a final product is sufficiently “European” to benefit from duty free access to the EU market. If one wants to ensure that a sufficient percentage of a final product is “European”, it makes sense to source ingredients or parts in NI rather than in another part of the UK.
Goods coming into NI will be subject to EU Customs rules and tariffs, whereas goods coming into Britain will be subject to (potentially very different) UK Customs rules and tariffs.
This gap has to be policed, if there is not to be abuse. In the Protocol the EU and the UK agreed how this gap is to be policed.
The gap will become progressively wider, if the UK seeks to exploit the freedom it won by Brexit by making new (and different) British standards to replace the old standards that it might claim had been “imposed by Brussels”.
The more the standards diverge, the more will checks be needed on goods entering the EU market through NI, to ensure that they comply with EU requirements.
Then there is the question of the European Court interpreting EU rules as they apply to NI goods circulating freely in the EU Single Market . The UK agreed to this but now is objecting to it.
For NI businesses to be free to export their products within the EU Single Market under the Protocol they have to be able to convince their competitors and customers in France and Germany that NI goods are fully compliant with EU rules. These rules are interpreted, in final analysis, by the European Court of Justice. That ensures consistency.
The rules must be interpreted in the same way for NI goods, as they are for goods produced in France or Germany. The role of the ECJ in the Protocol is the passport for NI goods into Europe, one of the biggest markets in the world.
The role of the ECJ is, of course, confined to EU rules applying to goods. It will have no general jurisdiction in NI on other matters. There the final arbiter will be the UK Supreme Court.
There is a logjam in the negotiations because the UK side keeps repeating the same talking points , pocketing EU concessions without reciprocity, and withholding cooperation with the EU authorities on access to data. It is also stalling on building installations in Belfast Port that would allow customs officials there to do their work safely and conveniently. The UK is using “grace periods” to defer indefinitely controls it agreed to. It is almost as if the UK does not want to face up to the implications of Brexit.
The UK, and some unionists, talk about using Article 16 as if this would allow the ending of checks in Belfast port. That is not legally possible. Article 16 only allows limited and temporary derogations. To use it to go beyond that would be a straightforward breach on international law.
We are facing a moment of truth.