Britain to defy EU by scrapping Northern Ireland trade rules

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By Paul Sandle and Andrew MacAskill

LONDON (Reuters) -Britain will set out plans on Monday to override some rules that govern post-Brexit trade with Northern Ireland in a move that will inflame tensions with the European Union and could spark a trade war.

Britain has been threatening for months to rip up the Northern Ireland Protocol, an agreement for the British-run region struck by Prime Minister Boris Johnson’s government in order to secure a Brexit divorce and wider trade deal between Brussels and London.

As part of the agreement, Northern Ireland effectively remained in the EU single market for goods to preserve an open border with EU-member Ireland that was key to a 1998 peace deal.

But that required customs checks on goods moving from Britain to Northern Ireland, which pro-British communities in Northern Ireland say erodes their place in the United Kingdom.

The legislation will be presented to parliament by foreign minister Liz Truss on Monday. Philip Rycroft, previously the most senior official in the British government department for Brexit, said the plan “guts” the protocol.

“This isn’t a modest tinkering with the protocol, this effectively seeks to give the UK government leeway to remove any aspect of the protocol that it doesn’t like,” he told Sky News.

Tensions have been simmering for months between London and Brussels over the protocol, with British ministers accusing the EU of imposing rules that have snarled goods in red tape and threatened political stability in Northern Ireland.

Critics of London’s plan, including representatives of the province’s dairy, manufacturing and logistics industries, say its unilateral action will damage business and introduce new uncertainty.

TRADE WAR

Brussels believes any unilateral change may breach international law and it could respond with legal action and the imposition of tariffs – a risk at a time when British inflation is set to hit 10% and the economy is shrinking.

Britain’s Northern Ireland minister Brandon Lewis insisted on Sunday the legislation complied with the law.

It is expected to propose a “green channel” for goods moving from Britain to Northern Ireland, scrapping rules that prevent the province from benefiting from tax assistance and ending the role of the European Court of Justice as sole arbiter, according to reports.

The plan will be a test of Johnson’s authority after four in ten of his lawmakers opposed him in a confidence vote last week.

It is also likely to spark alarm in Washington. U.S. House of Representatives Speaker Nancy Pelosi has said there will be no U.S.-UK trade deal if London scraps the protocol.

Ireland’s Sinn Fein, the nationalist party that won an historic victory in Northern Irish elections last month, said Britain would “undoubtedly” break the law by unilaterally changing the protocol.

(Reporting by Paul Sandle and Andrew MacAskillAdditional reporting by Elizabeth Piper and Kate HoltonEditing by Louise Heavens and Mark Potter)