Northern Ireland Protocol Bill explained – what is it, what the EU will do and how it might lead to a trade war

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The Northern Ireland Protocol is once again in the spotlight as, once again, the UK government seeks to scrap it. Once again, Ireland and the European Union are trying to keep the agreement in place in order to avoid a hard border on the island of Ireland.

The status quo

Currently, Northern Ireland is still in the European Union’s single market for goods. This allows the statelet to maintain an open border with Ireland. The agreement is called the Northern Ireland Protocol.

Since the Brexit process began, Ireland and the European Union have strongly resisted any attempts to place any kind of border infrastructure on the island of Ireland. The last time there was border infrastructure in Ireland it was targeted as enemy infrastructure by terrorists. It is feared that a hard border would lead to a resurgence in sectarian violence.

Minister for Foreign Affairs Simon Coveney speaks outside Government Buildings in Dublin, Ireland on Monday June 13, 2022.

However, because Northern Ireland remains in the EU’s customs area, it is not in the UK’s. Therefore the customs border is between Northern Ireland and the rest of the United Kingdom.

Unionist parties in Northern Ireland do not like this. In fact, the DUP have refused to enter into government in Northern Ireland because of the border in the Irish Sea.

The Northern Ireland Protocol also gives the EU control over state aid and VAT in the North. As the Protocol stands today, the Court of Justice of the European Union (CJEU) is the final arbitrator of any trade disputes arising from the Protocol.

The latest developments

Britain’s Foreign Secretary Liz Truss arrives to attend a Cabinet meeting at 10 Downing Street in London on June 7, 2022 (Image: NIKLAS HALLE’N/AFP via Getty Images)

The UK government’s new bill on the Northern Ireland Protocol was published yesterday. The bill gives UK ministers the power to rewrite the bulk of the Northern Ireland Protocol without any consultation with the other side, namely; the EU.

The UK’s foreign secretary Liz Truss, called the Northern Ireland Protocol Bill a “reasonable, practical solution to the problems facing Northern Ireland”. Many disagree. While Truss said that it doesn’t break international law, the European Commission is already looking at taking legal action against UK on the back of this bill.

If the bill becomes law, customs checks between Northern Ireland and Britain almost completely removed. It would also allow the UK to change nearly every aspect of the Protocol, without consulting the European Union.

The new proposed system of checks would divide goods into red and green channels. Traders would differentiate between goods that are to remain in Northern Ireland and those that are travelling through Northern Ireland on their way to the EU (Ireland).

Northern Ireland Department of Agriculture, Environment and Rural Affairs (DAERA) Portal Checkers at Larne Port as vehicles disembark from P&O European Causeway Ferry from Cairnryan in Scotland, as a Bill to amend the Northern Ireland Protocol unilaterally will be introduced in Parliament today, amid controversy over whether the legislation will break international law. Picture date: Monday June 13, 2022.

Green channel goods would move free of customs. Red channel goods would be subject to the Northern Ireland Protocol as it currently stands.

On top of that, some goods that are banned under the current Northern Ireland Protocol (such as certain types of seeds) would be allowed to go into the green channel as long as they stay in the North.

The UK government is also proposing to make it possible for goods to be sold in Northern Ireland if they meet EU rules or UK rules. This would allow products made to UK standards to be sold in the North even when they don’t meet EU rules. Effectively allowing products not of EU standard to be sold in the EU customs region.

The bill would also mean the EU would no longer have control over state aid and VAT in the North and that the CJEU would not be the final arbitrator in trade disputes.

What’s at stake

An anti-Northern Ireland Protocol sign close to Larne Port, as a Bill to amend the Northern Ireland Protocol unilaterally will be introduced in Parliament today, amid controversy over whether the legislation will break international law. Picture date: Monday June 13, 2022.

There are several things that might happen as a result of this bill.

The UK Prime Minister is likely to have a fight on his hands with his own party members over the bill as it is likely to face stiff opposition in Westminster.

The bill itself risks a trade war with the European Union and the Commission is likely to renew its legal retaliation (which it put on pause last summer).

What’s the problem

DUP leader Sir Jeffrey Donaldson speaks to the media in the Great Hall at Parliament Buildings, Stormont, Belfast as the Bill to amend the Northern Ireland Protocol is introduced in Parliament amid controversy over whether the legislation will break international law.

Northern Ireland is in the EU’s single market for goods while also being in the UK’s customs territory. This is a difficult issue to solve as it does mean that the UK doesn’t have full control over its own customs.

The unique arrangement does offer potential advantages to businesses in Northern Ireland who can operate in both territories. It also means that goods travelling within the one country but across the sea must be checked.

Under the Brexit Withdrawal Agreement, institutions in Northern Ireland will be periodically asked to consent if they wish to continue to operate under the Protocol. Considering that the DUP won’t go into government because of it now, and dissolved the government in February citing the same, this doesn’t bode well for the first vote – due to take place in December 2024.

What’s been said

Many officials and politicians in Ireland and the wider EU view the UK’s bill with concern.

Minister for Foreign Affairs Simon Coveney tweeted that the UK was proposing to “set aside” international law, ignore the majority in Northern Ireland and “deliberately ratchet up tension” with the EU.

He said the bill is not a fix to the Northern Ireland Protocol and “adds to instability”.

Maros Sefcovic, vice-president of the European Commission said that the UK bill puts Northern Irish businesses at-risk of losing their access to the EU single market.

He added that the Commission will look at “infringement proceedings” against the UK. These were put on hiatus last September but could now be resumed.

Sefcovic called negotiating the Protocol “unrealistic”.

“No workable alternative solution has been found,” he said, adding that the EU would not be renegotiating the Protocol.

How could this lead to a trade war

The legal action that the European Commission put on hold last summer could be resumed as Sefcovic has said.

If that legal action is won, the CJEU will impose daily fines on the UK for non-compliance with an international treaty.

The UK might refuse to pay those fines and, if that happens, the EU could end parts of the Brexit trade agreement between the bloc and Britain. This would mean tariffs would apply to British goods and begin a trade-war.

And Northern Ireland in the middle

The majority of Northern Ireland’s Stormont assembly members (MLAs) have written to Westminster to express their opposition to this bill. However, the bill doesn’t require their approval. In fact, the bill neutralises the say they have now by removing the option for the Northern Ireland Assembly to vote on keeping the Protocol in place in December 2024.