British business leaders have warned Boris Johnson’s government of the ‘horrendous’ economic impact if the Prime Minister provokes a trade war with the EU over the Northern Ireland Protocol.
No 10 has prepared legislation to remove protocol checks on goods transported from Britain to Northern Ireland, as the DUP pledges not to return to the Stormont executive until Mr. Johnson will not have acted.
The government is hoping the outcome of the election – which saw Irish nationalists’ Sinn Fein become the largest party for the first time – will persuade Brussels that controls must be dropped to restore power-sharing arrangements.
The DUP has insisted there can be no devolved government while the protocol remains in place, but Sinn Fein says the protocol prevents a hard border in Ireland.
The European Commission is ready to take retaliatory trade action if Downing Street tears up its commitment to the protocol, say legal experts – including moves to impose tariffs on UK goods.
Food industry bosses said The Independent they fear a trade war could lead to another spike in supermarket prices, as families struggle to cope with the soaring cost of living.
The British Meat Processors Association (BMPA) fears that the EU could decide to impose tariffs on British food exports, which would lead to tariffs on imports from Europe.
“I fear that if the UK government takes unilateral action we will have a major problem because the EU may interpret this as a breach of the deal,” said BMPA trade policy adviser Peter Hardwick.
He added: “The EU could take legal action first, but there could be punitive measures. If we end up with tariffs on goods, that would be horrible. This will drive up costs and prices.
Shane Brennan, chief executive of the Cold Chain Federation, said he expected a ‘spike’ in the row between the UK and EU after the election results – saying traders were ” sick and tired” of being victims of politics.
“Tariffs would be a huge step backwards,” the food supply chain chief said on the prospect of a trade war. “They would add significant inflationary pressure on costs at all levels, down to the end consumer.”
Barrie Deas, chief executive of the National Federation of Fishermen’s Organizations, also warned that a trade war would cause “considerable” damage. “That would be very unwelcome,” he said. “A trade war hurts everyone on both sides of the Channel. This will affect prices in restaurants in France, as well as in Britain.
The election reaffirmed that a majority of those elected to the Northern Ireland Assembly favor keeping the protocol.
Legislation prepared to override the protocol is not expected to be included in the Queen’s Speech next week, but The Independent understands that it could still be introduced later in the parliamentary session.
Northern Irish Minister Conor Burns was sent to Washington to explain the government’s position to the US government.
He is expected to argue that ministers have no choice but to act unilaterally on the protocol to restore power sharing at Stormont if the EU does not back down.
Catherine Barnard, professor of European law at Trinity College, Cambridge, warned that any unilateral decision to disable parts of the protocol “would make a trade war a serious possibility”.
She said: “I think the EU would take a hard line in response. They considered various retaliatory measures, including the suspension of parts of the trade and cooperation agreement.
Professor Barnard said the EU could immediately impose tougher controls at ports and use Section 506 – a lesser-known part of the Brexit Trade and Cooperation Agreement (TCA) signed in late 2020 – to take new measures.
“That means the EU could quite quickly impose tariffs on UK fish coming into the EU and then impose them on other goods,” she said. “You could get into a trade war pretty quickly.”
David Henig, UK director of the European Center for International Political Economy in Brussels, thinks a trade war is a long way off – since EU officials are aware the House of Lords would oppose legislation to tear up the protocol For many months.
But he rejects the idea that the Ukrainian crisis would prevent the European Commission from acting at some point. “I don’t think the EU would have any difficulty putting in place a robust set of retaliatory measures for any clear breaches of protocol by the UK,” he said.
Professor Anand Menon, director of the UK in a changing Europe, said the dispute could enter trade war territory this year. “How long can the EU allow this to pass? Trade retaliation is definitely something they will consider. Somewhere in a locked drawer is a list of retaliatory measures.
Brussels has proposed a series of changes to the protocol, saying they would remove 80% of checks on goods between Britain and Northern Ireland. But the UK wants all checks and documents deleted.
The European Commission has told member states it will “use the remedies available to it” if the protocol is not followed by the UK, according to TEN.
Labor colleague Jenny Chapman, shadow Cabinet Office minister, said the Lords will take “a very dim view of any attempt to dismantle obligations agreed outside of negotiations with the EU”.
Lord Richard Newby, leader of the Liberal Democrats in the Lords, has vowed to oppose ‘dangerous’ plans to override protocol. “Any attempt would not only represent a flagrant violation of international law, it would also plunge us into a trade war with our closest neighbours.”
A spokesperson for the European Commission said The Independent the intention was to “continue to work” on solutions with London, adding: “We are fully committed to working jointly with the UK to bring legal certainty and long-term predictability to Northern Ireland. ”