EU Weighs Targeted Trade Action If U.K. Reneges on Irish Accord
EU Weighs Targeted Trade Action If U.K. Reneges on Irish Accord
(Bloomberg) --
Certain member countries are pushing the European Union to consider scrapping the trade provisions of its post-Brexit accord if the U.K. follows through with its threat to renege on its commitments related to Northern Ireland.
The EU could terminate in just nine months the trade portions of the Trade and Cooperation Agreement -- the deal struck at the end of last year establishing tariff-free commerce -- allowing the bloc to impose duties on British goods, according to officials familiar with the discussions.
Maros Sefcovic, the bloc’s Brexit negotiator, is meeting U.K. Brexit minister David Frost in London Friday to discuss the impasse over Northern Ireland. Frost says that the treaty reached by both sides that sets out customs obligations in the Irish territory is too onerous and needs to be renegotiated.
EU ambassadors asked Sefcovic on Wednesday to prepare a package of retaliatory measures should the U.K. suspend parts of the so-called Northern Ireland protocol, said the officials, who asked not to be identified because the preparations are private. That agreement allowed the U.K. to leave the bloc’s single market without creating a hard border on the island of Ireland.
Under the protocol, goods moving into Northern Ireland from the rest of the U.K. are subject to customs checks if they are at risk of being later moved into the EU. Britain is demanding changes to the accord, which the government says has inhibited trade between different parts of the U.K.’s own single market.
The EU has also discussed terminating the entire TCA in retaliation, but that would require a year’s notice to take effect. Other EU options range from infringement procedures to increasing border checks on goods moving between the two regions.
One EU diplomat said the EU would start work on setting out options as soon as next week.
The nine-month option would pile heavy pressure on the U.K. in trade negotiations, as all EU member states would be able to make demands on London, which would have to give ground to limit tariffs, according to the officials.
Frost earlier this week urged the EU to “stay calm and keep things in proportion,” while Sefcovic told the bloc’s ambassadors that the negotiations aimed at avoiding an all-out trade war were going badly.
If the conflict is mishandled, it could stoke sectarian tensions in Northern Ireland and demolish the hard-fought trade agreement the EU and U.K. signed last year, putting Prime Minister Boris Johnson’s government back on track for what would effectively be a “no-deal” Brexit.
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