EU must play hard ball if UK triggers article 16

The UK government is apparently moving towards triggering article 16 of the Northern Ireland protocol. This article allows either side to take “safeguard measures” if the protocol is causing “serious economic, societal or environmental difficulties” or “diversion of trade” but requires that such measures be “strictly necessary” and that they disturb the functioning of the protocol to the minimum extent possible.

However, if Lord Frost is to be believed, the British government’s objections to the protocol cannot be addressed through limited changes. Rather, London objects to the protocol’s central feature, namely the fact that under its terms Northern Ireland remains subject to EU law for the purposes of trade in goods.

If, as seems likely, the UK seeks to use article 16 to restrict the applicability of EU law to Northern Ireland, the EU will be faced with an important choice as to how it will respond.

One option is to use article 16(2) which allows the EU to take “rebalancing measures”. However, such measures have to be “strictly proportionate”. Moreover, it is not clear what kind of “rebalancing measures” would be considered proportionate to an attack on the central feature of the protocol.

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The EU could also use the dispute settlement procedures under the EU-UK Withdrawal Agreement. This involves a potentially lengthy arbitration process leading to financial penalties and potential retaliation measures by the EU.

How effective this would be is open to question. The UK may prefer to pay any fine imposed and retaliatory measures may not inflict enough economic pain to bring about a change of heart in London.

Some EU member states may wish to move on from Brexit and will be wary of a strategy likely to ensure that it continues to occupy a lot of the EU's time

Moreover, during the lengthy period during which all of these procedures were being worked through, the EU would be faced with a hole in the border of the EU Single Market along the Irish Border. This would place massive pressure on Dublin to impose checks on the Border with the North in order to avoid question marks over full Irish membership of the Single Market.

Radical response

There are, therefore, good reasons for the EU to go for a much more radical response. All through the Brexit negotiations the EU was clear that it would not do a deal with the UK in relation to a future economic relationship unless the issue of the Irish Border was satisfactorily addressed.

The Johnson government feared the consequences of exiting the EU without a deal and therefore agreed to the Northern Ireland protocol, thus opening the door to the Trade and Co-operation Agreement (TCA) struck in late 2020 which allowed tariff and quota-free access to the Single Market for British firms.

The UK is now seeking to renege on the Northern Ireland protocol, hoping that, with the TCA in place, the EU will not be willing to countenance the disruption that abandoning it would entail.

This is a big gamble. Many states will be unwilling to allow the UK to make a fool of the EU by signing a deal and immediately reneging on it.

Article 779 of the TCA allows the EU or UK to terminate the entire agreement with 12 months’ notice. Terminating the TCA would mean a huge increase in trade barriers between the UK and EU, causing severe economic pain to both. However, the cost to the UK would be much higher and the pressure on the British government to concede as the end of the 12-month period approached would be intense.

Some EU member states may wish to move on from Brexit and will be wary of a strategy likely to ensure that it continues to occupy a lot of the EU’s time. In addition, Poland or Hungary may seek to impede the EU response as part of their threats to make trouble for the EU due to attempts to punish them for undermining judicial independence.

For Ireland, terminating the TCA would avoid a slow disintegration of the protocol and may offer the best hope of pressuring the British to adhere to the deal it signed up to in 2019. However, but if this strategy fails to produce a British climbdown the Dublin government will be faced with the prospect of enforcing a very hard economic border with the North or risking Irish membership of the Single Market.

EU law

With good will the UK and EU may be able to adapt the functioning of the protocol so that it is less objectionable to unionists than its current incarnation. But any protocol will involve applying EU law to Northern Ireland. Widespread unionist support for such a deal is unlikely to be any more forthcoming than nationalist support for the elements of the Brexit deal that create greater distance between the Republic and the North.

The Northern Ireland protocol came into being in 2019 because the British were unwilling to endure a no-deal Brexit

Back in 2018 I was skeptical about the Irish and EU strategy of focusing on the avoidance of physical infrastructure as the only form of Brexit mitigation worth having for Northern Ireland.

But a hard Brexit with significant North-South barriers in relation to trade in services counter-balanced by a protocol imposing barriers between Great Britain and Northern Ireland in relation to goods was the compromise both sides knowingly signed up to.

With London walking away from the compromises it made and no good options available, Brussels may well conclude that its best option is to call the UK’s bluff and threaten to terminate the TCA.

The Northern Ireland protocol came into being in 2019 because the British were unwilling to endure a no-deal Brexit. With London repudiating the core provisions of the protocol, the only way to save it may be to make it clear that acting in this manner means enduring the no-deal outcome that Johnson was unwilling to countenance two years ago.