Negotiations between the UK and EU on how to ease rules for trade between Northern Ireland and Great Britain, as set by the Northern Ireland Protocol, are grinding on into another week.
The atmosphere isn’t great, however, as noted in yesterday’s IOE&IT Daily Update (8 November).
EU relations minister Lord Frost has said that Article 16 is ‘still on the table’ and the EU is said to be considering how it will respond if the UK triggers it.
But what is Article 16 and why does it matter? Here the IOE&IT Daily Update looks at the key questions around the Northern Ireland Protocol negotiations.
What is the Northern Ireland Protocol?
The Protocol is the legal agreement between the UK and EU – agreed to in 2019’s Withdrawal Agreement – that governs trade in relation to Northern Ireland.
Under the Protocol, the region has remained subject to the rules of the EU single market following Brexit in order to avoid a hard land border and customs checks on the island of Ireland.
What does this mean for GB-NI trade?
Businesses sending goods to Northern Ireland from Great Britain are required to complete declarations and other customs requirements, though easements have been in place throughout 2021.
‘Unfettered access’ remains for goods entering Britain from Northern Ireland, except for certain controlled goods and goods subject to international treaties such as CITES and Diamonds.
Northern Ireland also continues to follow EU rules on product standards to prevent checks along the border. These checks take place on goods entering the region from Britain.
The BBC explains that the EU requires many goods - such as milk and eggs - to be inspected when they arrive from non-EU countries, and some products – such as chilled meats – are not allowed at all.
However, many of these checks and bans have been suspended for British goods entering Northern Ireland through what have become known as ‘grace periods’.
Why has the Protocol caused problems?
Businesses moving goods from Britain to Northern Ireland had not been required to complete declarations and other customs formalities until the start of this year.
The government in January admitted there were ‘teething problems’ for both businesses and border organisations in adjusting to the new rules for Northern Ireland.
What did the government do to mitigate problems?
The government agreed several easements and grace periods with the EU to allow businesses to adjust to the new rules.
This included delaying the introduction of export health certificates for products of animal origin and postponing the ban on chilled meats entering Northern Ireland from Great Britain.
The government also launched the Trader Support Service (TSS) to support businesses meet new declaration requirements to continue moving goods into the region.
To date (9 November), over 42,000 business have signed up to TSS, which has supported declarations for 400,000 goods movements between Northern Ireland and Great Britain since 1 January 2021, involving over 1.4 million consignments.
The head of the consortium behind TSS, Christian Benson from Fujitsu, said in March that he was “incredibly proud” of this service.
What is Article 16?
Article 16 can be triggered by either side if they believe the Protocol has caused “serious economic, societal or environmental difficulties” or the “diversion of trade”, reports the FT.
It allows for either side to take “safeguard measures”, which effectively means suspending parts of the Protocol, according to the BBC.
Why would Britain trigger Article 16?
Britain thinks that the EU has been “overly legalistic” in its interpretation of the Protocol and has already unilaterally extended some of the temporary grace periods designed to help businesses adjust to the new rules.
Specific grievances have related to checks on agrifoods, the requirement for export health certificates for products of animal origin and the restriction of certain medicines.
Lord Frost has stated that he believes that the threshold for Britain to trigger Article 16 has already been reached and that it is “on the table” during the current negotiations.
What happens if it is triggered?
The Irish Times reports that initially there would be more talking as the party triggering it has to notify the other “without delay”, providing all relevant information.
The triggering party should then “immediately enter into consultations in the Joint Committee with a view to finding a commonly acceptable solution”.
Neither party may begin to take the safeguarding measures until “one month has elapsed after the date of notification”.
How will the EU respond?
Brussels’s response will depend on how extensive the UK’s safeguarding measures are, reports the FT.
If the UK only identifies specific problems with the Protocol, the EU could take limited steps.
However, if Article 16 is used more broadly to suspend key parts of the Protocol, this could lead to a tougher response, such as withdrawing the trade deal agreed between the UK and EU at the end of 2020. This could lead to tariffs and quotas being imposed on British goods entering the bloc.
Alternatively, Brussels could apply targeted tariff measures against the UK on sensitive products such as cars, whisky or fish.
A senior EU diplomat told The Telegraph: “EU capitals like Berlin, Amsterdam, Copenhagen and Paris would expect a robust response. We are ready for peace but prepared for war.”
Under the terms of the UK’s trade deal with the EU, either side must give 12 months’ notice of termination before reverting to trading on World Trade Organization terms.
What happens next?
Frost and Sefcovic are due to meet again on Friday in London.
If there is no progress, the Telegraph reports that Britain could trigger Article 16 and enact legal changes to ditch customs checks before the end of the month.
These safeguarding measures would come into force in January.
