EU launches retaliatory action as UK publishes NI Protocol Bill

As expected, on Monday evening the UK Government published its Northern Ireland Protocol Bill aimed at allowing UK Ministers to circumvent a broad swath of the Brexit Agreement’s Northern Ireland Protocol. 

The Bill proposes to the introduction of so-called “green” and “red” lanes for British goods destined for Northern Ireland and the Republic of Ireland respectively. Under the proposal, only goods going through the red lane would have to undergo customs checks and paperwork upon entering Northern Irish ports. 

A new dual regulatory system would also allow Northern Irish businesses to produce goods to either EU or UK regulatory standards but does not mandate one or the other. While this would technically allow Northern Irish businesses to stay in both Single Markets, having to comply with two different regulatory standards is set to significantly increase their costs and competitiveness. At this point it remains to be seen which of the two standards would be more popular but given the latest figures on NI-GB and NI RoI trade, it shows that all-island trade has significant surpassed trade flows across the Irish sea.  

As is customary by now, the Bill also aims to unilaterally end the oversight of the European Court of Justice for Northern Ireland’s participation in the EU’s Single Market and seeks to replace it with an “independent arbitration mechanism,” – a proposal long categorically rejected by the European Union. Moreover, the Bill proposes making changes to the VAT and State Aid system in Northern Ireland, so that it would adhere to UK rules, rather than those of the EU Single Market, of which Northern Ireland is a part of. 

While the Prime Minister Boris Johnson sought to downplay the Bill as “not a big deal,” the proposal was received with dismay and outrage across the EU. Following a call with UK Foreign Secretary Liz Truss, Ireland’s Foreign Affairs Minister Simon Coveney warned that this “marks a particular low point in the UK’s approach to Brexit,” while Italy’s Europe Minister accused the UK of “violating its international legal obligations.” 

In a further sign of the EU’s dismay at the UK’s proposal and overall refusal to accept all negotiated aspects of the EU-UK Withdrawal Agreement, German Chancellor Olaf Scholz said the EU has its “entire toolbox at its disposal,” while Foreign Minister Annalena Baerbock said that the EU and her country “cannot accept” the UK’s plans. They both also strongly referred to the potential for the European Union to retaliate economically should the Bill come into force. 

Meanwhile, European Commission Vice-President Maroš Šefčovič swiftly announced the EU’s initial retaliatory actions, saying that the EU had resumed its suspended legal action against the UK, while also launching new infringement proceedings. The previous proceedings had been suspended by the European Commission to provide leeway for negotiations. According to the Commission, the UK could be brought before the European Court of Justice within two months as part of these proceedings. 

Speaking of announcing the measures, Mr. Šefčovič said that “it’s simply and legally and politically inconceivable that the UK Government decides unilaterally what kind of goods can enter our single market,” warning that “if this draft bill becomes the law, then I cannot exclude anything” including a broader trade war. 

The newly launched infringement proceedings are over the alleged failure of the UK to build and staff border control posts at Northern Irish ports, and an alleged failure by the UK to provide real time data on the movement of goods between Great Britain and Northern Ireland. 

In contradiction to previous UK statements, the Commission has also said that it had stopped several attempts of large-scale attempted smuggling of goods into the EU Single Market via Northern Ireland, with seizures including weapons, counterfeit smartphones, heroin, cocaine, tobacco, and counterfeit medicines potentially destined for the EU.