There is considerable speculation that the United Kingdom government will trigger Article 16 of the Northern Ireland protocol during the week of November 15th starting a potentially serious crisis in trade relationships between the UK and the EU.
The UK’s hard-line doubling down on this issue appears at odds with the majority of public sentiment (both the nationalist and unionist communities) in Northern Ireland, as evidenced by two major opinion surveys on behalf of the University of Liverpool and Queens University Belfast.
It has also triggered a robust response from the European Commission and the Irish Government, and there is little evidence that such a move would improve the supply chain issues which the UK is facing.
So, what’s driving this and how might things pan out?
Article 16 (A16) of the Northern Ireland Protocol allows either the EU or the UK to take ‘appropriate’ safeguard measures if the implementation of the Protocol leads to serious economic, societal or environmental disruption or major impacts on trade in or with Northern Ireland. Use of the article is intended to be restricted to the minimum time period necessary to resolve the problems concerned. And any impacts that discriminate against one or other party must be subsequently rebalanced.
The procedure for either the EU or the UK triggering A16 is as follows:
- Notification to the Joint Committee overseeing the Withdrawal Agreement.
- Immediate bilateral consultation on possible solutions – this to take place over at least a month before actions are taken. If those actions are taken, they should be reviewed every three months
- If either the UK or the EU act before the end of the month’s consultation, the other can take immediate ‘rebalancing’ actions though it must also apply a period of consultation.
- If A16 is judged to have been misused parts of the EU-UK Trade and Cooperation Agreement (TCA) can be suspended through processes outlined in the Withdrawal Agreement.
If the UK does activate A16, the EU can trigger arbitration under the Withdrawal Agreement via the Joint Committee this process allows three months for resolution. If that doesn’t do so, the EU can demand an Arbitration Panel (to be made up of 10 people proposed by the UK, and 10 by the EU, with a further five to be agreed between the UK and EU to act as chairpersons of the Panel. The Panel can order a fine or remedial action. If the action is not taken the EU can suspend other parts of agreements with the UK. Any action must be proportionate to the harm caused by activating A16. This would be a lengthy process. In practice, it is most likely that any action would come from the provision in the Protocol that allows rebalancing measures to be applied.
Possible Outcomes
The UK and EU are currently in technical talks about the competing proposals the UK outlined in the Command Paper and the package of proposed measures set out by the EU. Insiders tell us these talks may conclude this week and it seems they are unlikely to be successful. In that event, we see two possible courses:
- The UK uses the A16 in accordance with the provisions set out in the Protocol and notifies the Joint Committee, triggering a month of consultation. Meanwhile, or after that consultation, the UK implements elements of the Command Paper on trade in goods – e.g. the scheme where goods that are proved to remain in NI benefit from minimal paperwork, while still controlling goods deemed ‘at risk’ of entering the EU (ROI). These actions would be limited to Articles 5 to 10 in the Protocol that set out the customs and SPS requirements.
- The UK uses A16 to remove large parts of the Protocol, including references to the oversight of the European Court of Justice (ECJ), application of EU law to Northern Ireland, and references to state aid rules applying to decisions impacting Northern Ireland
In scenario 1, it is likely that the EU would take a limited and proportionate response. Scenario 2 would result in a more robust response from the EU through the application of rebalancing measures. The EU would be expected to take action under the Withdrawal Agreement’s arbitration process, with a view to suspending parts of the TCA.
Whatever happens, domestic British politics, rather than long term strategic interest, appears to be the driver of the UK approach to the coming weeks.