UK business chiefs have warned Boris Johnson’s government about the “horrific” economic impact if the prime minister provokes a trade war with the EU over the Northern Ireland Protocol.
No 10 has prepared legislation aimed at scrapping protocol checks on goods moving from Great Britain to Northern Ireland, as the DUP vows not to return to the Stormont executive until Mr Johnson takes action.
The government is hoping the outcome of the election – which saw Irish nationalists’ Sinn Fein emerge as the largest party for the first time – will persuade Brussels the checks must be dropped to restore power-sharing arrangements.
The DUP has insisted that there could be no devolved government while the protocol remained in place, but Sinn Fein says the protocol prevents a hard border in Ireland.
The EU Commission is prepared to take retaliatory trade action if Downing Street tears up its commitment to uphold the protocol, say legal experts – including moves to slap tariffs on British goods.
Food industry bosses told The Independent they fear that a trade war would lead to a further spike in supermarket prices just as families are struggling to cope with soaring living costs.
The British Meat Processors Association (BMPA) fears the EU could decide to impose tariffs on UK food exports, leading to tariffs on imports from Europe.
“I fear that if the UK government takes unilateral action we will have a major problem, because the EU can interpret that as the agreement being broken,” said the BMPA’s trade policy adviser Peter Hardwick.
He added: “The EU might take legal action initially, but there could be some punitive measures. If we end up with tariffs being applied on goods then that would be horrific. It will push up costs and prices.”
Shane Brennan, chief executive of the Cold Chain Federation, said he expected a “ratcheting up” in the UK-EU row after the election results – saying traders were “sick and tired” of being the victim of politics.
“Tariffs would be a huge step backwards,” the food supply chain chief said on the prospect of a trade war. “They would add significantly inflationary pressure to costs at all levels, through to the end consumer.”
Barrie Deas, chief executive of the National Federation of Fishermen’s Organisations, also warned that a trade war would cause “considerable” harm. “It would be very unwelcome,” he said. “A trade war hurts everyone on both sides of the Channel. It will affect prices in restaurants in France, as well as in Britain.”
The election reaffirmed that a majority of those elected to Northern Ireland Assembly are in favour retaining the protocol.
Legislation prepared with the aim of overriding the protocol is not expected to be included in next week’s Queen’s Speech, but The Independent understands it could still be introduced later in the parliamentary session.
Northern Ireland minister Conor Burns has been sent to Washington to explain the government’s position to the US government.
He is expected to argue that ministers have little choice but to act on the protocol unilaterally to restore power-sharing at Stormont if the EU does not back down.
Catherine Barnard, professor of EU law at Trinity College, Cambridge, warned that any unilateral move to turn off parts of the protocol “would make a trade war a serious possibility”.
She said: “I think the EU would take a tough line in response. They have looked at various retaliatory measures, including suspending parts of the Trade and Cooperation Agreement.”
Prof Barnard said the EU could immediately impose more rigorous checks at ports, and use Article 506 – a lesser-known part of the Brexit Trade and Cooperation Agreement (TCA) signed at the end of 2020 – to take further action.
“It means that the EU could quite quickly put tariffs on UK fish going into the EU, and then impose them on other goods,” she said. “You could get into a trade war pretty quickly.”
David Henig, UK director at the European Centre for International Political Economy in Brussels, thinks a trade war is some way off – since EU officials are aware the House of Lords would oppose legislation designed to rip up the protocol for several months.
But he dismisses the idea that the Ukraine crisis would distract the EU Commission from taking action at some point. “I don’t think the EU would have any difficulty putting in place a strong package of retaliatory measures for any overt UK breach of the protocol,” he said.
Professor Anand Menon, director at the UK in a Changing Europe, said the row could enter trade war territory this year. “How long can the EU let this pass? Trade retaliation is certainly something they will consider. Somewhere in a locked drawer is a list of retaliatory measures.”
Brussels has offered a series of changes to the protocol, claiming they would remove 80 per cent of controls on goods between Great Britain and Northern Ireland. But the UK wants all checks and paperwork dropped.
The EU Commission has told member states it will “use remedies at its disposal” if the protocol is not upheld by the UK, according to RTE.
Labour peer Jenny Chapman, shadow Cabinet Office minister, said the Lords will take “a very dim view of any attempt to dismantle agreed obligations outside of negotiations with the EU”.
Lord Richard Newby, Liberal Democrat leader in the Lords, vowed to oppose “dangerous” plans to override the protocol. “Any attempt would not just represent an egregious breach of international law, it would also plunge us into a trade war with our closest neighbours.”
A spokesperson for the EU Commission told The Independent the intention was to “continue working” on solutions with London, adding: “We fully committed to working jointly with the UK to bring long-term legal certainty and predictability to Northern Ireland.”