Stuck in the middle of (a trade war) with EU

The promise that the Northern Ireland protocol would deliver the “best of both worlds” for businesses in the North seems a long way off now. The pitch was that it would give unique access to both the British and EU markets. The subsequent issues with bringing in goods from Britain were real, in some sectors, though surely overplayed by the Johnson government and the protocol’s opponents, notably the DUP. And now the refusal of the UK to accept a compromise plan presented by the European Commission has generated further uncertainty, as London threatens to trigger article 16 of the protocol, leading to inevitable retaliation from the EU.

In the wake of the protocol, Invest NI, the body responsible for attracting inward investment, reported increased interest as companies weighed up the attractions of access to both markets. Any potential foreign investors will by now have put their moves on hold. A negotiated settlement between the UK and EU would need to be solid for them to be likely to move ahead. Local companies, meanwhile, can only wait and see what transpires.

It remains unclear exactly what the UK would do when triggering article 16 – any measures must, under the article, be “strictly necessary” in other to remedy the identified problem. Likewise the EU must decide how to react – it could threaten tariffs on some UK exports, setting off a trade war.

For the Republic the stakes are high. A suspension of checks on goods entering the North from Britain would raise questions of where goods are checked – the alternatives of the Irish Border or at French and Dutch ports would both be deeply unwelcome to Dublin. And the Belgian deputy prime minister said yesterday that the EU should consider scrapping the whole deal – which would throw us back into more uncertainty and negotiations.

Ireland will be pushing both the EU and UK to settle this issue in talks over the next month. But speculation remains that the UK could still decide to trigger article 16 after the Cop26 summit, starting an economic war where the island of Ireland would again find itself stuck in the middle.