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Block, March Quarterly

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Following yesterday's offer from the EU to strip away as much as 80% of the customs checks on food and retail goods entering Northern Ireland from Great Britain, in an effort to reach an agreement with the UK over the Northern Ireland protocol, focus now turns to the UK gov'ts response.

  • The two sides are set to enter a month of negotiations on changes to the protocol, and while the EU's offer marks the most significant concessions Brussels has been willing to allow the UK there remains a significant gulf between what the EU will countenance (various amendments to SPS, medicines, political participation) and what the UK is demanding (a full renegotiation of the protocol).
  • The prospect of a trade war in the short term is unlikely, with UK point-man on EU relations Lord Frost stating that the triggering of Article 16 (which allows for unilateral disapplication of parts of the protocol in extremis) would not take place this month.
  • The continued role for the ECJ in the functioning of the protocol could prove enough of an obstacle to stop the two sides reaching agreement during the course of talks. Should the UK eventually trigger Article 16, there is the low probability-high risk scenario of a trade war developing between the UK and EU.
  • For larger EU member states there remains significant incentive to 'punish' the UK for its breaches of signed agreements (notably in France, where President Macron's hardline stance against the UK could stand him in good stead before next year's presidential election). The Republic of Ireland will be extremely keen to avoid this scenario, given the huge damage that would be done to the country's economy by cutting off its major trading partner.