MNI: N. Ireland Deal Nears, Equivalence Hopes Fade-EU Sources

EU Commission Vice President Maros Sefcovic is lining up a visit to Northern Ireland next week as EU and British officials near a temporary deal to facilitate post-Brexit trade between the province and the rest of the UK, EU sources told MNI, but they added that more disputes will inevitably arise as the two sides diverge in areas including financial services.

EU officials said that timings and the agenda for Sefcovic's visit have yet to be finalised, but noted that it indicated that work towards narrowing differences between the two sides is now entering a new phase, following the end of the summer break.

"The EU is ready to go further than it already has committed to doing, but the UK is going to have to come down from the high position, where it has set out its bargaining position," an EU official said, referring to the recent Command Paper setting out UK demands for easing trade across the Irish Sea.

The Command Paper was not received well by officials in Brussels, many of whom saw it as a continuation of the UK's "bullying" approach to the EU-UK talks, which have been extended along with the grace period for full implementation of the protocol until the end of September.

The paper called for rewriting parts of the Northern Ireland Protocol regarding customs checks and the role of EU institutions in enforcing and arbitrating the deal.

PARTIAL DEAL

EU officials say that an announcement of some kind is on the cards before the end of September, although one well-placed source stressed that this was likely to be only a "partial" deal, with talks to find a long-term solution likely to continue for some months more.

But while collaboration and cooperation are currently the leitmotif in talks between the two sides on the Protocol, hopes are fast fading that the City of London will be able to secure any equivalence agreements for the financial sector, even in clearing. The EU focus is on closely monitoring the progress of the banking industry in moving its cleared transactions to eurozone-based clearing houses from LCH in London, ahead of the extended June 28, 2022 expiry of equivalence for the industry.

"It's very hard to see how we can grant equivalence to the UK, given that they have stated their intention to diverge (from EU financial services legislation), the source said.

Some EU officials caution that, regardless of the progress being made to ease the specific difficulties in UK-Irish trade - UK divergences are such that there will inevitably a major conflict over trade at some point.

"Over what and how, it's impossible to say. But that's not for now, that's for tomorrow," one said.

Last week, Sean Kelly MEP, leader of the Fine Gael delegation in the European Parliament and a member of the EP's UK Contact Group, told MNI that he was increasingly optimistic that EU and UK politicians would be able to secure agreement on ways to better ease trade flows between the UK and Northern Ireland by the end of September. (See MNI INTERVIEW: Chances Rising Of EU-UK Northern Ireland Deal)

Kelly said that a significant amount of work behind the scenes had been going on "in the background" between officials and at the technical level during August, allowing Commissioner Sefcovic and UK counterpart David Frost to pick up the baton in early September.