British business leaders have urged Boris Johnson’s administration not to suspend the Brexit deal with the EU, warning that it could start a “devastating” trade war in the coming weeks.
Brexit Minister Lord Frost said last week that the option to trigger Article 16 to suspend the Northern Ireland Protocol would remain on the table if “significant gaps” cannot be bridged with the EU, but seems to calm the dispute for the time being.
But while European Commission negotiator Maros Sefcovic welcomed the UK’s “change of tone”, Brussels is prepared for immediate retaliation against the UK if No. 10 suspends minutes, legal experts and analysts said The independent one.
Industry leaders in the UK said they fear a series of “damaging” moves that could hit UK exports, further disrupt supply chains and freeze investment.
Catherine Barnard, professor of EU law at Trinity College, Cambridge said: “A trade war is a serious possibility. The EU is looking at a number of options – it is looking at ways to quickly retaliate. “
EU leaders are believed to be considering a “nuclear” option to end the Trade and Cooperation Pact (TCA) if Downing Street triggers Article 16.
This would give Britain 12 months’ notice before the end of the pact and would be forced to trade with Europe on World Trade Organization (WTO) terms – essentially a “no-deal” Brexit scenario.
However, according to Prof. Barnard, the EU is also examining whether a lesser-known part of the TCA, Article 506, should take immediate action.
“This means that the EU would quickly retaliate before going into arbitration. The retaliation ranges from the cessation of fishing in [EU] Waters, to impose tariffs on British fish entering the EU and then to impose tariffs on other goods, “she said.
“The French and other countries could also impose stricter controls on goods coming from the UK, which could clog things up at the border pretty quickly.”
David Henig, UK director of the European Center for International Political Economy, said a decision by Brussels to retaliate would have “very negative effects” on the UK economy.
“If Britain triggers Article 16, I suspect [the EU] can start with things like 100 percent physical checks on UK goods and some retaliatory tariffs on certain goods before deciding whether to go completely nuclear by suspending or ending the TCA. “
He added: “If they do that, we could be back in no-deal Brexit territory, with that threat looming over the UK economy in 2022. This could lead to a freeze on investments. “
The British Meat Processors Association said it was increasingly concerned about the prospect of both short-term damage and much higher export tariffs if the trade deal is eventually abandoned.
Nick Allen, the facility’s chief executive officer, said The independent one: “Trade on WTO terms would be appalling for the meat industry. The idea that we are again concerned about trade on WTO terms is incredibly depressing. “
He added: “We are fighting enough food inflation without a harmful trade war and retaliation. Another year of uncertainty would be devastating for our industry and the food sector as a whole – it could mean that any investment our economy needs could be put on hold. “
The Road Haulage Association (RHA) fears the possibility that the EU will insist on stricter controls in Calais and other border points, which could lead to delays for UK truck drivers and disruption.
“A trade war wouldn’t be nice,” said Rod McKenzie, the RHA’s policy director. “This is a major concern for all of us in the logistics trade.”
The forwarding chief added: “If Article 16 is triggered, we know the EU will be angry and they will probably want to react. Supply chains are always my major concern. If the EU takes revenge, this has the potential to disrupt the currently very tight supply chains even more. “
Barrie Deas, executive director of the National Federation of Fishermen’s Organizations (NFFO), said it was not yet clear which agreements on fish could be suspended in the event of a trade war, but warned both sides of the dangers of escalating.
“A trade war would hurt everyone,” he said. “This could have a major impact on France, the Netherlands, Belgium, Denmark and Ireland – all countries that fish quite a lot in British waters. We all have the potential to be losers. “
If No. 10 triggers Article 16, the extent of the EU’s response will depend on how Prime Minister and Brexit Minister Lord Frost explain their actions – and the extent of their “safeguards”.
The government could decide to unilaterally end controls only on some goods shipped across the Irish Sea, or instead to suspend large parts of the protocol agreement with all customs controls, standards and VAT regulations.
The EU has proposed a number of changes to the protocol, claiming they would remove 80 percent of physical checks between the UK and Northern Ireland.
However, Lord Frost has continued to demand that Brussels agree to the dismissal of judges of the European Court of Justice (ECJ) in protocol arbitration. “Definitely nothing has changed on our side on the European pitch,” said Sefcovic on Friday.
That said a spokesman for the EU Commission The independent one that Mr Sefcovic remains “fully focused on finding practical solutions” so that Northern Ireland can have “stability and security”.