At the end of last week, speculation was rife that Rishi Sunak’s administration was closing in on a much-anticipated deal with the EU over the Northern Ireland Protocol.
London and Brussels have been at loggerheads for months over how to better facilitate goods moving between Britain and Northern Ireland, with the UK even introducing legislation that would enable it to unilaterally overhaul the agreement.
However, with relations having improved between the UK and EU since Sunak entered Downing Street, are we now on the cusp of a deal that would put post-Brexit tensions over Northern Ireland to bed?
The IOE&IT Daily Update here looks at the latest reporting on when a deal could be announced, what the main challenges for the agreement will be and what it could all mean for traders.
When could a deal be announced?
There were widespread reports last week that a deal could be announced by Sunak in the Commons tomorrow (Tuesday 21 February) after a scheduled Cabinet meeting in the morning.
UK officials have told the FT that an announcement could still happen tomorrow or Wednesday, but amid a reported backlash from senior DUP and Conservative politicians, the Telegraph reckons Sunak may have had to pause plans for a quick announcement. The DUP’s Sammy Wilson told Sky News that he doesn’t think a deal is likely this week.
A Downing Street insider told Politico’s London Playbook today: “It’s always like this — nothing seems to be happening, and then it suddenly all happens very quickly. There has been very good progress, but there are still some issues remaining.”
Over the last few days Sunak has been holding meetings with key stakeholders to try to generate backing for the deal, including European Commission president Ursula von der Leyen at the Munich Security Conference on Thursday last week.
What happens when a deal is announced?
Sunak doesn’t necessarily have to pass the deal through the Commons, but Politico reports that he may struggle to control his party’s backbenchers if he doesn’t put it to a vote.
In the Commons, Sunak could face a backbench rebellion, with the Guardian reporting that over 100 Conservative MPs could vote against the deal.
The deal could still pass through the Commons regardless though, with Labour leader Sir Keir Starmer saying his party would back a deal.
“We will vote with the government and so the prime minister doesn’t have to rely on his backbenches,” Starmer told reporters today. “We in the Labour Party believe country first and party second. I am inviting the prime minister to do the same thing.”
What’s being said about the deal?
UK officials have told the FT that Sunak is “focused on securing a deal that works for the people of Northern Ireland” and that “really good progress” had been made in the talks.
According to the Guardian, senior EU leaders, including von der Leyen, are keen to secure a deal quickly in order to move on from Brexit and refocus UK-EU relations on security issues such as Russia’s invasion of Ukraine.
However, the Sun reports that a “war of words” is emerging between Sunak and his predecessor in Downing Street, Boris Johnson. The former prime minister has said it would be a “great mistake” to drop the controversial NI protocol bill, which would allow the UK to unilaterally override the agreement.
Wilson, the DUP’s Westminster chief whip, said his party would not back what he describes as a deal that is only “tinkering” with the protocol.
“If a deal is agreed which still keeps us in the EU single market, as ministers in the NI Assembly we would be required by law to implement that deal and we are not going to do that because we believe such an arrangement is designed to take us out of the UK,” he said.
David Jones, the deputy chair of the European Research Group (ERG), told the Times that DUP consent for the deal was a necessary condition for support from the Eurosceptic group.
What could be in the deal?
Hugh Bennett, a former special adviser to Johnson and Liz Truss, who was a member of the UK’s negotiating team between 2020 and 2022, writes in Politico that there are six key aspects in the deal that onlookers should be attentive to:
- How ‘green’ the lanes for British goods bound only for Northern Ireland will be
- If the deal will involve any changes to the original treaty
- If the deal will return certain state aid and tax powers relating to Northern Ireland to London
- If the deal will allow Northern Irish consumers to buy UK-standard goods
- The role of the European Court of Justice in overseeing the future arrangements
- What will happen with the UK’s Northern Ireland Protocol bill
For traders, the possible introduction of different ‘lanes’ for British goods bound for Northern Ireland and those bound for onward travel into the Republic of Ireland will be most significant.
According to Bennett, the level of information required by the EU to facilitate such an approach will be pivotal to the deal’s success – i.e. whether information is equivalent to what is already being provided in customs declarations under the protocol’s current implementation, or whether this could be reduced to that which is typically provided in a commercial manifest or inventory.
The IOE&IT Daily Update will be reporting on the details and practical implications for traders of any deal that is announced.
