Economic Watch: Post-Brexit woes continue as Britain-EU rift deepens over N. Ireland
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E-mail Xinhua, May 12, 2022
LONDON, May 12 (Xinhua) -- More than one year after Britain and the European Union (EU) finalized their divorce with a hard-fought trade deal, Brexit still bites today. As the two sides were not on the same page with part of the deal, spats continued, sometimes with fresh confrontations.
In the latest escalation of bilateral tensions, Britain this week hinted again at taking unilateral actions on a protocol that grants Northern Ireland a unique status in post-Brexit trade relations between the two sides, which has met strong objections from EU leaders, with some even warning about the possibility of a trade war.
Post-Brexit chaos was also seen in ports where stricter border controls have been introduced since January. Further checks on EU goods have recently been postponed for the fourth time. All came to indicate that while Brexit is over, its repercussions linger.
TENSION BUILDS OVER PROTOCOL
The rift has recently deepened between Britain and the EU as rows continue over the Northern Ireland protocol agreement, under the terms of which Northern Ireland is part of Britain's customs territory but is subject to the EU's customs code, VAT (value-added tax) rules and single market rules for goods.
Despite the two sides' agreement in October 2019, the protocol has seen divisions over how to implement some of the rules, particularly for goods moving from Great Britain to Northern Ireland, according to an official report. While British leaders have argued the protocol needs to be amended, the EU has said a renegotiation was off the table.
The urgency for solutions grew even greater after Sinn Fein, the Irish nationalist party, was on Saturday declared winner in elections for the devolved assembly in Northern Ireland and a system of power-sharing was introduced. Second in the elections, the pro-Brexit Democratic Unionist Party has indicated it would not sit in the assembly, citing its opposition to the protocol with a trade border down the Irish Sea.
On Tuesday, British Prime Minister Boris Johnson told his Irish counterpart, Micheal Martin, that the situation in respect of the protocol was now "very serious," according to an official press release.
The balance of the Belfast Agreement, which underpins Northern Ireland's peace, its constitutional settlement and its institutions, was being undermined and the recent elections had further demonstrated that the protocol was "not sustainable in its current form," Johnson said.
Despite efforts by the British government, "the European Commission had not taken the steps necessary to help address the economic and political disruption on the ground," said the press release.
Over the past months, Britain left open the possibility that it may unilaterally impose "appropriate safeguard measures" in certain circumstances as the protocol provides in article 16. Reportedly, the country may legislate unilaterally to set aside parts of the protocol.
In response, EU leaders restated their opposition. "No one should unilaterally cancel, break or in any way attack the settlement we have agreed together," noted German Chancellor Olaf Scholz on Tuesday.
In his statement on Tuesday, European Commission Vice President Maros Sefcovic said, "Only joint solutions will work. Unilateral action by the UK would only make our work on possible solutions more difficult."
He stressed that a renegotiation is "not an option" and that the EU "is united in this position."
POST-BREXIT DELAYS, RISING COSTS
Amid the post-Brexit chaos, businesses have already felt the pain. Data published on Wednesday by the Institute of Directors, a British professional organization, showed only 27 percent of businesses which trade internationally expect to see an increase in imports in the next 12 months.
Emma Rowland, policy advisor at the organization, said it reflects uncertainty around global supply chain disruption, and the introduction of post-Brexit import controls. "Firms are burdened by bureaucracy, increased costs and delays at the border between the UK and the EU, and are calling for stability," Rowland added.
Border controls on products from the EU to Britain were tightened from this January, while more checks on EU goods were delayed at the end of April, including physical checks on meat and dairy. An official press release said the change is expected to save British importers at least 1 billion pounds (1.2 billion U.S. dollars) in annual costs.
This latest move was met with mixed reactions. "Our research has painted a clear picture that customs checks on goods and increased paperwork have damaged our exports to the EU, particularly from smaller businesses," said William Bain, head of trade policy at the British Chambers of Commerce.
"With food prices rising, the extra costs from new checks on meat, fish, dairy and other products would fuel inflation -- hitting the pockets of both businesses and the British public," Bain added.
Some industries, however, found it disappointing. "Businesses need stability, clarity and certainty which constant delays and changes to the nature of future post-Brexit checks do not deliver," said Sarah Laouadi, head of international policy at Logistics UK, a British trade association.
"The government's wavering approach comes at the cost of logistics businesses who have invested time and money preparing for the introduction of checks," Laouadi added.
In January, the British government published a report titled "The Benefits of Brexit: How the UK is taking advantage of leaving the EU," noting that it was taking back control and managing its own money. But Brexit also took an economic toll in one way or another.
Brexit has affected British businesses' production, and the increase in Britain-EU trade barriers has led to a 6-percent increase in food prices in Britain between the end of 2019 and September 2021 in comparison to the years before December 2019, the British research organization "UK in a Changing Europe" said in April.
And since Britain's EU referendum, 44 percent of the largest British financial services firms have announced plans to move some British operations and/or staff to the EU, and the number of Brexit-related staff relocations to the EU was over 7,000 as March 2022 closed, according to consultancy group EY. Enditem
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