EU's Sefcovic Signals Possible Trade Retaliation on Brexit Plan

  • In World
  • 2022-07-06 12:29:24Z
  • By Bloomberg

(Bloomberg) -- The European Union's chief Brexit negotiator signaled the bloc could impose retaliatory trade measures on the UK over its planned legislation to override parts of the withdrawal agreement, saying the proposal "seriously harmed" the bloc's interests.

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Maros Sefcovic told lawmakers in Strasbourg that if the bill put forward by Boris Johnson's government is adopted as drafted, "of course in that case we would be forced to use the measures at our disposal, including the measures" in the Trade and Cooperation Agreement, known as the TCA.

The TCA, which was painstakingly hammered out and signed on Dec. 30, 2020 to allow tariff-free commerce, allows for the partial or full suspension of benefits in case of a breach of the Withdrawal Agreement signed between the EU and the UK, including the Northern Ireland protocol. In that case, the EU could slap tariffs on UK exports to its territory.

Sefcovic said that no alternative solution to the Northern Ireland protocol, which keeps the area in the EU's single market while creating a customs border with the rest of the UK, had been found. "And it is not needed," he added. He reaffirmed that the EU "wishes to have a positive and stable relationship" with the UK.

The bill put forward by Prime Minister Boris Johnson, which would give Britain the ability to unilaterally amend the post-Brexit settlement for Northern Ireland, risks a trade war with the EU and has soured relations with the UK's biggest trading partner. The EU relaunched legal action against the UK last month.

"Our interests, as the other party to the agreement, are seriously harmed," Sefcovic said of the bill.

The EU's relationship with the UK "must be based on the agreements that both parties negotiated, agreed and ratified: the Withdrawal Agreement and the Trade and Cooperation Agreement," Sefcovic said.

"Our door remains open to the UK for dialog in order to identify joint solutions" within the framework of the protocol, Sefcovic said. "It is now for the UK to walk through that door. I sincerely believe that with political will and genuine commitment, solutions are still within reach."

Unilateral, Illegal

Sefcovic told Bloomberg News last week that the EU can't accept Britain's efforts to "unilaterally and illegally" dismantle the arrangements in the Brexit deal on Northern Ireland. He said he won't contemplate a hard border on the island of Ireland.

The UK legislation would separate goods flowing between Britain and Northern Ireland from goods intended for the EU into green and red channels, and allow businesses in region to choose whether they follow UK or EU standards, or both.

It would also extend UK subsidy controls and tax breaks, including changes to value-added tax, to Northern Ireland, and strip the European Court of Justice of its role in settling disputes in the region over the Brexit deal.

(Updates with remarks on trade agreement from first paragraph)

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