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US Putting Choke Chain on UK Over Threat to Invoke Article 16, Retrade Brexit Irish Protocol

Summary:
It’s pretty rich to see the Government caught flat-footed when other parties deliver on their threats. The latest example is the US saying very clearly and repeatedly to the UK during the Brexit negotiations not to touch the third rail of the Good Friday Agreement if the UK wanted a US trade deal. The new wrinkle is that if anything the US muscling has escalated as the UK has talked up invoking Article 16 to force a renegotiation of provisions related to Northern Ireland. Before it was Congresscritters, most loudly Nancy Pelosi, who said no way no how would any trade deal be approved by them if the UK reneged on the God Friday Agreement. The Financial Times reports that the Administration is now acting as enforcer. This story is a Financial Times exclusive and as of this hour, we don’t

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It’s pretty rich to see the Government caught flat-footed when other parties deliver on their threats. The latest example is the US saying very clearly and repeatedly to the UK during the Brexit negotiations not to touch the third rail of the Good Friday Agreement if the UK wanted a US trade deal.

The new wrinkle is that if anything the US muscling has escalated as the UK has talked up invoking Article 16 to force a renegotiation of provisions related to Northern Ireland. Before it was Congresscritters, most loudly Nancy Pelosi, who said no way no how would any trade deal be approved by them if the UK reneged on the God Friday Agreement. The Financial Times reports that the Administration is now acting as enforcer.

This story is a Financial Times exclusive and as of this hour, we don’t see any original input from other outlets, so forgive the dependence on the pink paper. The source of a sense of urgency is that the UK is now at a disadvantage relative to the EU because only the UK is now subject to some tariffs imposed in the Trump era.

Politico gave an overview of the issue, voicing the UK worry that its trade deal, which would provide relief from these tariffs, had become hostage to the UK’s spat with the EU over Northern Ireland.

For those of you who have not been following the neverending Brexit closely, a very simplified version. The bone of contention is that Northern Ireland is under EU rules for trade-related matters so as to avoid a hard land border with the Republic of Ireland. However, this creates difficulties for shipping goods between Northern Ireland and the UK. In reality, being tied economically into the EU has been a boon to Northern Ireland:

However, militant Protestants are not happy about perfidious Irish influence (not that it’s clear that they are capable of or would go on an IRA level campaign, but there have been a few car bombings). But the real driver of this train is Tory ideologues, who among other things want to free the UK of the limited and so far theoretical jurisdiction of the ECJ over certain Northern Ireland matters.

About a month go, the Government was threatening to invoke Article 16 which would among other things let the UK retaliate for its supposed suffering. The EU quickly offered tailored concessions around the goods traded between the UK and Northern Ireland, but also made clear that the jurisdiction of the ECJ is not negotiable.

As an aside, we pointed out then that the UK threat wasn’t as clever as it seems. The EU can also retaliate under Article 16, and it has plenty of informal ways it can retaliate outside Article 16.

The UK (as in Lord Frost) made noises that strongly suggested the UK was going to pull the Article 16 trigger soon. Some political mavens thought so to, so as to give Johnson some press putting the Government in the “take charge” frame as it was getting heat for supply shortages. But that went quiet. Perhaps now we know why.

From Politico:

Westminster is worried that instead of improving trade between the U.K. and the U.S., Brexit is making it more difficult.

U.S. President Joe Biden has warned the U.K. to tread with caution on the pact governing trade between Northern Ireland, Great Britain and the EU in the wake of Brexit, and fears an upset could imperil the hard-fought peace in the nation. But the British government has been threatening to trigger a nuclear clause in the protocol that could bring it crashing down.

Meanwhile, the U.S. has kept in place punishing tariffs on steel and aluminum first imposed during the Donald Trump administration. Britain has been unable to shake the tariffs off — despite Washington doing a deal to end the same war with Brussels a month ago — but will make a fresh appeal when its top trade minister visits Washington next week.

“This is yet another example of British industry paying the price for Boris Johnson’s botched Brexit deal,” said Shadow Foreign Minister Stephen Kinnock, who represents the steel-making seat of Aberavon in Wales. He said the tariffs were a simple method of inflicting pain on the U.K. over the protocol….

Trade expert Sam Lowe of Flint Global agreed that the protocol is putting an extra spanner in the works. “While it’s not the only reason the U.K. is finding it difficult to agree a deal with the U.S. to remove steel and aluminum tariffs, as the EU has done,” he said, “the ongoing standoff over Northern Ireland is certainly making it more difficult.”

The Financial Times provides evidence supporting these suspicions:

The US is delaying a deal to remove Trump-era tariffs on UK steel and aluminium because of Washington’s concerns about London’s threats to change post-Brexit trading rules in Northern Ireland.

Brussels and Washington have repeatedly warned London that unilaterally changing the EU-UK accord that sealed Britain’s exit from the bloc in 2020 could threaten peace on the island of Ireland.

In a communication seen by the Financial Times, a US commerce department official stated that talks with the UK on easing metals tariffs could not move ahead.

The official cited US concerns at British threats to trigger Article 16, a safeguard clause in the post-Brexit Northern Ireland protocol that overrides part of the UK’s exit with the EU and would suspend checks on goods travelling to Northern Ireland from the rest of the UK.

Washington had informed the UK of the reason for the hold-up, the communication said. Three people familiar with the matter also said talks were stuck after pressure from Congress over the UK’s threats to trigger the clause.

As I read this, the Administration isn’t simply saying “We won’t waste our time on a deal that Congress will nix.” It comes off as if the Administration is stating that it is of the same view, it won’t pursue a trade deal if the UK is going to mess with with Irish Protocol.

The article includes official “no comments” from the Commerce Department and the US trade representative, a claim from the National Security Council that there was no connection between the Irish Protocol spat and the US-UK trade talks (as if they were in this particular loop), and plenty of harrumphing from the UK department of trade. One presumes the US does not want to be seen as throwing its weight around in third party-relations of supposed close allies, but it’s no fun being a superpower otherwise.

The UK may in fact have gotten itself in a pickle with the US. Anyone who has been paying much attention to this row, or alternatively spoken to EU diplomats would have worked out that the UK is proposing to renege on an treaty it just signed and even touted as a great deal. That is bad faith behavior of the first order. For Ireland-backers in the US, it raises the specter of why ever give the UK a trade deal, since once it has that in hand, it will feel free to mess with the Ireland Protocol with impunity. And for appearance reasons, the US can’t tie UK treaty terms to continued good behavior with respect to the Irish protocol, even in the highly unlikely event that the UK would stomach requirements like that.

So the UK may have totally bollixed a US trade deal, at least unless and until Republicans are in charge. But the Irish mafia may be so powerful as to be able to block Congressional approval even with the Democrats in a minority. And I don’t see how the UK unrings the bell after having escalated to the point that the EU delivered a response which the UK keeps saying is not acceptable. Stay tuned.

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