Nearly six years after the Brexit referendum, the European Union [EU] and the United Kingdom [UK] are still dealing with the fallout from the vote. In particular, the UK and EU are still struggling to resolve current trade disputes, as Prime Minister Boris Johnson has threatened to “rip up” the Northern Ireland Protocol, which risks undermining stability and peace between Northern Ireland and the Republic of Ireland. In response, top U.S. and EU officials have warned the UK that its actions will be met with consequences that especially target their steel sector, already vulnerable as the Chinese continue to dump its dirty steel in vulnerable markets. Because the UK is under pressure, the U.S. has an opportunity to use its steel tariffs as a “bargaining chip” to help patch EU-UK differences.
On January 1st 2021, the Northern Ireland Protocol came into effect as an extension to the Brexit withdrawal agreement between the UK and EU. The protocol served as a mechanism to prevent the re-establishment of a “hard border” between Northern Ireland and the Republic of Ireland. Furthermore, the protocol aimed to establish customs duties along the Irish Sea to preserve the integrity of the EU’s Single Market and to safeguard the 1998 Good Friday Agreement. The trade of goods traveling from the UK to Northern Ireland would be inspected to ensure unchecked goods do not enter the European Union. In light of the new measures, the UK’s market share in Ireland plummeted from 23.2% in 2015 to 7.2% in 2020. The UK and Northern Ireland officials – specifically the Unionists – are challenging the protocol due to its economic impact on trade between the UK and Northern Ireland.
Opposition to the Protocol
On February 3rd, 2022, DUP agricultural minister Edwin Poots ordered a halt to Brexit checks on food and farm products at Northern Ireland ports. The deputy first minister commented that, “this stunt is an attempt…to unlawfully interfere with domestic and international law.” However, EU officials commented that they were “satisfied” that Brexit checks are still being carried out. Sinn Fein – the pro-protocol party of Northern Ireland – believes that the DUP is using this to gain political capital for the Northern Ireland Assembly election on May 5th, 2022.
Furthermore, Boris Johnson opposes the protocol due to the interruption of UK trade traveling to Northern Ireland via the Irish Sea. Johnson believes that the protocol can be fixed if the EU reduces the checks along the Irish Sea. In the meantime, Johnson is holding on to his Article 16 ace card very closely so to place pressure on the EU. Article 16 allows either the UK or EU to pursue unilateral “safeguard measures” – which terminates the customs checks of the protocol – if it produces “serious economic, societal or environmental difficulties.”
Consequences of Article 16
If Boris Johnson invokes Article 16, there would initially be further consultations between the UK and EU, which could take up to a month. If these talks fail, it is not impossible that a hard border consisting of many EU security measures and customs checks could be established between Northern Ireland and the Republic of Ireland. This action would violate the internationally binding Good Friday Agreement’s provision of ensuring “…a normalization of security arrangements and practices.” And it could possibly reignite violence between Ireland and Northern Ireland.
Furthermore, the use of Article 16 could provide fuel for the cause of Irish reunification. In a 2021 snap poll in Northern Ireland, 49% voted to remain and 42% voted to leave the UK. The May 2022 local election in Northern Ireland could significantly close the 7-point gap. Moreover, the Belfast Agreement mandates that – in the case of a pro-independence majority – a referendum must be initiated. In other words, the fallout of the Brexit deal puts greater pressure on UK sovereignty in Northern Ireland.
Overall, the reluctance for cooperation between the UK and EU will linger as critical topics, such as data protection, commercial access, and energy initiatives, are left undiscussed. Moreover, the UK’s economy will take a hit as the U.S. repairs its transatlantic partnership with the EU.
With these possible consequences in mind, Brussels has put pressure on London to prevent it from invoking Article 16. The threat of invoking Article 16 is considered the “nuclear option” by EU officials. Since November 11, 2021, the EU has threatened to terminate the post-Brexit trade deal – known as the Trade and Cooperation Agreement – which would trigger a trade war between the UK and the 27-member European Union.
Moreover, the political dilemma has caught the attention of U.S. President Joe Biden and other U.S. officials. While meeting with Prime Minister Boris Johnson at the G7 summit in June 2021, President Biden stressed the need for the UK to “stand behind” the protocol. Moreover, the U.S. played a significant role in brokering the Good Friday Agreement, and the U.S. has made it clear to the UK to not renege on their obligations. U.S. Speaker Nancy Pelosi warned that there could be no post-Brexit deal with the U.S. if the Northern Ireland peace agreement was destroyed. To this day, the U.S. continues to place economic pressure on Boris Johnson’s resolve regarding Article 16.
Applying Pressure With Steel
Current U.S. tariffs on UK steel exports places significant pressure on the UK government. British steel has seen the worst years of production since former-President Trump slapped U.S. tariffs on UK steel. The tariffs significantly blocked UK steel to export in its second largest market. According to Gareth Stace, the director-general of UK steel, “UK steel exports to the U.S. have halved since President Trump introduced steel tariffs in 2018.” Moreover, Alun Davis, the national officer of UK steelworkers’ union highlighted that, the “British steel industry is the backbone of the UK economy.”
The U.S. tariffs have created two economic burdens on the UK. First, the UK stands at a competitive disadvantage in both the U.S. and the EU. During the G20 summit in October 2021, President Biden announced the withdrawal of steel and aluminum tariffs imposed on the EU. Since then, there is a 25% tariff placed on UK steel exports to the EU. The tariffs now impact a huge percentage of the UK’s global market for steel. British steel will continue to decline as it experiences competitive disadvantages in the U.S. and EU. The national federation of trade unions in England and Wales warned the UK government that the steel tariffs dispute is “putting jobs and livelihoods at risk.” Public pressure continues to rise as the future of the UK steel industry remains uncertain.
Second, Western nations face a competitive challenge because of China’s over-capacity of 996 million tons in steel. China’s dumping of its cheap – and environmentally dirty – steel will put further pressure on the UK to seek a reduction of tariffs from the U.S. and EU. Moreover, the Western nations need the UK’s steel production to compete against Chinese steel.
As long as Boris Johnson threatens the use of Article 16, the UK economy could suffer and undermine its competitiveness against Chinese steel. President Joe Biden can significantly change the UK’s attitude by incentivizing a reduction in steel tariffs.
On January 19th, 2022, U.S. and the UK officials agreed to start talks regarding the Trump-era tariffs on UK steel and aluminum. The future discussion will address “global steel and aluminum excess capacity, and the United States’ application of tariffs.” The discussion will also address the UK’s retaliatory tariffs on various U.S. products. The UK and U.S. are under pressure to seek a resolution to the current trade dispute.
Steel for Peace
The UK will face these pressures as they continue to oppose the Northern Ireland Protocol and refusing to compromise with the EU. The U.S. has an opportunity to prevent Boris Johnson from invoking Article 16. The United States should offer a reduction in steel and aluminum tariffs as a “bargaining chip” to the UK, only if the UK removes the Article 16 threat and agrees to resolve the trade disputes with the EU. Furthermore, the resolution would secure peace for the Ireland-UK peace accords and tackle the over-capacity of Chinese steel. In the spirit of the new Atlantic Charter, the two allies are responsible to defend the democratic principles and institutions upon which both agreed to preserve.