What does it take to curb a trade war in the heart of Europe?

A burnt double decker bus in North Belfast, Northern Ireland, Nov 8. The bus was hijacked and set on fire in a loyalist area by four men. AP

At the heart of the British government’s controversial decision to re-open negotiations with the EU over future trading arrangements in Northern Ireland are fears that sectarian violence will return to the province.

Following Britain’s decision to leave the EU in 2016, during the long drawn-out Brexit negotiations, the Northern Ireland issue quickly emerged as a major stumbling block. Both British and European negotiators warned that if not properly handled it could undermine the 1998 Good Friday Agreement, which ended decades of hostility between Catholic and Protestants.

Now, judging by the recent upsurge in violence in the province in recent weeks, those warnings are becoming reality as Protestant protesters, angry at what they regard as unfair trading arrangements imposed on Northern Ireland as part of the Brexit deal, have staged a series of violent acts.

In one incident earlier this week, four men boarded a bus in Newtownabbey, just outside Belfast, and ordered the passengers to disembark before setting it alight. This followed another incident in which another bus was hijacked and burnt out in Newtownards. And fears that Protestant unrest could lead to further violent clashes with the security forces were confirmed soon afterwards when loyalist and nationalist rioters attacked the police close to a so-called peace wall in Belfast.

This worrying increase in violence is being blamed on the Northern Ireland Protocol, the agreement reached between Britain and the EU as part of the Brexit agreement signed at the end of last year.

Because Ireland remains part of the EU, and Northern Ireland is British territory, both sides were keen to avoid establishing a hard border on the island of Ireland, a move seen as jeopardising the Good Friday Agreement, which aimed to ease tensions between Protestants and Catholics by establishing better ties between Dublin and Belfast. There were concerns that the re-imposition of an EU customs border between the Republic of Ireland and Northern Ireland would exacerbate sectarian tensions once more.

To avoid this, the two parties instead agreed to the Northern Ireland protocol, which effectively places the customs border in the Irish Sea. While the protocol prevented the need for a hard border, it gave the province a separate status from the rest of the UK, as it kept the province within the EU’s customs union and single market.

This has meant that goods crossing between Britain and Northern Ireland must be subjected to checks to prove they comply with EU rules.

But the agreement has angered Unionist leaders, who claim the protocol unfairly disrupts trade with mainland Britain, and means that Northern Ireland is unfairly discriminated against by EU laws that apply to the province and not the rest of the UK.

There is certainly some justification for the Unionists' complaints, as the protocol has resulted in some goods, such as chilled meats and plants, being banned altogether, as such products cannot be imported into the EU from outside the bloc.

To date, the EU has allowed exemptions for some of the most controversial elements of the deal, such as sausages, but these are only temporary as both sides try to negotiate a long-term compromise.

Unionist anger at what is perceived as the British government’s betrayal of Northern Ireland’s interests has already resulted in the dismissal of Unionist former First Minister Arlene Foster, who agreed with British Prime Minister Boris Johnson to accept the protocol.

Now, more extreme members of the Unionist movement, such as the Progressive Unionist Party, which is politically aligned to the paramilitary Ulster Volunteer Force, has warned that the protocol threatens to undermine Northern Ireland’s status in the UK.

EU officials concede that difficulties have arisen between the UK mainland and the province since the protocol was introduced at the start of the year, and Maros Sefcovic, a vice-president of the European Commission, has offered an olive branch to the British government over the dispute, proposing to make a tranche of concessions to free up the movement of trade.

At the same time, EU officials have rejected a key British demand to remove the European Court of Justice as the ultimate referee on any future trade disputes, a decision that could lead to a trade war with Britain.

With tensions running high on all sides, Lord Frost, Britain’s chief Brexit negotiator, has warned that unless the EU agrees to wholesale changes to the current trading arrangements between the UK and Northern Ireland, the British government will trigger Article 16 of the Brexit agreement, which will suspend the protocol indefinitely.

Many involved in the negotiations regard taking such action as the nuclear option, and the EU has responded by threatening to impose trade sanctions against Britain in retaliation.

But with sectarian tensions in the province clearly on the rise, Lord Frost and his negotiating team are under increasing pressure to normalise trading relations with Northern Ireland, with or without the EU’s consent.

With talks on resolving the impasse due to resume shortly, neither side shows any sign of backing down. For its part, the EU has warned that there will be “serious consequences” if Britain decides to trigger Article 16 before an agreement is reached, with the British government insisting that it will be left with no choice unless further concessions are forthcoming from the EU.

Addressing the House of Lords before the resumption of talks this week, Lord Frost said the talks had “inched forward”, but the process was not moving quickly enough, and the “gap” between the two sides was “still extremely wide”.

But he warned that, if it became clear that “nothing more” could be achieved through the negotiations, then he would not hesitate to trigger Article 16, and warned the EU against taking “massive and disproportionate action” if the British government did indeed decide to pursue this option.

It remains to be seen just how far the British government is prepared to go to protect trading ties with Northern Ireland. But with the EU refusing to make any more concessions, there is every prospect that this dispute could soon result in a bitter trade war breaking out in the heart of Europe.