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Liz Truss was sent to stop a trade war — now No 10 fears she could start one

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When Boris Johnson called Micheál Martin, the Irish prime minister, last week he tried to break the ice with humour. “I haven’t seen you since your men thrashed us at Twickenham,” the PM remarked. The taoiseach, another rugby fan, was generous in return: “It wasn’t really fair, you only had 14 men on the pitch most of the time.”

The way the EU has enforced the rules on trade between Great Britain and Northern Ireland since the Brexit deal, with checks on goods crossing the Irish Sea, has made some in the government feel it is trying to play the game a man down.

On Tuesday Liz Truss, the foreign secretary, will publish domestic legislation giving the government the right to suspend elements of the Northern Ireland protocol to lift the checks. The EU has threatened to retaliate with a trade war if the legislation is ever used.

Boris Johnson with Micheál Martin at Twickenham in March

PAUL CHILDS/REUTERS

Yet after a week of sound and fury in which another confrontation with Brussels overshadowed the Queen’s Speech, and the mixed messages about it emanating from government, the tone of Johnson’s call with Martin was conciliatory. “The prime minister does not want a war with the EU,” a senior ally said.

The PM also spoke to Michelle O’Neill, whose party Sinn Fein won the most seats in the Northern Ireland Assembly, and Sir Jeffrey Donaldson, the vanquished DUP leader, who has said his party cannot rejoin the Stormont executive unless there are changes to the protocol. On Monday Johnson will travel to Northern Ireland to continue conversations face to face.

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There is ill-disguised fury in some parts of No 10 that Truss and David Canzini, the deputy chief of staff, are so privately gung-ho about confrontation with the EU. One senior official said: “The object of the exercise with some people seems to be to have a fight. The object of the exercise for the prime minister is to restore democratic processes to Northern Ireland. We want a weapon on the table, we don’t want to use it. It’s like the nuclear deterrent. The PM does not want to use nuclear weapons, whatever the knuckleheads tell him.”

Sources in both Downing Street and the Foreign Office stress that it could take a year to change the law. The bill itself will not be tabled for a couple of weeks and then the first and second readings will follow almost immediately. However, passing the bill and using its provisions are different things.

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There is little sign the EU is in the mood to compromise. A call between Truss and Maros Sefcovic, the EU’s negotiator, at 8am on Thursday was described as “frosty” and “tetchy”. The foreign secretary took the call in her ministerial car on the way to Whitehall before flying to a G7 foreign ministers’ meeting.

“Parts of the protocol aren’t working. We need to change it, that’s the reality,” Truss said to aides before the call. In a previous conversation she told Sefcovic: “Nothing we are suggesting will cost the EU any more at all. What’s not to like?”

Sefcovic, a Slovak diplomat who has served as vice-president of the European Commission for Interinstitutional Relations since 2019, replied: “Well, you signed the protocol.”

Thursday marked the culmination of months of efforts to get movement from the EU. When she got the job last December Truss told officials: “There’s a landing zone if the EU are willing to flex.” She invited Sefcovic to her Chevening retreat in January, with Britain agreeing to greater transparency on customs.

At a second meeting, at Carlton Gardens on February 11, Sefcovic continued to insist that no changes to the protocol would be permitted.

Under the plans drawn up by Truss the legislation does six key things:

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• Deals with customs delays by creating a green lane for registered trusted traders sending goods for sale only in Northern Ireland, and a red lane for those where products might go on to the Republic, with the latter subject to full EU checks.

• Imposes higher penalties on firms who break the rules and smuggle goods in the Republic.

• Includes measures to allow firms to produce goods to UK standards in Northern Ireland.

• Puts governance of the border in the hands of UK courts, rather than the European Court of Justice.

• Gives the chancellor the right to change tax rates to allow the same VAT cuts in Northern Ireland as in the rest of the country.

• Includes an explicit pledge that Britain would never install any border infrastructure between Northern Ireland and the Republic.

British officials stress the UK has already set up a computer system which provides one million live items of data in real time on the movement of goods. Ministers say this proves that trade between the mainland and Northern Ireland is no threat at all to the integrity of the EU single market — and yet the EU has not yet taken up the offer of access to the database.

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“There are only two ways of changing the status quo: one is an international treaty and the other is domestic,” said a senior government source. “It’s the Sherlock Holmes thing. If you rule out everything else, what’s left must be the answer. You’re left with domestic law. We are not scrapping the protocol, we are acting domestically to fix it.”

While there are highly mixed messages emanating from government about whether these laws should ever be used, the plan is expected to be signed off in a cabinet committee tomorrow. “There is no other plan,” a cabinet minister noted. It is expected to unnerve many. Conor Burns, the minister of state for Northern Ireland, was sent to Washington last week to explain the plans to the Biden administration in the hope that criticism is tempered.

Michael Gove, formerly the point man with Sefcovic, is also of the view that Britain should wait before taking unilateral action. The Cabinet Office has also commissioned Treasury officials to draw up estimates of the risks to the economy in different scenarios, spelling out which sectors are vulnerable to EU trade war retaliations.

Truss with Sefcovic at Chevening in January. At the meeting Britain agreed to greater transparency on customs

CHRIS J. RATCLIFFE/EPA

Even late last week Rishi Sunak sent back some of the work because it was not up to scratch. “He is a conviction Brexiteer but his job is to present the prime minister with worst-case scenarios of what could happen economically,” a Treasury source said. “When inflation is running where it is and interest rates are rising and the economy has begun to shrink, adding a potentially damaging trade war is not ideal.”

While immediate retaliation is possible, officials point out that there is a nine- month grace period between the implementation of rules which contravene the Brexit deal and the EU being able to bring legal action. The hope is that the new plans are shown to work and be no threat to the single market before that happens.

If cabinet centrists fear confrontation, hardline Brexiteers fear Johnson will talk up a row and then do nothing.

Lord Frost, Truss’s predecessor as EU front man, wrote last week: “The government will need to show strategic sense and consistent determination to deliver its goal,” before adding: “These have not generally been the most characteristic features of this government’s actions.”

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Sources say Frost believed the conditions had been met to take unilateral action at the end of last year but “Frosty also thought Boris would bluster and then bottle it at the first sign of gunfire”.

If the rhetorical veering over Northern Ireland came last week to resemble the shopping trolley to which Boris Johnson once compared himself, it was no less pronounced on the economy. The prime minister set hares running about the prospects of an emergency budget to help with the cost of living in a debate on the Queen’s Speech. That left the Treasury frantically denying that there was anything planned imminently.

Ideas under consideration include cutting tariffs on the import of food and an intervention to help those in fuel poverty. But the decisions cannot involve tax. “You can’t have income tax, VAT or council tax changes until there is a budget in the autumn,” a senior source said.

David Canzini is said to be gung-ho about confrontation with the EU

Johnson and his chancellor have been locked all week in a series of “intense one-on-ones” thrashing out their options. They plan to make an intervention before the summer recess at the end of July. “Anyone who isn’t in those meetings who thinks they know what is going on is lying,” said a No 10 insider.

The key moment lies ten days to two weeks away when the data on fuel prices, on which the consumer energy price cap is based, will be clearer. Only then will Sunak and his officials know how much prices will rise in October.

In a meeting with ministerial aides on Friday morning, Canzini suggested the government would roll out “five non-fiscal measures” before summer.

But the challenge facing the Tories after big losses in the local elections mean baubles are now needed not just for the fabled “red wall” seats in the North, but to prop up Johnson’s shrinking vote share in the South.

“Canzini said we need to find ways of getting support to people in the South West and South East as well,” said one of those present. “Rishi has to be a more effective Gordon Brown, he has to save the world and then get the credit for it.”

Under attack by economic events, Johnson might not be keen on all-out war with the EU, but he could not resist a quip last week about battling the French. Invited to the country retreat of Magdalena Andersson, the Swedish prime minister, to sign a mutual defence pact, Johnson took her out rowing and then told her: “This is a mutual security guarantee, you know. It also applies in reverse. If Emmanuel Macron sends rogue fishing boats into British waters, we would appreciate your help.”

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