EU rejects UK demand for new post-Brexit deal on Northern Ireland

© Reuters. A truck drives past a defaced 'Welcome to Northern Ireland' sign on the Ireland and Northern Ireland border reminding motorists that the speed limits will change from kilometres per hour to miles per hour on the border in Carrickcarnan, Ireland, March 6,

By Michael Holden and William James

LONDON (Reuters) -Britain demanded on Wednesday a new deal to oversee problematic post-Brexit trade involving Northern Ireland, warning it already had the right to unilaterally ignore parts of an agreement struck with the bloc just last year.

The European Commission immediately poured cold water on the plea, saying Prime Minister Boris Johnson and Brexit minister David Frost had negotiated the protocol and Britain had to respect its international obligations.

"We will not agree to a renegotiation of the Protocol," said the commission's Vice President Maros Sefcovic.

The Northern Ireland protocol was part of the settlement, backed by Johnson, that finally sealed Britain's bitter divorce from the bloc, four years after British voters backed leaving in a referendum.

Businesses in Northern Ireland say it is damaging trade, and some pro-British groups have protested at what they say is a weakening of ties with Britain, raising concerns about a return to the sectarian violence which plagued the province for three decades.

"We cannot go on as we are," Frost told parliament on Wednesday, saying London said wanted a new "balance", and to eliminate EU oversight of the accord.

The protocol addresses the biggest conundrum of the divorce: how to ensure the delicate peace brought to the province by a 1998 U.S.-brokered peace accord - by maintaining an open border - without opening a back door through Ireland to the EU's single market of 450 million people.

It essentially requires checks on goods between the British mainland and Northern Ireland, but these have proved burdensome to companies and an anathema to "unionists" who are fiercely supportive of the province remaining part of the United Kingdom.

Frost said there was justification for invoking Article 16 of the protocol, which allows either side to dispense with its terms if they are proving unexpectedly harmful.

"Nevertheless ... we have concluded that is not the right moment to do so," he said. "We see an opportunity to proceed differently, to find a new path to seek to agree with the EU through negotiations, a new balance in our arrangements covering Northern Ireland, to the benefit of all."

Despite repeated British complaints, the EU has refused to amend the protocol, fearing that the hard-to-police border with EU member Ireland could allow goods to enter its single market without meeting its regulatory standards.

"We will continue to engage with the UK, also on the suggestions made today," Sefcovic said in a statement. "We are ready to continue to seek creative solutions, within the framework of the protocol, in the interest of all communities in Northern Ireland."

Reuters had exclusively reported on Monday that Johnson was threatening to take unilateral action.

'NOT UNUSUAL TO RENEGOTIATE'

Frost called for new negotiations to produce "significant change", saying Britain wanted a "normal treaty framework" that was "more conducive to the sense of genuine and equitable partnership", and would not be policed by EU institutions and the European Court of Justice.

"We don't see what is wrong with that. Anyone would think that it was a highly unusual thing to renegotiate a treaty; of course it is not," he told lawmakers.

Much of what Britain suggested as a solution was rejected by the bloc during the four years of often torturous talks.

However, it was hailed as a significant step forward by the Democratic Unionist Party, which shares power in the devolved Northern Irish government.

Even though checks on goods entering Northern Ireland from Britain have so far been relatively lenient, major retailers say they have struggled to cope and might need to shift supply chains from Britain to the EU.

Frost called for a "standstill period" that would extend current grace periods and freeze existing legal action.

Britain has already unilaterally extended a grace period reducing checks on shipments of chilled meat products, and the EU later agreed this could apply through September to end a dispute dubbed the "sausage war".

Marks & Spencer (OTC:MAKSY), one of Britain's biggest retailers, said extra paperwork had made it hard to get goods into Ireland and France since Britain formally left the EU's single market on Jan. 1 - and that once full checks were introduced for Northern Ireland, it too should expect prices to rise and some items to be stopped.

The Northern Ireland Retail Consortium said a total breakdown in the protocol could result in tariffs.

"Any solution needs to be agreed with EU, as without this, there can be no stability," its director Aodhán Connolly said.

This April saw some of the worst riots seen in the province since the 1998 accord in unionist communities sparked by anger at the protocol. Pro-British paramilitary groups also told Johnson in March that they were suspending support for the peace agreement due to concerns over the Brexit deal.