Tory leadership hopefuls urged to avoid risk of EU trade war

The UK risks a trade war with the EU if the next Tory leader and prime minister rip up parts of the Brexit deal for Northern Ireland, an MEP has warned.

A law that would allow the government to unilaterally amend the 2019 deal is currently being considered by MPs.

The deal was agreed by both sides but the UK says it has disrupted trade and power-sharing in Northern Ireland.

Ireland South MEP Sean Kelly warned of "serious consequences" if the deal was breached by Boris Johnson's successor.

The UK government said it favoured a negotiated solution but accused the EU of repeatedly refusing to change the deal to resolve "the full range of issues".

Most of the remaining Tory candidates vying to replace Mr Johnson have expressed support for changing the deal and passing the bill that would give them powers to do so.

Mr Kelly is the lead author of a draft law that would enable the EU to retaliate to violations of the deal, known as the Northern Ireland Protocol.

When asked how realistic a trade war over this dispute was, Mr Kelly told the BBC: "I would hope it isn't going to happen. It would be madness if it did.

"But the point to be made is, if the United Kingdom push it, and go ahead [with the legislation], then the ultimate occurrence is going to be a trade war."

A trade war involves putting up barriers to the exchange of goods across borders and could increase living costs at a time of pressure on household finances.

"We urgently want to resolve the issues with the Northern Ireland Protocol," a spokesperson for the Foreign, Commonwealth & Development Office (FCDO) said.

Last week Mr Kelly, an MEP for the Fine Gael party in the Republic of Ireland, introduced a report on the draft law to the European Parliament.

Mr Kelly said it would give the EU "tools" to protect and enforce the protocol, which Mr Johnson's government signed up to in 2019.

When asked what those tools were, and if they included restrictions on trade, Mr Kelly said: "We'd need to look at all the options.

"We don't want to be specifying them now until we see those things happening.

"Ultimately, we're hoping - particularly now there's going to be a new prime minister in the United Kingdom - that common sense will prevail."

The protocol is a special arrangement that keeps Northern Ireland in the EU's single market for goods, avoiding a hard border with the Republic of Ireland.

The arrangement ensured free trade could continue across the Irish land border, which is a sensitive issue because of the history of conflict in Northern Ireland.

But the protocol brought in some new checks on goods moving between Great Britain and Northern Ireland and has been criticised by unionist politicians.

The biggest unionist party - the DUP - has refused to take part in Northern Ireland's power-sharing administration until changes are made to the protocol.

Under pressure to act, the UK government announced the Northern Ireland Protocol Bill in May.

Foreign Secretary Liz Truss said the law would not scrap the deal but make limited changes, such reducing checks on goods moving from Great Britain to Northern Ireland.

The EU says overriding parts of the deal would break international law and has launched legal action against the UK.

But the FCDO said the legislation was lawful and necessary to preserve peace in Northern Ireland, and "address the serious socio-political impact that the protocol is currently having".

The bill contains the proposal of green lanes and red lanes for trade.

This would mean:

London also wants any trade disputes resolved by "independent arbitration" and not by the European Court of Justice, and for Northern Ireland to benefit from the same tax breaks as elsewhere in the UK.

The bill has passed the first few stages of the legislative process in the House of Commons - where the Conservatives have a large majority - and is likely to be approved without changes. But the bill could be significantly revised by the House of Lords in the autumn.

In the meantime, the European Parliament will progress its legislation for responding to breaches of the protocol, with the aim of finalising the text by September, Mr Kelly said.

"We won't delay too long, and obviously we'll be keeping one eye on what's happening in the United Kingdom," Mr Kelly said.

While both sides say they want a negotiated settlement, "nothing definitive has happened since February", Mr Kelly said.

With parliaments in London and Brussels breaking up for summer soon, Mr Kelly urged the next Tory leader to come back to the negotiating table as soon as possible.

"Come and speak to us like any true democrat would," he said.

The FCDO spokesperson said "our preference remains for a negotiated solution", but added: "The EU have repeatedly refused to change the protocol so we can deal with the full range of issues - and their proposals would actually take us backwards from where we are today."