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Article 16: Why Triggering it Risks an All Out UK-EU Trade War


MongiIG

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ARTICLE 16 EXPLAINER:

  • UK-EU Tensions Rise Over Northern Ireland Protocol.
  • UK to Trigger Article 16 Should Talks Fail, Raising Trade War Risks.

EU, Britain seek to bridge differences over N.Ireland | Reuters

OVERVIEW

Tensions between the UK and EU have been on the rise in recent weeks, as both parties have yet to resolve their differences over the Northern Ireland Protocol. In turn, should the UK and EU fail to bridge the gap in talks, the UK have threatened to trigger Article 16.

WHAT IS ARTICLE 16?

Article 16 deals with issues related to trade between Great Britain and Northern Ireland. The protocol, which is a part of the EU-UK withdrawal agreement, prevents a return of a north-south trade border on the island of Ireland. As a result of the protocol, Northern Ireland has remained in the EU’s single market for goods and therefore, the UK is required to apply regulatory checks on select goods moving from GB to NI, protecting the integrity of the EU’s single market.

On Article 16, this is a safeguard measure, which states that if the protocol leads to serious “economic, societal or environmental difficulties that are liable to persist or to diversion of trade” then the UK or EU can take unilateral action to limit the aspect of the protocol at fault.

UK’S STANCE

Back in July, the UK issued a command paper, setting out its proposed changes to the NI protocol. In the paper, it stated that the protocol in its current form was causing serious economic and societal difficulties as well as creating a diversion of trade and thus provides justification for the UK to invoke Article 16.

AREAS THAT THE UK WISH TO CHANGE

The UK wish to reduce the number of checks and the number of goods that require checks between Northern Ireland and Great Britain. Now while the EU has shown a willingness to compromise on this, the biggest area for contention is the role of the European Court of Justice, which the UK wants to remove from enforcing elements of the protocol. Oversight of the ECJ is a red line for the UK and an area that the EU have to provide next to no compromise with. Therefore, the decision on the role of the ECJ will be crucial as to whether progress on talks has been made or not.

WHAT IF TALKS FAIL?

Should talks fail, Article 16 is likely to be triggered and checks across the Ireland board is suspended, which in turn would threaten the integrity of the EU single market. Subsequently, the UK can be expected to face a retaliatory response from the EU, raising the risk of an all-out UK-EU trade war. Much like the Brexit saga, it seems that tensions will get worse before the light is reached at the end of the tunnel, therefore, political risk premium is likely to be on the rise for the Pound, meaning that the currency’s sensitivity to headlines will increase.

USING TWITTER FOR TRADING UK POLITICS

That being said, I would recommend following my curated Twitter list, to help on top of the latest UK politics, while also on occasions providing a speed advantage. The example showcases how efficiently using Twitter can provide an edge to short-term traders.

During the Brexit saga, the first point of communication for many political correspondents had been via Twitter. This meant that traders who followed high ranking journalists that typically received the latest scoop from the halls of Westminister had a speed advantage over BBG/Refinitiv owners. The example below shows one of many occasions where Twitter had been quicker to report breaking Brexit news. Of course, the risk was the authenticity/reliability of the headlines, however, this was largely dependent on the journalist who tweeted the report.

On October 1st, 2020, a political correspondent tweeted that the probability of a Brexit deal had shifted from 30% to 70%. As such, in the near 4-minutes, before the tweet crossed the wires (Refinitiv), GBP/USD rose from 1.2841 to 1.2871 before taking a fresh leg higher from 1.2871 to 1.2976 in 36-minutes after the tweet had been picked up by Refinitiv.

Article 16: Why Triggering it Risks an All Out UK-EU Trade WarArticle 16: Why Triggering it Risks an All Out UK-EU Trade War

Source: Bloomberg

Justin McQueen, Strategy, 11th November 2021. DailyFX

2 Comments


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Business anywhere need stability. In N. Ireland the same is true.

As I see it the E. U. should not over do the obsession of applying oppressive conditions with the U.K & any of the UK's territories that were part of it pre- joining the EU. And then when she left the EU it hen honor her rights fully.

EU obsession to demonise the UK in going free of EU, & behind the scenes pushing its allies in the UK to cause chaos or confusion through the media has wasted much time in not creating friendly relationships after the divorce.

Getting Ireland to use N. Ireland as a leverage via special protocols for trade , or Spain desire for Gibraltar, or the English territorial waters as their right  to use for fishing, etc... ONLY DEMONSTRATES THAT OTHER EU NATIONS HAD BEEN THINKING OF LEAVING TOO (AT LEAST THEIR POPULATION HAD).

The EU has acted as if they are afraid to grant Britain them to regain full Self-determinism and a level playing field, for various reasons.

The U.S.A & the E.U. SHOULD REMEMBER THAT the British Empire had began with good ideals as had many past civilisations (e.g. Roman), namely that to do TRADE WITH OTHER NATIONS AND MAINTAIN GENUINE FRIENDLY RELATIONS. It was ONLY after bad & corrupt practices were allowed & greed over ruled common sense, fair play and not effecting justice actions among its own ranks that the dwindling spiral  of its Empire became lost (same with other past Empires too).

Obsessive control gives good control a bad name. Good control merely requires the above being employed for fair trading, justice actions  and trust. Bad control demonstrates destructive ploys that does neither side any good.

Britain has the right too use Article (as does the EU).

The EU should tell its Nation states to stop some of its nations in craving to ignite its old past dreams of grabbing , N Ireland or Gibraltar, or fishing rights in British waters through political mischief and complex twisted  laws to try to score brownie points.

Article 16 is not the real problem but the political the elite causing it via their faulty methods to keep some leverage over the UK.

Instead It would be easier and far better to create a level playing field, take responsibility for its own financial & economic problems, and maintain a friendly relations with the UK. After all we were already friends and allies. Lets cut out the friction from the EU.

 

 

  • Like 1
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On 11/11/2021 at 23:24, skyreach said:

Business anywhere need stability. In N. Ireland the same is true.

As I see it the E. U. should not over do the obsession of applying oppressive conditions with the U.K & any of the UK's territories that were part of it pre- joining the EU. And then when she left the EU it hen honor her rights fully.

EU obsession to demonise the UK in going free of EU, & behind the scenes pushing its allies in the UK to cause chaos or confusion through the media has wasted much time in not creating friendly relationships after the divorce.

Getting Ireland to use N. Ireland as a leverage via special protocols for trade , or Spain desire for Gibraltar, or the English territorial waters as their right  to use for fishing, etc... ONLY DEMONSTRATES THAT OTHER EU NATIONS HAD BEEN THINKING OF LEAVING TOO (AT LEAST THEIR POPULATION HAD).

The EU has acted as if they are afraid to grant Britain them to regain full Self-determinism and a level playing field, for various reasons.

The U.S.A & the E.U. SHOULD REMEMBER THAT the British Empire had began with good ideals as had many past civilisations (e.g. Roman), namely that to do TRADE WITH OTHER NATIONS AND MAINTAIN GENUINE FRIENDLY RELATIONS. It was ONLY after bad & corrupt practices were allowed & greed over ruled common sense, fair play and not effecting justice actions among its own ranks that the dwindling spiral  of its Empire became lost (same with other past Empires too).

Obsessive control gives good control a bad name. Good control merely requires the above being employed for fair trading, justice actions  and trust. Bad control demonstrates destructive ploys that does neither side any good.

Britain has the right too use Article (as does the EU).

The EU should tell its Nation states to stop some of its nations in craving to ignite its old past dreams of grabbing , N Ireland or Gibraltar, or fishing rights in British waters through political mischief and complex twisted  laws to try to score brownie points.

Article 16 is not the real problem but the political the elite causing it via their faulty methods to keep some leverage over the UK.

Instead It would be easier and far better to create a level playing field, take responsibility for its own financial & economic problems, and maintain a friendly relations with the UK. After all we were already friends and allies. Lets cut out the friction from the EU.

 

 

Hi @skyreach

Brexit: UK looks likely to trigger Article 16 - then what?

Map of the the UK showing how goods travelling from GB into NI and onward to the Republic of Ireland.
For the full article by Laura Kuenssberg, Political editor, BBC
 
 
  
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