British ministers and officials, wargaming for a sausage trade war with the European Union, are confident that any tariffs from Brussels won’t have teeth.
UK-produced chilled meats, such as sausages and pork pies, will be effectively banned from Northern Irish shops from July 1 when a grace period in the Northern Irish Protocol expires.
Charles Michel, the European Council president, on Thursday repeated the EU threat to impose tariffs and suspend parts of the trade deal if the UK unilaterally extended the grace period.
Lord Frost said that “all options were on the table” after talks with the EU in London broke up without a breakthrough on Wednesday.
If the grace period is extended, the EU will trigger dispute resolution processes that can ultimately lead to tariffs on British goods. But British officials are confident that any retaliation will be muzzled by provisions in the Brexit trade deal that demand any response is proportionate.
Given that chilled meat exports to Northern Ireland are relatively small, the EU’s response would have to be equally so.
“Any tariffs have to be proportionate to any harm being done to the other party,” a UK official said, “this is also a dispute in the Withdrawal Agreement rather than the trade deal so any EU action is far from straightforward.”
British negotiators ensured that any retaliation had to meet strict thresholds of evidence to specific injuries during the talks over the trade deal last year.
"It is wrong that anyone should be threatening the British sausage. We will stand up for the British sausage and no one will ever be able to destroy it," said trade minister Ranil Jayawardena.
EU sources confirmed that any tariffs would have to be limited in scope. “There are plenty of other things we can also do to make things difficult,” one official said.
The EU official said that Brussels was not going to grant UK financial services firms access to the Single Market “anytime soon”.
Brussels was already “going slow” in finalising the UK’s associate membership to the EU’s €100bn research programme Horizon Europe to increase the pressure on Britain, the official said.
The EU could also look at data sharing agreements and other areas of cooperation for leverage.
The UK could, if things escalate, withdraw market access to EU financial services firms, which it granted in November last year.
Brexit sausage war explained
“We will use all the tools we have in order to make sure that we defend our interests, that we protect the integrity of the single market,” Mr Michel said, ahead of the G7 meeting in Cornwall where Boris Johnson is set to discuss the row with Joe Biden.
“The European Union is determined to make the protocol work for the benefit of everyone in Northern Ireland, and we have bent over backwards for years to find a solution on that,” said Ursula von der Leyen, the European Commision president.
"But we also have to protect the Single Market,” she added.
The sausage ban can be stopped if both sides strike a veterinary agreement but there is no consensus on how it would work. Brussels favours a Swiss-style deal with the UK following EU rules, while Britain wants its food safety and animal health regime deemed equivalent to the EU’s.