Britain could compromise over the European Court of Justice’s role in Northern Ireland after Lord Frost suggested he would enter negotiations with Brussels without "red lines".
In a bid to finally break the deadlock over the Northern Ireland Protocol, the EU yesterday proposed to slash red tape and cut the majority of checks on British goods crossing into Northern Ireland.
Maros Sefcovic, the European Commission vice president, also announced in Brussels that it would ease food standard rules and change its laws to ensure that British medicines can still be sent to Northern Ireland.
Under its proposals, checks on food and plant products would be reduced by up to 80 per cent, a looming ban on British chilled meats would end, and customs paperwork would be cut in half.
However, the EU’s proposals made no mention of the EU court’s oversight of the protocol, which Mr Sefcovic suggested was a secondary issue and had been raised only "once" in his discussions with Northern Irish business leaders and representatives.
European Commission Vice President Maros Sefcovic
The EU has also turned down UK requests to allow pets to move freely between the province and the mainland under the EU’s pet passport scheme.
EU officials insisted they had gone "far beyond tinkering at the edges" of the protocol, which was established to prevent a hard Irish border but has resulted in significant disruption to trade flows with the British mainland.
Last night Government sources acknowledged the EU had "clearly" gone further than the UK had expected, with the two sides now expected to enter into intensive talks as early as next week.
"We were taken by surprise by the amount that the EU has moved," one Whitehall insider told The Telegraph. "We genuinely weren’t expecting movement of that sort."
They added the threat of the UK triggering Article 16 – enabling it to suspend parts of the protocol – would now be put off while the negotiations played out through to November.
"We are quite far away now from Article 16. It’s still to play for."
The proposals were also welcomed by the Irish premier Micheal Martin, while business leaders in Northern Ireland and Britain urged the Government to focus on ending disruption for business rather than "disputes about different legal systems."
However, Sir Jeffrey Donaldson, the DUP leader, warned that while the proposals were a "starting point" they fell "far short of the fundamental change needed".
In a clear bid to de-escalate the tensions that have poisoned relations between the two sides for months, both Mr Sefcovic and Lord Frost also said publicly they would enter the negotiations without "red lines".
"Although other people may use the words ‘red lines’, I never do," Lord Frost told peers earlier in the afternoon.
"We’re beginning a negotiation and we’ve got a track record of reaching successful outcomes in negotiations despite the predictions that we would not, and I hope we’ll do so again this time."
Mr Sefcovic added "I believe we could be in the home stretch in relation to the protocol. I think that we should really put aside this business of red lines, the business of artificial deadlines, and really focus on what we hear from the stakeholders in Northern Ireland."
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However, Government insiders warned that the future role of the European Court of Justice remained the key "stumbling block" – and would prove decisive in whether the talks succeeded or failed.
Lord Frost is calling for the EU to agree to an international arbitration panel to rule on disputes relating to the protocol rather than the ECJ, which the UK and unionist leaders in Belfast argue undermines the province’s sovereignty.
"Without new arrangements on governance the Protocol will never have the support it needs to survive," a Government source said.
"It is a fundamental issue which needs to be addressed if the Protocol is to be put on a sustainable footing."
But Mr Sefcovic yesterday reiterated that this was unacceptable as the Court is the supreme interpreter of the bloc’s single market rules, many of which Northern Ireland is still required to follow under the protocol.
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He also sought to play down the importance of the ECJ in the dispute, telling reporters: "I can tell you that in all my meetings I’ve had… I had quite a few of these interactions and exchanges, and in all of these discussions, the issue of the European Court of Justice was mentioned once."
Despite the clear fault lines, there is building optimism that a fix can be found to keep EU judges at arms length, although any compromise will likely face opposition from the DUP and some Tory Brexiteers.
The possible landing zone could be modelled on the EU’s treaty with Switzerland, where an independent arbitration panel resolves dispute. However, when questions about EU law are posed, the ECJ would then offer a view, which must then be taken into account by the panel.
"The PM and David are very keen that if we are to come to an agreement it is one that will endure forever, which is why the ECJ is so central to it," a senior UK source said last night,
"There has to be a governance and arbitration process, it just can’t be the European Court. But the EU does accept other international arbitration mechanisms in its dealings. If they can move on that then we could be onto something."