The government is dropping controversial plans to break international law in relation to Brexit, following a behind-the-scenes deal between the UK and the EU, it has announced.
But EU diplomatic sources warned that while the U-turn was a “reset moment” for relations with the UK, it was not a gamechanger for trade talks, which remain deadlocked.
On Tuesday, the government said it would abandon all the Brexit clauses relating to Northern Ireland in the internal market and finance bills following in exchange for promises by the EU to minimise checks and controls due to be imposed on food and medicines going into Northern Ireland from Great Britain from 1 January.
Details on the checks are expected to be disclosed on Wednesday, but the cabinet minister, Michael Gove, and the European commission vice-president, Maroš Šefčovič, announced they had sealed an agreement “specifically for checks on animals, plants and derived products, export declarations, the supply of medicines, the supply of chilled meats, and other food products to supermarkets”.
They have also agreed agriculture and fish business would be exempt from state aid rules, and drew up the long-awaited list of goods “not at risk” of being smuggled across the border into the Republic of Ireland.
Clearing its in-tray, the joint committee also revealed a decision on the makeup of an arbitration panel to adjudicate on any future Brexit disputes.
“In view of these mutually agreed solutions, the UK will withdraw clauses 44, 45 and 47 of the UK internal market bill, and not introduce any similar provisions in the taxation bill,” said the statement.
The deal was sealed at a meeting of the UK-EU joint committee chaired by Gove and Šefčovič, which is mandated to implement the Northern Ireland protocol and other parts of the withdrawal agreement signed in January.
As part of the agreement there will be an EU presence in Northern Ireland to monitor implementation of the protocol at the border. The Democratic Unionist party condemned the development as “unnecessary” and “concerning”.
A government source said the UK believed it had achieved significant shifts in the EU’s position, particularly on the application of state aid under the terms of the protocol.
However, two sources cautioned there should not be too much “read across” of goodwill for the talks with Ursula von der Leyen, president of the European commission, in the coming days – the agreement will mean additional goodwill but it also smooths the path for no deal.
“I think you can infer from what we set out on conditions for removing clauses yesterday that we’ve got good outcomes in all the areas we wanted,” a government source said.
“We always said clauses were there as a safety net, but our preference was to find agreement and pragmatic solutions through the joint committee.”
An EU source noted “good progress” was being made by the joint committee on minimising checks down the Irish sea and the introduction of law-breaking clauses to the internal market bill in September was a serious setback that damaged trust between the two sides.
“This does reset things and has helped lift the downbeat mood but it doesn’t necessarily mean a deal is any closer,” they said.
Ireland’s foreign affairs minister, Simon Coveney, described it as a “positive development” and business leaders in Northern Ireland reacted with relief.
Aodhán Connolly, director of the Northern Ireland Retail Consortium, described the move as “very welcome” and “hugely positive”. He is one of several business and farming leaders who have called for the Northern Ireland protocol to be delayed because businesses have not had enough notice to prepare for the remaining customs and regulatory checks that will still apply from 1 January.
“With three weeks left to go we still will need an implementation period to allow us to comply with the new requirements. While this is a positive step there is still much to do in little time,” he said.
Earlier on Tuesday the Food and Drink Federation boss, Ian Wright, had told MPs that the Northern Ireland protocol was “a shambles” with four in 10 producers in Great Britain planning to shelve or reduce the supply of produce to Northern Ireland because of the uncertainty over the Brexit trading regime.
Retail NI’s chief executive, Glyn Roberts, welcomed the progress but said “there is a lot of clarification needed” yet to overcome concerns of local shops.
“The joint statement refers to “food products to supermarkets” – such an agreement must include all food retailers, including local wholesalers and independent retailers in Northern Ireland,” he said.