By William James
LONDON (Reuters) - Britain said on Tuesday it would drop clauses in draft domestic legislation that breached the Brexit Withdrawal Agreement after it clinched a deal with the European Union over how to manage the Ireland-Northern Ireland border.
Michael Gove, one of Prime Minister Boris Johnson's most senior ministers, announced an "agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland".
The deal is separate to wider trade talks, which have yet to find a solution on how to manage nearly $1 trillion of annual trade between Britain and the EU, despite having just weeks until temporary arrangements expire.
But the agreement removes what was a major point of contention between Britain and the EU, with Brussels warning that no wider trade deal would be possible if London went through with its threat to unpick the exit treaty.
"I hope this may also provide some of the positive momentum necessary to instil confidence and trust and allow progress in the wider context of the future relationship negotiations," Irish foreign minister Simon Coveney said.
U.S. President-Elect Joe Biden had also raised concerns about the clauses, casting doubt on British-U.S. trade deal talks, amid concerns that any form of border controls between the two parts of the island could undermine Northern Ireland's 1998 peace deal.
Sterling jumped by almost a cent against the dollar on the news, erasing most of the day's losses to stand at $1.3367 at 1330 GMT, and also rose sharply against the euro."
Tuesday's deal will ensure that the Withdrawal Agreement is fully operational as of Jan. 1, European Commission Vice-President Maros Sefcovic said.
The clauses the would have broken international law in the UK Internal Market Bill would be removed before it received final approval, the British government said, and similar provisions due to be included in an as-yet unpublished taxation bill would also be deleted.
THORNY ISSUE
Trade between the EU, Northern Ireland and the rest of Britain has been one of the hardest issues to resolve in four years of Brexit talks, with Brussels wary of creating a back door into the bloc via the open border.
The "Northern Ireland Protocol" was agreed as part of a divorce accord signed in January to prevent a hard border between Northern Ireland and EU member Ireland, but the specifics of how to implement it left to agree later.
The protocol keeps the British-run province effectively in the EU's customs union and single market for goods after Dec. 31, when the rest of the United Kingdom fully leaves.
Tuesday's agreement fills in some of the blanks left by the January treaty, covering issues such as what export declarations are needed, supply rules for medicines and food to supermarkets, and the process for border checks on animals and plants.
Coveney welcomed the news, saying it would provide some certainty.
But, with only a few weeks until the new arrangements are put in place, businesses were anxious to see the practical implications of the new deal. Many firms in Northern Ireland fear they would be worst hit by Brexit disruption, and have made appeals for a grace period after Jan. 1.
"Now we need the detail ASAP," tweeted Seamus Leheny, policy manager for the Northern Ireland arm of the Logistics UK trade body.