The Government and the EU are urgently seeking to dissuade the UK from triggering article 16 of the Northern Ireland protocol, which officials in Dublin and Brussels fear could result in tit-for-tat retaliation between the sides.
There have been face-to-face contacts this week between senior figures from the Irish and British governments as the UK makes its case for triggering the mechanism, but Dublin remains fiercely opposed to such a move.
Tánaiste Leo Varadkar on Tuesday said planning for a potential no-deal Brexit would now recommence.
There has been a growing expectation in Brussels and Dublin that British prime minister Boris Johnson’s administration is moving towards using the clause to unilaterally suspend aspects of the protocol, which was designed to avoid a hard border on the island after the UK left the EU.
Article 16 is an emergency clause in the protocol which can be activated unilaterally if the agreement leads to “serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade”.
Westminster is insisting that triggering article 16 would neither be illegitimate nor illegal, and is provided for in the treaty. However, the EU side strongly disputes the basis for invoking it and Government figures in Dublin have warned that the move would endanger the entire EU-UK trade and co-operation agreement.
There was strong pushback from EU officials on Tuesday against suggestions that the European Commission was preparing options to escalate and impose swift retaliatory measures should London press ahead with the move.
Officials say they are working to steer the British government away from any potential triggering of the sensitive clause ahead of a meeting between chief negotiators Maros Sefcovic and Lord David Frost later this week.
Mr Sefcovic is to update EU ambassadors on the progress of talks with the UK on Wednesday and is expected to stress the union’s commitment to “pragmatic solutions”.
In the background, there has been preparation for legal redress and far-reaching responses that could affect the overall trade deal between the UK and the EU. However, sources stressed that these were not at the stage of being presented to ambassadors and the emphasis remained on working to find a solution through negotiation.
Simon Coveney said the British government had been asking the European Union to 'deliver the impossible' on the protocol
“We have come with a far-reaching package of proposals, so-called bespoke arrangements, to facilitate the implementation of the agreement, and we think that this can be the basis for discussion and agreement,” EU trade chief Valdis Dombrovskis said on Tuesday.
Britain has said the package does not go far enough and has insisted that the role of the European Court of Justice as an arbiter of disputes must be removed. However, Brussels says this is a condition for Northern Ireland to participate in the EU’s Single Market.
Minister for Foreign Affairs Simon Coveney said the British government had been asking the European Union to “deliver the impossible” on the protocol.
There was now a “very serious risk” that the Conservative administration would trigger article 16, Mr Coveney told an Oireachtas committee.
Mr Varadkar said the Cabinet’s Brexit sub-committee met on Monday to “essentially dust down and restart contingency preparations” in case a trade war developed with the UK. Sources said Ministers would be asked to engage with their UK counterparts to stress the dangers of triggering article 16.
A British government spokesman said: “Our overriding priority is the protection of the Belfast [Good Friday] Agreement and the peace process.
“Our preference is to find a consensual solution that deals with the problems which exist. As we have said consistently, we will use the article 16 safety mechanism if solutions cannot be found.”