Can Rishi Sunak stand up to the last Brexit holdouts?

When Prime Minister Rishi Sunak took office in November promising stability, the last thing he needed on his plate of woes was a trade war with Europe. Although the UK-European Union data agreement announced Tuesday is a long way from a comprehensive deal to resolve the Brexit impasse over Northern Ireland, it makes one a lot more likely.

To recap, Britain and the EU are at loggerheads over the Northern Ireland Protocol, the provision of the Brexit divorce treaty that kept Northern Ireland in the EU's single market for goods in order to avoid a hard border with Ireland. The agreement resulted in a customs border on the Irish Sea that the UK says is creating intolerable frictions. The Democratic Unionist Party in Northern Ireland collapsed the power sharing executive there over the issue, refusing to take part unless the Protocol is scrapped. Boris Johnson's government was determined to play hardball. Invoking the doctrine of "necessity," it drafted legislation to unilaterally override the parts of the Protocol it didn't like, a middle finger to treaty obligations. The EU warned it wouldn't negotiate with a gun on the table and moved to take legal action against the UK for breaking its international treaty obligation. 

Now, a deal is not certain, but it certainly seems in sight. The shenanigans of Johnson and missteps of Liz Truss did further damage to Britain's international reputation and public finances. Britain is on track to be the worst-performing G7 economy this year. Vladimir Putin's invasion provided another reality check — it's one thing to demonize the EU in peacetime; quite another when there's a real demon sending tanks into a European country.  

There is also perhaps more political space in Britain for a deal these days. Polls show a growing realization among voters that Brexit has brought no discernible gains but considerable costs in terms of trade friction that Brexiters had dismissed as "project fear." Sunak had risked his career to back Johnson over Brexit and campaigned for the Tory leadership on a promise to scrap some 4,000 laws inherited from the EU and press on with the Protocol bill. But he's also a pragmatist, not an ideologue, and staying that course would be suicidal. 

Brexit has piled on both economic, political and reputational costs for Britain. But if Sunak can shepherd through a deal on Northern Ireland in the coming months, he has a chance of putting UK-EU relations on a more positive footing and removing an obstacle to closer relations with Washington.

At first glance, Tuesday's agreement to share trade data seems like small beer. The Protocol itself allows the EU to request customs information on a consignment moving through a Northern Irish port; and in 2020, Michael Gove had promised remote, continuous access to five UK databases with real-time information. But the EU complained that access was never forthcoming; without it, the EU could not carry out the risk assessments required by the Protocol and therefore couldn't protect the single market. The lack of data sharing was a drag on trust and made further negotiations pointless.

Last year, the UK created a single access system from the different databases, at last providing real-time customs data on goods moving through Northern Ireland's ports. Bloomberg reported that the EU has suggested some improvements following a trial period over the past two months, but the change seems generally to have gone down well. 

But remaining obstacles are also complex and politically fraught. They include disagreements over agri-food checks, customs requirements and the role of the European Court of Justice. The EU has proposed an "express lane" to facilitate GB-NI trade, but insists suppliers should complete extensive customs requirements, while the UK wants a reduced burden for those declared "trusted traders."

Trust is the key ingredient to any broader deal, and as ever, it'll be the political obstacles that prove trickiest to surmount. Brexiters in the Conservative Party are no longer all-powerful, but they can still create problems for the prime minister. Conservatives are also wary that Nigel Farage's Reform UK will seize on any deal to pick off Brexit voters, further hurting the Tories' chances of closing the gap with Labour. Should Sunak withdraw or effectively defang the Protocol Bill (it contains a clause that would allow any UK-EU treaty to supercede its provisions) and scrap the promised "bonfire of EU regulations," he will be accused of betraying the cause.

And any deal would have to pass muster with the Democratic Unionist Party in Northern Ireland, whose single favorite word is "no." Sunak, though, is the unionists' worst nightmare; he's a numbers man who will remind them of just how much Northern Ireland gains from government subsidies.

There is the narrowest of landing strips, and it will require all sides to claim a victory of sorts. The EU will twist and bend itself into a pretzel to amend the Protocol's workings without abandoning the actual agreement, even if that means ultimately widening European Commission Vice President Maros Sefcovic's negotiating mandate as the UK has been demanding. It will not give up the ECJ's role — it is, after all, the ultimate arbiter of the single market that Northern Ireland is part of. But there are perhaps ways to add flexibility into how trade disagreements are addressed that should reassure all but die-hard Brexiters.

Will it be enough to get a deal over the line, much less by April 10, the 25th anniversary of the Good Friday Agreement that brought peace to Northern Ireland? There are reasons to be hopeful, but it will take all of Sunak's powers of persuasion, and more, to make it happen.

Therese Raphael is a columnist for Bloomberg Opinion covering health care and British politics. Previously, she was editorial page editor of the Wall Street Journal Europe.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.