The British government dramatically escalated a fight with the European Union by saying it will pass a law to change the trade treaty signed by the two sides less than two years ago.

Prime Minister Boris Johnson on Monday described the plan as an
Prime Minister Boris Johnson on Monday described the plan as an "insurance" policy, after holding talks in Belfast with leaders of Northern Ireland's main parties. (AFP)

The UK government has announced its intention to overhaul post-Brexit trade rules in Northern Ireland, arguing the plan was needed to end political paralysis in the territory but risking a trade war with the EU.

Foreign Secretary Liz Truss said on Tuesday that she would introduce legislation reforming the Northern Ireland Protocol "in the coming weeks" — unless Brussels caves on its insistence that the pact cannot be rewritten.

"Our preference remains a negotiated solution with the EU, and in parallel with the legislation being introduced, we remain open to further talks," Truss told parliament.

Under the new plan, the UK intends unilaterally to create a "green channel" for British traders to send goods to Northern Ireland without making any customs declaration to the EU.

The EU would have access to more real-time UK data on the flow of goods, and only businesses intending to trade into the single market via Ireland would be required to make declarations.

The bloc would need to trust the UK to monitor the flow, and Truss vowed "robust penalties" for any companies seeking to abuse the new system. But trust has been at a premium of late.

READ MORE: UK urges Northern Ireland parties to form government under Brexit shadow

EU raises concerns

In response, the European Commission vice-president Maros Sefcovic said on Tuesday the EU had significant concerns about the announcement by the UK government.

"Unilateral actions are not acceptable," Sefcovic said in a statement, adding that should the UK decide to move ahead with the bill, the EU would need to respond with all measures at its disposal.

Under the new plan, the UK would also harmonise tax policy between Great Britain and Northern Ireland, which has been unable to benefit from recent tax breaks announced in London given its position in the EU single market.

And it would seek to end oversight of the protocol by the European Court of Justice  — another red line for Brussels.

The original protocol was agreed as part of Britain's 2019 Brexit divorce deal with the European Union, recognising Northern Ireland's status as a post-conflict territory that shared the UK's new land border with an EU member.

Its requirement for checks on goods arriving from England, Scotland and Wales has infuriated pro-UK unionists in Northern Ireland.

They claim the protocol is undermining their place within the UK and are refusing to join a new power-sharing government in Belfast.

READ MORE: Sinn Fein hails 'new era' following historic Northern Ireland vote

Source: TRTWorld and agencies