Brexit and the Internal Market Bill : how far and how little it has progressed

Written before the 15-16 October 2020 EU summit.

On 31 January 2020, the United Kingdom (UK) ceased to be a member of the European Union (EU). Over the past eight months, the country has found itself carefully navigating its way towards the ‘open waters’ of economic and political freedom and away from the harboured safety and shelter of the union that  it has been part of for over 40 years. The jury is still out on whether the country will sail strong outside of the union or whether it will find itself battling rough seas in the years to come.

The outcome is largely dependent on how trade negotiations between the two sides will conclude. Since the Brexit referendum in June 2016, there have been significant ups and downs. Ultimately, whilst no trade agreements have yet been made, one can only hope or assume that the mantra of ‘no news is good news’ is the one to believe in. That being said, the prospects for  a trade deal were significantly undermined, if not diminished, when the UK government introduced its Internal Market Bill in mid-September of this year.  

Described by British Prime Minister Boris Johnson, the bill aims to provide a ‘vital legal safety net’ which would permit ministers to ‘take the necessary steps to ensure the integrity of the UK’s internal market’. In other words, the bill seeks an equal and fair platform for the trading of goods between all four nations of the United Kingdom: England, Scotland, Wales, and Northern Ireland. What is particularly interesting is that certain  principles  of the bill are akin to those of the EU’s very own single market. 

For instance, the use of mutual recognition as a means to streamline trade among the four nations of the UK is a nod to the EU system. Under the principle of mutual recognition, products made in any of the four nations can be sold across the country irrespective of specific laws in any of the devolved nations. This use of mutual recognition in the Internal Market Bill would appear logical because while the UK was an EU member state, all UK nations fell under the jurisdiction of the union’s common laws. At the end of the transition period, this will no longer apply to the UK as a whole but rather  each devolved nation will  be free to make their own rules, potentially bringing about barriers to trade seamlessly within the UK. 

Domestically, the proposed bill has already drawn criticism from the devolved nations. For example, in Scotland, the government has expressed concern that the bill directly undermines devolution by having to adhere to Westminster’s ruling and thus accept products that could otherwise fall below the standard as set out in Scottish Law.

Where the bill is most controversial, however, is in its implications for  Northern Ireland. Upon signing  the Withdrawal Agreement in January 2020, the UK and the EU created the Northern Ireland Protocol. The protocol ensures that no hard border would separate the island of Ireland so as to respect the Northern Ireland peace process and the Good Friday Agreement. Under the protocol, Northern Ireland would remain within the EU’s customs union, adhering to regulations in order to maintain the free movement of goods to and from the Republic of Ireland and thus checks on goods would be undertaken when entering or leaving the remainder of the UK.

Part 5 of the proposed bill (clauses 42-45) directly expresses the way in which ministers may override aspects of January’s Withdrawal Agreement. The first notable clause relates to exit procedures whereby goods leaving Northern Ireland would be subject to specific declarations under EU rules. The bill suggests that UK ministers would be able to ignore such requirements so as to ‘maintain and strengthen the integrity and smooth operation of the internal market in the United Kingdom’. The second notable clause relates to how state aid law is interpreted for Northern Ireland. According to the Northern Ireland Protocol, state aid will  be subject to the EU’s legal interpretation. However,  the Internal Market Bill aims to undermine this by stating that ministers in Westminster may disapply current provisions and provide necessary state aid according to the UK’s legal interpretation. The final, and perhaps most damning of all clauses directly contradicts aspects of the legal interpretation of the Withdrawal Agreement. Here, the bill stipulates that amendments made under clauses relating to trade and state aid in Northern Ireland may not be deemed unlawful on the basis of incompatibility with international or domestic laws, hence making it difficult for British courts to rule against the acts of ministers.

With such an apparent disregard for certain aspects of the Withdrawal Agreement, the Internal Market Bill has received widespread criticism from politicians, both domestically as well as across the continent. Many suggested that a deviation from the obligations set forth in the Withdrawal Agreement would in effect be a breach of international law. This suggestion was clarified in a revelation from the Northern Ireland Secretary, Brandon Lewis who unequivocally admitted to the House of Commons that the bill breaks international law in a ‘limited and specific way’.

A feature by the Institute for Government suggested that ‘unless the powers were actually used, the UK would not be in breach of the state aid and customs provisions of the Northern Ireland protocol.’ However, should the powers be used, the implications could be far more serious with the EU taking direct action against Britain and the country left akin to states such as Russia or China who are often branded as violating international law.

The EU has already made it clear that it is not afraid to take legal action should the UK pass the bill. A Letter of Formal Notice has been sent to Westminster from the European Commission, which outlines the union’s stance that the mere drafting of such a bill is ‘by its very nature a breach of the obligations of good faith laid down in the Withdrawal Agreement’. 

For now, the bill has only passed through the House of Commons and is yet to be voted upon in the House of Lords before making its way into British Law. The threat of legal action appears not to have deterred Boris Johnson’s government, which is pressing ahead with the bill and is yet to respond to the EU’s formal notice. Time will tell how the bill affects future British-European relations. Thus far, the EU has made it clear that the desired trade deal  cannot be ratified until there is clarity that obligations set forth in  the Withdrawal Agreement will be met by the UK.

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