Brexit hubris

The Internal Market Bill underscores the limitations of UK's EU exit

The Internal Market Bill, which British Prime Minister Boris Johnson managed to push through the House of Commons despite a split in his party, offers a potent demonstration of the problematic issues embedded in the UK’s decision to leave the European Union (EU), its biggest trading partner. In introducing the Bill, the government admitted to violating key aspects of the EU withdrawal agreement and made it likely that the UK would leave the EU without a deal on January 1, 2021. This is the immediate repercussion of Mr Johnson’s latest salvo. In the long run, it raises the spectre of a split within the UK and is also likely to diminish the country’s global reputation as an upholder of international treaties, with the US expressing reservations about discussing a free-trade agreement.

The immediate issue is the one that has bedevilled negotiations from the start: The status of Northern Ireland, the only land border with the EU (the Republic of Ireland in this case). To maintain the fragile peace that ended a centuries-long civil war in 1998, the withdrawal agreement had stipulated that there would be no border checks of goods flowing between the Republic and Northern Ireland. This stipulation would, however, imply some check on goods traded between Northern Ireland and mainland Britain once the UK exits the single market and customs union. The Internal Market Bill overrides this provision in two ways. First, it gives UK ministers the powers to overrule any requirement for export declarations for goods moving from Northern Ireland to Great Britain. Second, British ministers will have the powers to decide if goods moving from Great Britain to Northern Ireland are at risk of moving on to the Irish Republic, implying a de facto impositions of border checks.

These issues were to be negotiated by a joint committee of the EU and UK under the withdrawal agreement. The government says the objective of these provisions is to reassure Northern Irish businesses of minimal disruption after the transition. The other aspect of the Bill that overrides the UK’s commitments is the provision related to state aid. EU rules deem it illegal for member states to give financial help to some companies and not others in a way which would distort fair competition. The Bill gives the UK government the unilateral right to decide whether to inform the EU about state aid to firms doing business with its member-states. Under the withdrawal agreement, these issues were to be discussed in a joint EU-UK committee.

The refusal to declare details of state aid has heightened EU suspicions that the UK would use state subsidies to make British goods more competitive. Meanwhile, a provision on standard-setting for goods being traded within the UK has created an uproar over a potential Westminster’s “power grab”. In a nutshell, the Bill overrides the post-Brexit powers over regulations and standards — on food labelling and emissions, for example — that would have devolved from Brussels to the administrations of Northern Ireland, Wales, and Scotland. The Bill stipulates that the devolved administrations will still have to accept goods and services from all other parts of the UK even if they have set different standards locally. The government has explained that this too is to ensure seamless trading across the nation but it undermines local powers and raises the spectre of a post-Brexit constitutional crisis. The Bill, which is now before the House of Lords, suggests that the UK’s post-Brexit problems have only just begun.