Summary
The UK governments’ decision to breach substantive provisions of the Northern Ireland Protocol to the jointly agreed Withdrawal Agreement threatens to make ratification of any EU/UK agreement which may still be concluded extremely difficult. It increases the prospect of an acrimonious no-deal UK departure from the EU customs union and single market at the end of 2020. While the scope exists for policy measures to minimise the negative impact of a no deal UK departure on ACP exports, the window of opportunity for taking these necessary measures is rapidly closing. The absence of appropriate policy intervention will leave ACP exporters alone in facing the cost increasing challenges of a no-deal UK departure will generate. Not all current ACP exporters will be able to adjust to these new commercial realities, with all but the largest and best prepared ACP exporters being squeezed out of UK and some EU27 markets.
On 9th September 2020 the UK government published the Internal Market Bill designed to grant UK Ministers powers to breach critical components of the Northern Ireland Protocol to the UK/EU Withdrawal Agreement. The EU/UK Withdrawal Agreement was mutually agreed between the EU and the government of Prime Minister Johnson in October 2019 and formally entered into force in February 2020, with the power of a legally binding international treaty (1). An EU/UK Joint Committee was established to oversee the implementation of the legally binding obligations entered into under the Withdrawal Agreement.
While the UK Northern Ireland Secretary, Brandon Lewis, acknowledged in Parliament the UK would ‘break international law’ through the implementation of the provisions of the Internal Market Bill, he maintained the UK government would do so only ‘in a very specific and limited way’ by ‘taking the powers to disapply the EU law concept of direct effect… in certain very tightly defined circumstance’. This was seen as a necessary step in order to remove any ‘threat to the integrity of the united Kingdom’ (2).
This move needs to be seen in a context where Prime Minister Johnson had accused the EU of threatening to ‘install a blockade in the Irish sea’, which would then ‘carve up our country and seriously endanger peace and stability in Northern Ireland’ (3). UK government Ministers such as Michael Gove have sought to depict the new Internal Market Bill as a ‘sensible fall-back in case the ongoing Brexit trade talks collapse’ (5), while the Environment Secretary George Eustace claimed the Internal Market Bill was designed to tidy up ‘loose ends’, including through clarifying ‘the type of administrative customs processes that will be implemented on goods crossing the Irish Sea’ (4).
However, this raises serious problems since this tying up of ‘loose ends’ and clarification of implementation arrangements should be jointly undertaken. This is an important issue for the EU, since it relates to arrangements critical to maintaining the integrity of the EU single market, given the commitment to ensuring the avoidance of any border controls on, the island of Ireland.
The EU claims any threat to the food trade across the Irish Sea arises from ‘the UK government’s failure to provide details of its new SPS regime’, which has led to a lack of progress in moving beyond standard 3rd country approval requirements for future UK exports to territories covered by the provisions of the EU single market (including, as a result of the provisions of the Withdrawal Agreement, Northern Ireland). This has seen EU officials describing the UK’s approach to SPS issues as a ‘complete mess.’
The EU see’s Prime Minister Johnson’s claims of an EU food blockade of Northern Ireland as ‘fake news’ designed for domestic consumption in the face of the imminent danger of a no-deal UK departure from the EU customs union and single market (5). Such a no-deal departure would seriously compound the economic disruptions already facing the UK economy as a consequence of the global Covid-19 pandemic.
While UK officials have suggested the proposed Internal Market Bill will help re-boot the EU/UK negotiations by stimulating a higher level of political engagement on the EU side and some EU officials indeed see the move as an attempt to leverage last minute concessions from the EU in the trade negotiations (1), other EU officials and political representatives see it as part of a ‘blame shifting’ exercise, being undertaken as ‘a stepping stone to a no-deal’ UK departure (6).
Despite the political speculation over the UK’s intention the EU negotiating team under Michel Barnier remains committed to continuing with the ongoing trade negotiations until the final moment. This however, needs to be seen against a background where the EU has long expected the government of Prime Minister Johnson to ‘go rogue – one way or another’, with the only question being ‘when and precisely how’ (7).
However, the UK’s decision to renege on the legally binding obligations entered into through the Withdrawal Agreement has not gone unremarked. EC President Ursula von der Leyen tweeted ‘I trust the British government to implement the Withdrawal Agreement, an obligation under international law and prerequisite for any future partnership’ (8). The Irish Taoiseach (Prime Minister) meanwhile, directly conveyed in ‘forthright terms’ to Prime Minister Johnson the grave concerns of the Irish government over ‘Britain’s stated intention to breach an international treaty’ (9).
The European Commission Vice President Maroš Šefčovič, who co-chairs the Joint Committee established to oversee the implementation of the Withdrawal Agreement alongside UK Cabinet Minister Michael Gove, expressed the EU‘s ‘serious concerns’ and highlighted how ’if the U.K. followed through it would amount to an “extremely serious violation of the Withdrawal Agreement and of international law.’ He urged the UK to reconsider its proposed legislation before the end of September or risk EU legal action under the infringement provisions of the Withdrawal Agreement (10).
The EU’s legal advisors meanwhile are of the opinion Prime Minister Johnson’s government has already breached the terms of the internationally binding Withdrawal Agreement ‘by tabling the draft bill and pursuing the policy expressed therein’. It is held ‘the UK government is in violation of the good faith obligation under the withdrawal agreement (article 5) because this bill jeopardises the attainment of the objectives of the agreement.’ It is argued the adoption of the Internal Market Bill would be in ‘clear breach of substantive provisions of the protocol’ since it would involving waiving any export procedures or formalities on the trade of goods from Northern Ireland to Great Britain (11).
The legal opinion notes ‘once the bill is adopted (as proposed), the commission may initiate infringement proceedings against the UK for breach of the good faith obligations’, indeed ‘even before the bill is adopted, it could be defendable to bring infringement proceedings on the same grounds’ (11).
Against this background the EC has advised member states to seek legal remedies through the European Court of Justice before the end of the transition period, since ‘infringement procedures for facts which occurred before the end of the transition period can be brought to court during four years after the end of the transition.’ Potentially the EU could ‘impose a lump sum or penalty payment” on the UK, or make use of the Withdrawal Agreement’s dispute settlement mechanism ‘which may ultimately also result in the imposition of financial sanctions by the arbitration panel’ (11). More broadly the UK government action has been condemned in legal circles as a flagrant violation of international treaty commitments (12/13).
| Comment and Analysis In the absence of trust in the integrity of the UK government in implementing jointly agreed and internationally binding commitments, EU member states governments are likely to go over any concluded agreement in great detail. In areas of particular concern individual EU governments are likely to take great care to make sure any provisions are unambiguous and legally binding, with the overall agreement being subject to strict enforcement arrangements. Against this background, even if an EU/UK agreement is concluded in the coming weeks, it is inconceivable EU ratification would occur before the end of 2020 if the UK government goes ahead with passing into law the Internal Market Bill in its current form. This could see not only a no-deal UK departure from the EU customs union and single market but also an acrimonious no-deal UK departure. If there is no EU/UK agreement before the end of 2020, it will be no easy matter to resume negotiations in 2021, since the underlying issues of controversy will remain the same, while the atmosphere for negotiations will have been poisoned. This could see the adoption of a ‘work to rule’ approach which would greatly slow down the conduct of mutual EU/UK trade. While in terms of the specifics of the Internal Market Bill the adoption of unilateral powers relates to both State Aid to Northern Ireland and movement controls on food and agricultural products between the mainland UK and Northern Ireland, it is the latter dimension which is of greatest concern to ACP exporters. Any breakdown of EU/UK relations over the cross border movement of food and agricultural products is likely to carry profound implications for the future functioning of ACP triangular supply chains. It is likely to leave little political band width for addressing triangular supply chain issues arising as a result of a no-deal UK departure. These ACP triangular supply chains account for an estimated value of ACP trade in excess of €1.5 billion. The problems which will arise range from: · The need for the establishment of special phytosanitary import requirements for ACP products which have already been cleared through EU phytosanitary controls (and where any reasonable risk assessment would set control requirements at zero). · The need to waive safety and security declaration checks for ACP products which have already been cleared upon entry to the EU. · The need to waive customs checks on ACP exports where duty free-quota free access is enjoyed to both the EU and UK market. · The establishment of electronic trade information and administration systems which allow the use of ‘green lane’ systems of border clearance, involving no physical inspection requirements. · The need for special rules of origin to accommodate the functioning of current ACP triangular supply chains where some level of repackaging or simple processing takes place prior to onward trade. · The need to ‘roll over’ recognition of EU and UK certifications and authorisations for the duration of the ‘Covid-19 pandemic + 9 months’, given the practical constraints faced in securing reauthorisations in an era of Covid-19 linked travel restrictions and social distancing requirements (e.g. continued recognition of use by 3rd country suppliers of organic certification issues by either the EU or UK for goods entering wither the UK or EU). In addition, an acrimonious no-deal UK departure from the EU customs union and single market will exacerbate the serious road haulage and ‘groupage’ challenges arising for the onward shipment of goods across an EU/UK border, by poisoning the atmosphere for the identification of practical solutions. It will also exacerbate shortages of cold storage space, as supermarkets and wholesalers stockpile goods to mitigate supply chains disruptions, with this potentially impacting on the availability and cost of refrigerated containers (‘reefers’), which are increasingly being used as temporary cold storage solutions. What is more, the human and institutional capacity challenges facing the UK border control services could be such as to spill over into a reduced efficiency at all UK Border Control Posts, as staff are redeployed to get to grips with challenges at critical bottle necks (e.g. around the channel ports in Kent). Finally, disruptions to UK exports to the EU could see sudden UK export surges to ACP markets, as UK traders desperately seek alternative markets for goods no longer allowed entry to the EU market (e.g. for exports of poultry parts currently exported from the UK to eastern Europe) and EU traders seek alternative markets for goods facing high import tariffs on entry to the EU market (e.g. sugar and poultry meat). ACP governments will need to ensure that have the policy tools available to deal with these import surges where these could undermine domestic production. This will raise important issues in regard to the interpretation and implementation of commitments contained in EU trade agreements, many of which have been rolled over in unchanged form, under UK-only Continuity Agreements. |
Sources
(1) The Economist, ‘Brexit Negotiations Hit a Formidable New barrier’, 12th September 2020
https://www.economist.com/britain/2020/09/12/brexit-negotiations-hit-a-formidable-new-barrier
(2) Guardian, ‘Government admits new Brexit bill ‘will break international law’, 8 September 2020
https://www.theguardian.com/politics/2020/sep/08/government-admits-new-brexit-bill-will-break-international-law
(3) Guardian, ‘Gove claims internal market bill protects UK integrity from EU threat’, 12 September 2020
https://www.theguardian.com/politics/2020/sep/12/brexit-gove-claims-internal-market-bill-protects-uk-integrity-from-eu-threat
(4) Guardian, ‘Why is the UK seeking to unpick the EU withdrawal agreement?’ 7 September 2020
https://www.theguardian.com/politics/2020/sep/07/why-is-the-uk-seeking-to-unpick-the-eu-withdrawal-agreement
(5) Guardian, ‘MEP attacks ‘fake news’ of Barnier Northern Ireland threat’, 9 September 2020
https://www.theguardian.com/politics/2020/sep/09/brexit-claim-boris-johnson-responding-to-barnier-threat-called-fake-news-
(6) politico.eu, ‘Brexit negotiations hit low after UK’s ‘carpet-bombing’ tactics’, 9 September 2020
https://www.politico.eu/article/brexit-negotiations-eu-uk-no-deal-withdrawal-agreement-irish-border-breach-international-law/
(7) Politio.eu, ‘Brussels knows it can’t force the UK’s hand over Brexit’, 11 Sept 2020
https://www.politico.eu/article/eu-brussels-uk-brexit-withdrawal-agreement/
(8) Guardian, ‘UK negotiators believe brinkmanship will reboot trade talks’, 11 September 2020
https://www.theguardian.com/politics/2020/sep/11/brexit-uk-negotiators-believe-brinkmanship-reboot-trade-talks
(9) Politico.eu, ‘Boris Johnson angers everyone but Brexit talks limp on’, 10 September 2020
https://www.politico.eu/article/boris-johnson-angers-everyone-but-brexit-talks-limp-on/
(10) Politico.eu, ‘EU ultimatum as Brexit talks sour’, 10 September 2020
https://www.politico.eu/article/eu-tells-uk-to-amend-internal-market-bill-or-face-brexit-consequences/
(11) Guardian, ‘Brexit talks on brink as UK rejects EU call to drop law-breaking plan’, 10 September 2020
https://www.theguardian.com/politics/2020/sep/10/fears-grow-that-uk-is-preparing-to-quit-brexit-talks
(12) Guardian, ‘Internal market bill: what it says and the UK hopes to achieve’, 9 September 2020
https://www.theguardian.com/politics/2020/sep/09/internal-market-bill-what-it-says-and-the-uk-hopes-to-achieve
(13) Guardian, ‘Brexit override plan would breach Vienna convention, QC says’, 11 September 2020