October 26, 2020

Market and Financial News Aggregator

EU warns UK over Brexit deal backsliding

4 min read

The EU’s leadership warned the UK on Monday that any future trade deal would be conditional on full respect of last year’s Brexit divorce agreement, as the prospect of UK backsliding shocked capitals and threatened to destabilise future-relationship talks. 

European Commission president Ursula von der Leyen said in a tweet that last year’s withdrawal agreement, including its protocol on Northern Ireland, was “an obligation under international law and prerequisite for any future partnership”, in a clear signal to UK prime minister Boris Johnson that attempts to unpick the treaty will rattle relations. 

The “protocol on Ireland/Northern Ireland is essential to protect peace and stability on the island and integrity of the single market”, she wrote.

Her remarks follow a report in the Financial Times on Sunday that sections of the UK government’s internal market bill — set to be published on Wednesday — will eliminate the legal force of parts of the politically sensitive protocol on Northern Ireland that was thrashed out by Mr Johnson and the EU in the closing stages of last year’s Brexit talks. 

The next round of future-relations negotiations, which start in London on Tuesday, already promised to be difficult because of entrenched disagreements about market-access rules and fishing rights.

Ahead of the latest talks, Mr Johnson sought to increase the pressure on Brussels by setting an October 15 deadline to conclude a deal. “If we can’t agree by then, then I do not see that there will be a free trade agreement between us,” Mr Johnson said.

Responding to the FT’s report on Monday, the EU’s chief negotiator Michel Barnier said he would press his UK counterpart David Frost on the government’s intentions, warning that “everything that has been signed in the past must be respected; it is what underpins confidence going forward”. 

The UK internal market bill, outlined in a 100-page white paper in July, is designed to secure the “seamless functioning” of trade between England, Wales, Scotland and Northern Ireland after the UK leaves the EU’s single market and customs union at the end of the Brexit transition period on December 31. 

UK environment secretary George Eustice, acknowledged on Monday that there were “a few loose ends” from the 2019 withdrawal agreement concerning Northern Ireland that needed to be tidied up, but denied the government was threatening to rip up the deal.

“We have a withdrawal agreement including the Northern Ireland protocol and we are committed to implementing that,” he told the BBC.

Under last year’s Brexit deal, the UK must notify Brussels of any state-aid decisions that would affect Northern Ireland’s goods market, and compel businesses in the province to file customs paperwork when sending goods into the rest of the UK.

Mr Johnson’s spokesman said ministers were working with the EU in the so-called “joint committee” to resolve outstanding issues on the Northern Ireland border question. 

But Mr Johnson had authorised “limited and reasonable steps to clarify specific elements” of the Northern Ireland protocol in UK law. This included giving the UK business secretary powers to determine whether Brussels needed to be notified in the event that state aid given to a company in Great Britain had implications for a company in Northern Ireland where EU state aid rules would continue to apply.

Officials said the internal market bill would aim to stop Brussels using its authority over state aid in Northern Ireland to extend its authority to subsidies given elsewhere in the UK, even if the impact on Northern Ireland was marginal.

Downing Street confirmed the new measures would also ensure that “unfettered access” for Northern Ireland businesses to the rest of the UK market was not hindered by excessive bureaucracy, including export declaration summaries.

Separate measures in the finance bill this autumn, which implements budget decisions, would seek to limit the number of goods deemed to be “at risk” and therefore subject to checks and tariffs when they enter Northern Ireland from Great Britain.

Ministers accept that the unilateral nature of these powers — using British ministerial discretion rather than the direct application of EU law — will cause concern in Brussels.

Number 10 insists that the powers in the internal market bill will be needed to implement what they hope will be mutually agreed “clarifications” with the EU in the joint committee overseeing the implementation of the withdrawal agreement, but they are also seen as a “precautionary measure” if the two sides failed to agree.

Ireland said any breach of the withdrawal treaty would have a “very negative impact” on the trade talks, raising the possibility that the UK plan is simply a ruse to boost its position in the negotiations with Brussels.

Simon Coveney, Irish foreign minister, told national broadcaster RTE: “If there’s any suggestion that the UK are not going to implement the legal obligations they have on what has already been agreed in the withdrawal agreement, that would in my view fundamentally undermine trust between the two parties in their efforts to get what is a very complex negotiation concluded in the weeks ahead.”

Additional reporting: Arthur Beesley in Dublin

2020-09-07 09:45:08

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