EU-UK trade talks are set to start up again tomorrow.
ALARM BELLS ARE ringing across Europe today after reports last night that the UK government is threatening new legislation that would roll back important parts of last year’s Brexit Withdrawal Agreement as it relates to Northern Ireland.
Under the Internal Markets Bill, due to be published this week, special post-Brexit customs arrangements, agreed-upon last October, could be significantly altered, according to the Financial Times.
Downing Street says the legislation is a “fallback” in case ongoing trade negotiations between the UK and the EU collapse before the next European Council meeting on 15 October.
But experts have warned that the move could itself undermine the trade talks, which are due to recommence tomorrow.
But I thought Brexit had already happened?
Brexit happened on 31 January 2020 at 11pm Greenwich Mean Time after which time, the EU28 officially became 27 because Britain had formally left the bloc.
Literally overnight, the UK lost its EU commissioner, its 73 sitting Members of the European Parliament and shut down its government Brexit department while Prime Minister Boris Johnson lost his right to attend EU summits.
Apart from that, and the rollout of the vaunted blue passports from March, not a huge amount changed.
That’s because as part of the Brexit Withdrawal Agreement, signed by Johnson on 24 January — which became a binding international treaty at the moment Britain left the EU — the UK and the EU had now entered an official ‘transition period’.
What is the transition period?
It’s exactly what it says on the tin.
During the period — which we are now in until 31 December 2020 — the UK is still technically governed by many European Union rules.
Until that deadline, British citizens still enjoy the benefits of EU membership, including freedom of movement, caps on mobile phone roaming prices and the use of the blue channels at European airports.
Crucially, the UK is also temporarily tied to EU single market rules around trade and customs, so businesses on either side of the equation didn’t face a raft of overnight rule changes back in January.
The idea is to allow a grace period for Britain and Europe to agree on the precise nature of their post-Brexit relationship and to put in place an all-important trade agreement.
Britain’s exit from the EU means the government also has to negotiate discrete trade arrangements with a host of countries like Australia and the US.
How have talks been going?
Not particularly well.
Both sides want to get a deal over the line by next month but, over the course of the summer, the talks hit a number of stumbling blocks.
EU chief negotiator Michel Barnier and his UK counterpart, David Frost, have been deadlocked, among other things, on the so-called ‘level playing field’ provisions.
Essentially, the EU wants Britain to hold onto many of its pre-Brexit regulations around workers’ rights and ‘state aid’ to UK companies.
The idea is to prevent British businesses from gaining a competitive advantage over their European counterparts by undercutting standards or receiving handouts or sweetheart tax arrangements from the UK government.
Over the weekend, Frost ruled out accepting level playing field terms that “lock us into the way the EU do things” and argued that wanting control over the country’s money and affairs “should not be controversial”.
The eighth round of talks is due to begin tomorrow.
What did the Withdrawal Agreement say about Northern Ireland?
Quite a lot, as you would probably imagine.
Originally negotiated by Theresa May’s government in 2018 and re-negotiated by Boris Johnson’s team in 2019, the so-called ‘Northern Ireland Protocol’, was officially signed off on by both sides in October of last year.
In a nutshell, the protocol provides that when the transition period concludes at the end of 2020 and Britain finally gets shot of EU regulations, the North will still follow single market rules for goods and administer the EU’s customs code at its ports.
The main goal of the arrangement was to avoid anything that looked like an economic border between north and south where goods would be checked when moving from one part of Ireland to the other.
Instead, the agreement placed a de facto customs border down the Irish Sea.
As part of the agreement, the UK was guaranteed that it could ensure “unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom’s internal market”.
Article 10 of the agreement provided that EU rules on state aid (government subsidies to private businesses) would apply to Northern Irish goods and services.
Effectively, this means that even after Brexit, Westminster would still be required to notify Brussels of any state aid decisions — changes to tax laws, government support schemes etc — that would impact businesses in the region.
Although these broad principles were agreed and signed off on by all parties when the Withdrawal Agreement became a binding treaty on 31 January 2020, their implementation is still being hammered out in the ongoing trade talks.
What happened last night?
It emerged yesterday that the British government is planning new legislation to override aspects of the Withdrawal Agreement.
Specifically, the Internal Markets Bill — which the government will publish on Wednesday — will target the agreed-upon state aid rules and the EU’s insistence that Northern Irish firms will have to fill out summary customs declarations for goods exported to mainland Britain.
The Financial Times, which broke the story, reported that the issue of customs declarations is a sticking point for Brexiters.
They believe that requirement would not be compatible with the promise that Northern Ireland will have “unfettered access” to the UK’s internal market.
The UK also wants to tinker with the agreed-upon rules around tariffs applied to goods going from Britain to the North.
Under the terms of the protocol, EU tariffs could apply to goods going from Britain to Northern Ireland if they are “at-risk” of entering the European single market by moving south into the 26 counties.
Now, the British government wants to give UK ministers the power to define what goods “at-risk” means.
BBC correspondent Chris Mason described the new proposal as, in effect, an “attempt to free the UK of an obligation… to check goods crossing from Great Britain to Northern Ireland”.
Why is this happening now?
Probably because EU-UK trade talks are due to recommence tomorrow and the UK government probably hopes the threat of reneging on the agreement will focus minds.
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For its part, the EU has insisted that the full implementation of the Withdrawal Agreement is imperative before the future relationship between the bloc and the UK can be hashed out.
But, in a statement issued today, Boris Johnson said that collapsing the trade talks, should there be no agreement by the 15 October European Council, would still be a “good outcome for the UK”.
“If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on.”
But UK government sources told the BBC that legislation was “not intended to derail the talks”.
“As a responsible government, we are considering fallback options in the event this is not achieved, to ensure the communities of Northern Ireland are protected,” she said.
How have the major players reacted to the latest development?
Pretty much predictably.
EU chief negotiator Barnier said that the Brexit terms that the Withdrawal Agreement “must be respected”.
“The important thing for me is what the prime minister says and does, and what the British government itself says and does,” said Barnier during an interview on a French radio station this morning.
Speaking to reporters in Dublin today, Tánaiste Leo Varadkar said the Brexit Withdrawal Agreement is an international agreement and trumps any domestic legislation.
A hard border on the island of Ireland “is something we all want to avoid”, he said but he added that he “can’t speak for the British government or speculate on their motivations”.
EU Commission President Ursula von der Leyen also weighed in this morning.
The German politician said, “I trust the British government to implement the Withdrawal Agreement, an obligation under international law & prerequisite for any future partnership.”
Von der Leyen described the Irish protocol as “essential to protect peace and stability on the island & integrity of the single market”.