Brexit: What is the UK’s controversial Internal Market Bill?

The United Kingdom published draft legislation on Wednesday on how it wants to manage trade within its borders after Brexit, a bill which caused a new row with the European Union after the government admitted it will break international law.

The Internal Market Bill will be subject to debate and approval by both chambers of Parliament before it becomes law.

European Commission head Ursula von der Leyen expressed strong concern about the UK’s plans to pass the bill, noting it would destroy trust and undermine trade talks.

“Very concerned about announcements from the British government on its intentions to breach the Withdrawal Agreement,” she said on Twitter.

“This would break international law and undermines trust. Pacta sunt servanda = the foundation of prosperous future relations,” she said. The Latin phrase, meaning “agreements must be kept”, is a basic principle of international law.

But UK Prime Minister Boris Johnson told Parliament on Wednesday that the bill was “a legal safety net to protect our country against extreme or irrational interpretations” of the Northern Ireland protocol of the Withdrawal Agreement that could threaten peace in the British province.

The EU will not seek to suspend talks about a new Brexit deal despite London publishing the bill, sources said.

“Talks will continue albeit in a tense atmosphere. It won’t be the EU walking away from the table, rest assured,” said an EU diplomat.

If approved, the bill would give ministers the power to ignore parts of the protocol by modifying the form of export declarations and other exit procedures.

The UK quit the EU in January but has remained part of its single market, largely free of trade barriers, under a status quo agreement that expires in December. It has been negotiating a trade deal to take effect from January 1, but said it is willing to walk away if it cannot agree to favourable terms.

The British pound, which tends fall on the rising prospect of a no-deal scenario, was lower on Wednesday.

Here are six things to know about the controversial bill: 

Where does the bill stand on claims of breaking international law?

The bill says its provisions will have effect “notwithstanding inconsistency or incompatibility with international or other domestic law”.

What does the bill say about trading with Northern Ireland?

The bill will put into domestic law Johnson’s election pledges to ensure goods from Northern Ireland will have unfettered access to Britain’s market and make clear that EU state aid rules – which will continue to apply in Northern Ireland – will not apply to the rest of the UK.

These points have prompted concerns in the EU as the UK has unilaterally decided to change – or according to the UK government, “clarify” – some of the provisions in their divorce agreement that they signed in January.

The UK said it had to make the clarifications to remove “any ambiguity and ensure that the government is always able to deliver on its commitments to the people of Northern Ireland” and protect the 1998 Good Friday Agreement which largely ended three decades of political and sectarian conflict in Northern Ireland.

The bill gives ministers unilateral power to change or disapply export rules for goods travelling from Britain to Northern Ireland.

Will Britain have to adhere to EU state aid rules, under the bill?

No. The bill will make clear that Britain will be able to set its own subsidy regime while Northern Ireland will continue to apply the EU’s state aid rules.

This move is seen as crucial for Johnson’s government, which has baulked at the EU’s demands to be aligned with its rules, saying that every country outside the bloc has the right to set its own subsidy regime.

Who will have spending powers?

As with state aid, the bill hands spending powers to the government, enabling ministers to design and implement replacement schemes for the EU spending programmes.

It will also enable the British government to provide financial assistance to Scotland, Wales and Northern Ireland with new powers to spend taxpayers’ money previously administered by the EU.

From January 2021, the UK will be able to invest in communities and businesses nationwide with powers covering infrastructure, economic development, culture, sport, and support for educational, training and exchange opportunities both within the UK and internationally.

Will the bill implement the EU principle of mutual recognition?

The bill will implement mutual recognition and non-discrimination principles to ensure the rules governing the production and sale of goods and services from one part of the country will be recognised in another.

Each devolved administration will still be able to set their own standards as they do now, while also being able to benefit from the trade of businesses based anywhere in the UK.

The bill also says the government will consider tasking an independent, advisory body to report to Parliament on the functioning of the internal market.

Why are Scotland and Wales concerned?

The bill will bind the British government when acting on behalf of England in areas of devolved competence.

But Scotland and Wales say the bill will undermine the United Kingdom by stealing powers from Wales, Scotland and Northern Ireland.

The government says the transfer of powers from the EU to the British government will complement and strengthen existing support given to citizens in Scotland, Wales, and Northern Ireland by the devolved administrations, without taking away their responsibilities.

Under the UK’s delicate constitutional balance, semi-autonomous parliaments and governments in Scotland, Wales and Northern Ireland known as the devolved administrations have powers over areas like education, health, policing and justice. 

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