Date first published: 15/09/2020

Key risks: trade disputes; political stability; frustration of process

Key sectors: all

Much has happened in the United Kingdom (UK) over the last year, yet the last two weeks in UK politics have felt eerily like a year ago. Following a Conservative landslide victory in December 2019, the UK signed the European Union (EU) Withdrawal Agreement in January 2020 and formally left the EU at the end of that month. The Agreement contains a transition period which lasts until 31 December 2020, during which time the UK remains part of the single market and negotiates its future relationships with Brussels. Despite being revised by Prime Minister Boris Johnson in October 2019, his government is now attempting to unilaterally frustrate the Agreement, risking the future of trade negotiations with the EU.

Westminster’s formal problem relates to the implications of the Agreement’s protocols on Northern Ireland. Under the protocols, Northern Ireland will continue to enforce EU single market rules on goods after the transition ends, which prevents the need for checks  – and therefore a customs border – on products travelling between Northern Ireland and the Republic of Ireland. The protocols implies that absent a comprehensive agreement between London and the EU, certain goods entering Northern Ireland from the rest of the UK will need to be checked – de facto creating a regulatory and customs border in the Irish Sea. The provisions thus imply that London either accepts that the UK’s internal market will fragment, or it reach an agreement with the EU to harmonise regulations – including on state aid – and eliminate the need for tariffs. Either option is politically harmful, and reduces the UK’s negotiating leverage.

Johnson’s solution to the problems created is to override the Northern Ireland protocols through domestic legislation. The Internal Market Bill would give government ministers the right to override EU customs law. However, Article 4 of the Withdrawal Agreement explicitly states that the provisions of the treaty take precedence over UK domestic law. The Internal Market Bill thus breaches the government’s international obligations, with Northern Ireland Secretary Brandon Lewis explicitly noting that the bill violates international law.

The Internal Market Bill has split the Conservative Party. Senior Conservative figures including former attorney generals Geoffrey Cox and Jeremy Wright and former Chancellor Sajid Javid refuse to back the bill. Johnson has an 80-seat majority, which allowed the bill to secure a comfortable majority on its second reading. However, it could be amended to ensure that the Commons has the final say over whether the Withdrawal Agreement is broken. Such an amendment could defang the bill. Even if passed in its current form by the Commons, the House of Lords could vote down or delay the bill, with Conservative peers – including Norman Lamont and former party leader Michael Howard – publicly opposing it. Even should the bill pass Lords, it will face a Supreme Court challenges for violating constitutional norms and the rule of law.

The Internal Market Bill may obfuscate a larger risk. Commission President Ursula von der Leyen said that implementation of the Withdrawal Agreement was a “prerequisite for any future partnership”, and Brussels is unlikely to continue serious trade discussions while the Internal Market Bill is still being debated. With time running out, it is becoming increasingly likely that the transition agreement will end without any clarity over the future of EU-UK trade – effectively a ‘no deal Brexit’.