GP Insights # 411, 12 September 2020
On 10 September, the European Union demanded that the UK should reconsider its plans to change the Withdrawal Agreement "by the end of the month" or "risk jeopardising trade talks." The ultimatum by the EU comes as the BREXIT trade talks are in the process and after two key announcements by Boris Johnson's government that have challenged the divorce treaty agreed with the EU early this year.
On 9 September Boris Johnson proposed a draft Internal Market bill that will allow the UK government to change the customs laws in Northern Ireland thereby allowing itself a stronger role over trade rules in Scotland and Wales as well. Secondly, the government said the UK would not follow the EU rules for state aid which is a key stumbling block in the negotiations with the bloc till date. Instead, it will apply state aid rules agreed at the WTO level, which is less strict.
Johnson's bill has been criticised as "embarrassing for the UK" as Former Prime Ministers Tony Blair and Sir John Major urged the Parliament to reject the bill.
What is the background?
First, the UK's attempt to revisit the Withdrawal Agreement. The proposed bill attempts to breach the binding withdrawal agreement which Westminster approved by majority votes in December 2019. The new bill allows the UK to unilaterally waive export controls and tariffs between Northern Ireland and Great Britain and withhold information on state aid from Brussels. With custom changes in Northern Ireland, the bill is likely to make the region the UK's only land border with the EU thereby also putting in question another agreement (the Good Friday Agreement) with the Republic of Ireland that aims to preserve the Irish identity and peace in the region. Under the withdrawal agreement, Northern Irish businesses would need to fill out customs forms when shipping goods to mainland Britain, but the new bill alters these custom rules and makes it uniform across the country, thus breaching the spirit, rules, and the trust agreed with the EU.
Second, the bill questions the sanctity of the Good Friday Agreement. The new bill is also believed to breach the commitments made to protect the peace process and avoid a hard border on the island of Ireland. While this bill is seen as critical to ensure unfettered movement of goods from Northern Ireland to the rest of the UK, it also challenges the principle of devolution and local institutions in the region. The draft bill undermines the Good Friday Agreement that upholds the devolution of power in Northern Ireland and in the process protects the Irish identity. In economic terms, the legislation will also see Scotland, Wales, and Northern Ireland give up powers in areas such as air quality regulated at the EU level to completely comply with the standards adopted in different parts of the UK.
Third, the EU runs out of patience ironing out differences with the UK. As the UK attempts to revert the Withdrawal treaty agreed after three years of negotiation, the EU has toughened its position not to allow another digression from the UK. EU's ultimatum on Johnson's plans to override elements of the BREXIT withdrawal agreement reveals that trust in the UK has been "seriously damaged" and eroded over the past four years. With multiple deadline extensions and several political quagmires, the BREXIT process has indeed tested the patience of the EU and the people who still await clarity on mundane civic laws.
What does it mean?
In relooking the Brexit withdrawal agreement, Boris Johnson has risked dividing the domestic political discussion over the likely future of a trade deal. Instead of ironing out the differences over fishing rights or investment terms, the political parties will now either support the bill or challenge Johnson for his inability to stand by the agreement. Furthermore, the collateral damage to the Good Friday agreement will also reopen historical questions between two communities, further diverting the BREXIT trade talks. Johnson's bill is likely to be defeated in the House of Lords as many veteran Tory leaders call the bill a matter of "principle, that the UK keeps its word internationally."
At the same time, the UK's decision to apply the WTO framework raises serious questions like whether a framework meant to solve trade issues between two different nations be adept within the UK's unique four-nation system.