The transition period agreed between the EU and Great Britain ends on 31 December 2020. During this period, Great Britain – also after the exit from the EU at the end of January 2020 – remains part of the customs union and the EU Internal Market. If by then no agreement has been reached on the future economic relationship, Great Britain will be trading under WTO rules. Great Britain rejected a possible extension of the transition period of up to two years, which would have been possible until 30 June 2020. However, in view of the time required for the legislative process, one has to plan for a respective buffer. That is why the British Prime Minister Boris Johnson has set 15 October 2020 as the date by which an agreement had to be reached. However, following the announcement of the British government of its intention to unilaterally wanting to change aspects of the Withdrawal Agreement, such agreement has receded into the distance.

New British Internal Market Bill

The background is a new Internal Market Law, which was announced by the british Minister of Northern Ireland Brandon Lewis on 8 September 2020. If this would indeed be ratified, it would mean a unilateral change of the 2019 EU Withdrawal Agreement, thereby representing a breach of international law. The law would infringe some of the rules stipulated in the Agreement on the future relationship with Northern Ireland, for example as regards to state aid and custom provisions for British businesses. According to the Agreement, EU competition law also applies to trade between Great Britain and Northern Ireland. This shall avoid a “hard” border between Northern Ireland and the Republic of Ireland. Hence, London would have to inform the EU Commission on state aid, if it affects Northern Irish business and the latter would have to fill in export declarations, if goods are delivered to England, Scotland or Wales.

The fact that Johnson wants to use this law to break the Agreement, which he himself has negotiated, is not only being criticised by many of his predecessors – among them also by his immediate predecessor and party colleague Theresa May – but also by his own MPs. Nevertheless, MPs in the House of Commons backed the bill by 340 votes to 263. If it will be backed again by a majority in the final vote next week, it has to go to the House of Lords. However, a number of conservative members have already announced their resistance.

Harsh criticism from the EU

The reaction of the EU concerning the planned breach of law was harsh. Commission Vice President Maroš Šefčovič, who had travelled to London for crisis talks said “it would constitute an extremely serious violation of the Withdrawal Agreement and of international law”. Šefčovič called on the British government to withdraw the law by the end of September 2020. Otherwise, legal action might be taken. According to media reports, the EU has already launched a review of such steps, such as taking the UK to the European Court of Justice or the invocation of the dispute settlement mechanism enshrined in the Withdrawal Agreement.  In her State of the Union Address on 16 September 2020, Commission President Ursula von der Leyen did not mince her words either. She emphasised the importance of “trust as the foundation of any strong partnership” and made it clear that the EU would not backtrack from the negotiated agreement.

However, the breach of law might have negative consequences for the British government apart from the bilateral negotiations with the EU. For example, the Speaker of the United States House of Representatives, Nancy Pelosi, stated Congress would prevent a trade agreement with Great Britain if the latter would not adhere to international agreements.  

European law standards have to be maintained

It has been clear for a long time that the negotiations on a possible agreement between the EU and Great Britain would not be easy. During the last months, in particular the areas Fishery and Competition rules – keyword Level Playing Field – have emerged as key points of conflict. The Chamber of Labour too demands fair competition on equal terms and under maintaining european law standards. An effective mechanism is required to ensure and enforce this; that is why all provisions laid down in this connection, should be subject to the general dispute settlement mechanism. Even though the Chamber of Labour welcomes a future close cooperation with Great Britain in principle, it is of utmost importance to prevent the watering down of legal standards and that employees have to face an additional burden.

Further information:

AK EUROPA Position Paper: A new partnership with the United Kingdom

AK EUROPA: EU and Great Britain: Tough negotiations regarding future trade relationship

AK EUROPA: Brexit has happened – what now?