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On 31 January 2020 the Withdrawal Agreement confirming the UK’s exit from the EU came into effect. Following this, in order to ensure trade between the four nations making up the UK after the end of the transition period on 31 December 2020, the Internal Market Bill was drawn up.

Trade laws between the UK’s nations had existed before entry into the European Economic Community in the 1970s, when they were replaced by European laws. The subsequent devolution of powers to Scotland, Wales and Northern Ireland occurred while the UK had EU membership, and so European trade laws required to be followed. The Internal Market Bill seeks to maintain a market and set standards and rules between the nations which replace European trade laws, thus ensuring the same standards are held throughout each nation.

This seemingly straightforward aim and the resulting draft legislation is controversial for a few reasons, namely:- the Bill’s effect on the exercise of devolved powers; its effect on Northern Ireland’s relationship with Great Britain and the EU; and its breaching of international law and the resultant reputational damage to the UK’s international standing at such a pivotal point in time.

(1)    The Bill has been described as a “power-grab”. It will leave Scotland, Wales and Northern Ireland unable to make and implement policy and regulatory decisions in areas of devolved power which differ from the legislated standards without leaving their own traders or investors at a disadvantage. Within the Bill’s concepts of mutual recognition and non-discrimination there is very little regard for the individuality of each of the UK nations, which is seen as problematic rather than a “valid search for different solutions to societal problems”, as stated by Professor Michael Dougan at a meeting of the Scottish Government’s finance committee earlier this year.

One of the biggest concerns when considering a potential centralisation of devolved powers is the future of the NHS. The Internal Market Bill is being introduced in the midst of a global pandemic and its potential negative effect on the ability of the UK’s member nations to provide adequate healthcare within the NHS to the increased number of people who need it cannot be understated.

(2)    Probably the most widely publicised and discussed problem with the Bill is in relation to Northern Ireland, which shares the only land border between the UK and the EU. The Protocol on Northern Ireland is intended to resolve the highly charged issue of a hard border with the Republic of Ireland, as well as to protect the Good Friday Agreement and allow regulatory divergence between the EU and Great Britain.

The Protocol allows Northern Ireland to continue to enforce EU customs rules and product standards, so avoiding checks on goods travelling across the land border, while still remaining part of the UK’s customs territory and allowing the inclusion of Northern Irish goods in any UK trade deals with other countries.
The Internal Market Bill was intended to legislate on full access of Northern Irish goods to the UK market, however it has done so in a way which is widely described as “driving a coach and horses through the law”.

Clause 42 of the Bill gives UK ministers powers to disregard its domestic or international legal obligations, including those under the Northern Ireland Protocol, in relation to the movement of goods.

Clause 43 gives ministers powers to regulate how state aid law is interpreted in Northern Ireland, including in ways which modify the Protocol or are incompatible with international law. Of course, EU state aid laws would apply to trade in relation to the Protocol, and these would be potentially overridden by this clause.

Clause 45 sets out that clauses 42 and 43 cannot be deemed unlawful on the basis of their incompatibility with domestic or international law.

(3)    Breaches of international legal obligations do happen, however they are not planned in advance and legislated for in the way the UK Government intends to do. Any future breach under this internal market legislation therefore cannot be said to be in good faith. The introduction of the Bill to Parliament is in itself is a direct breach of the Vienna Convention and has put the civil servants tasked with drafting it in an unenviable position.

The Bill also breaches Article 4 of the Withdrawal Agreement, which states that it takes precedence over UK domestic law. This is what was described as a “specific and limited” breach of international law. The Government’s justification for such a breach is that it will protect the UK from EU threats on trade post-Brexit.

The UK is a signatory to thousands of international treaties and has an historic reputation for upholding the rule of law and taking its international legal obligations seriously. If the Internal Market Bill were to be passed it would seriously harm the UK’s reputation and credibility nationally and internationally. It would undermine its position with potential investors looking to ensure their investments are safe at a time when the Government is trying to progress international trade deals, and it would make future treaty negotiations almost impossible - who will believe that the UK will uphold any legal obligations it agrees to when it has demonstrated that, if it suits, it will not?

The Northern Irish Assembly and the Scottish Government have confirmed their rejection of the Bill. It has been described as flawed and concerns have been raised by Scotland, Northern Ireland and Wales about the overriding of the NI Protocol, the undermining of devolved powers and the risk of uncertainty and confusion for business and consumers, among various other criticisms.

Although, as stated above, the UK Government has advised it intended the Bill to protect the UK in the wake of its exit from the EU, its effect so far, before it has even been passed, has been to jeopardise relationships with the devolved nations and the international community and threaten investment and trade after 31 December 2020. It remains to be seen if the House of Lords will insist on the substantial amendments required to ensure the legality of the Bill and if the UK Government will realise its misstep in introducing such provocative legislation in the first place.

Blog by Shona Cocksedge, Solicitor

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