How does the Internal Market Bill breach the EU Withdrawal Agreement?

On Wednesday the government asked parliament to vote for a bill that would enable ministers to break an international treaty. The Internal Market Bill, which aims to ensure that the UK’s own internal market is legally ready after the end of the Brexit transition period, says that ministers would have the power to override international law, and in particular the EU Withdrawal Agreement. What exactly does the government propose?

First of all, it should be noted that the government does not say that it is trying to denounce the entire withdrawal agreement. Nor does the bill try to give the government powers to breach all of it. There are no powers proposed, for instance, to breach the rules on the rights of EU citizens staying in the UK, or the financial settlement. Instead, the bill proposes to give ministers power to breach some—but not all—parts of the protocol agreed with respect to Northern Ireland.

In particular, the bill gives ministers two such powers. The NI protocol states that the UK has to comply with any EU rules on exports which stem from the EU’s international obligations. The reasoning is that goods might pass from Ireland to Northern Ireland without being checked, providing an opportunity to evade any law governing those exports. If passed, the new bill would enable ministers to implement their own rules on export declarations and other procedures for products moving from NI to GB, in effect deciding that international law need not apply. Obligations in the withdrawal agreement might be overridden.

The state aid clause is more blatant, stating that the minister can disapply the state aid article in the NI Protocol, designed to ensure the free trade in goods between NI and the EU is not distorted by subsidies. The bill specifically states that ministers can block key parts of that article: the jurisdiction of the European Court of Justice to rule on state aid which “affects” trade between NI and the EU, and the power of the commission to make decisions on such state aid based on the protocol. Competing companies can also be blocked from going to UK courts to complain about UK state aid decisions.

Further, the bill makes clear that these two clauses, along with any regulations to give effect to them, apply in UK domestic law notwithstanding international law, including the withdrawal agreement and the protocol.

The bill does not contain any provision on products moving from Great Britain to Northern Ireland or entering Northern Ireland from non-EU countries. Where goods might pass through without being checked, providing an opportunity to evade EU law governing imports, the protocol mostly provides for the Joint Committee made up of EU and UK politicians to negotiate further. Alarmingly, it has been reported that an upcoming finance bill will deal in a similar way with this issue.

Even though it may be argued that the Internal Market Bill, if adopted, does not immediately breach the NI protocol, because ministers are not explicitly obliged to use the powers to disapply it, it would still be a breach of the obligation in the withdrawal agreement to provide for UK law to give supremacy to the WA in the event of any conflict. Although the UK’s Withdrawal Agreement Act refers to the principle of parliamentary sovereignty, this principle is not in the withdrawal agreement itself, and international law is clear that the domestic law of a country signing up to a treaty is not a justification for a breach of that treaty.

In the national courts, if adopted as an Act of Parliament, the judges would likely accept that the principle of parliamentary sovereignty meant that the Internal Market Act, not the withdrawal agreement, was the law of the land. Any legal remedy by the EU would be at the international level, trying to use the dispute settlement process in the withdrawal agreement to pressure the UK. Alternatively or additionally, the EU might focus on political pressure—for instance, calling off trade talks with the UK, and not proceeding with decisions to recognise UK data protection and financial services law as equivalent to its own.

The proposed bill might be amended, or delayed for a year by the House of Lords. If it does go through, time will tell whether it is part of the process of a breakdown in relations between the UK and EU, or part of the endgame in fractious, but ultimately successful, trade talks.