[PRIMER] UK Internal Market Bill for Brexit to be published, 'annulling' parts of the Withdrawal Agreement; timing TBC but likely ~12:30BST/07:30ET

The Bill

• The Internal Market Bill was initially proposed in July and is designed to outline how the UK Gov’t will ensure trade can occur between the UK, England, Ireland & Scotland without barriers; via the creation of one set of common rules to replace the EU equivalent. Additionally, it ensures that external trade partners have access to the UK as a whole on one unified set of trade terms/rules, to avoid having different standards for each of the devolved Gov’ts.

Northern Ireland

• Regarded as the most important component, and the primary section of focus for today’s expected announcement is the Northern Ireland Protocol. Essentially, the protocol avoids a hard border within Ireland in the scenario of a no-deal Brexit via including Northern Ireland within the UK customs union, so it complies with the Internal Market Bill overall; but, also compelling N. Ireland to adhere to some EU trade rules in order to allow the ‘borderless’ movement of goods into the Republic of Ireland. Note, while this avoids a hard border it is accepted that there will be some goods/custom processes at the divide but items entering from the UK should not be tariffed unless it is seen as likely they could then pass to the EU itself.

Today’s Announcement

• Later in the session (timing TBC, likely ~12:30BST) the Gov’t is to publish the Internal Market Bill which will reportedly annul sections of the Brexit withdrawal agreement, specifically relating to the aforementioned Northern Ireland Protocol. At present, it is not clear as to what the specific changes will be but multiple reports (initially via FT) state the legislation would override key parts of the treaty eliminating the legal force of the Withdrawal Agreement relating to Northern Ireland as well as state aid. Explicitly, the FT reported the bill will say the UK Gov’t retains the right to set its own regime which would place UK law in opposition with obligations under the agreement – which would be seen as a breach of international law; Northern Ireland Secretary Lewis has since stated this legislation would breach international law in a specific & limited way, a fact which has prompted the resignation of the Gov’t most senior lawyer.

Ramifications

• Northern Irish and Scottish ministers have pushed back on these plans saying that this would significantly increase the likelihood of a no-deal Brexit and impact on the UK’s ability to come to trade agreements elsewhere in the future. Ireland specific, Social Democrat & Labour Party (SDLP) leader Eastwood has commented this risks a hard border and the undermining of the Good Friday agreement; of which the US is a guarantor and as such could factor into UK-US trade discussions – particularly if Democratic Candidate Biden wins the November election. With similar responses from various EU Officials and the Chief Brexit Negotiator Barnier demanding the political agreements from the Withdrawal Agreement are translated legally into the treaty. Within the UK Conservative Party, reports via Eurasia citing senior sources, state that Chancellor Sunak, Foreign Secretary Raab and Cabinet Minister Gove have concerns about the attempt to alter the agreement; unsurprisingly, this has been strongly denied by the Gov’t.


• The annulment of the deal could significantly derail Brexit talks, the extent of which is impossible to determine until the bill is published and lawyers from both sides of the channel debate the legal ramifications. As a guide, the Eurasia group’s Rahnman posits it is hard to see trade negotiations occurring under such circumstances and that the potential for a last minute ‘tunnel’ as we saw last year is ‘arguably dead’.

Next Steps

• After the bill’s presentation, MPs are expected to have at a minimum 4-days to debate it within the House of Commons before casting their judgement on it; during this time, it is likely the EU will release their take on the amendments and, given that we are close to the cut off point for a deal to be ratified, may elect to explicitly outline the likely negative implications of it on final stage negotiations.

09 Sep 2020 - 08:25- Research Sheet- Source: Newsquawk