Summary

• Ongoing talks on Brexit between Britain and the EU seem to be on the edge of a collapse due to the UK’s inflexibility over the Internal Market Bill.
• Britain rejected EU’s request of not going ahead with legislation that would not apply the Northern Ireland Protocol.
• The Northern Ireland Protocol is a key part of the withdrawal agreement that was negotiated a year ago.
• Nancy Pelosi, Speaker of the US House of Representatives, cautioned that the US-UK trade deal could suffer in case the UK goes against the international trade treaty.

The ongoing talks on Brexit between Britain and the European Union (EU) seemed to be on the edge of a collapse due to the UK’s inflexibility over the Internal Market Bill. The Boris Johnson's government has not agreed to a request from the EU that Britain need not go ahead with legislation that would not apply the Northern Ireland Protocol, a key part of the withdrawal agreement that was negotiated almost a year back.

The EU has warned of a legal action to restrict the British move, which pressurizes the Tory government from the Democrat party of the United States (US). It has given a deadline to pull out of the Internal Markets Bill by end-September 2020 and has described the matter as quite serious. Michel Barnier, the chief EU negotiator is yet to release a public comment. But, the talks on the UK’s future relationship with the EU are seen to be disintegrating.

Maros Sefcovic, vice president of the European Commission (EC) was in London on 10 September 2020 for emergency talks and requested that the UK withdraws from the internal market legislation. Sefcovic commented that it violated the international law and it depends on the UK government to reinstate the trust. He stressed that if required Brussels was prepared to go ahead with legal action. The withdrawal agreement has several mechanisms and legal solutions to counter any violations of the legal obligations. Sefcovic mentioned that the EU could potentially use these mechanisms.

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With €1 billion worth of weekly EU exports to Britain, it is cautioned that the UK might have decided to crash out without a deal. However, in the absence of a deal, it is expected that there could be significant loss in sales and jobs in Britain from the start of 2021. EU officials clarified that if the UK continued with its bill it would hurt the positive sentiments to conclude a trade agreement.

Michael Gove, Britain's chief Brexit minister, stated that he had clarified to Sefcovic that the UK could not and would not do that, adding further that the UK was determined to implement the protocol. However, it was needed to ensure that the implementation is done in a manner to respect the fact that Northern Ireland is an integral part of Britain. It forms the part of the customs zone.

In the meantime, the Internal Markets Bill is supposed to be introduced on the floor of the House of Commons and would be eyed closely. This would be done amid the situation of the Irish government’s monitoring levels of restlessness within the Conservative Party.

Comments from leaders in Ireland

Taoiseach Micheál Martin, a politician from Ireland reiterated on 10 September 2020 that he was not confident about the UK reaching a trade deal with the EU. He cited the views regarding high tariffs on exports. Mary Lou McDonald, a leader from Sinn Féin in Ireland commented that the UK government has infringed an international commitment and needed to come back in line.

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US-UK trade deal to suffer if UK violates international treaty

Nancy Pelosi, Speaker of the United States House of Representatives, cautioned that the US-UK trade deal is expected to suffer in case the UK goes against the international trade treaty. Pelosi said that the UK would not be in a position to grab the trade deal with the US if it underscores the treaty that brought peace to Northern Ireland after years of violence. Pelosi was skeptical and demanded how Britain could recede from an international deal. Pelosi's comments followed the UK’s determination on the Internal Market Bill.

The UK government claimed that its Internal Market Bill is structured to make sure that trade between the four nations of the UK remained unregulated in case of a no-deal Brexit situation. The UK’s admission that it would break the EU withdrawal agreement did not suit the top Democrats in the US. The Democrats worried that it could destabilise the Good Friday agreement of 1998 that was instrumental in bringing peace to Northern Ireland after decades of unrest.

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What happens if the Internal Market Bill becomes a law?

The British administration insisted that the legislation would not undermine the Good Friday agreement but protect it. However, the EU was not in agreement that the draft Bill aimed to protect the Good Friday (Belfast) Agreement. In case, the Internal Market Bill gets sufficient vote to make it into a law, then it would overwrite the fundamentals of the Brexit deal that UK Prime Minister (PM) Boris Johnson signed with London in 2019. In particular, it would affect the Northern Ireland protocol that removed the need for a hard border between Northern Ireland and the Republic of Ireland as per Good Friday agreement.

It is to be noted that the Good Friday agreement holds specific importance to the US Democrats as former President Bill Clinton played a crucial role in bringing together the different sides of the divide in Northern Ireland.

Will the UK-US trade deal be impacted?

Pelosi's comments would be seen in an important light by the UK. Many prominent Brexiteers have felt that the UK’s ability to sign international trade deals would serve as one of the crucial outcomes of leaving the EU. Being a member state and part of the EU's market and customs union, the UK could not bargain for its trade deals. A delegate from the EU represented the UK at the World Trade Organisation (WTO).

The UK-US trade deal has been given substantial importance due to the vast size of the US economy, the traditional relationship between the UK and the US, besides the fact that the US is Britain’s largest single trading partner. It is to be noted that the trade relationship is quite strong without the two countries having a formal trade deal in place.

Conclusion

The ongoing developments in the discussions on Brexit between the UK and EU took a significant turn with UK’s determination to legislate the Internal Market Bill. This development in the event looked as if the ongoing talks stood at the brink of a collapse. Given the non-pleasant arguments over legislation as well as a vast list of other outstanding issues that still needed to be resolved in the bilateral trade talks and time inching closer, neither Britain nor the EU wanted to be a pioneer and step out of the talks. In another twist to international trade deals, the UK-US trade deal also seemed to gather importance with comments from Nancy Pelosi, Speaker of the United States House of Representatives. Pelosi feared that the trade deal between the UK and the US would suffer if Britain goes against the international trade treaty. It remains to be seen if the Internal Market Bill becomes a law and what happens in due course of time.