EU to Start Legal Action Against U.K. on Internal Market
EU to Start Legal Action Against U.K. on Internal Market Today
The European Union is starting legal proceedings against the U.K. over Boris Johnson’s plan to breach terms of its Brexit divorce deal and break international law.
“The commission has decided to send a letter of formal notice to the U.K. government,” European Commission president Ursula von der Leyen announced in Brussels on Thursday. “This draft bill is by its very nature a breach of the obligation of good faith laid down in the Withdrawal Agreement.”
The pound dropped by 0.7% against the dollar on the news. The letter is the first step in a legal process against the U.K.’s Internal Market Bill that could result in a lawsuit at the European Court of Justice.
While the move is of little immediate consequence, it highlights that tensions are high as trade negotiations enter a critical phase. Von der Leyen gave the U.K. one month to reply.
A statement from Johnson’s office indicated the government would “respond to the letter in due course.”
The U.K. was expecting the letter and the European Commission sends dozens of such notices to member states each month over various instances of alleged breaches of EU law. An exchange of letters and explanations follow, before some of these cases reach the EU’s courts.
It’s not unusual for the EU to take legal action against countries and as soon as the U.K. acknowledged that its plan was in breach of the Withdrawal Agreement, such a move became inevitable. But officials on both sides say privately that they don’t want it to overshadow negotiations on a future trade deal. They hope that if they get an agreement on that, fuss over the legal action will quietly fade into the background.
Back in U.K.
Prime Minister Boris Johnson has risked a chaotic and bitter separation from the EU with his plan to introduce legislation that would override parts of the Brexit withdrawal agreement he signed, which would be in conflict with international law.
Critics, including all five living ex-U.K. prime ministers, say the law will damage the U.K.’s standing in other international disputes.
The Internal Market Bill cleared its final stage in the House of Commons on Tuesday and will move to the House of Lords, where Johnson’s Conservative Party doesn’t have a majority. Ministers expect the bill to be savaged there, according to people familiar with the matter.
Defeat for Johnson would deprive him of negotiating leverage in the final stages of trade negotiations with the bloc.
The bill had been seen as an attempt by the U.K. to get better terms from the EU by threatening the status of Northern Ireland. Without a deal, the U.K. will crash out of the bloc’s single market and customs union on Dec. 31, saddling businesses and consumers with additional costs and disruption.
Court Oversight
The U.K. has agreed that for treaty obligations breached before the end of the transition period, it is still subject to rulings by the European Court of Justice for another four years. But the British could choose to ignore them, especially if they include financial penalties, in what would constitute another treaty breach.
The Withdrawal Agreement provides for a five-member arbitration panel to rule on matters of non-compliance from next year. Again, the panel may impose financial penalties. If the U.K. still refuses to pay, the EU can suspend the Withdrawal Agreement at will, except the parts on citizens’ rights.
The biggest penalty would be for the EU to refuse to enter into any trade or other agreement with the U.K., depriving Britain of access to its biggest and closest economic partner.
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