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Vulcan Insight | Post-Brexit Talks Escalate Over UK Plans to Break Withdrawal Agreement

As the EU chief Brexit negotiator headed to London for the eighth round of post-Brexit negotiations, the underlying tensions between the EU and UK Government finally reached breaking point after a series of aggressions, this week. The deep-seated divisions and mounting tensions between Michel Barnier and his UK counterpart David Frost have become increasingly apparent over the past few weeks, with the two men publicly accusing each other, or the institutions they represent, of everything from stalling progress to refusing to engage with the realities of modern trade talks.

This week marked yet another escalation when, firstly, Mr. Frost declared that the UK would refuse to accept any level-playing field conditions – one of the EU’s two negotiating red lines – followed by UK Prime Minister Boris Johnson publicly setting EU leaders a deadline of 15 October to reach a deal or his Government would “move on” and walk away from the discussions.

The UK Government’s posturing over the weekend, broadly considered by EU policymakers as yet another attempt at setting the conditions for blaming the EU should negotiations fail, was quickly trumped by a staggering leak in the Financial Times and subsequent admission by Secretary of State for Northern Ireland, Brandon Lewis, that the Government intended to unilaterally undermine and change the EU-UK Withdrawal Agreement’s Northern Ireland Protocol through its UK Internal Market bill. An act Mr. Lewis admitted would “break international law in a specific and limited way” in the House of Commons.

The EU-UK Withdrawal Agreement, an international treaty negotiated over 18 months, co-signed by UK Prime Minister Johnson and ratified by the UK and European Parliaments, set the legal framework which enabled the UK to exit the European Union earlier this year ahead of a departure from its Single Market and Customs Union on 31 December. Crucially, the Agreement’s Northern Ireland Protocol, in a deal personally negotiated by Prime Minister Johnson, lays out the conditions under which Northern Ireland will remain in the EU’s economic and customs remit to prevent the re-emergence of a hard border on the island of Ireland.

According to the Government, the bill is designed to “protect jobs and trade” by in fact establishing a domestic state aid subsidy regime that would enable London to provide financial assistance to Northern Ireland, Wales and Scotland following the departure from the Single Market and Customs Union. So far, David Frost’s refusal to sign on to EU state aid limitations and controls (a level-playing field for open and fair competition) had been one of two major stumbling blocks preventing negotiations from moving forward.

It was, however, the bill’s text, which in quite blunt terms encourages Ministers to break “any provision of the Northern Ireland Protocol [and] any other provision of the EU Withdrawal Agreement”, and make Regulations which disregard “any other legislation, convention or rule of international or domestic law whatsoever, including any order, judgment or decision of the European court or of any other court or tribunal”.

Unsurprisingly, Wednesday’s publication of the Internal Market bill raised so much concern in both Brussels and national capitals, that European Commission Vice President Maroš Šefčovič, co-chair of the Joint Committee on the implementation of the Withdrawal Agreement, called an extraordinary meeting with Michael Gove on Thursday. Extraordinarily, the meeting was also attended by representatives of several EU countries to further underline the EU’s unease with the proposed bill.

According to a statement released by the Commission following the meeting, Vice President Šefčovič stated in no uncertain terms that “the timely and full implementation of the Withdrawal Agreement, including the [Northern Ireland] Protocol is a legal obligation” and that the EU fully expects it to be upheld. In a sign of how tense the meeting was, Mr. Šefčovič added that “violating the terms of the Withdrawal Agreement would break international law, undermine trust and put at risk the ongoing future relationship negotiations.”

With the full backing of the EU27, Vice President Šefčovič also informed Mr. Gove that the EU “does not accept the argument that the aim of the draft bill is to protect the Good Friday (Belfast) Agreement, [and] in fact, is of the view that it does the opposite,” before setting the UK Government a deadline of the end of the month to “withdraw the measures from the draft bill.” While not specifically floating an end to negotiations, it would be one of a number of mechanisms and legal remedies available to the Commission.

Vice President Šefčovič’s sentiment was echoed by EU chief negotiator Michel Barnier, who in a statement following the conclusion of the eighth round of negotiations on Thursday reiterated that “for the EU, its Member States and the European Parliament, any future economic partnership, regardless of its level of ambition, must ensure that competition is both free and fair.” While clearly attempting to de-escalate the tensions building, Mr. Barnier also warned that the characteristics of modern trade agreements such as ensuring sustainable and fair partnerships with high standards in areas like the environment, climate, employment, health and safety, and taxation were “at the heart of EU trade policy.”

Despite the EU chief negotiator’s language, it did not raise the prospects of negotiators finding any sort of agreement before the end of October, with Mr. Barnier arguing that the UK continued to refuse to give guarantees on fair competition, non-regression from social, environmental, labour and climate standards, as well as engage credibly on horizontal dispute settlement mechanisms, essential safeguards for judicial cooperation and law enforcement, fisheries, or level playing field requirements in the areas of transport and energy. Moreover, he also added that “there are also many uncertainties about Great Britain’s post-Brexit sanitary and phyto-sanitary (SPS) regime, and that more clarity would be needed for assessing whether to grant the UK third-country status. Without such status, there would be significant non-tariff barriers on UK food, livestock and agricultural exports entering the EU. In some cases, goods not deemed to be in compliance with EU SPS standards may even be barred from entering the EU’s Single Market.

Compliments of Vulcan Consulting – a member of the EACCNY.