UK Brexit Bulletin: Friday September 18

The Government has secured a deal with Tory rebels unhappy about the proposed Internal Market Bill breaching international law

• Rebel Conservative MPs Bob Neill and Damian Green secured an agreement with Prime Minister Boris Johnson to table an amendment to the Internal Market Bill which will give MPs a vote to approve the implementation of ministerial powers to override parts of the Withdrawal Agreement. The Government will also put forward a second amendment which will limit the prospects of any judicial review into the use of the provisions.
• The Prime Minister also agreed that the powers should be used “in parallel” with the “appropriate formal dispute mechanism” set up under the Withdrawal Agreement “with the aim of finding a solution through this route”.
• The agreement comes after the Government saw off a mini-rebellion in the House of Commons over the first vote of the Internal Market Bill,  which passed by 340 votes to 263. The vote saw only two Conservative MPs vote against the bill and almost 30 abstain.
• The deal makes it easier to get the bill through the House of Commons, however it will not address EU concerns as the bill still threatens to break international law.
• The EU believe that if the bill were to become law that would in itself breach international law, they argue that Article 4(2) of the Withdrawal Agreement requires the UK to ensure its domestic primary legislation allows for the “direct effect” of EU law. Killing off that direct effect by passing the bill would mean an immediate breach, whether or not the powers are used at a later date. The later use of those powers would amount to a second breach of the Withdrawal Agreement under Article 4(1).
• However the Johnson insists that the measures are needed as a safety net and accused the EU of threatening to stop food from flowing between Great Britain and Northern Ireland by declining to give the UK third-country listing status.
• Under the terms of the Withdrawal Agreement, export of “products of animal origin” such as meat, fish, shellfish, eggs and dairy from Great Britain to Northern Ireland will become subject to EU oversight. The EU has a “third country” list of approved third parties that can legally import agricultural goods into areas subject to their rules.
• However EU chief negotiator, Michel Barnier, dismissed the notion that the EU threatened the UK and insisted that the EU simply wanted to know what the UK’s agricultural standards will be after Brexit.
• Many experts have dismissed the notion that the EU could threaten to block food flow from Great Britain to Northern Ireland for two reason: Firstly under the Withdrawal Agreement  the UK has sole authority for implementing the Northern Ireland protocol; secondly Article 16 in the protocol, allows the UK to “unilaterally take appropriate safeguard measures” if implementing the protocol leads to “serious economic, societal or environmental difficulties.”

European Commission President Ursula von der Leyen has said she is ‘convinced’ that an EU-UK trade deal is still possible

• Von der Leyen insisted that EU-UK trade talks should continue, with the dispute over the Withdrawal Agreement kept at arm’s length from the sides’ future relationship negotiations.
• EU diplomats have said they will not take decisions on whether to initiate legal action against the UK over the Internal Market bill until after the next formal round of trade talks with the UK, which are scheduled to take place at the end of this month.
• Meanwhile UK officials are reported to have said that significant progress was made at last week’s EU-UK talks on trade in goods and services, while EU officials have reported some progress on fishing. However level-playing field commitments on competition, labour and environmental standards remains a stumbling block.
• Meanwhile the EU has moved ahead with plans to allow the UK’s clearinghouses to keep servicing EU clients and clearing euro derivatives after the Brexit transition up until 30 June 2022.
• The UK currently accounts for 90% of euro-denominated, over-the-counter interest rate derivatives. Making the UK’s clearinghouses critical for European financial markets to function.
• The EU hopes the 18-month reprieve will give the UK more time to negotiate a permanent arrangement and give European banks time to reduce their dependence on UK infrastructure, and a chance for EU clearinghouses to boost their capacity to clear the trades themselves.

Other Brexit news 

• The Government has tasked Conservative MP John Penrose to lead a review on how to bolster the UK’s competition policy after Brexit. The review will look into what changes to bring to the competition regime to meet the Government’s policy aims. The goal of the review is to “cement the UK’s position as a leader in this field,” the Government statement said.
• The French government will reimburse €30 million in payroll costs to French ferry companies hit by the Covid-19 crisis and Brexit, Prime Minister Jean Castex said.
• It has been reported that the Government is planning to use the land at Ebbsfleet International station as a for a lorry park for post-Brexit customs checks if the UK leaves the EU without a deal.
• The Treasury has announced plans to withdraw the VAT retail export scheme for ​non-EU visitors after the end of the Brexit transition period on 31 December. The scheme has allowed visitors from beyond the EU to claim a refund on the VAT on items bought in the UK and taken home. Businesses had hoped to see it extended to EU visitors next year.
• Joe Biden has said he will not allow peace in Northern Ireland to become a “casualty of Brexit” if he is elected US President in November. The Democratic candidate for President said any UK-US trade deal had to be “contingent” on respect for the Good Friday Agreement. Foreign Secretary Dominic Raab has been trying to reassure US politicians about the latest Brexit developments during a trip to Washington. US Secretary of State Mike Pompeo said he trusted the UK to “get this right”.
• The Government’s law officer for Scotland, Lord Keen, has offered his resignation to the Prime Minister over the Internal Market Bill.