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7 December 2020

What does the Conservative retreat over the Internal Market Bill mean?

The decision makes a no-deal Brexit less of a threat to Northern Ireland, while boosting the prospect of reaching a deal. 

By Ailbhe Rea

The UK government has said it will drop the international law-breaking clauses in its controversial Internal Market Bill – if it reaches agreement in the joint committee with the EU over how to implement the Northern Ireland protocol.

What does that mean? And how does it affect the chances of striking a Brexit deal? 

The Northern Ireland protocol was negotiated by Boris Johnson last October, as part of the withdrawal agreement that saw the United Kingdom leave the European Union on 31 January of this year. It comes into effect when the transition period ends on 1 January 2021, whether or not there is a trade deal between the UK and EU. It is a safety net so that, regardless of future trade arrangements, there won’t be a hard border on the island of Ireland; instead, there will effectively be a border in the Irish Sea, as goods coming into Northern Ireland from Great Britain are subject to the EU’s customs rules. A trade deal would mean some checks under the Northern Ireland protocol would still be necessary, but there would be no need to impose tariffs; no trade deal, however, would mean tariffs would have to be applied between Great Britain and Northern Ireland, with far greater disruption.

The exact arrangements for implementing the Northern Ireland protocol are not being decided in the trade negotiations between Michel Barnier and David Frost, but in a separate forum called the UK-EU joint committee, chaired by Michael Gove and the European commission vice-president Maroš Šefčovič. It was only in September that the joint committee’s separate negotiations cropped up in the context of the trade talks, as the UK government claimed that the EU was threatening to implement the protocol unfairly or egregiously, and responded by unveiling its Internal Market Bill, which would see the UK break international law in a “specific and limited way” by refusing to implement those checks on goods coming into Northern Ireland from Great Britain. Those goods would still need to be checked, however, prompting concern internationally that the UK’s plans to renege on its legal commitments would see the recurrence of a hard land border between Northern Ireland and the Republic of Ireland, threatening peace and stability.

[see also: Is the UK heading for a no-deal Brexit?​]

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Yet today, in a statement published on its website, the UK government has declared that “good progress” has been made in the joint committee in areas where it had accused the EU of overreach, and that “if the solutions being considered in those discussions are agreed, the UK Government would be prepared to remove clause 44 of the UK Internal Market Bill, concerning export declarations”, as well as potentially removing the offending clauses on state aid rules. 

The announcement has been wrongly interpreted by some to mean that the government won’t break international law if a trade deal is struck. In practice, the government was unlikely ever to implement the Internal Market Bill and break international law if there was a trade deal (because, basically, there wouldn’t be any need to); the real risk was a “no deal” scenario. All this announcement does on a technical level is offer reassurance that, deal or no deal, the government intends to respect its international obligations and implement the Northern Ireland protocol; if anything, it makes no deal a slightly less alarming prospect for the EU. 

But coming at this point, as trade talks reach a crunch point and with no deal looking increasingly likely, the UK has offered an olive branch in parallel negotiations, and changed the mood. Some might say it is a perverse tactic to use stability on the island of Ireland as a bargaining chip in negotiations, only then to send a gesture of goodwill by taking that option off the table again. But that is the intended effect. By signalling its willingness to remove the law-breaking clauses in the Internal Market Bill and making progress in the joint committee, the government has removed one of the dark clouds hanging over trade negotiations and the single biggest thing corroding trust between the two sides. Just like that, no deal is a slightly less worrying prospect for Northern Ireland, and striking a deal looks slightly more likely.

[see also: No EU trade deal can undo the harm Brexit has inflicted on the UK​]