EU is losing leverage over a London no longer bound by its word

The Brexit process has upended expectations about how Britain is governed and how its politics are conducted. On Wednesday there was a further move into unprecedented territory when the British government unveiled legislation that it openly admits violates international law by going back on commitments it signed up to less than a year ago in the EU Withdrawal Agreement.

This course of action will be damaging to the reputation of the United Kingdom but, unfortunately, the way the Brexit process has played out means that the EU has lost much of the leverage it had to hold the British government to the promises it made.

The threat to the arrangements set out in the Northern Ireland protocol to the Withdrawal Agreement comes from the British government’s Internal Market Bill. This Bill is intended to deal with the consequences of Brexit for the internal market of the UK for the devolution settlement with Scotland, Wales and Northern Ireland.

Because EU law guarantees free movement of goods and services, for as long as the UK was subject to EU law the devolved legislatures were limited in their ability to use their powers in ways that restricted that freedom of movement between the different parts of the United Kingdom.

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Now that Brexit has removed this constraint, the British government wants to pass a law to impose some of the free movement guarantees previously provided by EU law between the various parts of the UK in order to prevent the devolved parliaments from legislating in ways that hinder free movement of goods and services within the UK.

State aid

However, under the Withdrawal Agreement, Northern Ireland cannot be fully part of the UK internal market as the agreement provides that it will, in effect, remain part of the EU single market for the purposes of free movement of goods. This means that Northern Irish enterprises would have to complete customs formalities when they send goods from Northern Ireland to Britain and that the EU would be entitled to vet state aid decisions (decisions to subsidise companies with state money) that could affect the goods market in Northern Ireland.

The Bill violates the agreement by including provisions overriding commitments in the Withdrawal Agreement that force British courts to follow EU law rather than UK law in relation to key matters of state aid and customs issues as they relate to Northern Ireland.

This threat to violate the Withdrawal Agreement may be intended to put pressure on the EU to make further concessions in the ongoing Brexit negotiations. Even in the unlikely event that this succeeds in forcing a move in the EU position, this gambit will cause lasting damage to the international reputation of the United Kingdom.

For a country to renounce obligations that it explicitly signed up to less than a year ago does lasting reputational damage. The United Kingdom government has ambitions to conclude a wide range of free-trade agreements with non-EU countries in the near future. How will these countries be able to negotiate with the UK when it becomes clear that the British cannot be trusted to comply with the deals they sign up to? Many senior figures in the UK are aware of how bad the damage will be. The head of the government legal department has resigned and the Internal Market Bill may now face strong opposition in the House of Lords.

Hard Brexit

That said, the worry for the Irish Government is that much of the leverage that the EU held over the UK has now disappeared. Throughout the Brexit process, the main source of EU leverage over the UK has been the threat of restriction of British access to the EU single market.

However, it is now clear the Johnson government is committed to a very hard Brexit. Even if a deal is concluded, it will involve very major restrictions on British access to the EU single market. Because the UK is hellbent on a course of action that involves major loss of access to the single market, the EU’s main negotiating threat (the loss of such access) has lost much of its force.

Without that threat, the EU will be reliant on the enforcement provisions of the Northern Ireland protocol of the Withdrawal Agreement. These provisions provide for arbitration of disputes. The arbitration panel is restricted to imposing financial penalties or permitting the EU to retaliate by refusing to honour its own Withdrawal Agreement commitments. None of these will prevent the hardening of the border between the Republic and Northern Ireland if the British government is determined to bring this about.

The Brexit situation has become very worrying. Even if the Johnson government backs down, significant damage will have been done as states will now know that Britain does not consider itself bound by its word.

Worse, with such a short window of time remaining, any deal that ultimately emerges will be very limited and will involve major disruption to trade between the UK and Ireland. The Covid crisis also means that businesses have been unable to devote time and resources to Brexit planning, and face an uphill struggle to make preparations in the short time remaining. With the economy already reeling from the pandemic, these are worrying times.

Ronan McCrea is professor of constitutional and European law at University College London