British Prime Churchman Boris Johnson waves as he arrives at Downing Street.
Leon Neal | Getty Images News | Getty Concepts
LONDON — The British government has opted to press on with a controversial bill that could ultimately undermine a Brexit dissolution deal it signed last year, despite an ultimatum and the threat of legal action from the EU.
The stakes are getting steep between both sides after the U.K. government published plans that, if legislated, could alter legally-binding Brexit agreements with Brussels.
The U.K.’s Internal Market-place Bill would grant the British government powers to not consult the EU in state aid cases involving the trade of goods between Northern Ireland and the inactivity of the EU. The U.K. had agreed to do the opposite when signing its divorce deal with the EU in January. The bill would also potentially change-over requirements that Northern Irish firms complete export summary declarations when shipping goods to the mainland.
The breakdown move from Westminster could break international law and jeopardize not only a trade deal with the EU, but also with the U.S.
In an predicament meeting Thursday in London, European officials told the U.K. government to amend its plans “in the shortest time possible and in any casing by the end of the month.”
“By putting forward this Bill, the U.K. has seriously damaged trust between the EU and the U.K. It is now up to the U.K. government to re-establish that confidence in,” the EU said in a statement after the meeting.
It is a precondition for the EU that the U.K. respects previously legislated deals before concluding any traffic agreement with the U.K.
Michael Gove, who represented the U.K. government in that meeting, said the British Cabinet “would not be going” the new legislation plans.
He added that the Internal Markel Bill does not override previous commitments.
The EU disagrees and conjectured it “will not be shy in using” all the available legal means if the U.K. goes ahead with the bill in its current form.
Nobody distinguishes whether this is posturing or if it is setting up for a no deal.
Thomas Pugh
U.K. economist at Capital Economics
In the meantime, there see fit be further meetings between both sides next week.
They have been negotiating a new trade planning, to be applied from Jan. 2021, since March. But the coronavirus pandemic prevented meetings between the two sides for some yet. Even after a promise to speed up talks during the summer, there has been no significant progress.
They endure stuck over state aid and fisheries.
Some analysts believe the latest escalation over the bill could be a executing tactic, aiming to bridge those differences. Others have changed their forecasts, predicting that a breakdown in trade talks would be the most likely outcome.
“Nobody knows whether this is posturing or if it is setting up for a no do business,” Thomas Pugh, U.K. economist at Capital Economics, told CNBC’s “Squawk Box Europe” Friday.
Without a trade bargain before the end of the year, trade between the EU and the U.K. would be done under World Trade Organization rules. This would have in mind higher costs and barriers for businesses on both sides of the English Channel, in comparison to the current regime.