Brexit Internal Market Bill – the 3 issues

8 Dec update - the UK has agreed via the UK-EU Joint Committe on Northern Ireland that it will fromp the controversial terms below on NI-GB customs and state. The same for the NI-GB tariff clauses proposed in the Taxation Bill scheduled for 8 December 2020.

The UK government is planning to give itself new powers to override elements of the Brexit Withdrawal Agreement via a new piece of legislation, the Internal Market Bill (‘the Bill'). The issues at stake cover: movement of goods from Northern Ireland ('NI') to the rest of the UK ('Great Britain' or 'GB'); state aid provisions; and an override (ouster) clause.

The UK's House of Lords has already rejected clauses in the Bill. However, it returns to the UK House of Commons on 7 December. In addition, the Brexit Taxation Bill add customs duties and VAT powers to this.

• 1 Movements of goods from NI to GB – Clause 42, Internal Market Bill

As part of the Brexit Withdrawal Agreement signed in January 2020, the Northern Ireland Protocol put NI in dual positions within the EU / UK Customs Unions, Single Markets and VAT regimes. This was to prevent the need for customs border controls between NI and Ireland. The Protocol instead moved the port of entry and checking to NI ports. This included EU checks on GB goods coming to NI. 

This status comes into effect on 1 January 2021 irrespective if the EU and UK sign a Free Trade Agreement (FTA). Without this, this would mean exit export paperwork and some checks on sending goods from NI to GB. The UK government now wishes to take powers to stop this requirement for controls or paperwork within the UK customs unions, breaking the Brexit Withdrawal Agreement.

• 2 Modify state-aid provisions – Clause 43, Internal Market Bill

Within Article 10 of the Brexit Withdrawal Agreement is the right of the EU to act against any state aid granted by the UK to businesses with NI links - known as 'reach back’. This is to maintain the rule of the EU Single Market in NI.

In Article 43 of the Internal Market Bill, the UK government is seeking powers to be able to interpret Article 10 in any way it sees fit. The UK is concerned that Article 10 is loosely defined, and the EU could use it to interfere in broader UK measures, such as UK cuts in Corporation Tax, that it could claim have some ‘trade effect’ in NI.  The EU claims the UK government has so far failed to define its state aid policies and objectives for it to agree to, and so the EU has refused to trim down Article 10 in a way that suits the UK.

• 3 Override clause – Clause 45, Internal Market Bill

Lastly, the Internal Market Bill contains an ‘ouster clause’, aimed at excluding UK courts from judicial review over the Bill. These type of measures are often cut back by courts as inconsistent with the rule of law and the courts’ ability to scrutinise the executive branch of the government.