Brexit update: what could Boris Johnson’s Internal Market Bill mean for future trade deals?

Brexit update: what could Boris Johnson’s Internal Market Bill mean for future trade deals?

UK Prime Minister Boris Johnson has submitted a bill that would undermine parts of the Brexit agreement and break international law. The bill was backed by MPs in the Commons 340 votes to 263 and would enable free movement of goods and services across England, Wales, Scotland and Northern Ireland after Brexit. This new law would give the UK government the power to override the legally binding withdrawal agreement between the UK and the EU.

Turmoil in Parliament…

The bill was submitted to the Commons after PM Boris Johnson accused the EU of making unfair demands to “exert leverage” during trade talks. The British PM suspects the EU will enforce excessive checks and tariffs on goods crossing the border between Great Britain and Northern Ireland and that his suggested bill will ensure the country’s “economic and political integrity”. Tory MPs in favour of the bill have argued that it will keep the peace in Northern Ireland as well as protect jobs in all parts of the UK.

More sceptical MPs, from both Conservative and Labour parties, have argued that Boris Johnson is attempting to undermine his own Brexit deal, while “trashing” the UK’s international reputation, thus jeopardising future deals with other countries.

…and overseas

European governments have interpreted the UK government’s move as a tactic to get the EU to make a number of concessions on trade talks. European Commission Vice President Valdis Dombrovskis has threatened to freeze trade talks until the Internal Market Bill is scrapped. He has reportedly expressed concern about the UK government’s “behaviour” and said that “If the UK does not comply with the exit agreement, there will no longer be a basis for a free trade agreement between the EU and the UK”. However, EU ambassadors have agreed to continue negotiations while a legal case is being built against Britain for breaching the withdrawal agreement.

On the other side of the Atlantic, US democrats have warned that the UK will not secure their congressional support for a free trade deal between the UK and the US, should the UK reinstate a hard border or undermine the Good Friday peace treaty with Northern Ireland. Presidential candidate Joe Biden tweeted “We can’t allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit. Any trade deal between the U.S. and U.K. must be contingent upon respect for the Agreement and preventing the return of a hard border. Period.” Similarly, House Speaker Nancy Pelosi has issued a stark warning to Dominic Raab who is currently in Washington, saying that “If the UK violates its international agreements and Brexit undermines the Good Friday accord, there will be absolutely no chance of UK-US free trade agreement passing the Congress”.

With the US election less than 50 days away, Biden currently has a 75% chance of becoming the next US President. His endorsement of the UK’s plans is therefore critical to the economic future of the country.

Possible outcomes for Brexit and international relations

There is little evidence to suggest that trade talks between Britain and the EU have been fruitful. Key differences on state aid and fishing rights have challenged the withdrawal agreement over the past few years and have yet to be bridged. With the deadline for the transition period only months away, it feels like everyone is holding their breath.

Despite many spectators feeling confident that both parties will come to an agreement (albeit at the last minute), this assumption is rooted partly in denial, partly in the belief that a deal is in the economic and political interest of both sides - and that both are fully aware of it. However, from what we have witnessed from Brexit negotiations so far, these beliefs fail to consider the extent of the ideological differences on both sides. Having said that, pressure from the US could sway the UK into falling in line with the withdrawal agreement.

As always, it is difficult to predict what the outcome of the UK-EU trade talks will be. Not to mention that the British government has demonstrated erratic handling of both trade talks and the COVID-19 crisis. While a deal is still possible, a hard Brexit is more likely now than it was in 2016 when the referendum took place. A no-deal Brexit would see the trading relationship between the UK and the EU revert to World Trade Organisation (WTO) terms.

Last Update on 21/09/20

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