EU pulls legal card as high-stakes negotiation approaches crunch point
The European Union has begun legal proceedings against the United Kingdom over the Internal Market Bill. The European Commission charges that several controversial clauses in the legislation contravene international law and renege upon a treaty signed with the EU earlier this year.
Speaking ahead of a meeting with Irish Prime Minister Michael Martin, Commission President Ursula von Der Leyen said the British government would have until the end of November to respond to the EU’s official concerns. “The Commission has decided to send a letter of formal notice to the UK government,” she said. “This is the first step in an infringement procedure.”
Von der Leyen’s big announcement was hardly surprising. Such action was widely expected, given that the British government refused to abide by the EU’s request to remove problematic clauses from the Internal Market Bill by the end of September. Moreover, legal infringement procedures are a common exercise in Brussels; there are currently 33 active cases against the UK, which is still less than the active cases against Spain, Italy, Germany, Greece, Poland, Hungary, Romania, Austria and France.
For this reason, Downing Street is unlikely to fret over today’s move. The interpretation in Westminster is that the EU is seeking to add a new tool to its negotiating arsenal, to be disbanded with as soon as a deal is struck. Von der Leyen’s latest deadline, stretching to the end of November, provides more than sufficient time for a trade deal to be agreed which would render the controversial parts of the Internal Market Bill irrelevant and allow the EU to quietly withdraw the notice.
Indeed, trade negotiations are much closer to a breakthrough than the conventional wisdom suggests. British negotiators have been showing flexibility on fishing rights since mid-September, hoping to exchange concessions on fisheries for increased sovereignty over state aid. Some reports suggest the UK is planning to offer a three-year transition period for European fishing fleets, which indicates a willingness in Whitehall to agree to lengthy and generous fishing quotas with the EU.
A compromise on state aid is also anticipated, with both sides expected to step back from their maximalist positions and accept an independent dispute mechanism overseen by a non-EU international authority. This would assuage the UK’s concerns that the EU intends to use Northern Ireland as a backdoor to influence subsidies for the rest of the country.
Additionally, Britain would be required to set up a powerful domestic regulator, which, alongside the dispute mechanism, would assure the EU against the prospect of British governments abusing the system. The specific regulations on subsidies will have to be intricately negotiated, but officials in Brussels believe that the restrictions that Whitehall signed up to in its trade deal with Japan provides a framework for a UK-EU agreement.
Given Boris Johnson’s domestic problems – with open revolt in his parliamentary party, a cabinet divided over coronavirus policy, an incoming unemployment storm, and a credible Labour leader breathing down his neck – many in Westminster believe he will, in the end, adopt the above compromise. It would allow both sides to credibly claim victory, and open the path to a special deal for the City of London in the years ahead.
Talks are expected to enter “the tunnel” in the coming fortnight, where the details of a deal will be frantically hashed out before the trickiest issues are negotiated by heads of government at the Council level in mid-to-late October. “We know what the outstanding issues are and they’re not insurmountable,” Irish Foreign Minister Simon Coveney told reporters yesterday. “I still think there’s a good chance we’ll get a trade deal before the end of the year.”
For all the talk of legal action, both sides are now working flat out to get a deal.