UK threats to break international law make a Brexit deal even more difficult

The Brexit talks have taken a turn for the worse. It was always clear that some form of political intervention from the top was necessary to break the stalemate, but the UK government’s dramatic interventions have left the EU baffled.

The prime minister has described provisions in the UK Internal Market Bill as a safety net. If the UK and the EU are unable to resolve their disagreements inside the joint committee, the body responsible for overseeing the Withdrawal Agreement, then the bill would give UK ministers the power to make unilateral decisions on how to proceed. For the EU, the fact that the government sees it as a safety net that may never get used makes no difference. The Withdrawal Agreement is crystal clear that neither party should adopt measures to undermine it, so the bill unamended is a non-starter for the EU.

The trade talks themselves are also causing problems. The EU has indicated it would move on state aid, but only if the UK sets up a similar system to self-regulate its own use of subsidies. The UK’s decision to adopt a weak subsidy regime has not given the EU reassurances it was looking for.

Despite these developments, the EU believes a deal is still possible – just. However, this will require the UK to show that it can be trusted to stick by its commitments.

Evisceration of trust will reduce EU room for manoeuvre

The EU has consistently said that a trade deal with the UK would only be possible with a fully operational withdrawal agreement. Not surprisingly, the government’s attempt to unpick that agreement has gone down like a lead balloon in Brussels. The timing of the UK Internal Market Bill’s publication is equally hard to fathom. Discussions in the joint committee – the body responsible for overseeing the Withdrawal Agreement – were reportedly going well, including with regards to the application of the Northern Ireland protocol. However, the government’s chief Brexit Negotiator, David Frost, has suggested that the EU is still playing hardball on some issues which could impact trade between Great Britain and Northern Ireland.

If the government’s aim was to put pressure on the EU to soften its position, either over the Withdrawal Agreement or in trade talks, it has had the opposite effect. Member states are unlikely to shift their position now if they think the UK will simply turn its back on joint commitments further down the line. The European Parliament has also said that it would not back any trade agreement without the UK’s full backing of the Withdrawal Agreement.

All joint-committee meetings have now been paused, and the EU has given the UK until the end of the month to de-escalate tensions and modify the bill. It has also said that it stands ready to launch legal proceedings if the UK refuses to shift its stance.

Trade talks between the EU and the UK are stuck

EU capitals have entrusted Michel Barnier with the task of brokering a deal with the UK, and only he can convince them to compromise. That is no easy task. On many issues, like recognising British qualifications in the EU to finding an agreement on fisheries, it has been the member states (and sometimes even the EU Parliament) that have been more hard line than the Commission.

Barnier is also the UK’s best hope of reaching a Brexit deal. Many EU capitals are growing tired of Brexit – some are even starting to think that a no-deal outcome may be better than the existing headache of negotiations. However, this view is not shared in Brussels which, like London, wants a deal. But it will be much harder for Barnier to get member states on board with a compromise, and persuade them that the UK can be trusted, if the UK Parliament passes the bill unamended.

The Internal Market Bill would make a no deal more acrimonious

Many sectors like flights, lorry transport or scientific co-operation, would face huge disruption in the event of no deal; simply because there are currently no World Trade Organization terms to fall back on. In his statement last Monday, the prime minister said that he hoped the UK and EU can find “sensible accommodations on [these] practical issues”. The EU would of course issue unilateral measures – as it did ahead of no deal in 2019. But with trust so low, they are unlikely to be very generous.

For now, despite recent developments, both sides continue to search for a deal. But a deal with the EU requires three things: time, an agreement and trust. The first is running out, the second has yet to emerge, and the third has been seriously damaged by recent developments. The UK government still wants a deal, as does the EU27, but in searching for a safety net the UK may well have set itself up for a fall. At that point, all bets are off.