Brexit talks appear to be on the brink of collapse after the UK rejected the EU’s demand that it withdraw legislation that would enable it to breach the withdrawal agreement.
Brussels has given Boris Johnson’s government three weeks to drop plans to break international law or face financial or trade sanctions, as EU lawyers ruled that Britain has already breached the withdrawal agreement by tabling the internal market bill.
In a hard-hitting statement following a meeting with Michael Gove in London, the European commission’s vice-president, Maroš Šefčovič, put the prime minister on notice that he needed to regain Brussels’ trust. He raised the prospect of both a collapse in the on-going trade and security talks and a legal battle with the bloc.
“The EU does not accept the argument that the aim of the draft [internal market] bill is to protect the Good Friday (Belfast) agreement. In fact, it is of the view that it does the opposite,” the European commission said in a statement.
It said Šefčovič had told Gove “in no uncertain terms” that the UK government must “withdraw these measures from the draft bill in the shortest time possible and in any case by the end of the month”.
Šefčovič had stated that “by putting forward this bill, the UK has seriously damaged trust between the EU and the UK”, the commission said. “It is now up to the UK government to re-establish that trust.”
Less than two hours later Gove said Downing St would not climb down: “I made it perfectly clear to the vice-president of the commission we would not be withdrawing this legislation.
“I explained to Vice-president Šefčovič that we could not and would not do that … he understood that. Of course, he regretted it.”
Gove said the UK was “absolutely serious about implementing the Northern Ireland protocol” and looked forward to setting out the justification to critics within his own party, which include former leaders Michael Howard, Theresa May and John Major when the bill has its second reading on Monday.
The Cabinet Office minister said it was “a good meeting” in which the UK “stressed the importance of making progress” to iron out the details of the Northern Ireland protocol in the UK-EU joint committee.
The European commission made clear in its statement that it considered the unliateral move to be illegal and that it would “not be shy” in using legal measures, including action against the UK, for “violation of good faith obligations”.
Šefčovič had “reminded the UK government that the withdrawal agreement contains a number of mechanisms and legal remedies to address violations of the legal obligations contained in the text – which the European Union will not be shy in using”, the statement said.
The clash has overshadowed the eighth round of negotiations between Michel Barnier, the EU’s chief negotiator, and his British counterpart, David Frost, with just five weeks to go until a 15 October deadline set by the prime minister for an agreement on a trade deal.
According to an EU legal opinion, leaked to the Guardian, the commission believes Johnson’s government has already breached the terms of the treaty just by taking the first steps to pass a new law that would negate key parts of the withdrawal agreement signed last year.
“Already by tabling the draft bill and pursuing the policy expressed therein, the UK government is in violation of the good faith obligation under the withdrawal agreement (article 5) because this bill jeopardises the attainment of the objectives of the agreement,” the commission lawyers write.
The commission has advised the 27 EU capitals that there are therefore grounds for the bloc to take “legal remedies” through the European court of justice before the end of the transition period, leading to significant fines or potential trade sanctions.
The legal opinion goes on to say that should the legislation be adopted it would be in “clear breach of substantive provisions of the protocol” in waiving any export procedures or formalities on the trade of goods from Northern Ireland to Great Britain and in restricting the application of EU state-aid rules in the case of Northern Ireland.
“Once the bill is adopted (as proposed), the commission may initiate infringement proceedings against the UK for breach of the good faith obligations,” the EU lawyers write. “Even before the bill is adopted, it could be defendable to bring infringement proceedings on the same grounds.”
The lawyers add: “Given the length of the pre-litigation phase, it is unlikely that the case against the UK can be brought to the court before the end of the year.
“However, infringement procedures for facts occurred before the end of the transition period can be brought to the court during four years after the end of the transition.”
The paper says the EU court has the potential to “impose a lump sum or penalty payment” on the UK, or Brussels could use the dispute settlement mechanism under the withdrawal agreement, “which may ultimately also result in the imposition of financial sanctions by the arbitration panel”.
“In case of non-payment or persisting non-compliance, the complaining party is entitled to suspend its obligations arising from the withdrawal agreement (with the significant exception of the provisions relating to citizens) or from the future EU/UK agreement,” the lawyers write.
The prospect of legal action may present itself before the year is out after it emerged that the government was hoping to rush through the internal market bill this month. A second reading of the bill is scheduled for next Monday and committee stage scheduled for Tuesday and Wednesday.
The prime minister’s spokesman denied the bill was being “rushed through”, saying it was to ensure there were “no barriers to trade within the UK” at the end of the transition period on 31 December.
Brexit talks resumed on Tuesday but nosedived after it emerged the UK was planning to row back on some of the Northern Ireland protocol through a section inserted into the internal market bill published on Wednesday.
Gove and Šefčovič met privately before a full extraordinary meeting of the EU-UK joint committee, which they both chair, which was set up to implement the withdrawal agreement.
Brussels has accused Johnson of deliberately endangering the talks, and the Irish prime minister, Micheál Martin, said there were now “justifiable doubts” as to whether the UK wanted to conclude negotiations at all.
On Sunday Johnson said that if there was no deal by 15 October both sides should “accept that and move on”.
It is understood that Lord Frost has told colleagues the best possible scenario is a low-grade deal, suggesting that no deal is, by comparison, not such an unpalatable option.
He said the UK would then trade with the EU like Australia, which does not have a deal with the bloc, describing that as “a good outcome for the UK”.
Brussels is now alive to the notion that the bill, which the Northern Ireland secretary, Brandon Lewis, admitted would breach the law, was designed to collapse the talks.
Martin told the Financial Times in Dublin: “Our colleagues in Europe, in particular those conducting the negotiations, are now wondering whether the will is there or not to arrive at a conclusion and get an agreement – and that is a very serious issue.”
Adding to the tension, sources said the commission had been blindsided by the internal market bill with no notice provided of the changes the government was looking to make to the withdrawal agreement.
One senior EU diplomat said: “In four years of negotiations this is the absolute low. They could at least have tried to fudge it.
“UK ministers are getting the powers to overrule not only international but also national law? By now we’re well used to seeing this in other parts of the world but Britain?