In this post, Will Perry of Monckton Chambers provides a summary of the third Cambridge Law Faculty – Monckton Chambers EU Relations Law seminar on the UK’s internal market.
In the third of a series of five webinars jointly organised by Monckton Chambers and the Centre for European Legal Studies at Cambridge University, four academic and practising lawyers considered the UK Government’s proposals for a UK Internal Market and how this squares with the responsibilities and ambitions of the devolved governments. The webinar was chaired by Valentina Sloane QC of Monckton Chambers.
A recording of the one-hour webinar is available here.
Professor Jo Hunt, University of Cardiff – The UK Internal Market – a Solution in Search of a Problem?
Professor Hunt began by considering the way in which the Internal Market Bill’s “top-down” approach to the free movement of goods and services undermines the “collaborative and consensual” approach which characterises the Common Frameworks process. Describing the UK Internal Market (‘UKIM’) as a “tool to keep the devolved legislatures under control”, she considered how the Bill’s “unconditional and absolute” market access principles would limit the use of devolved powers and restrict regulatory divergence across the UK in a stricter way than under EU law. She referred to the example of a Welsh law to limit the access of single use plastics into the Welsh market, highlighting that, under the UKIM, requirements would not apply to producers based in other parts of the UK.
Professor Hunt explained how a major driver of the Bill is to commit the UK as a whole to any obligations arising out of post-Brexit free trade agreements. She suggested that this objective was far more important to the UK Government than the Bill’s impact on internal trade.
She criticised the way in which the Internal Markets Bill was introduced without prior consultation or devolved consent, but instead was presented as a “fait accompli”, despite impacting the four nations’ roles, responsibilities and powers. She argued that the Bill has not respected the devolution settlements and is “profoundly damaging” to relations between the devolved administrations and Westminster.
Alan Bates, Monckton Chambers – A Market Access Commitment – The Principles of Mutual Recognition and Non-Discrimination
Alan began his talk by providing an overview of the two ‘market access principles’ in the Internal Market Bill: ‘mutual recognition’ and ‘non-discrimination’, highlighting at the outset that these concepts may sound technocratic in nature but are likely to have “transformative” political and legal effects.
Alan emphasised that, unlike the position under EU law, the Bill is incredibly prescriptive in how the market access principles should apply. However, he still considered that there were many areas which are likely to be argued before the courts over the coming months and years – for example, determining where goods are produced for the purposes of the Bill where production takes place in more than one part of the UK.
Alan then went on to consider three “areas of concern” with how the market access principles operate.
First, the list of legitimate aims at clauses 8(6) and 20(7) of the Bill, which have to be relied on if a statutory requirement which indirectly discriminates is to be justified, are very limited in comparison to the legitimate aims existing in EU law. Alan referred, in particular, to the ‘public morality’ legitimate aim, which has been important for the effective development of EU environmental and animal protection law, and which is not listed in the Bill.
Second, Alan considered that a lowering of standards might arise from companies “forum shopping” – moving production of goods to the part of the UK which offers the lowest standards or, in the case of service provision, simply moving its head office there.
Third, whereas EU law on free movement applies to all ‘state measures’ (a broadly defined concept which includes a range of non-legislative action), as well as ‘horizontally’ to private bodies which interfere with free movement (e.g. self-regulatory bodies), the Bill has a far narrower scope which results in major lacunas.
Professor Kenneth Armstrong, University of Cambridge – The Impact of the UKIM on Devolved Powers in Scotland
Professor Armstrong considered three ways in which the Internal Market Bill impacts on devolved powers, using Scotland as an illustrative example.
First, he considered whether the UKIM could be conceptualised as “an economic constitution in the making”, arguing that, like the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020, the Internal Markets Bill is likely to be classified as a ‘constitutional statute’. In this regard, Professor Armstrong highlighted clause 49(1) of the Bill (as introduced), which protects the Bill from modification by the Scottish Parliament by adding it to the list of protected enactments at Schedule 4 to the Scotland Act 1998.
Second, Professor Armstrong considered the effect of the Bill on a range of legal enactments. He considered, by way of example, that the Bill’s market access principles could be used in litigation concerning changes to the Scottish minimum alcohol unit pricing regime and Scotland’s new deposit and return scheme for drinks containers (which comes into force in 2022). He also referred to a tension between the Bill and the second Scottish Continuity Bill (which empowers Scottish ministers to modify Scottish law to keep pace with EU rules).
Third and finally, Professor Armstrong discussed the interaction between the Bill and the Common Frameworks. He considered how divergences legitimately arising from the Common Frameworks process could still be disapplied if inconsistent with the market access principles. Overall, he argued that the Internal Market will erode regulatory cooperation which underpins the coordination of UK and devolved rule making.
Professor Stephen Weatherill, University of Oxford – Two Internal Markets – the Position of Northern Ireland
Professor Weatherill considered two internal markets: the EU internal market and the UKIM. His overarching point was that the Northern Ireland Protocol “protects the EU’s internal market but disrupts the UK’s internal market”.
Professor Weatherill began by emphasising that Northern Ireland was not bound by the “entirety” of the EU internal market acquis: rules on the free movement of persons and services are not binding under the Protocol; nor is a substantial amount of further secondary legislation (e.g. consumer protection legislation). It would appear from this that there is a “hardcore of [EU] internal market law”,which is required to facilitate a soft border between Northern Ireland and the Republic of Ireland and a different band of internal market law which the EU is willing to discard. Professor Weatherill suggested that this revealed how the EU internal market was more “malleable” and “fragile” than the EU suggests.
Turning to the UKIM, Professor Weatherill highlighted “significant regulatory divergence” between Northern Ireland and Great Britain which will result in the Irish Sea becoming a “border of regulatory and customs significance which it did not have previously”.
He then considered “four deceptions” in the Protocol where “what the Protocol says is not really what the Protocol does”:
- The Protocol says that Northern Ireland is in the UK’s customs territory, but treats it as being within the EU’s customs territory.
- West-East trade (i.e. Northern Ireland to Great Britain) is declared by the Protocol to be “unfettered”, but in reality it will not be. As a minimum, export declarations will need to be submitted on the basis of the EU’s Customs Code; and other requirements imposed EU law (e.g. checking goods to ensure they are not products of endangered species) will also apply.
- The Protocol is “deceptive” because it does not spell out the magnitude of changes to East-West trade (i.e. Great Britain to Northern Ireland), which will be subject to “considerable” burdens as a result of regulatory divergence. In particular, there will be “new and burdensome checks on products of animal origin”. In this respect, East-West trade covered by the Protocol “will resemble trade between Great Britain and France, and Great Britain and Belgium”.
- “The reach of the state aid rules under the Protocol are much broader than one would imagine from a casual reading of the Protocol”: aid granted within Great Britain which will be used within Northern Ireland is likely to fall within the scope of the Protocol and will therefore subject to EU rules and supervision of the EU Commission.
Professor Weatherill argued that each of these four deceptions went in the same direction: “They are all deceptions which understate the commitments made by the UK. They are all deceptions which tend to conceal the extent of the rupture made to the UK’s Internal Market by separating out Northern Ireland from Great Britain.” These deceptions “strongly suggest … the Protocol was drafted deliberately on both sides to give the UK Government a certain amount of political ‘cover’ to try and hide from those who would be horrified” by true situation.
What’s up next?
The next webinar, on 25 November 2020, will focus on the UK’s new relationship with the EU and other trading partners. Details of how to register are available here.
Full details of the entire Cambridge-Monckton webinar programme (and registration forms) are also available here.
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