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Bloomberg | 15 March 2021
EU begins legal action against UK over Brexit violation
By Ian Wishart
The European Union launched legal action against the U.K. in a major escalation of tensions between the two sides less than three months after Brexit was formally completed.
It follows Britain’s unilateral decision to delay implementing a key part of the Brexit deal relating to Northern Ireland. The move could ultimately lead to financial penalties or trade tariffs being imposed on the U.K.
The dispute is likely to worsen the already fraught relationship between the two sides that has led to disagreements over the export of Covid vaccines and the U.K. refusing to grant full rights to the bloc’s ambassador in London. The EU is still smarting from the U.K.’s threat — later withdrawn — to break international law last year and rewrite the Brexit agreement.
“The recent measures once again set the U.K. on a path of a deliberate breach of its international law obligations and the duty of good faith,” European Commission Vice President Maros Sefcovic wrote in a letter to the U.K. setting out the measures.
An EU official told reporters in Brussels on Monday that the bloc considered the U.K.’s latest actions an enormous problem and raised doubts about the government’s commitment to the Northern Ireland part of the Brexit agreement. The official said he hoped the government would hold talks with the commission to come up with joint solutions and draw a line under the legal action.
The commission is still deliberating whether to grant U.K. financial firms greater access to the bloc under a so-called regulatory equivalence decision. While there is no formal link between that decision and Monday’s legal action, there will be a joined-up response, said the official, who asked not to be identified because the process is private.
Under the Brexit deal, Northern Ireland effectively stayed in the EU’s customs union and single market. This avoided the need for border checks on the island of Ireland, but introduced them for the first time on goods coming into the province from Great Britain, leading to delays and disruption.
Prime Minister Boris Johnson has come under increasing pressure from members of his own party, as well as unionist politicians in Northern Ireland, to renegotiate the Brexit deal’s Northern Ireland Protocol.
Last month, the U.K. said it would temporarily waive rules set begin on April 1 that would have required firms sending food between Great Britain and Northern Ireland to provide additional customs paperwork — a move the commission warned violated the terms of the Protocol. Britain also plans similar delays in other areas, including checks on parcels.
The U.K. said the EU was over-reacting. In a statement, the government said that “low-key operational measures” like the ones it implemented are “well-precedented and common in the early days of major international treaties” and “not something that should warrant legal action.”
“The measures we have taken are temporary, operational steps intended to minimize disruption in Northern Ireland,” the government said. “They are lawful and part of a progressive and good faith implementation of the Northern Ireland Protocol.”
The commission launched infringement proceedings under EU law, according to Sefcovic’s letter. That means it can ultimately ask for a ruling from the European Court of Justice, which could impose financial penalties. Despite the ECJ’s influence in the U.K. being a bone of contention in the campaign in the run-up to the 2016 Brexit referendum, the government accepted a role for the EU court in the treaty.
The commission is also taking action under the dispute resolution mechanism of the treaty itself, which could eventually see the establishment of an arbitration panel and — if the U.K. lost — could potentially see the suspension of part of its overall trade deal with the EU, or tariffs imposed.
Both options could take well over a year to reach a conclusion and officials on both sides have said they want to reach a settlement before getting as far as the imposition of penalties.
The commission previously initiated infringement proceedings against the U.K. after Johnson’s government announced plans in September to override part of the Protocol. These were dropped when the government backed down shortly before the trade deal was signed in December.
— With assistance by Emily Ashton