Brexit: what’s next for the protocol Bill and ‘bonfire’ of EU rules?

The UK has found itself facing a change in leadership, with Boris Johnson announcing that he would step down as Prime Minister following a wave of ministerial resignations. The House of Commons was adjourned on 21 July 2022 for summer recess and as the new prime minister will not be announced until 5 September 2022, all significant draft legislation has been put on pause until the autumn.

Either Liz Truss or Rishi Sunak as the new Conservative leader will want to ensure their leadership is clearly defined and, in some respects, distinct from Mr Johnson’s, which may lead to a reassessment the government’s legislative priorities, raising the prospect of some Bills being redrafted or even abandoned.

Against this background, we look at the Brexit Freedoms Bill and the recently introduced Northern Ireland Protocol Bill, and consider the impact the current state of affairs within government may have on their progression.

Northern Ireland Protocol Bill

On 13 June 2022, Foreign Secretary Liz Truss presented the Northern Ireland Protocol Bill in order to unilaterally disapply large parts of the Northern Ireland Protocol. With one eye on a future leadership contest, Truss drafted the Bill in conjunction with the European Research Group of pro-Brexit MPs. The legislation, which the UK Government argues will address practical problems caused by the Protocol, is at the far end of what commentators were expecting and proposes wide ranging changes to its operation. Aimed at fixing the Protocol and protecting the Good Friday Agreement, the controversial Bill is opposed by most Northern Irish Members of the Legislative Assembly (MLAs) and has been criticised by the EU.

Despite warnings from some Tories that the plans are “illegal”, no Conservative MPs voted against the Bill and it passed in the House of Commons (295 to 221) and has started its passage through the House of Lords.

A lengthy stalemate between the government and the House of Lords, where the government does not presently have a majority, is expected when the House returns from summer recess, with several members of the Lords having already made their opposition to the legislation apparent.

What is in the Bill?

The Bill aims to provide durable solutions in four key areas:

  • Green and red channels to remove unnecessary costs and paperwork for businesses trading within the UK, while ensuring full checks are done for goods entering the EU.
  • A dual regulatory model allowing manufacturers the choice of following UK or EU goods rules.
  • A return to a single UK-wide tax area, including on VAT.
  • The removal of the European Court of Justice in disputes.

While the Bill would allow the government to amend the Protocol, it does not immediately or automatically do so.

EU’s response

EU Ambassador to the UK Joao Vale de Almeida said the UK’s unilateral strategy was a “road to nowhere” and Irish Taoiseach said Mr Martin said, “one cannot trivialise the breaching of an international agreement between the United Kingdom Government and the European Union”.

As forewarned, the European Union has launched four legal actions relating to an alleged failure to provide the EU with data about exports from Northern Ireland to Great Britain, and implement agreed EU customs, VAT and alcohol excise rules. These legal steps could lead to the UK being fined under a dispute process overseen by the European Court of Justice.

The ongoing disputes around the Protocol continue to hold up wider initiatives. The financial services Memorandum of Understanding agreed in March 2021 remains inactive. The Horizon Europe research fund looks set to be another target, with the European Commission refusing to confirm the UK’s participation in the €95 billion programme until the Protocol issues are resolved.

View from Northern Ireland

The Unionist community in Northern Ireland is steadfastly against the implementation of the Protocol in its current form, with the DUP refusing to engage with any power-sharing arrangement with Sinn Fein until it is “substantially” altered. The UK Government hopes that by bringing forward legislation to reform the Protocol, the DUP can be brought back to the negotiating table to form an Executive at Stormont. To date, the DUP has not been won over though. The party’s leader Sir Jeffrey Donaldson said: “We will consider what happens in the legislative process, but at this stage we haven’t come to a view as to when the institutions might be restored”.

However, a majority of members of the Legislative Assembly (MLAs) support the Protocol’s implementation and reject the UK Government’s unilateral move. 52 of the 90 members of Northern Ireland’s Assembly wrote to the Prime Minister saying that the Northern Ireland Protocol Bill “flies in the face” of voters and businesses in the region.

Next steps

  • House of Lords second reading (Autumn 2022).
  • New Prime Minister to be announced (5 September 2022).
  • New elections triggered if Northern Ireland is without an Executive (22 October 2022).

Retained EU Law – what next?

The Brexit Freedoms Bill was announced in the 2022 Queen’s Speech to make it “easier to amend, repeal or replace [retained EU law] REUL to deliver the UK’s regulatory, economic and environmental priorities”.

Retained EU law (REUL) is a category of UK domestic law created at the end of the Brexit transition period (31 December 2020) by essentially ‘cutting and pasting’ certain EU legislation onto the UK statute book. This catalogue of REUL can be accessed through an interactive dashboard which references over 2,400 pieces of legislation.

A bill to end the special status of REUL in the UK legal framework was first hinted at by Lord Frost the former Brexit minister in 2021, and was formally announced in January 2022.

On 31 January 2022, the European Scrutiny Committee (the Committee) launched a Call for Evidence into the future of REUL and on 13 June 2022, the Committee launched a second Call for Evidence into ‘Regulating after Brexit’. This latter inquiry, which closed on 22 July 2022, looks at the opportunities for, and the challenges of, policy and law-making following Brexit.

Call to Evidence questions

  1. How was the UK’s regulatory autonomy constrained when it was an EU Member State?
  2. After Brexit, how can the UK now regulate differently?
  3. How is the government regulating differently since EU exit and how could the process of doing so be most effectively undertaken?
  4. What restrictions are there on the UK’s regulatory autonomy as a result of commitments in the UK/EU Withdrawal Agreement and the UK/EU Trade and Cooperation Agreement?
    1. How might divergence in certain policy areas have practical consequences for the UK’s wider relationship with the EU?
  5. How might Common Frameworks—introduced by the government to ensure a common UK approach is taken where powers have returned from the EU which intersect with policy areas of devolved competence—affect the government’s ability to regulate differently after EU exit?
  6. What wider obligations—flowing from new UK free trade agreements—might affect the government’s ability to regulate differently after EU exit?
  7. In which sectors is the UK well placed to maximise the opportunities afforded by its newfound regulatory autonomy and, conversely, in which areas might diverging from the EU prove more challenging?
  8. Of the priority sectors highlighted by the Committee (agriculture, data and financial services), where and how should the UK diverge from EU rules?
    1. Are there any specific examples of retained EU law that should be kept or revoked and/or replaced?
    2. What are the likely cost and resource implications of divergence and how can these be effectively managed?
  9. Should the government adopt a particular approach to regulating in areas previously governed by EU rules?
    • Should priority be given to forms of governance like legislation or should other methods like self-regulation be pursued?

Next steps

Brexit opportunities minister Jacob Rees-Mogg planned to publish the Brexit Freedoms Bill this summer, but in light of Boris Johnson’s departure, key elements of the government’s legislative agenda initiated under his leadership, including the Brexit Freedoms Bill, are now in doubt.

If and when the Bill is published, considering the UK joined the EU on 1 January 1973, the process of untangling EU and UK law is likely to be both time consuming and complicated. This process may also bring the government into difficulties in relation to Scotland and indeed Northern Ireland. However, until the Brexit Freedoms Bill comes into force, the position in relation to REUL is unlikely to change.

Comment

The country now waits to see whether Rishi Sunak or Liz Truss will succeed Boris Johnson as leader of the Conservatives and the next Prime Minister.

Former Chancellor Rishi Sunak has been quiet on the Northern Ireland Protocol Bill, but has said he will scrap all retained EU legislation by the next General Election. Foreign Secretary Liz Truss, on the other hand, has called the Northern Ireland Protocol Bill “legal and necessary”.

Ultimately, whether the Northern Ireland Protocol and Brexit Freedoms Bills are progressed, fundamentally altered or are dropped entirely remain in the balance. The current legislative agenda for the rest of this parliamentary term could change course dramatically.

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