UK Internal Market Bill – here’s what you need to know

Tuesday, 13 October 2020

The UK Internal Market Bill had its first reading on 30 September in the House of Commons. The second reading - the general debate on all aspects of the Bill - is scheduled for 19 October.

The importance of maintaining a single internal market for agricultural products within the UK is well understood. Agricultural products frequently cross national boundaries for slaughtering, processing, distribution and final sale so ensuring they can do so without additional costs incurred seems, on the face of it, uncontroversial. However, as is so often the case, the complications with the UK Internal Market Bill lie in the detail.

What’s it for?

The Bill aims to enshrine the concept of a single internal UK market into UK law at the end of the EU exit transition period. Based on the two fundamental principles of mutual recognition and non-discrimination, its aim is to ensure there are no new barriers for businesses trading across the UK

Mutual recognition provisions ensure any goods which are sold legally in one part of the UK can also be sold in the other parts of the UK. What this means in practice is that no part of the UK may introduce legislation that would block the flow of goods from any other part of the UK. For example, if England banned a certain product that was legal in Wales, a Welsh business could use the mutual recognition principle as a legal defence, should the English authorities try to prevent its sale.

Non-discrimination ensures that any regulation made by any part of the UK does not discriminate against goods from any other part of the UK. Regulation is considered discriminatory if it makes it ‘in any way more difficult, or less attractive, to sell or buy the goods or do anything in connection with their sale’. Importantly, this principle covers both goods brought from other parts of the UK and goods imported into any part of the UK and then subsequently moved within the UK.  

Where does this fit with current legislation?

The Bill has important implications for Northern Ireland (NI) and the arrangements agreed to under the NI Protocol. The Bill prevents any government from introducing new checks or processes on goods moving from NI-GB, unless required to facilitate market access for Northern Ireland businesses. This enshrines the UK Governments’ commitment to ‘unfettered access’ for Northern Ireland businesses to the UK internal market into UK law. This means the Bill will give the power to modify or remove exit summary declarations currently required by EU rules under the NI Protocol. for goods moving from NI-GB. In the event that no trade deal is reached between the EU and the UK, this will allow the UK to remove the requirement unilaterally.

Currently under the NI protocol, EU state aid law will apply to any UK act affecting trade between NI and the EU. State aid is a complex area of competition law, which essentially prevents the use of state resources to give individual businesses within the EU an advantage over their competitors. The Government is concerned this may have implications for state aid in other parts of the UK.

Because of this concern, the Bill gives UK Ministers powers to make regulations to determine how the state aid law is applied, in accordance with the UK interpretation rather than the EU interpretation, which may differ. This includes a way which may modify the NI protocol or maybe incompatible with international law. It states that only UK Ministers may notify the European Commission of state aid requiring approval under the NI protocol.

Reactions to the Bill

The Bill has not been well received by the devolved nations with the Scottish Government calling it ‘an assault on devolution’[i] and Jeremy Miles, Counsel General for Wales calling it a ‘power grab’.

At the time of writing, the EU has taken the first step in issuing infringement proceedings against the UK, saying the proposed legislation would constitute ‘an extremely serious violation’ of the Withdrawal Agreement.

Conclusion

The Internal Market Bill addressess some of the problems created by moving the EU statute book into UK law in its entirety. However, it has created further issues in relationships with both devolved nations and the EU itself. There are ramifications for all our levy payers within the UK, whether they are involved in primary production, processing and/or importing goods for distribution within the UK. The Bill sets out a blueprint for free trade between and within the four nations and for how we position our products within the UK and with the rest of the world. However, it has not met with approval from the devolved nations, who see the Bill as potentially undermining their own devolved responsibilities, or with the EU who view the Bill as a violation of International Law. 

What next?

We’ll be keeping an eye on the progress of the Internal Market Bill and post further analysis as it progresses through Parliament. In the meantime, it’s never too early to start preparing your business for the significant changes ahead, visit ahdb.org.uk/brexit for information, tools and resources.

  1. [i] Scottish government, UK Internal Market Bill: Scottish Government consent impossible, 8 September 2020, www.gov.scot/news/uk-internal-market-bill

 

Sarah Baker

Strategic Insight Manager
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