Brussels/London, October 1
The European Union (EU) launched a legal case against the United Kingdom (UK) on Thursday for undercutting their earlier divorce deal and a senior UK minister said differences remained in talks on a post-Brexit trade agreement.
Controversy over UK’s new Internal Market Bill has thrown the tortuous Brexit process into a fresh crisis, while disagreements over corporate subsidies, fisheries and ways to solve disputes overshadow parallel trade negotiations.
“We had invited our British friends to remove the problematic parts of their draft Internal Market Bill by the end of September,” head of the EU’s executive commission Ursula von der Leyen said. “The deadline lapsed yesterday.”
With London not budging, she said the commission started a so-called infringement, an EU legal procedure against countries that violate the bloc’s laws, while continuing to work towards implementing the divorce deal, or Withdrawal Agreement.
“We stand by our commitments,” von der Leyen said.
London now has a month to reply to the commission’s formal letter of complaint and even more time to change tack before the Brussels-based executive can sue at the bloc’s top court. The case could lead to hefty fines, but that takes years.
Sterling slipped 0.6% against the euro and the dollar after the EU’s action was announced. “A no-deal is looking more likely,” said Neil Jones, head of FX sales at Mizuho, who predicted further falls.
The United Kingdom says ensuring that its nations can trade freely with each other after Brexit would require breaking the divorce deal provisions on the sensitive Irish border. The lower house of parliament approved the Internal Market Bill on Tuesday and it is now with the House of Lords.
A UK government spokesman said in reacting to the news from Brussels that Britain has “clearly set out reasons” to change its Brexit treaty provisions.
The EU is adamant, however, that it would not implement any new UK deal as long as London undermines the divorce treaty. Reuters