Market leading insight for tax experts
View online issue

EU threatens Brexit legal action against UK

printer Mail

Brussels has launched legal action against the UK over alleged breaches of the two sides’ Brexit deal on Northern Ireland which could lead to British goods being hit with tariffs.

The European Commission on Monday initiated a process that could result in Britain being taken to the European Court of Justice and facing trade sanctions. Brussels said steps by the UK government earlier this month to unilaterally ease trading conditions for Northern Irish businesses amounted to a breach of the two sides’ Brexit treaty.

Maros Sefcovic, the EU’s Brexit commissioner, wrote to his UK counterpart Lord David Frost warning that Britain was ‘on a path of a deliberate breach of its international law obligations and the duty of good faith’. He urged the UK to ‘refrain’ from putting the unilateral steps into practice, and to call for work on joint solutions for problems encountered by business. 

The British moves include steps such as a longer exemption from paperwork attached to shipments of food from Great Britain to Northern Irish supermarkets and insists its actions in extending the grace periods for Northern Ireland businesses do not breach its commitments, nor international law. UK ministers hope the dispute can be settled before it reaches court and remains committed to the Northern Ireland protocol.

The government wanted to address issues that had arisen at the border through the joint committee with the EU. A UK government spokesman said ‘low-key operational measures like these are well precedented and common in the early days of major international treaties’. Britain also claimed that ‘in some areas the EU also seems to need time to implement the detail of our agreements’. UK officials say some EU member states are not yet fulfilling commitments on citizens’ rights to UK nationals in relation to residency cards and access to healthcare.

Brussels complained that Britain’s actions in Northern Ireland would create holes in the EU’s trade border with the rest of the world and were taken without agreement or forewarning. Another EU concern is that Britain is yet to provide a ‘road map’ setting out when it plans to fully enforce that trade border. 

The European Commission sent Britain two letters on Monday. One sets out a ‘political’ message to the country on the need to honour its obligations under the Brexit withdrawal treaty, and another setting out the grounds for legal action known as an ‘infringement procedure’. EU officials said the political letter could pave the way for an arbitration process that could in turn lead to British goods being hit with tariffs if the UK refused to comply with any decision. The infringement proceeding letter could lead to an ECJ ruling and a lump-sum fine for non-compliance. Brussels’ intention is that the EU and UK quickly restart talks on resolving problems on the ground, although Britain has previously said its decision to act unilaterally was driven by concerns that joint action would be too slow given the imminent expiry of grace periods in April.

Issue: 1524
Categories: News