The flag of the British Union, also known as the Union Jack, to the right, flies with flags of other European Union (EU) member states outside the European Parliament in Brussels, Belgium, on Thursday, January 30, 2020.
European Commission President Ursula von der Leyen said on Thursday that she has sent an official notification letter to the United Kingdom regarding its plan to bypass the divorce agreement on Brexit, in a first step in legal proceedings.
This comes after British lawmakers approved Prime Minister Boris Johnson’s controversial home market bill earlier this week, despite some ministers’ acknowledgment that the legislation could lead to the country’s breach of international law.
The United Kingdom said the proposed legislation, which now requires approval by the House of Lords, will protect the UK’s integrity. The bill would allow ministers unilaterally to amend elements of the withdrawal agreement with the European Union.
It has magnified divisions between the UK and Europe, threatening to derail trade talks during the post-Brexit transition period.
“If adopted as is, it would be completely inconsistent with the Northern Ireland Protocol,” Von der Leyen said in a televised statement.
The head of the European Union’s executive said he had given Britain until the end of September to remove the “problematic parts” from the internal market bill, but that the deadline had now passed and the provisions remained in place.
“Therefore, the Commission decided this morning to send a formal notification letter to the UK government. This is the first step in the infringement procedure.”
Von der Leyen said the British government had a month to respond with its “observations.” “Besides, the Commission will continue to work hard towards the full and timely implementation of the withdrawal agreement. We are committed to our commitments.”
The European Union has He previously said The internal market bill constituted a “very serious violation” of the withdrawal agreement. It also warned that it would “not be shy” to use all available legal means if the UK failed to amend the bill in its current form.
What is an internal market bill?
The UK Internal Market Bill grants the British government Powers not to consult the European Union on issues of state aid Involving the trade in goods between Northern Ireland and the rest of the European Union. The UK had agreed to do the opposite when signing a divorce deal with the European Union in January.
The bill would also likely change the requirements for Northern Irish companies to complete export summary data when shipping goods to the mainland.
The dispute has prompted some analysts to suggest that the UK and European Union will ultimately fail to reach a trade agreement.
The lack of an agreement before the end of the year will lead to the UK doing trade with the European Union on WTO rules. This could mean higher costs and barriers for companies on both sides of the English Channel, compared to the current system.
CNBC’s Sylvia Amaro contributed to this report.