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EU and UK Treading Water with Legal Action and Continued Negotiations

Last week, the European Union launched formal legal proceedings against the United Kingdom as the two negotiating parties concluded their ninth round of negotiations.

Following the passing of the third reading of the Internal Market Bill in the UK Parliament, European Commission President von der Leyen announced, on 1 October, that the Commission has decided to send a letter of formal notice to the UK government. According to the President, this decision was taken following the Commission’s conclusion that sections of the draft Internal Market Bill is, ‘by its very nature’, a break of the obligation of good faith laid down in Article 5 of the Withdrawal Agreement and would be in full contradiction to the Irish Protocol.

Following this announcement, the UK will have one month to submit its observations to the letter, after which point the Commission may decide to issue a Reasoned Opinion.

This exercise may be moot, as both sides indicate they would still like to have a full deal drafted in the month of October. This would be the last month that allows all European institutions to sign off on a negotiated deal before the end of the transition period.

European leaders have reacted to these latest developments with a display of varying displeasure. Angela Merkel agreed with the Commission President that this is a ‘very bitter moment’, but stated that Europe is in a ‘constructive mood’ and that she remains optimistic as long as negotiations are ongoing. Mark Rutte, on the other hand, accused the Commission of ‘making a little bit too much out of’ the controversial UK draft bill, and does not believe the exercise ‘will influence, to a large extent, the negotiations at the moment with London’.

FTA negotiations have continued against the backdrop of this political drama, with the ninth round wrapping up on 2 October. According to Michel Barnier, who gave brief remarks following the conclusions of the negotiating round, progress has been made on aviation safety, social security coordination and the respect of fundamental rights and individual freedoms. More work, however, must be done on the protection of personal data, climate change commitments and carbon pricing, as well as the ‘persistent serious divergences on matters of major importance for the European Union’. One could hazard a guess that these matters refer to the ‘level playing field’ as well as state aid.

To conclude the week, von der Leyen and Prime Minister Johnson held a call on Saturday, 3 October. It is understood that the negotiating parties will continue to talk, albeit more ‘intensely’, and there is a possibility that the October negotiating deadline may become more flexible. No news about entering the negotiating tunnel, shifting the end of the year deadline, or substantial progress was made.

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