By Paul Sandle, Gabriela Baczynska and William James
LONDON/BRUSSELS (Reuters) – Britain and the European Union held emergency talks on Thursday over Prime Minister Boris Johnson’s plan to undercut parts of the Brexit divorce treaty, with Brussels exploring possible legal action against London.
As Britain pushes ahead with its plan to act outside international law by breaching the divorce treaty, EU negotiators are trying to gauge how to deal with London.
European Commission Vice President Maros Sefcovic expressed concern about the plan before a meeting with British counterpart Michael Gove in London, taking place alongside trade talks between chief negotiators Michel Barnier and David Frost.
EU diplomats and officials said the bloc could use the Withdrawal Agreement to take legal action against Britain, though there would be no resolution before the end-of-year deadline for Britain’s full exit.
One EU source said Britain would not succeed if it aims to try to use the planned breach of the Withdrawal Agreement as a threat to extract concessions from the bloc in trade talks.
“If they try to do that, it will fail,” the EU source said on condition of anonymity.
A note distributed by the EU executive to the 27 EU member states said the Withdrawal Agreement gives the bloc up to four years to launch a legal procedure against Britain, if it violates EU rules during a transition period this year.
The British government says its planned law, put forward on Wednesday, clarifies ambiguities in the Withdrawal Agreement, and its main priority is the 1998 Northern Irish peace deal that ended decades of violence. It said the bill would be debated on Monday.
Europe’s leaders have been handed an ultimatum: accept the treaty breach or prepare for a messy divorce. Britain signed the treaty and formally left the EU in January, and leaves the single market when the status quo agreement expires at the end of this year.
Sterling, which tends to fall when Brexit hits a snag, has tumbled in recent days. The currency was flat at $1.2999 on Thursday, but overnight implied volatility, an indicator of investor jitters, rose to 13%, its highest since March 26.
Talks on a trade deal have been stuck over state aid rules and fishing. Without an agreement, nearly $1 trillion in trade between the EU and Britain could be thrown into confusion at the beginning of 2021, compounding the economic impact of the coronavirus pandemic.
The latest dispute centres on rules for Northern Ireland, which shares a land border with EU member Ireland. Under the 1998 agreement, there must be no hard border in Ireland.
To ensure that, the British-EU divorce pact calls for Northern Ireland to continue to apply some EU rules. But Britain’s new bill unveiled this week would assert the power to override many of those EU rules, acknowledging that London would be violating international law by doing so.
U.S. House of Representatives Speaker Nancy Pelosi said any move by Britain that undermined the 1998 Irish peace agreement would ensure that a potential U.S.-UK trade deal would not pass the U.S. Congress.
Former British leaders Theresa May and John Major scolded Johnson for considering an explicit, intentional breach of international law.
“If we lose our reputation for honouring the promises we make, we will have lost something beyond price that may never be regained,” Major said.
European diplomats said Britain was playing a game of Brexit “chicken”, threatening to wreck the process and challenging Brussels to change course. Some fear Johnson may view a no-deal exit as a useful distraction from the pandemic.
“I’m not optimistic at this stage,” Irish Prime Minister Micheal Martin told national broadcaster RTE when asked how confident he was in a trade deal being reached. He said trust in negotiations had been undermined, making it harder to secure a free trade agreement without tariffs and quotas.
(Writing by Guy Faulconbridge; Additional reporting by William James and Elizbath Piper in London, Padraic Halpin in Dublin and John Chalmers in Brussels; Editing by Kim Coghill, Peter Graff and Timothy Heritage)
PHOTO: EU Commission Vice President Maros Sefcovic arrives at the Europe House in London, Britain, September 10, 2020. REUTERS/Simon Dawson