This is the fourth and final post in a series covering the UK Internal Market Bill. See Part 1 for the introduction to the series, Part 2 for an explanation of the mutual recognition principle and Part 3 for the non-discrimination principle.
As noted in Part 1, the Bill would in large part replace the constraints that EU law (and particularly Article 34 TFEU) currently places on the ability of the various legislatures and governments within the UK to affect the free movement of goods. While EU law is focused on trade between member states, the EU free movement rules also significantly limit the scope for barriers to intra-UK trade. The Bill would continue to limit that scope post-Brexit.
However, it is important to remember that the devolved institutions would not (in the absence of the Bill) simply have carte blanche to put up barriers once EU law ceases to apply. In the Scottish Parliament's case, the Scotland Act 1998 specifies a number of 'reserved matters' on which the Parliament cannot competently legislate. Many of these reserved matters would prevent the Parliament, even once unconstrained by EU law, from introducing differential regulation that would affect trade within the UK.
These areas include: financial services; data protection; gambling; regulation of companies, partnerships and other types of business association; competition; IP; import and export control; consumer protection; products covered by EU technical standards; product safety and liability; product labelling; weights and measures; telecoms and internet services; energy regulation; transport; professional regulation of architects, health professionals and auditors; medicines and medical supplies; and health & safety. A post-Brexit Scottish Parliament will therefore still be subject to significant constraints on its ability to legislate in many of the areas that could otherwise create barriers to intra-UK trade.
There are nevertheless a number of key areas that are not reserved. This includes entire policy areas such as environmental regulation and public procurement, and also exceptions to some of the above reserved matters. For example, food & drink is expressly excluded from the reservations of import & export control, aspects of consumer protection, product safety and liability, and product labelling. EU law is therefore the main constraint on devolved competence in these areas, and once it ceases to apply significant barriers to trade would become legally possible in the absence of the Bill (or something like it).
One of the chief areas of controversy is that the Scottish Government believes that restraints in those areas should be agreed between the different governments using common frameworks on a voluntary basis, whereas the UK Government considers that a legal fallback is necessary. However, a further controversy arises from the limited exceptions to the market access principles. Article 34 TFEU is limited by Article 36, which allows for free movement to be restricted by reference to human, animal or plant health; public policy or public security; public morality; the protection of national treasures with artistic, historic or archaeological value; or the protection of industrial and commercial property. The Bill makes only the first two grounds available as potential justifications for indirect discrimination, and the exemptions to the mutual recognition principle are narrower still. The Bill could therefore result in the devolved institutions having somewhat less scope to regulate in non-reserved areas than they currently do under EU law. The argument over minimum alcohol pricing, prior to the amendments made to the Bill by the UK Government, was a reflection of that concern.
The Bill may in particular clash with the Scottish Government's policy desire to 'keep pace' with EU law, which it is pursuing through the UK Withdrawal from the European Union (Continuity) (Scotland) Bill. That Bill would allow the Government to use secondary legislation to keep Scots law aligned with EU law post-transition (in non-reserved areas), but the Internal Market Bill would make it more difficult to impose (or at least enforce) certain regulations in Scotland if the rest of the UK did not follow suit.
The Bill should not undermine legislation that is already in place before the Bill comes into effect, as that will not be subject to the market access principles. However, the principles will apply if legislation is substantively changed.
The Bill also interacts with devolved powers in other ways, in particular by making the regulation of State aid (though not the granting of State aid) a reserved matter. There had previously been a disagreement between the different governments over whether State aid was already reserved, so the UK Government is using the Bill to put it beyond doubt. The Bill also provides that the UK Government can provide financial assistance for economic development, infrastructure, culture, sport, education and training directly in any part of the UK. While it almost certainly already has those powers, their express restatement in the Bill has also provoked arguments with the devolved administrations who consider that such spending should be done by them through existing financial transfer mechanisms such as the Barnett Formula.
The Bill will continue to receive significant attention as it passes through Parliament, not only in relation to the provisions concerning Northern Ireland and the Withdrawal Agreement but also in terms of its interaction with devolution. As the minimum pricing amendment shows, there may be scope for changes that will ameliorate at least some of the areas of dispute. However, the debate and the arguments will surely continue both before and after the Bill is enacted.
Read all the articles in this series: Part 1, Part 2, Part 3
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