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UPDATE 2-Brexit back in crisis as UK threatens to undermine divorce pact

Mon, 7th Sep 2020 07:52

* UK plans to override parts of Brexit withdrawal agreement
- FT

* Johnson tells EU to agree trade deal by Oct. 15 or 'move
on'

* Barnier 'worried' about difficult negotiations

* Trade talks planned for Tuesday
(Adds Barnier and lawmaker quotes)

By Guy Faulconbridge and Elizabeth Piper

LONDON, Sept 7 (Reuters) - Brexit trade talks plunged into
fresh crisis on Monday after Britain warned the European Union
that it could undercut the divorce deal it signed unless the
bloc agrees to a free trade deal by Oct. 15.

In one of the most startling turns of the four-year Brexit
saga, Britain is reportedly planning new legislation to override
parts of January's Brexit Withdrawal Agreement, potentially
jeopardising the treaty and creating frictions in Northern
Ireland.

Sections of the internal market bill are expected to
"eliminate the legal force of parts of the withdrawal agreement"
in areas including state aid and Northern Ireland customs, the
Financial Times newspaper said, citing three people familiar
with the plans.

EU diplomats were aghast, cautioning that such a step would
tarnish Britain's global prestige and heighten chances of a
tumultuous EU exit on Dec. 31.

Sterling fell around half a percent against the
dollar and euro on Monday.

Britain has set a deadline of Oct. 15 to strike a deal.

"If we can't agree by then, then I do not see that there
will be a free trade agreement between us, and we should both
accept that and move on," Prime Minister Boris Johnson was to
say on Monday, according to his office.

Britain left the EU on Jan. 31 but talks on a new trade deal
before the end of a status-quo transition arrangement in
December have snagged on state aid rules and fishing.

Without a deal, nearly $1 trillion in trade between Britain
and the EU could be thrown into uncertainty, including rules on
everything from car parts and medicines to fruit and data.

'DESPERATE' STRATEGY?

Some Brexit-supporting members of the ruling Conservatives
argue that Britain should denounce the Withdrawal Agreement
because, they say, it poses constitutional dangers to Britain
even if the two sides secure a future partnership deal.

They refer to article 184 of the agreement binding both
sides to using "their best endeavours, in good faith and in full
respect of their respective legal orders" to try to secure a
future relationship agreement, and argue the EU has not done so.

The reported plan to undermine the Withdrawal Agreement -
disclosed on the eve of new talks in London - was condemned by
parties on both sides of the Irish border and elicited surprise
in Brussels.

"If the UK chose not to respect its international
obligations, it would undermine its international standing,"
said one EU diplomat. "Who would want to agree trade deals with
a country that doesn't implement international treaties? It
would be a desperate and ultimately self-defeating strategy."

Leaders of Northern Ireland's Sinn Fein and SDLP parties,
the British-ruled region's two largest Irish nationalist groups,
also criticised the government's plan, as reported by the
newspaper.

Asked about the report in the Financial Times, British
Environment Secretary George Eustice said there might be some
minor "legal ambiguities" that needed to be tidied up over the
Northern Irish protocol.

"We have a Withdrawal Agreement, and that includes Northern
Ireland Protocol, and we are committed to implementing that," he
told BBC radio.

Negotiations were ongoing to "iron out a few remaining
technical details" on how the protocol would work and there
might then be a need for legislation to provide legal certainty,
he said.

"We are not moving the goal posts," he told Sky News.

EU chief negotiator Michel Barnier acknowledged anxiety but
declined to comment on the FT report. "I remain worried ... the
negotiations are difficult, because the British want the best of
both worlds," Barnier told France Inter radio.

If no deal is agreed, Britain would have a trading
relationship with the bloc like Australia's, which would be "a
good outcome", Johnson was also to say on Monday.
(Additional reporting by John Chalmers and Gabriela Baczynska
in Brussels, Benoit Van Overstraeten in Paris;
Writing by Guy Faulconbridge;
Editing by Hugh Lawson and Andrew Cawthorne)

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