The UK is to table its long awaited finance bill next week but anticipated controversial clauses to override the Brexit withdrawal agreement are expected to be axed if a trade deal is struck beforehand.
The EU has warned that trade talks will be pulled immediately if the government goes ahead with a second batch of legislation granting itself unilateral powers to renege on part of the withdrawal agreement signed in January.
“If it violates the withdrawal agreement, it’s curtains, no deal,” said a senior Brussels source.
However government sources have said the content of the bill depends on progress in the trade talks, now at a make-or-break phase.
If a deal is struck this week the clauses are “pretty unlikely if we are in a world of a trade deal”, they said.
The bill has been on the cards since September and was expected to include several clauses mirroring the controversial measures in the internal market bill – denounced by three former prime ministers and last month comprehensively rejected by the House of Lords, which was horrified by the government’s admission it was prepared to break international law.
If the government goes ahead, the finance bill with its contentious clauses intact would be seen by the EU as an incendiary act if the trade and security negotiations were ongoing – but there is no expectation in Brussels of such an outcome.
Sources in the UK said the next three to five days were critical, with hopes that even if a deal does not emerge before Friday it will do so over the weekend.
The proposed finance bill would have given a minister the unilateral power to decide which goods being exported from Britain to Northern Ireland would be deemed “at risk” of entering the Republic of Ireland.
Such “at risk” goods would attract tariffs – although the tax would be redeemable if it could be proved that the item stayed in Northern Ireland.
The issue is being discussed by the joint EU-UK committee implementing the withdrawal agreement. But a trade deal delivering “zero tariffs and zero quotas” on goods being traded between the UK and the EU would completely resolve the problem, leaving the government without any requirement for the relevant clauses in the finance bill.
A separate strand of talks being run by the UK-EU joint committee chaired by Michael Gove and Maroš Šefčovič is said to be making good progress on the issue, and that of the free movement of food between Great Britain to Northern Ireland.
The UK government had argued that both the Brexit clauses in the finance bill and the internal market bill were a safety net needed to guarantee unfettered trade between Northern Ireland and Great Britain in the event that trade talks collapsed.
In an interview with the Irish Times the Irish taoiseach, Micheál Martin, said: “We are now really in the endgame if a deal is to be arrived at this week.”