(Bloomberg) — The UK unveiled legislation to override parts of the Brexit …

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(Bloomberg) — The UK unveiled legislation to override parts of the Brexit deal it signed with the European Union, risking a trade war with the bloc, which threatened to take legal action.

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The bill seeks to hand the UK powers to unilaterally rewrite the bulk of the Northern Ireland protocol, which kept the region in the EU single market after Brexit, creating a customs border with mainland Great Britain. If passed, the new law would allow ministers to rip-up the regulatory framework both sides agreed to in 2019 and replace it with new rules on customs checks, tax and arbitration.

“This is a reasonable, practical solution to the problems facing Northern Ireland,” Foreign Secretary Liz Truss said in a statement. “It will safeguard the EU Single Market and ensure there is no hard border on the island of Ireland.”

But the move risks reopening divisions between Prime Minister Boris Johnson’s administration and the EU 2 1/2 years after the UK left the bloc, just as a unified approach to Russia following its invasion of Ukraine had binded them together again. The EU’s chief Brexit negotiator, Maros Sefcovic said the bloc will now consider legal proceedings against the UK.

“Unilateral action is damaging to mutual trust,” Sefcovic said after the bill was published. He said that the bloc’s reaction will be “proportionate,” including considering both continuing infringement proceedings that were put on hold last year and opening fresh legal procedures that “protect the EU Single Market from the risks that the violation of the Protocol creates for EU businesses and for the health and safety of EU citizens.”

Infringement proceedings have been suspended during negotiations over how the protocol operates and if unfrozen could ultimately lead to financial penalties being imposed on the UK.

The legislation opens up Johnson’s government to accusations that it’s breaking international law, and also threatens to deepen Tory splits over Europe just a week after the premier scraped through a confidence ballot that saw more than 40% of his MPs vote against him. Some in his party want him to go even further in dismantling the protocol, while others have expressed concern about the damage to Britain’s international reputation caused by breaking an agreement.

The Foreign Office said in its statement that the plans are “consistent with international law” and aimed at protecting the 1998 Good Friday peace deal in Northern Ireland.

Potential EU Retaliation

The bill contains a provision for it to be replaced by a negotiated settlement, if one is agreed with the EU. “In the meantime the serious situation in Northern Ireland means we cannot afford to allow the situation to drift,” Truss said.

Here’s what the bill aims to do:

  • Introduce green and red trade channels, separating goods just flowing between Britain and Northern Ireland from goods intended for the EU

  • Allow businesses in Northern Ireland to choose whether they follow UK or EU standards, or both, for goods

  • Extend UK subsidy controls and tax breaks, including changes to value-added tax to Northern Ireland

  • Strip the European Court of Justice of its role in settling disputes over the Brexit deal in the region, allowing instead an independent arbitration panel to oversee legal issues

The government wants to push the bill through the UK’s lower House of Commons before Parliament breaks at the end of July, though it likely wouldn’t become law for at least a year because it is likely to face strong opposition in the upper chamber, the House of Lords. Even after it becomes law, trading arrangements under the protocol as agreed with the EU will continue until ministers draw-up and implement a replacement regime, according to the government.

By not defining the details of the new regime, such as which goods should enter each trading route or what standards firms should follow, businesses will face fresh uncertainty.

The government also indicated that a consent vote for the Northern Ireland Assembly that’s planned for the end of 2024 on whether to continue with the protocol will cover whatever arrangements are in place at the time. That means if Monday’s legislation is passed, it’s the new provisions that will be voted on rather than the ones originally negotiated.

Johnson’s administration argues that the present deal threatens the peace agreement because the Democratic Unionist Party is refusing to participate in Northern Ireland’s power-sharing executive until the protocol is changed, effectively blocking the formation of a new regional government.

But even before the government set out its plans, senior DUP MP Sammy Wilson told Bloomberg that the bill won’t be enough to spur his party to join a new regional government. Without DUP participation, a new executive can’t be formed.

Truss outlined her plan to publish the legislation in a phone call with her Irish counterpart Simon Coveney earlier on Monday. During the 12-minute call held at the UK’s request, Coveney warned the move would be “deeply damaging” to British relations with Ireland and the EU, according to an Irish foreign ministry statement.

Coveney also accused Truss of not engaging in meaningful negotiations with the EU since February. “Far from fixing problems, this legislation will create a whole new set of uncertainties and damage relationships,” he added.

In a sign that Johnson’s plan risks causing further political upset in Northern Ireland, a majority of the region’s elected representatives co-signed a letter calling his approach “reckless” and one which “flies in the face of the expressed wishes of not just most businesses, but most people in Northern Ireland”.

(Updates with Sefcovic statement, details of bill, starting in fourth paragraph.)

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