UK Internal Market

The United Kingdom's internal market or UK Internal Market is the internal market of the United Kingdom (UK), consisting of four members: England, Scotland, Wales and Northern Ireland. It allows the free trade of goods and services across the UK.[6]

UK Internal Market

artist:Italay90

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   UK Members


  In a Customs Union with the UK
  Has an EPA with the UK
Policy ofUnited Kingdom
TypeInternal market
Members
   UK Members

(4 Members nations)

[Non UK Members]

  Customs Union

(3 Members)
Crown Dependencies

  Economic Partnership Agreement

(13 Members)
UK Overseas Territories
Establishment
1707
2020
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United Kingdom politics
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History

Creation

The Treaty of Union (1707), particularly articles 4 to 18, established a single market covering England and Wales and Scotland.[7] It was formalised by the passing of the Acts of Union in 1706 and 1707.

Article 6 of the Acts of Union 1800 created a customs union with the Kingdom of Ireland. The Anglo-Irish trade war meant that only Northern Ireland remained in the customs union after 1932.

During EU Membership

The Single European Act (1986) resulted in a single market covering the whole of the European Union, including the United Kingdom. The United Kingdom left the European Union in January 2020, but remains in the EU single Market until the end of a transition period in December 2020.

Exit from European Single Market

Withdrawal preparation

In April 2019 the UK Government began to design UK Common Frameworks Policies to enable the functioning of the UK Internal Market after the end of the transition period.[8]

In October 2019, Article 6 of the Northern Ireland Protocol included in the withdrawal agreement includes reference to the notion of United Kingdom's internal market:[9]

Legislation as defined in point (2) of Article 5 of Regulation (EU) No 952/2013 shall apply to and in the United Kingdom in respect of Northern Ireland (not including the territorial waters of the United Kingdom).

— Article 5 Customs, movement of goods

Having regard to Northern Ireland's integral place in the United Kingdom's internal market, the Union and the United Kingdom shall use their best endeavours to facilitate the trade between Northern Ireland and other parts of the United Kingdom, in accordance with applicable legislation and taking into account their respective regulatory regimes as well as the implementation thereof. The Joint Committee shall keep the application of this paragraph under constant review and shall adopt appropriate recommendations with a view to avoiding controls at the ports and airports of Northern Ireland to the extent possible.

— Article 6 Protection of the UK internal market

Transition period updating of the UK Internal Market

On July 16, 2020 the United Kingdom Government published its white paper for the UK Single Market Bill, which will update the UK Internal Market, place new definitions and structures into domestic law that will complement the what is currently on the statute book, and update the overall old language currently used in the Act of Union 1707 into “modern english”.[10]

Principles & core function goals

Principles

The UK Internal Market has some members.

The UK Internal Market is driven by three overarching principles which are:

  1. To continue to secure economic opportunities across the Internal Market
  2. To continue competitiveness and enable citizens in all members of the UK to be in an environment that is the best place in the world to do business and trade
  3. To continue to provide for the general welfare, provide prosperity, and create economic security of all citizens in all members within with UK.[11]

Core function goals

UK Internal Market has two core function goals to ensure the smooth functioning of the UK Internal Market and ensure maximum transparency and communication between the different organizations and governments within the UK Internal Market.

  1. foster collaboration and dialogue; and
  2. build trust with business and maintain openness.[12]

UK Market Access Commitment principles (Mutual recognition & non - discrimination)

There will be two foundational principles which together will provide a legislative means to enable the smooth operation the UK Internal Market and these two principles are:

  • Mutual recognition
  • Non-discrimination [13]

The UK Internal Market will have three fundamental goals that are designed to allow the continued functioning of the UK Internal Market, while also acknowledging that there may be policy divergence in some areas and these aims are:

  1. To ensure friction-less trade between all members of the UK Internal Market
  2. To ensure fair competition practices and prevent discrimination within the UK Internal Market
  3. To continue to protect businesses, consumers and civil within society by engaging them in the design and progression and evolution of the UK Internal market.

The central purpose of having mutual recognition within the UK Internal Market will be to ensure that goods and services can be traded freely across the UK and ensure regulations made by one member of the UK Internal Market is accepted by all the other members.

The non - discrimination principle will forbid discrimination against businesses in any Member of the UK Internal Market, and will avoid members of the UK Internal Market from having to complying with two sets of requirements.

The Mutual recognition system is a known and well-tested system, and is used in countries across the world including Australia and Switzerland.

Mutual recognition will provide low-cost and decentralized methods for dealing with differences in regulation, as well as protecting the ability of the Members of the UK Internal Market to regulate their own domestically produced goods, professionals and services originating from their territory.

The mutual recognition system will ensure that any differences in regulation that emerge between jurisdictions do not result in unnecessary barriers to trade, and a requirement not to discriminate (a ‘non-discrimination principle’) which will provide additional support to the mutual recognition system.

The mutual recognition system will make it unlawful for any government within the UK to regulate in any way that would give less favorable treatment to another member of the UK Internal Market, and effect goods, professionals or service providers by giving an unfair advantage to a that members territory over that of the other members of the Uk Internal Market.

The mutual recognition principle will form an essential part of the UK Internal Market, will be tailored to the UK's unique circumstances and will encompass 3 areas of regulation, and reflect the different ways goods and services are currently treated under UK law:[14]

a) Goods – mutual recognition of goods will mean that goods from one Member of the UK Internal Market can be sold to all other members without having to comply with another members requirements that would otherwise apply).

Mutual recognition will cover mandatory requirements relating to lawful sale, i.e. product requirements and their related processes and production methods (for example, requirements on production, composition, quality, packaging or labeling). Other types of requirement not directly related to lawful sale will be excluded e.g. conditions on transport, disposal or the manner of sale of goods. These will instead be covered by the non-discrimination principle. As noted earlier, goods being placed on the Northern Ireland market will have to comply with the arrangements set out in the Northern Ireland Protocol The mutual recognition principle will also take account of our commitments to ensure that Northern Ireland goods will have unfettered access to sell to all other members of UK Internal Market. Northern Ireland's specific role within a legislative underpinning for goods is addressed in detail below.

b) Professional qualifications – mutual recognition of professional qualifications will mean that regulations required to access a profession in one members territory will be able to be used to access of that profession in all members territories. Where a member has different entrance requirements, a process will be implemented to enable professionals to demonstrate compliance. In addition, other profession-specific regulatory requirements needed to practice the profession will be included as part of this process.

c) Services – Mutual recognition is already in place for most services authorizations within the UK Internal Market through the Provision of Services Regulations 200928. These regulations have broad application and areas out of scope of this regime (such as financial, healthcare and transport services) are also out of scope of the UK Internal Market.

The Provision of Services Regulations 2009 set out that any authorization scheme provided for by one of the UK Internal Markets competent authority, it must be justified and it must be shown that the objective could not be attainable in a less restrictive manner. The scheme itself will be based on criteria that prevent arbitrary assessment.

Additionally, an authorization issued by an UK Internal Market authority with functions covering less than the whole UK Internal Market will generally be permitted and the exercise of the relevant activity could be conducted throughout the whole of the UK Internal Market.

This system will be explicitly brought within the Internal Market system.

Non-discrimination

The non-discrimination principle will be ensure that members of the UK Internal Market do not to discriminate between individuals or businesses based on residence or origin within the UK Internal Market.

Direct discrimination is where an individual or business is treated differently and unfavorably by a member of the UK Internal Market, who has acted in an explicit manner, compared with a members territorial operators when operating in the other Members territories, expressly on the grounds of residence or geographical origin. The non-discrimination principle will allow scope for such differential treatment where this is necessary, for example, to address a public, plant or animal health emergency.

The UK Government will be able to take action where instances where an economic operator in the UK Internal Market is not directly discriminated against but is nevertheless treated in a substantially unfavorable way by another administration compared with an operator in that members territory when operating in any other members territories. and where for example, this is not justifiable on the grounds of a clearly stated policy objective.

This obligation on Members of the UK Internal Market and regulators not to discriminate in a way that affects trade will provide an additional safeguard for the UK Internal Market in areas where mutual recognition is excluded. For example, if a member specified that milk cannot be transported more than a certain distance which meant that in effect most milk from other members of the UK Internal Market could not be sold in that that members territory, this could be viewed as a case of indirect discrimination. This kind of discrimination could be prohibited as it has equivalent effect to direct discrimination.

It will be necessary to decide whether indirect discrimination in this context should be prohibited at the outset in legislation as a justifiable right for business, or after a period of monitoring and assessment. Another option would be for this element of the non-discrimination principle to be given effect by other means, such as via robust administrative or intergovernmental processes.

Mutual recognition and non-discrimination will operate together to ensure fair trade within the UK Internal Market in goods, a UK Internal Market wide specific mutual recognition principle will be introduced.

Mutual recognition will be the default presumption but there are areas where mutual recognition will not be appropriate (‘exclusions’). As set out before, there have always been areas out of scope of the UK Internal Market, such as the Scottish legal system.[15]

For services, the effect of mutual recognition is already provided through the principles applied to authorizations under the Provision of Services Regulations 2009 and this effect will be retained explicitly as part of the system.

For both goods and services, these provisions will be supplemented by the non-discrimination principle. For goods, non-discrimination will apply within certain excluded areas such as procurement.

For services, the non-discrimination principle will contribute to preventing unnecessary barriers to service provision within the UK Internal Market For professional qualifications, a system will be introduced to ensure that professionals regulated a members territory will be able to seek recognition of their qualifications in all other members territories, allowing them to provide services. As with goods, the principle of non-discrimination could apply in certain areas of professional regulation that are exclusions from the core approach.

As set out below, the non-discrimination principle will also take account of obligations that apply under the Northern Ireland Protocol and legislative provisions on unfettered access for Northern Ireland businesses. Stakeholders are invited to comment on the scope of non-discrimination in Question 2 below.

Figure 5 below illustrates how mutual recognition and the non-discrimination principles will be implemented .

Figure 5. What the Scope of mutual recognition and non-discrimination for good will be.

Regulation of goods in devolved areas Reserved areas, tax, existing regulation,
Mutual Recognition. Out of scope of mutual  recognition as not market access related (ND Applies)

     

 Out of Scope of UKIM

(ND could still apply some areas)

Requirements Relating to the   lawful sale of good (Including Common Frameworks) Ancillary areas. e.g. manner of sale, transport / handling and some inspections, and procurement

Some areas will be excluded from mutual recognition and non-discrimination. Exclusions will be defined from the outset in legislation and will not be expected to change. If the UK government or a devolved administration introduces new regulation that falls within an exclusion, then the mutual recognition system will not apply to all or part of it as appropriate. The excluded categories will likely include:

areas out of scope of the UK Internal Market model as set out above, that is, UK government regulation in reserved areas, existing regulatory differences (which remain unchanged), tax and fiscal matters, and the provision of goods and services by public authorities (market activity from economic operators and professional qualifications would be covered)

regulation necessary to implement some international obligations

Non-discrimination will apply to the ancillary areas of regulation which are not directly related to the lawful sale of goods, (i.e. requirements on transportation, disposal, or the manner of sale of goods); and is considering whether and to what extent it should apply to public procurement, in particular for above-threshold procurements. Stakeholders are invited to comment on the application of non-discrimination to public procurement. In addition, the government is keen to obtain views on which other areas which have the potential to affect goods or services but are not covered by mutual recognition should also be covered by the principle of non-discrimination.

(See Citation link for more detail) .[16]

Benefits and criticism

Plans for UK's internal market, post-Brexit, question constitutional issues, for instance on the way of resolving dispute.[17]

Geographic & Economic Information
UK Internal Market (UK Members)
Country (s) Area km2 Area (sq mi) Population (Nominal GDP)

Total

(GDP)

Per Capita

United Kingdom (as a whole) 242,495 km2(93,628 sq mi) [18] 67,886,004 [19] $2.744 trillion [20] $41,030
England 130,279 km2(50,301 sq mi) [21] 56,286,961 [22] £1.8 trillion [23] £33,000

($44000)

Scotland 77,933 km2(30,090 sq mi)[24] 5,463,300 [23] £138 billion[25] £25,500
Wales 20,779 km2(8,023 sq mi) 3,153,000 [26] £75 billion

($100B) [27]

 £23,900

($31867)

N.Ireland 14,130 km2(5,460 sq mi) [28] 1,893,700 [29] £49 billion [30] £26,000

See also

Currency

Free Movement

Laws in the United Kingdom

International Trade

Constitutional Arrangement in the United Kingdom

United Kingdom

Devolution

Other Internal Markets in the UK

EU Exit

UK intergovernmental relationships

References
  1. "Policy paper Customs arrangements with the Crown Dependencies". Gov.UK. 28 November 2018.
  2. "The Customs (Tariff-Free Access for Goods from Overseas Territories) Regulation". Gov.UK. 14 March 2019.
  3. "Market access arrangements for financial services between the UK and Gibraltar: a consultation". Gov.UK. 11 March 2020.
  4. "The Articles of Union,". The Scottish Archive for Schools.
  5. McCall, Chris (July 14, 2020). "Scotland must accept UK rules on food, and the environment under 'internal market' plans". Daily Record.
  6. "Government consults on legislation to underpin the UK internal market: We want your views". National Famers Union (NFU). July 17, 2020.
  7. "Articles of the Treaty of Union Agreed on by the Commissioners of Both by Lords Commissioners for the Union of the Kingdoms of England and Scotland". Google Books. May 1, 1707.
  8. research, senedd (February 19, 2020). "UK common policy frameworks: The story so far". Senedd Research.
  9. https://ukandeu.ac.uk/northern-ireland-and-the-conundrum-for-the-uk-internal-market-after-brexit/
  10. Association, Press (July 15, 2020). "As Brexit approaches, UK government promises 'power surge' to Belfast". Breaking News.ie.
  11. "WHITE PAPER ON UK INTERNAL MARKET: ISSUES OF EXCEPTIONAL ECONOMIC, POLITICAL AND CONSTITUTIONAL IMPORTANCE FOR THE UNITED KINGDOM". Wyeside Consulting Ltd. July 16, 2020.
  12. Internal Trade, Dept. (July 16, 2020). "UK Internal Market". Gov.UK.
  13. "Government action to optimise UK internal market". IDG. July 21, 2020.
  14. Clarke, Osbourne (July 23, 2020). "Brexit Transition Countdown: The UK is leaving the Single Market…and so will have to legislate for its own Internal Market". Osbourne Clark.
  15. GILLOW, HARRY (July 20, 2020). "The UK Internal market White Paper: is it really an assault on devolution?". EU Relations Law.
  16. Alok Sharma MP, Rt Hon (July 6, 2020). "UK Internal Market". Gov.UK.
  17. https://www.bbc.com/news/53456419
  18. "Demographic Yearbook (Population by sex, rate of population increase, surface area and density)" (PDF). United Nations. 9 August 2015.
  19. "World Population Prospects". UN. March 31, 2020.
  20. 30 October 2019, Economic Outlook Database,IMF
  21. Region and Country Profiles, Key Statistics and Profiles, October 2013, ONS. August 9, 2015.
  22. "Population estimates for the UK". O.N.S.
  23. ONS. "Regional gross value added (income approach), UK: 1997 to 2018, December 2015". Retrieved 24 April 2017.
  24. Region and Country Profiles, Key Statistics and Profiles, October 2013, August 9, 2015, ONS.
  25. O.N.S (April 24, 2017). "Regional gross value added (income approach), UK: 1997 to 2017, December 2015".
  26. "Mid year estimates of the population". gov.wales. June 26, 2020.
  27. "Regional economic activity by gross value: UK 1998 to 2018". O.N.S. December 12, 2018. Retrieved April 27, 2019.
  28. "The Countries of the UK". O.N.S. July 7, 2015.
  29. "Population estimates". O.N.S. July 18, 2020.
  30. Regional Economy Activity, December 19, 2019, O.N.S

External Sources

July 2020, Katy Hayward, The UK Internal Market White Paper and Northern Ireland A primer in light of the Protocol on Ireland/Northern Ireland

UK Internal Market Hub

Creates the Internal Market Legislation
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