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The UK Internal Market Act: How does it impact Welsh law?

Published 20/02/2023   |   Reading Time minutes

The UK Internal Market Act became law in 2020. It was introduced by the UK Government to regulate the UK’s ‘internal market’ after Brexit but generated fierce debate about its impacts on devolved law. Both the Senedd and the Scottish Parliament refused consent for the Bill but it was passed by the UK Parliament.

This article will look at how the Act is shaping law making in Wales and across the UK and its effect on how the Welsh Government and Senedd consider laws impacted by it.

How does the Act affect Welsh law?

Parts 1-3 of the Act establish the presumption that (in general) goods, services and professional qualifications that can be sold or recognised in one part of the UK should be able to be sold or recognised in any other part, regardless of what the law in that other part of the UK says.

Part 1 of the Act introduces “market access principles” for goods. This means that, even if the Senedd passes a law to ban or regulate a particular product, that law can only be enforced on something produced in or imported directly into Wales from outside the UK. Anything that comes into Wales from another part of the UK doesn’t have to comply with this law if it falls within the scope of the UK Internal Market Act, unless it is specifically excluded.

The Act says that a good or service that meets the legal requirements in one part of the UK has the right to be sold anywhere else in the UK “free from any [restrictions] that would otherwise apply to the sale”.

A clear distinction to make here is that the Act does not affect the Senedd’s ability to pass laws in devolved areas (its legislative competence) but it does impact on the practical effect of those laws once they are in force.

The effect on Senedd legislation

The Legislation, Justice and Constitution and Economy, Trade and Rural Affairs committees have both argued that the Act has a practical effect on two pieces of Senedd legislation that have been considered in the past few months: the Environmental Protection (Single-use Plastic Products) (Wales) Bill and the Agriculture (Wales) Bill.

One of the provisions in the Agriculture (Wales) Bill would allow Welsh Ministers to create marketing standards for agricultural products sold in Wales. Products that meet the marketing standards in other parts of the UK would still be able to be sold in Wales even if Welsh Ministers introduce different standards for Wales.

Similarly, the Environmental Protection (Single-use Plastic Products) (Wales) Bill prohibits the sale of single-use carrier bags and oxo-degradable plastics but these are still being legally sold to consumers in England, Scotland and Northern Ireland. These items will still be able to be sold to consumers in Wales from another part of the UK, even though Wales based suppliers won’t be allowed to sell them to consumers in Wales.

The Welsh Government has taken a different view to Senedd Committees about the impact of the UK Internal Market Act on these Bills. For example, they say that the Environmental Protection (Single-use Plastic Products) (Wales) Bill is “fully effective and enforceable”. In its view, the UK Internal Market Act 2020 “cannot and does not cut across Senedd competence to legislate in relation to non-reserved matters” and it cannot “reserve matters by the back door”.

Legislation from other parts of the UK

The Legislation, Justice and Constitution Committee has reported that this position appears to be different to how the Welsh Government has interpreted the effect that new law for England will have in Wales.

The Genetic Technology (Precision Breeding) Bill is UK Parliament legislation that only relates to England. It seeks to remove plants and animals produced using gene editing technology (known as Precision Bred Organisms or PBOs) from current regulations for genetically modified organisms.

The Bill will create different regulatory environments in England and Wales, just as the Welsh legislation on agriculture and single-use plastics do, but is being interpreted differently by the Welsh Government.

The Welsh Government has said that this Bill would have “significant implications” for Wales because of the UK Internal Market Act. The Legislative Consent Memorandum on the Bill says:

this Bill will in essence allow the sale and marketing of PBOs in Wales, which currently Welsh legislation doesn’t allow

When moving the motion in the Siambr, the Minister for Rural Affairs and North Wales said that the Welsh Government has taken a consistent approach to this Bill and the single-use plastics legislation, and added:

Where the Senedd legislates, they do so free of UKIMA, so primary Senedd legislation in a devolved area can be made free from the requirements of UKIMA. This means the Senedd could correct the position caused by this Bill by making new primary legislation here in Wales.

But this does not appear to be consistent with the UK Internal Market Act, which states that only requirements in place before the Act came into force (31 December 2020) that aren’t substantially changed can be exempt in this way.

So what impact does the Act really have?

So, what is the actual impact of the UK Internal Market Act? Can both of these positions be taken at the same time? The Welsh Government had sought to answer some of these questions through a legal challenge to the Act. This challenge was ultimately unsuccessful because they were told by the courts that it was premature without a piece of Senedd legislation to test it against.

The Environmental Protection (Single-use Plastic Products) (Wales) Bill was initially meant to provide that test case but a judgment of the Supreme Court “closed off the avenue of using it as part of the ongoing legal challenge.

After the Bill progressed through the Senedd, the Counsel General decided not to refer the Bill to the Supreme Court to test whether it is within the Senedd’s legislative competence.

So for now, there is still no agreement about when the UK Internal Market Act does and does not have an impact on Welsh law.

Article by Josh Hayman, Senedd Research, Welsh Parliament