Internal Market Act 2020: position paper
This paper presents the Scottish Government's position on the Internal Market Act (2020), noting the UK Government is currently undertaking a statutory review of the Act, due to conclude in 2025.
Footnotes
1 House of Commons Library The Scotland Bill: Devolution and Scotland’s Parliament. Research paper 98/1, 7 January 1998
2 Hansard of House of Commons Debate. (31 Jul 1997 : Column 456).
3 Section 53 of the Scotland Act 1998 transferred all UK Government functions to in devolved areas to the Scottish Government. See Scotland Act 1998 - Explanatory Notes: Scotland Act 1998 - Explanatory Notes.
4 United Kingdom Internal Market Act 2020: Explanatory notes
5 “The two principles set out above – mutual recognition and non-discrimination – together constitute in the Government’s view a legislative framework that will preserve the fundamental market access rights of businesses and citizens across the UK Internal Market. This system will replace the effect of the rules and mechanisms of the EU Single Market had within the UK.” Department for Business, Energy and Industrial Strategy, UK Internal Market White Paper, July 2020, paragraph 151.
6 See, for example, Weatherill, S. https://academic.oup.com/yel/article-abstract/doi/10.1093/yel/yeab008/6409921
Yearbook of European Law, Volume 40, 2021, pp. 431–474
7 BEIS White paper, paragraphs 12 ff.
8 Treaty on the Functioning of the European Union (TFEU), Article 36
9 Judgement of the European Court of Justice, Case C-302/86 Commission v Denmark, para 9
10 As commentators have noted, proportionality and subsidiarity ‘… are familiar trade law principles and often work together to structure the review of regulation adversely affecting cross-border trade – they sit alongside each other in the EU internal market. The two principles operate (explicitly and implicitly) to manage the limits of regulatory divergence within systems of multilevel government, including the EU, whilst also preserving the democratic authority of governments and parliament to make their own policy choices’ . Brown Swan, C; Horsley, T; McEwen, N; and Whitten, L.C. Westminster Rules? The United Kingdom Internal Market Act and Devolution, Centre for Public Policy, University of Glasgow, 3 October 2024
11 Mario Draghi, Forget the US — Europe has successfully put tariffs on itself (paywall), Financial Times, 14 February 2025
12 Joint Ministerial Committee (EU Negotiations) Communique, 16 October 2017.
13 Hansard HL Deb. (Wednesday 18 November 2020). vol. 807. Available at: https://hansard.parliament.uk/lords/2020-11-18/debates/71C89BAD-4989-4E96-8678-A5B187344635/UnitedKingdomInternalMarketBill
14 Scotland’s deposit return scheme (DRS) is instructive. DRS regulations were made while EU law still applied; there was extensive consideration of EU law as Ministers had to act compatibly with EU law. In the development of our DRS the Scottish Government took careful account of EU guidance on establishment of deposit return schemes, in terms of what would be considered proportionate under EU law, and was satisfied that the legislation complied with EU law because it could be justified as a proportionate measure in pursuit of environmental objectives.
15 Constitutional and legal experts, and environmental organisations in Scotland have noted the Act’s chilling effect – actively seeking to avoid divergence, at the expense of policy innovation, and effectively restricting the policy options open to devolved governments and legislatures. See Brown Swan, C; Horsley, T; McEwen, N; and Whitten, L.C. Westminster Rules? The United Kingdom Internal Market Act and Devolution, Centre for Public Policy, University of Glasgow, 3 October 2024, p25; and Scottish Environment LINK, https://aprs.scot/resources/the-internal-market-act-a-challenge-to-devolution/
16 BDA, The Association of UK Dieticians Folic acid fortification in the UK, 18 November 2019
17 Food Standards Scotland Bread and flour to be fortified with folic acid to prevent birth defects, 20 December 2024
18 https://www.legislation.gov.uk/ukpga/2023/6/contents
19 https://scottishgrocer.co.uk/2021/04/06/brand-scotland-is-a-powerful-force/
20 https://www.gov.uk/government/news/radical-action-plan-to-cut-red-tape-and-kickstart-growth
21 See for example, Zglinski, J. The Internal Market Act : a Global Outlier?, Cambridge Law Journal, September 2023; Dougan, M, Hunt, J, McEwen, N & McHarg, A 2022, Sleeping with an elephant: Devolution and the United Kingdom Internal Market Act 2020, Law Quarterly Review, vol. 138, no. Oct 2022, pp. 650-676; Keating, M (2020) The Internal Market for the Scottish Parliament Culture, Tourism, Europe and External Affairs Committee
22 Dougan, M, Hunt, J, McEwen, N & McHarg, A 2022, Sleeping with an elephant: Devolution and the United Kingdom Internal Market Act 2020, Law Quarterly Review, vol. 138, no. Oct 2022, pp. 650-676
23 Zglinski, J. The Internal Market Act : a Global Outlier?, Cambridge Law Journal, September 2023
24 The Welsh Government shares the Scottish Government’s concerns: former Finance Minister Rebecca Evans commented in 2020 that the Act “…gives UK Ministers, for the first time since devolution, powers to fund activity in areas which are clearly devolved to Wales. In Wales funding decisions are taken in partnership with local communities, to ensure that they reflect the needs of the people in Wales. The powers set out in the Bill completely undermine devolution and will see decisions currently taken in Wales clawed back by the UK Government.” Finance ministers express ‘real concerns’ over UK Internal Market Bill | GOV.WALES
25 “A meaningful reset of UK government-devolved government relations must first recognise that the UKIMA has undermined the authority and status of the devolved institutions and contributed to the erosion of intergovernmental trust” Brown Swan, C; Horsley, T; McEwen, N; and Whitten, L.C. Westminster Rules? The United Kingdom Internal Market Act and Devolution, Centre for Public Policy, University of Glasgow, 3 October 2024
26 Common Frameworks are, of course, expressly designed to weigh these questions; a better operating exclusions process flows from better functioning Common Frameworks, i.e. frameworks operating free of the automatic application of the market access provisions on almost every relevant policy area.
27 There is merit in the proposal that the burden of proof is reversed in an updated exclusions process. Primacy should be returned to legitimate lawmaking in areas of devolved responsibility. Only by exception, and with robust evidence as to disproportionate market impact, should an exclusion not be agreed.
28 Federal Register of Legislation - Mutual Recognition Act 1992
29 Boadway, R The Internal Market in the Canadian Federation, Report to the Scottish Parliament – Finance and Constitution Committee, August 2019
30 Dougan, M, Hunt, J, McEwen, N & McHarg, A 2022, Sleeping with an elephant: Devolution and the United Kingdom Internal Market Act 2020, Law Quarterly Review, vol. 138, no. Oct 2022, pp. 650-676; the Cassis de Dijon principle further established mutual recognition in the EU, EUR-Lex - 61978CJ0120 - EN - EUR-Lex
31 Constitution of Switzerland 1999 (rev. 2014), Article 46; Belser, E. M; Mazidi, S Internal Market Approaches – Comparative Research (Switzerland), Report to the Scottish Parliament – Finance and Constitution Committee, August 2019
32 Belser, E. M; Mazidi, S Internal Market Approaches – Comparative Research (Switzerland), Report to the Scottish Parliament – Finance and Constitution Committee, August 2019; Dougan, M, Hunt, J, McEwen, N & McHarg, A 2022, Sleeping with an elephant: Devolution and the United Kingdom Internal Market Act 2020, Law Quarterly Review, vol. 138, no. Oct 2022, pp. 650-676.
33 MUTUAL RECOGNITION ACT 1992 - SCHEDULE 2 Permanent exemptions: laws relating to goods;
34 National Cabinet Terms of Reference | Federation; Before 2020, the COAG Ministerial Council made these decisions, but it was replaced by National Cabinet
35 Research Report - Mutual Recognition Schemes; Ministerial Councils | Federation
36 See First Secretaries Group's Review of Ministerial Councils
38 See the full list of legitimate exceptions in chapter 13 Canadian Free Trade Agreement - Canadian Free Trade Agreement | Accord de libre-échange canadien
39 About RCT - Regulatory Reconciliation and Cooperation Table (RCT)
40 BOE-A-2013-12888 Law 20/2013, of 9 December, on the guarantee of market unity; Arroyo, L. Mutual Recognition in the Spanish Multi-level Administrative State, , 4/20 Preprints series of the Center for European Studies Luis Ortega Álvarez and the Jean Monnet Chair of European Administrative Law in Global Perspective, 2020
41 Preamble, Ibid
42 Arroyo, L. Mutual Recognition in the Spanish Multi-level Administrative State, , 4/20 Preprints series of the Center for European Studies Luis Ortega Álvarez and the Jean Monnet Chair of European Administrative Law in Global Perspective, 2020
43 Ibid
44 Judgments of the Constitutional Court No 79/2017, 110/2017, and 111/2017; Arroyo, L. Mutual Recognition in the Spanish Multi-level Administrative State, , 4/20 Preprints series of the Center for European Studies Luis Ortega Álvarez and the Jean Monnet Chair of European Administrative Law in Global Perspective, 2020
45 Arroyo, L. Mutual Recognition in the Spanish Multi-level Administrative State, , 4/20 Preprints series of the Center for European Studies Luis Ortega Álvarez and the Jean Monnet Chair of European Administrative Law in Global Perspective, 2020
46 The last review of the Australian Mutual Recognition Act was carried out by the Productivity Commission in 2015. Research report - Mutual Recognition Schemes - Productivity Commission
47 See Research report - Mutual Recognition Schemes - Productivity Commission for an overview of the work of the CRRF
48 Chapter Eleven - Institutional Provisions - Canadian Free Trade Agreement | Accord de libre-échange canadien; See overview on Committee on Internal Trade - Canadian Free Trade Agreement | Accord de libre-échange canadien
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