Liam Fox is demanding the right to bypass the Scottish and Welsh governments when striking free trade agreements after Brexit.
The trade secretary has written to cabinet ministers suggesting that they deny devolved administrations the ability to veto deals, even if they allow in more genetically modified products, despite the bans on GM crops in Scotland, Wales and Northern Ireland.
Dr Fox is also suggesting that the devolved administrations should not sit on the new board of trade that Theresa May has decided to reform. This is likely to be opposed by colleagues who fear it signals that the government is unwilling even to consult on trade.
In his letter, Dr Fox set out four options for negotiating trade deals, from agreeing a common position with the devolved governments to ignoring them and declaring trade a reserved matter for the British government. Dr Fox is understood to favour options that do not give the devolved administrations a veto.
The move has split the cabinet, which received Dr Fox’s letter in the past week. David Mundell, the Scottish secretary, Alun Cairns, the Welsh secretary, and James Brokenshire, the Northern Ireland secretary are said to have rejected Dr Fox’s proposals. They are worried that it will further undermine the devolution settlement, strengthen the nationalists in Scotland and destabilise the situation further in Northern Ireland, where the devolved administration remains suspended.
However, Dr Fox is understood to have the backing of senior members of the cabinet amid fears that the SNP will deliberately scupper trade deals if given the chance. A government source told The Times: “Liam is pushing to ensure that trade deals remain a reserve power for the UK and the letter went into ministerial boxes in the last week. The secretaries of state for devolved institutions are very, very keen to keep the devolved administrations on board and work together in a collaborative way. We can see a situation where the Scottish government is not going to allow trade deals to work.”
The government must work out which powers held by Brussels go to devolved administrations and which go to the central government. Striking the right balance is likely to be one of the most difficult domestic issues on Brexit.
Dr Fox has included two compromise solutions which update the devolved administrations on the progress of talks without allowing them to set the negotiating position. One option would give them a veto at the end and the other would not. A Whitehall source said: “We don’t want to be held hostage at this point.”
Mrs May repeatedly said during the election campaign that she would not do anything to undermine the devolution settlement and some ministers believe she will not side with Dr Fox. No final decisions have been made and replies are still being submitted.
New trade deals could highlight the diverging economic priorities of the four countries in Britain.
The prospect of GM foods in particular is likely to be controversial. In 2015 Scotland, Wales and Northern Ireland banned the cultivation of GM crops while England did not. This could pose a problem striking a trade deal with the United States, where GM food is common.
When single market rules no longer apply after Brexit, the devolved administrations could make further changes to regulatory standards, making UK-wide trade deals harder.
Owen Smith, the shadow Northern Ireland secretary, said it would be a scandal if Dr Fox tried to ignore the views of the Welsh and Scottish governments and it was “even more outrageous that he should be trying to ram this through in the absence of the Northern Ireland executive”.
A Scottish government source said: “We have made it crystal clear we will not recommend parliamentary approval for the EU withdrawal bill as it stands and they need to understand we are serious about that.”
An international trade spokeswoman said: “We have been very clear that we want a trade policy that is inclusive and transparent and which represents the whole of the UK.”
