BRUSSELS/LONDON (Reuters) – The European Union launched a legal case against the United Kingdom on Thursday for undercutting their earlier divorce deal and a senior UK minister said differences remained in talks on a post-Brexit trade agreement.

Controversy over the UK’s new Internal Market Bill has thrown the tortuous Brexit process into a fresh crisis while disagreements over corporate subsidies, fisheries and ways to solve disputes are overshadowing parallel trade negotiations.

“We had invited our British friends to remove the problematic parts of their draft Internal Market Bill by the end of September,” the head of the EU’s executive Commission, Ursula von der Leyen said. “The deadline lapsed yesterday.”

With London not budging, she said the Commission started a so-called infringement, an EU legal procedure against countries that violate the bloc’s laws, while continuing to work towards implementing the divorce deal, or Withdrawal Agreement.

“We stand by our commitments,” von der Leyen said.

London now has a month to reply to the Commission’s formal letter of complaint and even more time to change tack before the Brussels-based executive can sue at the bloc’s top court. The case could lead to hefty fines, but that takes years.

“It think it is a logical administrative next step given that this particular law has now passed so many stages in the UK parliament,” Dutch Prime Minister Mark Rutte said on arriving at talks with his EU peers.

The Internal Market Bill has passed the UK’s lower chamber of parliament and now awaits debate in the House of Lords.

Sterling seesawed following the announcement, which came as the EU’s 27 national leaders began a two-day meeting in Brussels that will also assess progress in the negotiations over the new trade agreement, which are reaching a critical point.

Related Coverage

As we are nearing Boeing’s (NYSE:BA) Q3 result earnings call in October, we are also expecting Boeing to announce or outline consolidation plans for the Boeing 787. The announcement seems to be a formality as Boeing faces lower costs in North Charleston for the Dreamliner production, and demand for wide body aircraft has dwindled, and the company has been looking for ways to make its business less prone to work disruptions from the strong unions in the Seattle area.

In this analysis, we will look at why this is a major blow to the Everett assembly site.

Boeing moves Boeing 787 production Everett Washington to North Charleston South Carolina

Source: Australian Aviation

Note from Author: As we were preparing this report for subscribers, The Wall Street Journal reported that Boeing will set plans this week to consolidate production in South Carolina.

Wide body in Washington state to tumble

Moving the Boeing 787 from Washington would be a blow for the Everett facility. In 2019, the delivery volume for Everett was 172 wide body aircraft, providing significant cash inflow at a time that the Boeing was under significant pressure due to the grounding of the Boeing 737 MAX, and that pressure remains to this day. How big of a blow this would be to the Washington state becomes clear when we look at how many of those aircraft were Dreamliners, and that are 78 aircraft or 45% of the total.

Table 1: Aircraft production in Everett (Source: AeroAnalysis)

So, if we look over a 5-year period from 2019, then we know that at least 78 deliveries or 45% of the 2019 volume will be gone. Additionally, the Boeing 747 program will be terminated by 2023, taking another 6 aircraft away from the Everett output. The biggest wide body that Boeing currently produces is the Boeing 777, and the production on that program is