Brussels has launched legal action against the UK over its plans to override sections of the Brexit Withdrawal Agreement.
The European Commission had given the British government until the end of September to withdraw the controversial provisions from its Internal Market Bill, which it unveiled earlier this month.
"The deadline lapsed yesterday. The problematic provisions have not been removed," Commission chief Ursula von der Leyen said in a short address on Thursday.
The Commission has "decided to send a letter of formal notice to the UK government — this is the first step in an infringement procedure," she added.
The UK government, which has one month to reply to the Commission's letter, reiterated in a statement on Thursday that its bill is designed to "create a legal safety net to protect the integrity of the UK's internal market."
Brussels had warned Prime Minister Boris Johnson on multiple occasions that it would "not be shy" in taking legal action if he went ahead with the bill.
It also rejected his argument that the law was meant to protect the Good Friday Agreement that guarantees peace in Northern Ireland.
UK lawmakers gave their final backing to the draft bill on Tuesday. It will now be examined by the House of Lords.
Reacting to the news as he attended the EU summit in Brussels, Dutch Prime Minister Mark Rutte said: "This is an administrative step in the process" rather than a political one.
Ireland's Taoiseach Micheal Martin told Euronews: "The mood seems better in terms of the prospects for negotiations but there's some distance to go yet before intensive negotiations commence. Obviously fisheries is a significant issue, along with state aid, along with the issue of governance. But both sides are engaging. We believe that parallel to the infringement proceedings the talks should continue."
'The UK has breached its obligation'
With its bill, "the UK has breached its obligation to act in good faith, as set out in Article 5 of the Withdrawal Agreement. Furthermore, it has launched a process, which — if the Bill is adopted — would impede the implementation of the Withdrawal Agreement," the Commission said in a statement.
The Withdrawal Agreement was signed in January after it was renegotiated by Johnson and approved by UK and EU lawmakers. It sets out the terms of the UK's exit from the bloc.
Under the treaty, Northern Ireland is to be part of the UK's customs union and therefore be included in any trade deals Britain strikes with third counties.
However, EU customs rules will continue to apply for goods travelling between Northern Ireland and the Republic of Ireland so as to avoid a hard border on the island, which many fear could reignite sectarian tensions and violence.
This would mean that customs checks will have to be performed for some goods travelling between Northern Ireland and Great Britain.
But Johnson now says he is opposed to this measure as it would create a de-facto border between Northern Ireland and the rest of the UK in the Irish Sea.
Britain's Cabinet Office said in a statement on Thursday that it "will respond to the (Commission's) letter in due course."
"We have clearly set out our reasons for introducing the measures related to the Northern Ireland Protocol. We need to create a legal safety net to protect the integrity of the UK's internal market, ensure Ministers can always deliver on their obligations to Northern Ireland and protect the gains from the peace process," it added.
Fishing rights and level playing field
The announcement comes as the EU's Michel Barnier and the UK's David Frost are currently holding the ninth round of Brexit negotiations in the hopes of hammering out a deal before the end of the transition period.
The talks have been deadlocked for months with fishing rights and the level playing field among the thorniest issues.
Fishing rights, open and fair competition and law enforcement and judicial cooperation are among the issues being discussed in this latest round of talks.
Brussels and London have both previously stated that a deal needs to be reached by mid-October to leave enough time for their respective parliaments to ratify it before the transition period expires at the end of the year.
If an agreement cannot be reached, trade between the two sides will revert to World Trade Organisation (WTO) rules.
The UK announced on Wednesday. it had signed a fisheries agreement with Norway. Under the deal, the two countries will have mutual access to each other's fisheries jurisdiction and will set annual fishing quotas.
_Correction: An earlier version of this article stated that Northern Ireland would remain within the EU's customs union until another arrangement could be found _—_ this was in the Withdrawal Agreement negotiated by former British Prime Minister Theresa May but rejected by MPs._