Brexit Briefing - July 2021

Christmas Truce 1914

Author Harold B Ronson Copyrightexpired Source Wikimedia Commons

Jane Lambert

On the first Christmas of the Great War, the fighting paused to enable both sides to bury their dead.  At least one football match took place between opposing troops. Luxuries from food parcels were exchanged as well as other simple kindnesses.  The suspension by the Commission of legal proceedings against the British government for alleged breaches of the withdrawal agreement is reminiscent of that truce.  There has even been a football match with Germany which England conveniently won.

The Christmas truce of 1914 did not last long and there is no reason to believe that the slightly improved relationship between the UK and its neighbours will last any longer.  There have certainly been enough provocations from the British media from exaggerated indignation over the announcement of visa waiver fees to visit Schengen countries to David Gauke's article Dominic Cummings’s solution to the Irish border problem would have been disastrous on 29 July 2921 in The New Statesman alleging a plot to drive the Irish Republic out of the European Union or at least out of the single market.  

From a brexiteer perspective, such a plot is not as mad as it sounds. It would have avoided customs checks in the Irish sea and on the island of Ireland.  It might even have worked.  There has been a lot of ill-feeling between Britain and Ireland over the centuries but the United Kingdom and the Irish Republic share a common travel area, a common language, the common law, a parliamentary system of government, close economic ties and even closer family ones.  Relations between Dublin and Brussels have been strained over Irish tax incentives to attract US tech companies and they may become strained again if the recent consensus on taxation is ever implemented.  It is not entirely fanciful to suppose that a time may come when the peoples of the UK and Ireland may find that they have more in common with each other than they do with the Continent and that they have more to gain from cooperating with each other than with their continental neighbours.

The suspension of legal proceedings has been viewed by some as a sign of weakness on the part of the EU. It is said that the Commission has been spooked by the threat in Northern Ireland Protocol: the way forward to invoke art 16 of the Northern Irish Protocol. I have to say that I do not think that is very likely. As I explained in British Proposals for Renegotiating the Northern Ireland Protocol on 29 July 2021, art 16 is intended only to bring short term relief should the application of this Protocol lead to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade.  It can be compared to a force majeure clause in a commercial contract.  A more likely explanation for the suspension of legal proceedings is that civil servants on both sides like to take their family holidays in August.

In his foreword to Global Britain in a competitive age which I discussed in my article of 19 March 2021, the Prime Minister wrote:

"In 2021 the aircraft carrier HMS Queen Elizabeth, one of the two largest warships ever built for the Royal Navy, will lead a British and allied task group on the UK’s most ambitious global deployment for two decades, visiting the Mediterranean, the Middle East and the Indo-Pacific. She will demonstrate our interoperability with allies and partners – in particular the United States – and our ability to project cutting-edge military power in support of NATO and international maritime security. Her deployment will also help the Government to deepen our diplomatic and prosperity links with allies and partners worldwide."

That task force has now arrived in the Pacific to the irritation of the Chinese government that was to be expected:

"The threat to freedom of navigation could only come from the one who deploys a carrier strike group to the South China Sea half a world away and flexes its naval muscles to heighten the military tension in that region." (Chinese embassy in London quoted by Frank Gardner in China warns UK as carrier strike group approaches 30 July 2021 BBC website)

What was perhaps less expected was its lukewarm reception by the USA.  Katherine Hille reported that US Defence Secretary Lloyd Austin had suggested that the UK might be more helpful as an ally if it did not focus on Asia.  In a speech at an event in Singapore sponsored by the Institute of Strategic Studies, Mr Austin stressed that military resources were scarce and that the US and its allies had to work out the best way of sharing military burdens. “If for example, we focus a bit more here [in Asia], are there areas that the UK can be more helpful in other parts of the world?” he mused,  Hille opined that Mr Austin's remarks would come as a blow to HM government (see Katherine Hille Britain ‘more helpful’ closer to home than in Asia, says US defence chief 27 July 2021 Financial Times).

In addition to the negotiations to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership which I mentioned in my Brexit Briefing for May 2021, the UK has become a dialogue partner to the Association of South-East Asian States (see the joint press release from the Foreign Office and the Department for International Trade UK becomes Dialogue Partner of the Association of Southeast Asian Nations 5 Aug 2021). The press release does not state what a "dialogue partner" actually does and it appears that the UK enjoyed that status through its membership of the EU until 31 Dec 2020.

Nevertheless, it is another quiet achievement for the Department for International Trade under Liz Truss, She is the minister who has escaped most of the criticism that has been levelled at the government.  Truss's department seems to be responsible for business with the EU now that the withdrawal and trade and cooperation negotiations are at an end.  It has published useful documents such as its guidance on EU business: data protection and copyright updated 9 July 2021.  Truss campaigned for the UK to remain in the EU in 2016 yet she has become the minister who has come closest to making brexit work. 

Anyone wishing to discuss this article or any of the topics discussed in it may call me on +44 (0)20 7404 5252 during office hours or send me a message through this form at other times.  

British Proposals for Renegotiating the Northern Ireland Protocol

Author Heenah Licence CC BY-SA 4.0 Source Wikimedia Commons

 

Jane Lambert

The pickle in which HM government finds itself over the Northern Ireland Protocol to the agreement between the EU and the UK for the UK's withdrawal from the European Union was hardly unexpected. If there is to be regulatory divergence between the UK and the EU there have to be customs inspections and formalities somewhere.  If the re-establishment of customs posts on the border between the Republic of Ireland and Northern Ireland is unacceptable to this country's European and American allies, then inspections and formalities have to take place between Great Britain and both parts of the island of Ireland.

Immediately after the end of the implementation or transition period provided by art 126 of the withdrawal agreement, there was disruption in the supply of goods from Britain to Northern Ireland.  These led to street protests and calls for the denunciation of the Protocol if not the whole of the withdrawal agreement.  But there are signs that Northern Ireland retailers are sourcing more and more products from within Northern Ireland, the Republic or the rest of the EU.  That is, of course, weakening economic ties with Great Britain and strengthening ties with the Republic. Ultimately that could lead to the cession of Northern Ireland to the Irish Republic. While Irish unification would be welcomed by some in Great Britain it would be regarded as a calamity not only by Northern Ireland Unionists but also by many members of the British Conservative and Unionist Party.   

Mrs Theresa May was offered an arrangement similar to the Northern Irish Protocol but she rejected it on the ground that it was something that no British Prime Minister could accept.  That raises the question of why her immediate successor did just that.  Para 13 of the UK Government position paper Northern Ireland Protocol: the way forward (CP 502) published on 21 July 2021 offers the following explanation:

"However Parliament’s insistence in the BennBurt Act that the UK could not leave the EU without an agreement radically undermined the Government’s negotiating hand; and the final compromise, while delivering the fundamental aim of a clear Brexit, and recognisably based on the UK’s proposal, included several elements which would prove to cause difficulties subsequently: notably, though not only, the EU’s insistence on customs arrangements between Great Britain and Northern Ireland, with detail to be worked out subsequently; and the failure to provide for Northern Ireland’s consent to enter the arrangements."

That does not make a lot of sense.  Had the government's negotiating hand not been "undermined" the government would have been free to take the United Kingdom out of the EU without any agreement on anything including the border between the Irish Republic and Northern Ireland.  That would inevitably have led to border controls and probably security forces to protect them.

The doleful consequences of the Protocol are summarized in para 20 of the position paper:

"Supply chains have been disrupted and costs increased, with staff redeployed to deal with new bureaucracy, impacting investment and growth. Consumers have seen real impacts: at least 200 companies in Great Britain have stopped servicing the Northern Ireland market; plants and trees long-sourced from Great Britain can no longer be stocked in nurseries or garden centres in Northern Ireland; supermarkets have reduced their product lines due to the delays and barriers in moving goods; and the costs of deliveries for those who do serve the market have continued to increase. The effects are felt more broadly too. Medicines are at risk of discontinuation because the hurdles to clear to reach the small Northern Ireland market make supply unviable. And pet owners, including those reliant on assistance dogs, have faced the prospect of unnecessary vaccinations and treatments, and bureaucratic certification hurdles simply to travel within the United Kingdom."

If this is true, the Northern Irish Protocol is clearly not working for the benefit of British suppliers to Northern Ireland but that does not mean that consumers in that province are going hungry.  There are signs that supplies from Great Britain are being replaced by supplies from Ireland and other EU member states (see InterTradeIreland Cross-Border Trade & Supply Chain Linkages Report).

In the position paper, the government is threatening to invoke art 16 of the Protocol.   It is hard to see how that will help.  The first paragraph of the article provides:

"If the application of this Protocol leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade, the Union or the United Kingdom may unilaterally take appropriate safeguard measures. Such safeguard measures shall be restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation. Priority shall be given to such measures as will least disturb the functioning of this Protocol."

It would appear that "safeguard measures" taken under this article are to be proportionate, short-term and to be taken only in an emergency.  If such measures lead to an imbalance between the rights and obligations under this Protocol, the other party may take such proportionate rebalancing measures as are strictly necessary to remedy the imbalance in accordance with art 16 (2).  Extensive consultations are required before a party may resort to art 16.

The revision to the Protocol that the British government appears to want is inspection-free entry of goods that are intended for consumption in Northern Ireland and full controls for goods intended for the Republic and beyond.   How this would work is not clear because most exporters to the Republic would be expected to choose the M4 to Fishguard or the A55 to Hollyhead rather than the long drive to Cairnryan. The only advantage of the latter would be the opportunity to smuggle. 

The other concession that the government seeks is to remove the resolution of disputes from the jurisdiction of the Court of Justice of the European Union. As EU law applies to the Protocol it is unlikely that there can be much movement there.

Anyone wishing to discuss this article may call me on +44 (0)20 7404 5252 during normal business hours or send me a message through my contact form.

The Commission's Second Letter of Formal Notice

Author Oliver Dixon  Licence CC BY-SA 2,0 Source Brexit and the Irish Border

Jane Lambert

On 3 March 2021, the Secretary of State for Northern Ireland announced that 

"For supermarkets and their suppliers, as part of the operational plan the UK committed to at the UK-EU Joint Committee on 24 February, the current Scheme for Temporary Agri-food Movements to Northern Ireland (STAMNI) will continue until 1 October. Certification requirements will then be introduced in phases alongside the roll out of the Digital Assistance Scheme." (see the minister's written statement of 3 March 2021). 

In a letter to Lord Frost dated 15 March 2021, Mr Maroš Šefčovič, Vice-President of the Commission complained that the announcement was a breach of the Northern Ireland Protocol which is an integral part of the agreement by which the UK withdrew from the European Union.

The letter is the first step in proceedings that the Commission has threatened to bring against the British government for the infringement of the withdrawal agreement.   It indicates that the Commission has two options.  It could bring proceedings in the Court of Justice of the European Union under art 12 (4) of the Northern Ireland Protocol:

"In particular, the Court of Justice of the European Union shall have the jurisdiction provided for in the Treaties in this respect. The second and third paragraphs of Article 267 TFEU shall apply to and in the United Kingdom in this respect."

Alternatively, it can start consultations under art 169 (1) of the withdrawal agreement:

"The Union and the United Kingdom shall endeavour to resolve any dispute regarding the interpretation and application of the provisions of this Agreement by entering into consultations in the Joint Committee in good faith, with the aim of reaching a mutually agreed solution. A party wishing to commence consultations shall provide written notice to the Joint Committee."

This could lead to arbitration in accordance with the dispute resolution procedures that I discussed in Dispute Resolution under the Withdrawal Agreement on 31 Dec 2020.

Either course could have adverse consequences for the British government. A press release of 15 March 2021 hints darkly at "the possibility to impose a lump sum or penalty payment" if the Commission prevails though it does not identify the authority by which such a penalty could be imposed and I can't think of any right now. However, it could make a finding that would embarrass the British government in its dealings with countries outside the EU.  As for the alternative, the press release warns:

"This may ultimately also result in the imposition of financial sanctions by the arbitration panel. In case of non-payment or persisting non-compliance, the EU could suspend its obligations under the Withdrawal Agreement (with the exception of the citizens' rights part of the agreement) or from the Trade and Cooperation Agreement, in accordance with Article INST.24(4), e.g. by imposing tariffs on imports of goods from the UK."

That would be damaging especially as the UK and remaining member states remain party to many other multilateral agreements such as the Atlantic alliance.

Anyone wishing to discuss this article or the resolution of disputes with the EU may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page.

European Union (Withdrawal Agreement) Bill

Author O Flammger London (Stengel & Co. Dresden)
Source Wikipedia, The Palace of Westminster

Jane Lambert

If the revised draft withdrawal agreement that Her Majesty's government published on Saturday is to come into force, it has to be ratified by Parliament.  The bill that is intended to implement that legislation is the European Union (Withdrawal Agreement) Bill 2019-20. It was published while I was travelling from the World Intellectual Property Organization in Geneva to my home in Yorkshire so I have had only time only for the most cursory examination but readers will see that it is a very substantial piece of proposed legislation consisting of 40 clauses in 5 parts and no less than 6 schedules.

As I said yesterday in The Revised Draft Withdrawal Agreement and Political Declaration yesterday, the revised draft withdrawal agreement seems to have been achieved through major concessions some of which such as the proposed internal frontier between Great Britain and Northern Ireland will not be easy to justify.  The draft agreement has not been approved in principle by the House of Commons and the government proposes to allow Parliament no more than 3 days to scrutinize this instrument. With the best will in the world, that is a very tall order indeed.

Clause 1 of the bill would revise the European Union (Withdrawal) Act 2018 by inserting a new s.1A after s.1:

"Savings for implementation period

1A  Saving for ECA for implementation period 

(1) Subsections (2) to (4) have effect despite the repeal of the European Communities Act 1972 on exit day by section 1. 

(2) The European Communities Act 1972, as it has effect in domestic law or the law of a relevant territory immediately before exit day, continues to have effect in domestic law or the law of the relevant territory on and after exit day so far as provided by subsections (3) to (5). 

(3)  The Act of 1972 has effect on and after exit day as if —

(a) the definitions of “the Treaties” and “the EU Treaties” given by section 1 (2) to (4) (interpretation)—

(i) included Part 4 of the withdrawal agreement (implementation period), other than that Part so far as it
relates to, or could be applied in relation to, the Common Foreign and Security Policy, but
(ii) were otherwise limited to anything which falls within those definitions as at immediately before exit day so far as it is not excluded by regulations made on or after exit day by a Minister of the Crown under this sub-paragraph,

(b) the reference in section 2 (2) to the objects of the EU were a reference to those objects so far as they are applicable to and in the United Kingdom by virtue of Part 4 of the withdrawal agreement,
(c)  section 2 (3) (payment of EU costs etc.) were omitted,
(d) in section 3 (decisions on, and proof of, EU Treaties and EU instruments etc.)—

(i) the references to the Treaties in subsections (1) and (2) included the withdrawal agreement, and
(ii) the words in brackets in subsection (1) only applied so far as they are in accordance with Part 4 of the withdrawal agreement,

(e) references in sections 5 and 6 (customs duties and common agricultural policy) to the common customs tariff of the EU, directly applicable EU provision, the exclusion of customs duties, EU arrangements and agricultural levies of the EU were to such things so far as they are applicable to and in the United Kingdom by virtue of Part 4 of the withdrawal agreement, and
(f)  in Part 2 of Schedule 1 (general definitions in relation to the EU)—

(i) in the definition of “EU customs duty”, the reference to directly applicable EU provision were to such provision so far as it is applicable to and in the United Kingdom by virtue of Part 4 of the withdrawal agreement, and
(ii) in the definition of “Member” in the expression member State”, after “EU” there were inserted “and for the purposes of this expression the United Kingdom is to be treated as if it were a member of the EU during the implementation period (within the meaning given by section 1A (6) of the European Union (Withdrawal) Act 2018)”.

(4) In this section “relevant territory” means the Isle of Man, any of the Channel Islands or Gibraltar. 

(5) Subsections (1) to (4) are repealed on IP completion day. 

(6)  In this Act—
“the implementation period” means the transition or implementation period provided for by Part 4 of the withdrawal agreement and beginning with exit day and ending on IP completion day;
“IP completion day” (and related expressions) have the same meaning as in the European Union (Withdrawal Agreement) Act 2019 (see section 37 (1) to (5) of that Act); European Union (Withdrawal Agreement) Bill
“withdrawal agreement” has the same meaning as in that Act (see section 37(1) and (6) of that Act). 

(7) In this Act—
(a) references to the European Communities Act 1972 are to be read, so far as the context permits or requires, as being or (as the case may be) including references to that Act as it continues to have effect by virtue of subsections (2) to (4) above, and
(b) references to any Part of the withdrawal agreement or the EEA EFTA separation agreement include references to any other provisions of that agreement so far as relating to that Part.”

Clause 2 of the bill would insert a new s.1B into the 2018 Act:

1B Saving for EU-derived domestic legislation for implementation period 

(1) Subsections (2) to (5) have effect despite the repeal of the European Communities Act 1972 on exit day by section 1. 

(2) EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day, subject as follows. 

(3) Any enactment which continues to have effect by virtue of subsection (2) is to be read, on and after exit day and so far as the context permitsor requires, as if— 

(a) any reference to an expression which is to be read in accordance with Schedule 1 to the Interpretation Act 1978 and is an expression defined by section 1 of, or Part 2 of Schedule 1 to, theEuropean Communities Act 1972 were a reference to that expression as defined by that section or that Part of that Schedule as it continues to have effect by virtue of section 1A(2) to (4) of this Act,
(b) any reference (however expressed and subject to paragraph (a)above) to—

(i) EU law,
(ii) any particular EU Treaty or any part of it,
(iii) any EU instrument, or other document of an EU entity or of the EU, or any part of any such instrument or document,
(iv ) any part of EU law not falling within sub-paragraph (ii) or (iii),
(v) any tax, duty, levy or interests of the EU, or
(vi) any arrangement involving, or otherwise relating to, theEU of a kind not falling within sub-paragraph (i), (ii), (iii), (iv) or (v), were a reference to any such thing so far as it is applicable to and in the United Kingdom by virtue of Part 4 of the withdrawal agreement,

(c)  any reference (however expressed and subject to paragraph (a) above) to the European Communities Act 1972 were or (as the case may be) included a reference to the Act of 1972 as it continues to have effect by virtue of section 1A (2) to (4) of this Act,
(d) any reference (however expressed) to the area of the EU or of the EEA included the United Kingdom,
(e) any reference (however expressed) to a citizen of the EU or a national of the EEA included a United Kingdom national (within the meaning given by Article 2 (d) of the withdrawal agreement), and 

(f) such other modifications were made as—

(i) are provided for by regulations under section 8A or Part 1A of Schedule 2, or
(ii) so far as not so provided, are necessary for any purpose of Part 4 of the withdrawal agreement and are capable of being ascertained from any such purpose or otherwise from that Part of that agreement. 

(4) Any EU-derived domestic legislation which is an enactment passed or made on or after exit day and before IP completion day is, unless the contrary intention appears, to be read in accordance with subsection (3) (and anything done or omitted to be done in connection with any such enactment is to be understood, and has effect, accordingly). 

( 5)  Subsections (2) to (4) are subject to any regulations made under section 8A or 23 or Part 1A of Schedule 2 or otherwise under this Act or under the European Union (Withdrawal Agreement) Act 2019. 

(6) Subsections (1) to (5) are repealed on IP completion day. 

(7) In this Act “EU-derived domestic legislation” means any enactment so far as— 

(a) made under section 2 (2) of, or paragraph 1A of Schedule 2 to, the European Communities Act 1972,
(b) passed or made, or operating, for a purpose mentioned in section 2 (2) (a) or (b) of that Act,
(c) relating to—

(i) anything which falls within paragraph (a) or (b), or
(ii) any rights, powers, liabilities, obligations, restrictions, remedies or procedures which are recognised and available in domestic law by virtue of section 2 (1) of theEuropean Communities Act 1972, or 

(d) relating otherwise to the EU or the EEA, but does not include any enactment contained in the European Communities Act 1972 or any enactment contained in this Act or the European Union (Withdrawal Agreement) Act 2019 or in regulations made under this Act or the Act of 2019.”

Clause 3 of the bill would enable a minister to correct any deficiencies arising from withdrawal by regulation inserting a new s.8A into the European Union (Withdrawal) Act 2018.  Clause 4 would confer a corresponding power on the devolved authorities (that is to say, the governments of Scotland, Wales and Northern Ireland) by inserting a new Part 1A with new sections 11A, 11B, 11C, 11D, 11E and 11F into the Act.

Clause 5 would insert new s. 7A into the 2018 Act to implement the revised draft withdrawal agreement into the laws of the United Kingdom.  Clause 6 would insert a new s.7B to implement the agreements with the European Economic Area, European Free Trade Association and Switzerland.

Part 3 of the bill consists of 11 clauses (7 to 17) which give effect to the provisions on citizens; rights in the draft withdrawal agreement.

Clause 20 provides for the UK's financial settlement to be paid out of the Consolidated Fund or if the Treasury so decides the National Loans Fund.

Clause 21 would enable a Minister to make regulations to implement the new Northern Ireland protocol to the revised draft withdrawal agreement including the concerning internal frontier between Great Britain and Northern Ireland.

Schedule 4 of the bill would insert a new Schedule 5A into the European Union (Withdrawal) Act 2018 in relation to workers' rights.  In any new legislation relating to those rights, Paragraph 1 of that Schedule requires a Minister to  make a statement before its second reading to the effect that "in the Minister’s view the provisions of the Bill will not result in the law of the relevant part or parts of the United Kingdom failing to confer any workers’ retained EU right (a “statement of non-regression”)" or if he or she cannot make a statement of non-regression a statement that the House wishes to proceed with the bill.

There is, of course, a lot more to the bill than that but those provisions are significant enough in themselves.  Anybody wishing to discuss them or brexit generally should call me on 020 7404 5252 during office hours or send me a message through my contact form.