UK's Future Relationship with the World Trade Organization

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Jane Lambert

The UK was one of the founder members of the World Trade Organization ("WTO") but its rights under the WTO Agreement and annexes are exercised, and its obligations are undertaken, on its behalf by the European Union. When the UK leaves the EU it must exercise its rights and discharge its responsibilities on its own account. Naturally, that will have repercussions for all the other member states of the WTO. By a joint letter dated 11 Oct 2017 to the Permanent Representatives to the WTO, Julian Braithwaite, UK Permanent Representative to the International Organizations in Geneva, and Marc Vanheukelen, EU Permanent Representative to the WTO, have set out their intentions with regard to the implications of the UK withdrawal from the EU within the WTO.

The letter states that the UK intends to replicate as far as possible its obligations under the current commitments of the EU. The EU and UK will follow a cooperative and transparent approach regarding any necessary adjustment in the WTO arising from the UK withdrawal from the EU and they will strive to minimize disruption to trade. Both the UK and EU UK intends to replicate as far as possible its obligations under the current commitments of the EU. The EU and the UK will follow a cooperative and transparent approach regarding any necessary adjustment in the WTO arising from the UK withdrawal from the EU.

Initially, the UK will continue the same policies as those of the EU with regard to market access, agricultural support, government procurement and trade and development.  It will continue to engage with the EU "in a spirit of cooperation, inclusiveness and openness on these matters over the course of the coming weeks and months."

This is an important document because the WTO Agreement and its annexes may be the only international agreement binding the UK to our neighbours when the EU treaties cease to apply to us in March 2019 pursuant to art 50 (3) of the Treaty of European Union. Interestingly, I found it not on the website of the Department for Exiting the EU, nor on any other British government website but on that of the Commission's task force on art 50.

Should anyone wish to discuss this letter or Brexit generally, call me on 020 7404 5252 during office hours or send me a message through my contact form.

Some Proposals for Dispute Resolution from the Institute for Government

Jane Lambert

Last week I reported that the German equivalent of the CBI had warned its members with business or investments in the United Kingdom to prepare for a very hard Brexit (see German Industry Federation advises its Members to prepare for a Hard Brexit 6 Oct 2017). As I have said before, the problem is how to guarantee British performance of the UK's obligations under any withdrawal treaty (see Dispute Resolution: A Potential Deal Breaker? 8 Aug 2017, Has Mrs May done enough to break the Logjam? 24 Sep 2017, Fourth Round of Brexit Talks: Still a Logjam 28 Sep 2017 and Brexit Briefing - September 2017 3 Oct 2017).

The performance of the other member states would be policed by the Court of Justice of the European Union. We are not prepared to accept that while the governments of the remaining member states cannot be expected to accept anything less. Until we have resolved that question there really is very little point in discussing anything else. Thus, a "good deal" or indeed any kind of deal with Europe other than those that exist under multilateral agreements just cannot happen. That is why the BDI is warning its members to prepare for a hard Brexit and indeed why my professional body is advising me to do the same (see German Industry Federation advises its Members to prepare for a Hard Brexit supra).

There does not need to be a breakdown of talks. I am sure that the present and any successor government would honour its obligations to its neighbours. It would be politically unthinkable to do otherwise. As I said in Fourth Round of Brexit Talks: Still a Logjam:

We may not have a written constitution but we do have rules that known as conventions that are at least as robust as those of other countries' constitutions. For instance, any Parliament could extend the 5-year limit to the duration of a Parliament originally contained in the Parliament Act 1911 and now re-stated in the Fixed Term Parliaments Act of 2011 but it would never do so. Would not an agreement between the main political parties not to repeal a withdrawal agreement statute be enough? The political reality for those who understand our constitution is that it probably would ....."

However, I added: "that may not be how they see things from across the Channel."

So are there any other solutions?  The Institute of Government, which describes itself as  "the leading think tank working to make government more effective" has considered a number of options in Dispute Resolution after Brexit  2 Oct 2017 which can be downloaded from that link plus this useful little video The UK position on dispute resolution after Brexit 2 Oct 2017. Re-joining EFTA and relying on the EFTA Court seems to tick more boxes than any of the others according to the Institute's infographic, but it would not be very popular with hardline Brexiteers.

Should anyone wish to discuss this article, call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Further Reading

Date	Author	Title	Source
12.10.2017	Raphael Hogarth	Giving Effect to “Direct Effect” in Brexit Negotiations	Institute for Government

German Industry Federation advises its Members to prepare for a Hard Brexit

Jane Lambert

In an article on its homepage entitled Deutsche Industrie schaut mit Sorge auf Fortgang der Brexit-Verhandlungen (German Industry views with Concern the Progress of the Brexit Negotiations) the Bundesverband der Deutschen Industrie e.V. ("BDI") the Confederation of German Industry (the equivalent of the CBI) warned its members with interests in the UK to prepare for a very hard Bexit ("einen sehr harten Austritt Großbritanniens aus der Europäischen Union"). "Anything else would be naive," said the BDI's Director-General Joachim Lang.

There is more gloom from the Bar Council which reports that the working assumption of the Commission's art 50 Task Force is that "there will be no formal EU-UK relationship in future. Therefore, following UK withdrawal, no CJEU, no single market, end of application of 4 freedoms and all economic rights; no cooperation in civil and criminal justice etc. UK nationals will no longer be EU citizens" (see Brussels News Issue 137 5 Oct 2017). It follows that "no protection will be given to secondary establishment and cross-border services. Thus, if a UK lawyer is appearing in a case pending before the CJEU at withdrawal date (WD), the client must change lawyer."

The Bar Council reports that the Task Force is aiming for an orderly winding down in judicial cooperation as in other areas. "The EU regime will cease to apply to the UK as at the date of withdrawal. The UK will be starting with a blank sheet, even with the Lugano Convention etc, since it is not a signatory in its own right."

I regret to say that I share the BDI and Bar Council's gloom because I do not think that the remaining 27 states can accept a withdrawal agreement that binds them as a matter of European Union law but not us.  German and other exporters will no doubt lose some sales if tariff barriers and customs formalities return at the border but they will not lose their market altogether. Where else are we Brits to get our cars, white goods, sparkling wine and luxury leather goods than the EU27? The Bar Council concludes that "the harsh reality is that the clock ticking is a far more serious problem for the UK than it is for the EU, whatever committed Brexiteers may wish to believe."

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

Brexit Briefing - September 2017

Helen Tse and Jane Lambert

Jane Lambert

Since my last Brexit Briefing, there has been a fourth round of negotiations on the terms of the UK's withdrawal from the EU, Mrs May made a speech at the church of Santa Maria Novella in Florence that has been generally warmly received, the British government and the Commission's art 50 task force published position papers on data protection and intellectual property and Helen Tse's book Doing Business After Brexit was launched in Manchester.

The Brexit Negotiations

Despite Mrs May's concessions in Florence. there is still a gap between the two sides which may prove to be unbridgeable.  It was summed up today by Michel Barnier in his speech to the European Parliament:

"We understand and share the worry of the 4.5 million British and European citizens who want to continue living and working like they did before Brexit.
This worry, which you refer to in your resolution, has been worsened by certain discriminatory measures taken by the British authorities. We are worried about this.
To effectively guarantee these rights, we need:

1. The withdrawal agreement to have direct effect to allow British authorities and judges to rely directly on the withdrawal agreement. Without direct effect, these rights could be changed over time
2. A coherent interpretation of the agreement on both sides of the Chanel, which only the European Court of Justice can assure."

Mrs. May went some way to allaying those fears by offering to incorporate the terms of any withdrawal agreement that guarantees the rights of the citizens of the remaining member states into English and Welsh, Scottish and Northern  Irish law, but, as I said in Has Mrs May done enough to break the Logjam? 24 Sept 2017, "it does not address the problem that a future British government could repeal any statute that incorporates a withdrawal agreement at any time." In Fourth Round of Brexit Talks: Still a Logjam 29 Sep 2017 I suggested a possible solution in the form of a constitutional convention but for countries used written constitutions that is unlikely to be enough.  I fear that the reluctance of our government to accept the interpretation of any withdrawal agreement by the Court of Justice will be the deal breaker.

Data Protection 

In its position paper on  data protection, the Commission's art 50 task force warned that "the United Kingdom's access to networks, information systems and databases established by Union law is, as a general rule, terminated on the date of withdrawal." That would be disastrous for a country with a services based economy.  As I said in Another Data Protection Act! "You're joking! Not another one!" - A Short History of Data Protection Legislation in the UK 23 Sept 2017 NIPC Law, we enacted data protection legislation because other countries passed laws that restricted the flow of personal data to us To enable the United Kingdom to safeguard personal data after the General Data Protection Regulation ceases to apply to us, the Government has introduced a new Data Protection Bill into the House of Lords (see Introduction to the Data Protection Bill 16 Oct 2017 NIPC Data Protection).

Intellectual Property

The Commission's position paper on intellectual property rights including geographical indications has been generally welcomed as far as it goes.  However, it is silent on the unitary patent which Tony Rollins regards as assent to the British position that the Unified Patent Court Agreement is an international agreement extraneous to the Treaties (see Commission Position Paper on Intellectual Property Rights including Geographical Indications 7 Sept 2017). I wish I could agree with him but I don't think I can for the reasons set out in my postscript. Fourteen countries including France have ratified the UPC Agreement which means that it could come into effect upon  British and German ratification. Unfortunately, German ratification has been delayed by mysterious proceedings in the German constitutional court. The following announcement appears on the UPC's website:

"A case is currently pending in the German Federal Constitutional Court (FCC) concerning the law passed by the German Parliament on the implementation of the Agreement on the Unified Patent Court (UPCA). This will cause delay to the German ratification of the UPCA and the Protocol on Provisional Application."

There is no indication as to how long those proceedings will last.

Asia

In response to a tweet by Lord Digby Jones that the 21st Century belongs to Asia, not the EU, I looked at Chin, India and Russia which are the three largest countries in that continent and found that they are coming together in the Shanghai Cooperation Organization, BRICS and the One Belt One Road project just as we are drawing away from our neighbours (see The Shanghai Cooperation Organization 9 Sep 2017). Our IP attaché to Beijing, Tom Duke, was in the UK last month and I had the honour of chairing his talks in Barnsley and Leeds.  His visit culminated in a symposium at the IPO's London office hosted by the IPO and SIPO entitled "Future Proofing the IP System" (see UK-China IP symposium highlights importance of innovation 22 Sep 2017 .Gov.UK website).

Book Launch

Finally, Helen Tse's book, Doing Business After Brexit, to which I have contributed the chapter on IP and data protection, was launched at a meeting of the Manchester SME Club at Deloitte's Manchester office on 20 Sept 2017. I reported it in Doing Business After Brexit  24 Sep 2017 in IP North West. The photograph of us both that appears at the top of the page was taken at that event.

Further Information

Should anyone wish to discuss this article or Brexit further, call me on +44 (0)20 7404 5252 or send me a message through my contact form.