Tuesday, 6 July 2021

Brexit Briefing - June 2021

White Cliffs of Dover
Photochrom Film Collection  Copyright expired

The transition or implementation period provided by art 126 of the agreement by which the UK left the EU expired on 31 Dec 2020 and commentators have been taking stock.   The British economy has not collapsed though some industries have reported difficulty,  On the other hand, the economy has not shown any signs of outperforming the economies of its continental neighbours.

Cabinet Office Policy Paper

The Cabinet Office has just updated a policy paper entitled Summary: The UK’s new relationship with the EU which it first published on 8 June 2021.  The policy paper purports to give an overview of what has changed, and what remains the same and refers to a special site at https://www.gov.uk/brexit for the detail.

Influence of EU Law

The first paragraph of that policy paper states that the UK has now left the EU Single Market and Customs Union which is entirely correct. It also claims that EU law no longer applies in the UK.  That is correct only in the sense that the British government no longer participates in EU legislation, courts in this country are not bound by decisions of the Court of Justice of the European Union and judges can no longer refer cases to the court under art 267 of the Treaty on the Functioning of the European Union. However, it ignores the incorporation of EU legislation and case law into the domestic laws of England, Wales, Scotland and Northern Ireland by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and the continuing right of courts in this country to have regard to judgments of the Court of Justice that have been or may be delivered since the end of the transition period.  Moreover, anyone in the UK who wishes to invest in, trade with or even visit the EU must continue to comply with EU law. 

Travelling to the EU

The right of free movement which was ensured by art 3 (2) of the Treaty of European Union no longer applies to British nationals.  There are now new rules for visiting the EU which are set out in the Passports, Travel and Living Abroad pages of the government website. Travellers are advised to take out comprehensive travel insurance, check that their passports meet new validity rules, and get any documents they may need to take their vehicles with them.  

Existing European Health Insurance Cards ("EHIC") will continue to be recognized until they expire and similar benefits are promised under the Global Health Insurance Card ("GHIC").   Applications for new GHICs or replacements for the EHIC are directed to www.nhs.uk/GHIC but that link is broken.  The correct site is headed Applying for healthcare cover abroad (GHIC and EHIC).   As my EHIC expired on 21 June 2021 I applied for a GHIC through that website while carrying out research for this article.  I received confirmation that my application had been successful almost immediately.

Visitors from the UK are not allowed to bring a ham or cheese sandwich or indeed any other meat or dairy products with them when crossing the channel.  Almost all plants and plant products, including fruits, vegetables, flowers and seeds, require a phytosanitary certificate.  Pet passports can no longer be relied upon.  Although it is not mentioned in the policy paper, roaming charges are to be reintroduced from January 2022 (see Anthony Reuben EE to reintroduce Europe roaming charges in January 24 June 2021 BBC).  Regulation (EU) 2017/1128 on cross-border portability of online content no longer applies to the UK which means that British travellers can no longer access online content in the EU (see IPO Guidance Protecting Copyright in the UK and EU 30 Jan 2020).

Trade in Goods

Businesses now need to comply with new customs procedures, including UK export declarations and import requirements on entry to the EU.   Some industries have found it harder to adapt than others.   The Food and Drink Federation reported a 47% drop in exports in the first quarter of 2021 compared to the same quarter of 2020 (see Exports snapshot: Q1 2021).   On the other hand, sales to Australia, China, Hong Kong, Japan and Saudi Arabia actually increased slightly in that period.  

Difficulties had arisen in sales of certain foodstuffs to Northern Ireland which is now treated as part of the EU for some purposes but the Commission has agreed to extend a grace period for the export of chilled meats for the time being.  Lord Frost, who was one of the UK government's principal negotiators has admitted that he did not anticipate the difficulties that have arisen over Northern Ireland (see Government Didn't Expect Brexit To Be So Disruptive For Northern Ireland, David Frost Admits  Adam Payne 17 May 2021).  If that is really the case it is extraordinary because I warned of them in this blog as did many others in other publications (see Brexit Briefing March 2020 4 April 2020).  

One bit of good news in manufacturing was Nissan's announcement of a substantial investment in battery production in this country (see Nissan to create thousands of UK jobs in battery investment 29 June 2021 BBC website).  It is thought that the British government has invested or promised to invest a substantial sum in the project.  Even with this investment, battery production in the UK will be a fraction of that of Germany.

Trade in Services

The Trade and Cooperation Agreement did not make extensive provision for trade in services.   Talks did take place between Her Majesty's Government and the Commission on recognizing each other's standards as equivalent but these have ended without agreement (see Sunak: Financial services equivalence deal with EU 'has not happened 2 July 2021 The Guardian).   Happily, the Commission has recognized the UK's data protection legislation as broadly equivalent to its own which should ensure that the mutual exchange of personal data shall continue for the time being (see Jane Lambert Commission Adequacy Decisions 29 June 2021 NIPC Data Protection).
There had been consternation earlier this year when Amsterdam appeared to overtake London in the trading of equities (see Philip Stafford Amsterdam ousts London as Europe’s top share trading hub 10 Feb 2021 FT).  London has recently recovered its position as the leading equity market (see Philip Stafford London reclaims top trading status from Amsterdam 2 July 29021 FT).  According to Stafford, London regained its lead through trading in Swiss stocks.

Free Trade Agreements

The rationale for Brexit is that the world's fastest-growing markets lie outside the EU and that any loss of trade with mainland Europe can be more than offset by increasing trade elsewhere. It is argued that commodity prices are lower ln world markets than in the EU because there are no external tariffs and that British negotiators can obtain more favourable trade deals for the British economy than EU negotiators because British interests no longer have to be weighed against those of other EU member states. So far, most of the agreements that the British government has concluded with countries outside the EU have been based on agreements between those countries and the EU. The agreement with Japan was slightly different (see Jane Lambert Agreement in Principle on a Comprehensive Economic Partnership with Japan of 12 Sept 2020 and An Introduction to and Overview of the Comprehensive Economic Partnership Agreement with Japan of 28 Oct 2020), The prospective agreement with Australia is the first bilateral trade agreement to be negotiated from scratch (see Jane Lambert The Proposed Australia-UK Free Trade Agreement of 17 June 2021).  HM Government also opened negotiations for British accession to The Comprehensive and Progressive Agreement for Trans-Pacific Partnership on 22 June 2021 (see the Department for International Trade's press release Britain launches negotiations with £9 trillion Pacific free trade area 21 June 2021 DfIT website).

Further Information

I shall be monitoring and reporting on those developments over the next few months.   Anyone wishing to discuss this article or the Brexit experiment generally may contact me on +44 (0)20 7404 5252 during normal business hours or by sending me a message through my contact form at all other times. 

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Brexit Briefing - June 2021

White Cliffs of Dover P hotochrom Film Collection   Copyright expired   Jane Lambert The transition or implementation period provided by art...