Brexit Briefing September 2020

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Jane Lambert

The event for which September 2020 will be remembered was the introduction of the United Kingdom Internal Market Bill    Why the Bill was needed at all or at any rate while negotiations on the new partnership with the European Union are at a critical stage is far from obvious.  As I said in The United Kingdom Internal Market Bill  19 Sept 2020 "my first impression on reading through this bill was that there was nothing in it that did not already fall within the scope of existing legislation except perhaps Part 5."

As even Nigel Farage could see, a stiff response from the European Commission was to be expected and perhaps even justified:

Forget Theresa May and Michael Howard - Johnson's conduct is now making even Nigel Farage seem sensible and reasonable https://t.co/llqrXJHVLi

— david allen green (@davidallengreen) October 1, 2020

If the UK is to leave the customs union and single market and the Republic of Ireland is not, there have to be customs controls at the border between the Irish Republic and Northern Ireland unless it is placed somewhere else. The only other place they could be located is between the ports of Great Britain and Northern Ireland.  That is what Mrs May said no British Prime Minister could ever do.

It seems unlikely that this difficulty was not foreseen by Mr Johnspn or members of his party when they voted for the European Union (Withdrawal Agreement) Act 2020 which ratified the Agreement on the withdrawal of the United Kingdom of Great Britain and Nothern Ireland from the EuropeanUnion and the European AtomicEnergy Community.  The only explanation that occurs to me is that the Messrs. Johnson, Gove and Lord Frost hoped to renegotiate the withdrawal agreement in the new partnership talks.

Since art 50 (2) of the Treaty on European Union required the negotiators to take account of the framework for the UK's future relationship with the EU which was supposed to be expressed in the Political Declaration, the EU negotiators were mandated only to flesh out the details of that framework.  That is the substance of their draft treaty of 18 March 2020.  When Johnson, Gove, Frost and company refused to consider that draft the talks became deadlocked allegedly on state aids, fishing and dispute settlement.

If that surmise is right the United Kingdom Internal Market Bill could have been intended to jolt the EU into making concessions.  The threat is that if nothing is done the Irish government will be forced to police the border with Northern Ireland that could lead to political instability in the Republic as well as (possibly but from the Briitish point of view much more affordably) in Northern Ireland.   If that is the tactic it is not clear that it will work for the Commission announced at 10:00 this morning the first step in taking legal action against the UK.  We should know fairly quickly for both sides agree that the middle of October is the cut-off point for ratification of any new partnership agreement by the parties' legislatures before the end of the year,

Other developments in September have been the Agreement in Principle on a Comprehensive Economic Partnership with Japan 12 Sept 2020, exploratory talks with the governments of the parties to the Comprehensive and Progress Agreement on the Trans-Pacific Partnership and continuing talks with the US government on a possible trade deal.

Anyone wishing to discuss this article or any of the issues discussed should call me on 020 7404 5252 during office hours or send me a message through my contact form.

Barnier's Speech to the EESC - Some Uncomfortable Home Truths

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Jane Lambert

On 10 June 2020, Michel Barnier, the Head of the Commission's Task Force for Relations with the UK, delivered an important speech to the plenary session of the European Economic and Social Committee ("EESC"). The reason it is important for business in the UK is that it spells out the limits to the concessions that the EU can afford in its negotiations with the British government for a new relationship.  The speech has not attracted much attention from British politicians or media, possibly because the first and perhaps more important part was delivered in French.

Before considering the speech it is worth considering the audience to which it was delivered.  The EESC's website describes the Committee as "the voice of organised civil society in Europe."  The EESC is established by art 300 (1) of the Treaty on the Functioning of the European Union to assist the European Parliament, Council and Commission in their functions.  Art 300 (2) provides that the EESC "shall consist of representatives of organisations of employers, of the employed, and of other parties representative of civil society, notably in socio-economic, civic, professional and cultural areas." The institutions are required to consult it when considering new legislation.  Monsieur Barnier began his speech by saying that for his part he regards the EESC as an important partner in the new relationship negotiations because brexit has consequences for the unions, businesses and citizens that the Committee represents.

He expressed the wish to build a solid partnership with the UK which he described as a "great neighbouring country, friend and ally" and that such a partnership was more necessary than ever in the present economic and geopolitical circumstances.  He acknowledged the history, values and interests that the UK shared with the rest of Europe. His aim was to secure an agreement - but not at any price.  The UK no longer wishes to be a partner in the European project and is positioning itself as a competitor. Monsieur Barnier acknowledged that there is nothing wrong with competition so long as that competition is fair and equitable.  The negotiations over the last 4½ months have been essentially over where to strike a balance between the ambition for a new partnership and the reality that the UK is now a competitor. Because of the size of its economy and geographical proximity, the UK cannot be compared to countries like Canada, Japan and South Korea,  For that reason, it cannot expect a similar free trade agreement.

The negotiations which have been conducted by video conference concurrently on all topics have hit four stumbling blocks, namely:

• the need for a level playing field
• fishing
• judicial cooperation in criminal matters, and
• future governance of the relationship.

Some progress has been made on those matters but not much.

Monsieur Barnier was disappointed by the UK's lack of commitment in foreign and defence matters, measures against money laundering and cybercrime, and parliamentary and other consultation on matters relating to free movement and social inclusion even though they were included in the Political Declaration which was signed by Boris Johnson.  The EU was not asking for anything more than had already been agreed.

The negotiations are now at a crunch point because important deadlines are approaching. The Britsih government has refused any extension to the transition period even though the EU is willing to agree to one.  On the assumption that there will be no extension, Monsieur Barnier had proposed intensification of negotiations to David Frost to make the best use of the time remaining.

However, his negotiating mandate required any agreement to be fair and equitable in relations to competition.  The terms that had been offered went much further than previous agreements with third countries and covered not just goods but services and investments.  The EU could not allow access to its market of 450 million without cast-iron guarantees of a level playing field.  On this point, he is willing to seek compromises but he was not willing to renegotiate points that had already been agreed in the Political Declaration.

The rest of Monsieur Barnier's speech is in English and contains some uncomfortable home truths.

There can be no cherry-picking of single market benefits.  The UK's financial and professional services industries have done very well out of EU membership.  The country has also benefited from being a certification and regulatory hub and entry point for the single market.  He gave the following warning:

• "Do we really want to consolidate the UK's position as a certification hub for the EU, knowing that it already controls some 15%-20% of the EU certification market?

• Do we really want to take a risk with rules of origin that would allow the UK to become a manufacturing hub for the EU, by allowing it to assemble materials and goods sourced all over the world, and export them to the Single Market as British goods: tariff- and quota-free

• Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?"

He added:

"When considering our options, we need to look beyond the short-term adaptation costs, to our long-term economic interests.
Even more so in the context of ensuring Europe's economic recovery after the Coronavirus crisis."

Referring no doubt to Mr Frost's letter of 19 May 2020 which I mentioned in Better Late than Never - The UK Counter Proposals in the New Relationship Negotiations 19 May 2020, Monsieur Barnier said that the UK insists that it is asking for nothing more than well-established precedents but the truth is that, in many areas, it is demanding a lot more than Canada, Japan or any other free trade agreement partners.  In many areas, it is looking to maintain the benefits of being a member state without the obligations of membership.  He gave the following examples:

• "To maintain almost complete freedom of movement for short-term stays for UK service providers;

• To maintain a system for the recognition of professional qualifications that is as complete and broad as the one we have in the European Union;

• To have its customs rules and procedures recognised as equivalent, while refusing to commit to the necessary compliance checks and monitoring, or alignment to EU rules where necessary.

• To be able to co-decide with the Union on decisions relating to the withdrawal of equivalences for financial services, when they know these are – and must remain – our own, autonomous decisions."

He emphasized that the UK chose to become a third country and cannot have the best of both worlds. The concessions sought by the UK are not in the long term interests of the EU.  Provisions in earlier free trade agreements were the result of negotiations and cannot be extended automatically to an agreement with the UK.  No free trade agreement can ever be as good as EU membership.

Monsieur Barnier also warned of some of the consequences of leaving the EU that will come about on 1 Jan 2021 whatever the outcome of the new relationship negotiations:

• "UK firms will lose the benefit of the financial services passports.

• As a third country, the UK will no longer be able to grant marketing authorisations for pharmaceuticals or type-approvals for cars for the EU market.

• There will be customs formalities for all goods entering the EU customs territory.

....... No FTA – no matter how ambitious – can change this."

He expressed the EU's position as follows:

"Simply: we will never compromise on our European values or on our economic and trade interests, to the benefit of the British economy."

Replying to criticisms that the EU's positions are unreasonable, he said:

• "But they are only unreasonable for those who refuse to accept that Brexit has negative consequences for the UK.

• They are only unreasonable if your starting point is that the EU should not have the sovereign power to define its own conditions for giving access to its own market."

In his view, member states were unlikely to change his negotiating mandate and any new partnership agreement would also be contingent on the UK's implementation of the withdrawal agreement, particularly with regard to Northern Ireland and citizens' rights.

Monsieur Barnier hoped that expected high-level discussions with the Prime Minister would provide a new political impetus to the talks.  Discussions between the Prime Minister and Presidents of the Council, European Parliament and the Commission did indeed take place on 15 June 2020.   A communique issued by the Commission on 15 June 2020 accepted the recommendations for intensified negotiations but also emphasized the need for full and timely implementation of the withdrawal agreement.

I have added Monsieur Barnier's speech and the Commission's communique and this article to my page on the future trade negotiations with the EU.  As it seems to me that regardless of the outcome of those negotiations there will be a need to develop new markets, I have updated my page on negotiations with Japan and opened new pages on negotiations with Australia and New Zealand.  Although relations with China have deteriorated lately I hope that British firms may still win some business from the Belt and Road initiative. I have therefore opened a Belt and Road Initiative page.  If British financial services firms lose business in the EU as a result of a loss of passporting rights one possible new market is the Astana International Financial Centre in Kazakhstan which I mentioned in An English Language Common Law Court in Kazakhstan 10 June 2020 NIPC Law. That Centre is modelled on similar financial centres in Abu Dhani, Dohar and Dubai which I cover in NIPC Gulf.

Anyone wishing to discuss this article or any of the topics mentioned in it should call  my clerk Stephen Somerville on +44(0)7986 948267 or send me a message through my contact page

Irish Preparations for 'No Deal'

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Jane Lambert

The rationale for keeping the threat of leaving the EU without a withdrawal agreement is that the prospect of disruption and other negative consequences for the economies of the 27 remaining member states will force the governments of those countries to require the Commission negotiators to make concessions.  It is not a very attractive negotiating position either for us or for our trading partners and it may well do a lot of long term harm, but, for some in the UK, that will not matter if the threat is effective.

Probably no country in the EU stands to lose more from a disorderly brexit than the Republic of Ireland for two reasons.  First, the UK is Ireland's top trading partner in the EU importing €18,868 million worth of goods from the UK in 2017 and exporting €16,455 million to the UK in the same year according to the Irish Central Statistics Office  (Ireland's Trade in Goods 2017). Secondly, it shares a land border with the United Kingdom that has to be kept open in accordance with the Belfast and St Andrews agreements.  If the threat of 'no deal' in order to extract concessions is to work anywhere, it will have to work in Ireland.

It is therefore worth looking at the preparations the Irish government is making for a 'no deal' brexit.  On 9 July 2019, the Republic published an Update to its Brexit contingency plan Getting Ireland Brexit Ready which was published last December.  The government recognizes that:

"The consequences of a no deal Brexit will be profound, including macroeconomic, trade and sectoral challenges. It will also have implications for trade on the island of Ireland, North and South cooperation and will pose risks for the Good Friday Agreement and political stability. It could have lasting societal impacts for Northern Ireland."

That is clearly not an outcome that anyone in Ireland wants (even though there may be some benefits  for Ireland such as the transfer of some financial services businesses from the City of London to Dublin) but it is one that the government of the Republic seems at least as able to handle as that of the United Kingdom.

In short, there seem to be no signs of panic in either the main report or the update and therefore no indication that in bare-knuckle negotiations the Irish government will blink first.  The value for the British government of keeping 'no deal' on the table as a bargaining chip is less than obvious, to say the least.

Anyone wishing to discuss this article or the IP or other legal issues relating to brexit generally should call me on +44 (0)20 7404 5252 or send me a message through my contact page.

Today's White Paper on the Withdrawal Agreement - What's happened to Ireland?

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Jane Lambert

Today our government published yet another white paper on Brexit.  This one is entitled Legislating for the Withdrawal Agreement between the United Kingdom and the European Union Cm 9674 and it proposes legislation for the implementation of the withdrawal agreement contemplated by art 50 (2) of the Treaty of European Union,

A draft of that agreement was published at the end of February and about 80% of it has been agreed according to Monsieur Barnier  (see Press statement by Michel Barnier following the July 2018 General Affairs Council (Article 50) 20 July 2018). But there remains one stumbling block and that is how to avoid the need for border posts with customs officers and immigration inspectors along the border between the Irish Republic and Northern Ireland when the UK leaves the Customs Union and Single Market that allows freedom of movement between member states.  One obvious solution would be for Northern Ireland to remain in the Customs Union and Single Market so that the border between the EU and UK is the Irish Sea but that would be anathema to Ulster Unionists as well as many in the Conservative Party and perhaps other British politicians.

It is no doubt for that reason that the 44 page white paper is almost silent on Ireland.   I counted only 13 references to the island in the text, mainly in the Introduction.  There is a lot more detail on Citizen's Rights (Chapter 2 - paragraph 16 to 51), the Implementation Period (Chapter 3 - paragraph 52 to 104), The financial settlement (Chapter 4 - paragraph 105 to 136) and Procedures for approval and implementation of the Withdrawal Agreement and framework for our future relationship (Chapter 5 - paragraph 137 - 157).  A lot of Mrs May's problems would disappear if more of her backbenchers and local Conservative Association members bothered to read those last 20 paragraphs.

In that it shows how far the negotiations have progressed on everything except Ireland and it betokens an intention to seeing the job through I am mildly comforted by  this document. Should anyone wish to discuss it or Brexit in general, call me on 020 7404 5252 or send me a message through my contact form. 

Brexit Briefing - June 2018

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Jane Lambert

Despite Lords' amendments and a threatened revolt by a number of Tory MPs, the European Union (Withdrawal) Bill received royal assent and is now law. I have removed my link to the bill and added one to the Act in the left hand column.

But from the government's point of view that was the only progress that it could celebrate.  Members of the Cabinet could not agree on mechanisms for avoiding a hard border with the Republic of Ireland. There were reports that the Rt Hon Michael Gove MP had torn up a report on a policy said to be favoured by the Prime Minister in a fit of pique (see  'Livid' Michael Gove rips up EU customs partnership report 30 June 2018 BBC website). Major employers like Airbus SE and BMW have been drawing up contingency plans for the UK's departure from the EU without a withdrawal agreement (see Hope for the best but prepare for the worst 22 June 2018).

A draft withdrawal agreement has been available since 28 Feb 2018 but many of its provisions are still to be agreed (see Brexit Briefing - February 2018 7 March 2018).  There has been progress as the European Council acknowledged in its Conclusions of 29 June 2018 but there is a great deal more still to do.    It expressed concern that no substantial progress had yet been achieved on agreeing a backstop solution for Ireland/Northern Ireland despite commitments undertaken by the UK in this respect in December 2017 and March 2018.  It also called for work to be accelerated with a view to preparing a political declaration on the framework for the future relationship. 

The lack of progress with such two issues is the reason for the nervousness of businesses like Airbus and BMW.  At the time that the draft was published there was every hope that the parties would reach an agreement before the 29 March 2019 that would allow integrated aerospace and automotive manufacturing across the Channel and North Sea to continue.  As every day passes such an outcome becomes less and less likely.  There is a growing chance that the UK will withdraw from the EU without any agreement at all.

Although most businesses seem to regard withdrawal without agreement as a bad thing some will find opportunity.   Regardless of whether such an outcome would be good or bad it has to be planned for and it is reassuring that many organizations are doing just that,

Anyone wishing to discuss this article or Brexit in general should call me on 020 7404 5252 or send send me a message through my contact form.

Hope for the best but prepare for the worst

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Jane Lambert

It is important for businesses to remind themselves of the plain words of art 50 (3) of the Treaty on European Union:

"The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."

In other words, unless a withdrawal treaty is agreed by the teams led by Michel Barnier and David Davis and ratified by the British and European Parliaments and the legislatures of the other 27 EU member states by the 29 Feb 2019, the the whole legal framework that has been constructed on the Treaty on European Union and the Treaty on the Functioning of the European Union will fall away.

On 19 June 2018 the negotiators for the European Union and the United Kingdom published a joint statement from the negotiators of the European Union and the United Kingdom Government on progress of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union.  Agreement has been reached on the following articles since 19 March 2018:

• Title I – Goods placed on the market: Article 42 (Making available of information held by notified bodies established in the United Kingdom or in a Member State); 
• Title III – Ongoing value added tax and excise duty matters: Article 47 (Value added tax); - 
• Title IV – Intellectual property: Article 56 (Pending applications for supplementary protection certificates in the United Kingdom); 
• Title VI – Ongoing judicial cooperation in civil and commercial matters: Article 63 (Jurisdiction, recognition and enforcement of judicial decisions, and related cooperation between central authorities); 
• Title VIII – Ongoing public procurements and similar procedures: Article 72 (2) (Rules applicable to ongoing procedures); Article 73 (Review procedures); 
• Title IX – EURATOM-related issues: Article 79 (Ownership and rights of use and consumption of special fissile materials in the United Kingdom); and 
• Title XI – Administrative cooperation procedures: Articles 94 (Administrative cooperation for matters related to indirect tax); Article 95 (Mutual assistance for the recovery of claims relating to taxes, duties and other measures).

Agreement has also been reached on several annexes.  However, Monsieur Barnier has warned that serious divergences remain on the protocol on Ireland, that any withdrawal agreement must contain a fully operational backstop solution on the border and while there has been a step forward in the withdrawal negotiations a lot more work needs to be done before October.

Comparing what needs to be done over the next 4 months with what has been achieved to date it seems to me increasingly unlikely that agreement will be achieved.   In a speech to that he gave to both houses of the Irish parliament on 21 June 2018, President Juncker remarked:

"Of course, it is in everyone's interest for the United Kingdom and the European Union to stay as close as possible. We will be friends, partners, allies.
The reality is that there is no arrangement outside the European Union which is as good as membership. This simply does not exist. Instead, our goal is to secure the next best option for both sides.
But with pragmatism comes realism. As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal. This is neither a desired nor a likely outcome. But it is not an impossible one. And we are getting ready just in case."

The Commission is not alone in preparing for a failure for such an outcome.

In a Risk Assessment published on 21 June 2018, Airbus SE noted:

"Aerospace operates in a unique, safety driven and heavily regulated environment. The design, production, maintenance, repair & overhaul and use of parts follow tight regulations and can only be executed by certified organizations under EASA, such as Design Organisation Approval (DOA), Production Organisation Approval (POA) and Maintenance Organisation Approval (MOA). More than 10,000 original aircraft parts originate in the UK.
In the absence of a Brexit agreement, UK aerospace companies will not be covered anymore under existing regulatory approvals including EASA approvals. All UK companies will need to transfer their DOA, POA and MOA into the EU. This means that should a single supplier not be certified, its parts cannot be installed and consequently prevent the delivery of aircraft. It is therefore vital that the EU supply chain gets duly prepared.
This is why Brexit imposes additional major risks to the aerospace sector compared to other industries and Airbus is getting increasingly concerned by the lack of progress on the Brexit process. "

Even if a withdrawal agreement can be agreed Brexit will impose costs and introduce inefficiencies. If the UK withdraws from the EU without an agreement Airbus the consequences for Airbus SE would be even worse.  Accordingly, the company has announced that until it knows and understands the new EU/UK relationship, it will carefully monitor any new investments in the UK and refrain from extending its UK suppliers/partners base here. The extent of Airbus's involvement in British industry was considered in a report by Oxford Economics entitled The Impact of Airbus on the UK Economy which was published a year ago.

Airbus's announcement has been criticized in some quarters but it seems to me to be prudent for  businesses to make risk assessments and draw up contingency plans for a disorderly Brexit.  It will affect different businesses in different ways.   Some believe that they could benefit from it. Whether or not that is so, it is sensible to consider the legal as well as business issues that would arise on Brexit.  If, for example, you fear that your imports or deliveries abroad could be disrupted, check your supply and distribution agreements (particularly force majeure clauses) and insurance cover. Also, your trade mark and design registrations, licences and joint venture agreements.  If you find that you are at risk you still have time to do something about it.   I you wait until a problem arises it may be too late to do anything about it.

Should amplification or clarification be required, call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Withdrawal Agreement - Not a done deal yet

Hanover from space

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Jane Lambert

Monsieur Barnier was is Hanover last Monday and he gave a speech at the 8th EU Policy Reception: How hard will Brexit be for industry?. A transcript appears on the Commission's website (see Speech by Michel Barnier at Hannover Messe 23 April 2018). In it, he sketched out the sort of trade relationship that he hopes to negotiate with the British government but he also warned of the difficulties that could destroy the progress that has already been made and that "companies must waste no time, and prepare for all scenarios now" including a disorderly Brexit.

The vision that he sketched out would suit most people in the United Kingdom very well:

"Even with the UK's current red lines, our intention is to reach an ambitious and wide-ranging free trade agreement with:

• Zero tariffs and no quantitative restrictions on goods;

• Customs cooperation to facilitate goods crossing the border;

• Rules to limit technical barriers to trade and protect food safety [sanitary and phytosanitary measures];

• A framework for voluntary regulatory cooperation to encourage convergence of rules;

• An open market for services, where companies from the other party have the right of establishment and market access to provide services under host state rules – I repeat, under host state rules;

• Access to public procurement markets, investments and protection of intellectual property rights."

The future relationship could even extend to such fields as coordination of social security and the recognition of professional qualifications, air transport, and participation by the UK in programmes in the field of research and innovation, where participation of third countries is allowed.

However, such a relationship will be possible only if there is an agreement on the terms of the UK's withdrawal from the EU. Monsieur Barnier noted that there had been a lot of progress in the negotiations of those terms but nothing is agreed until everything is agreed. There are plenty of potential stumbling blocks such as the border between the Irish Republic and Northern Ireland and the governance of the withdrawal agreement.

During the referendum campaign and at various times since, proponents of British withdrawal have argued that our market is so important to German car makers, Italian white goods manufacturers and French farmers that they will force their governments to make concessions.   Monsieur Barnier gave two reasons why that is unlikely in his speech.  First, the trade of the remaining member states with UK may be big but but not all that big:

"Let me remind you that, for the EU27 today, 6% of trade in goods is with the UK, while 60 % of this trade is inside the EU27 Single Market. Ten times as much!"

Secondly, the single market and the principles on which it is founded matter more to the remaining member states than trade with the UK.  Professor Grey suggested a possible third in Business gets vocal about Brexit 12 April 2018 The Brexit Blog.  If the supposedly pro-business government of the UK refuses to pay heed to business interests in its own country, why should  the Commission that represents the whole EU be any more inclined to listen to the voices of business leaders of individual member states?

We may get a 20 month implementation period to allow the UK to adjust to its new status in accordance with the draft withdrawal agreement (see The Draft Withdrawal Agreement: Getting Down to Business at Last 3 March 2018) but then again we may not.  My advice to British business is the same as Monsieur Barnier's in Hanover.  Hope for the best but prepare for the worst.

Anyone wishing to discuss this article or Brexit in general should call me on 020 7404 5252 during office hours or send me a message through my contact form.

The Draft Withdrawal Agreement: Getting Down to Business at Last

Jane Lambert

The draft withdrawal agreement that the European Commission published on 28 Feb 2018 has to be welcomed. As every lawyer (if not every business person) knows, there comes a time in every negotiation when the provisions that appear to have been agreed must be committed to writing. Then and only then can potential deal breaking issues be identified and perhaps addressed. The sooner that is done the greater the chance of a successful outcome.

The thing that struck me most about the draft agreement is its length: 168 articles plus protocols on Ireland and Cyprus each with its own annexes compressed into 118 pages. I am surprised by how much has been agreed or is capable of agreement. Obviously there are a few hot issues such as those in the Protocol on Ireland that could scupper everything but there is so much more that has been, or can easily be, agreed.

The main body of the draft is divided into the following Parts:

• Part 1 - Common Provisions
• Part 2 - Citizens' Rights
• Part 3 - Separation Provisions
• Part 4 - Transition
• Part 5 - Financial Provisions
• Part 8 - Institutional and Final Provisions.

Part 1 consists of 7 articles the most important of which is art 1:

"This Agreement sets out the arrangements for the withdrawal of the United Kingdom of Great Britain and Northern Ireland ('United Kingdom') from the European Union ('Union') and from the European Atomic Energy Community ('Euratom')."

There follow definitions and interpretive provisions.

Arts 8 to 35 constitute Part 2 which are divided into 4 Titles. The first contains general provisions such as definitions and basic principles such as continuation of residence and non-discrimination. Title II divides into 3 chapters on rights related to residence, workers and the self-employed and recognition of professional qualifications respectively. Title III is on social security and Title IV contains final provisions.

The bulk of the draft treaty (arts 36 to 120) is in Part 3 which is also divided into Titles some of which are further subdivided into Chapters.  Title I is on goods placed on  the market. Title II on customs procedures, Title III on VAT and other duties, Title IV on intellectual property, Title V on police and judicial cooperation in criminal matters, Title VI on judicial cooperation in civil and commercial matters, Title VII on data protections, Title VIII on public procurement and similar issues, Title IX on Euratom and related issues, Title X on EU administrative and judicial procedures, Title XI on administrative cooperation, Title XII on privileges and  immunities and Title XIII on other issues relating to the EU. Interestingly, the provisions of Title IV on intellectual property are silent on the Unified Patent Court and unitary patent. They cover the conversion of EU trade marks, registered Community designs and Community plant varieties into the corresponding British rights and the adaptation of provisions on supplementary protection certificates and the exhaustion of rights.

Part 4 contains 5 articles (arts 121 - 126) on the transition period.

Part 5 (arts 127 to 150) is divided into 7 Chapters covering currency (Chapter 1), the UK's contribution to the budget up to 2020 (Chapter 2), the European Central Bank (Chapter 3), the European Investment Bank (Chapter 4), European Development Fund (Chapter 5), Refugees in Turkey (Chapter 6) and Common Defence and Security (Chapter 7).

Part 6 spells out the continued jurisdiction of the Court of Justice of the European Union in the implementation period and beyond and the establishment at art 157 (1) of a joint committee to supervise and implement the agreement and resolve disputes.

This instrument is, of course, only a draft and it is likely to be changed over time but it sets out the likely framework of the withdrawal agreement contemplated by art 50 (2) of the Treaty on European Union as well as the transition or implementation period between 29 March 2019 and 31 Dec 2020. Should anyone wish to discuss this draft, he or she should contact me during office hours on +44 (0)20 7404 5252 or send me a message through my contact form.

Brexit Briefing - November 2017

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Jane Lambert

As most readers of this blog already know, the British and European negotiators reached sufficient consensus on the first phase of the Brexit negotiations for the Commission to recommend to the Council to allow the negotiations to proceed to the second phase (see the Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union 8 Dec 2017 and the Communication from the Commission to the European Council on the state of progress of the negotiations with the United Kingdom under Article 50 of the Treaty on European Union  8 Dec 2017).

Because those events took place yesterday I will discuss them properly in my December Brexit Briefing. All I will say now is that money was not the sticking point that many (though not I) thought it would be and that in the end the British government had to give ground on a continued role for the Court of Justice of the European Union as I had said it might in previous articles in this blog (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).

Because of yesterday's agreement, other important events that took place in November have been overlooked.   Two of the saddest were the Relocation of the UK-based EU agencies 20 Nov 2017 and the termination of the selection process for the European Capital of Culture in the UK (see Jane Lambert European Capital of Culture 28 Nov 2017 NIPC Bexit).

The European Medicines Agency will move from London to Amsterdam (see the press release European Medicines Agency to be relocated to Amsterdam, the Netherlands 20 Nov 2017) and the European Banking Authority to Paris (see  press release European Banking Authority to be relocated to Paris, France 20 Nov 2017).

A letter from  Martine Reicharts, Director-General for Education, Youth, Sport and Culture to Sue Owen, our Permanent Secretary for Department for Culture, Media and Sport, brought the selection of the British city for the 2023 European Capital of Culture to a grinding halt just days before the final choice was due to be made in London,  The letter generated a lot of resentment upon which some politicians and newspapers sought to capitalize but the legislation setting out the selection procedure is very clear. It is just a shame that cities across the country had been given false hope and allowed to spend so much of their council taxpayers' money on what was clearly an impossible objective. However, it would be even more of a shame if something were not salvaged from that effort by at least an unofficial celebration of those cities' contribution to European culture.

I can see very much the same thing happening to the British government's investment in fitting out premises for the Central Division of the Court of First Instance of the Unified Patent Court in Aldgate House (see press release Intellectual Property Minister hosts reception at Aldgate Tower 18 Sept 2015). Although Jo Johnson MP, the Minister for Intellectual Property, has argued that the UPC Agreement is a free standing international agreement that stands outside the EU Treaties, it is hard to see how the UK could remain a party to that agreement after Brexit. Even if it could, it would be equally hard to reconcile participation in the Court with Mrs May's rejection of the jurisdiction of the Court of Justice of the European Union even if she has made an exception for citizens' rights.  Again rather sad in view of a report by the London School of Economics and the University of Colorado at Boulder which anticipated an increase trade and foreign direct investment in high-tech sectors by up to 2% and 15% in the EU as a result of the unitary patent, leading to annual gains of €14.6 billion in trade and €1.8 billion in foreign direct investment (see Patents, trade and foreign direct investment in the European Union Nov 2017 European Patent Office).

Also on the subject of intellectual property, the European Intellectual Property Office has published a Notice to holders of and applicants for EU trade marks and registered Community designs on the consequences of Brexit if no agreement is reached in respect of EU trade marks and Community designs in the UK.  The Notice does not take account of the government's intention to incorporate EU legislation into national law through the European Union (Withdrawal) Bill which should preserve the rights of EU trade mark and Community design proprietors in the UK after the 29 March 2019. However other rights are bound to go including the rights of representation that British lawyers and attorneys currently enjoy.

One of the arguments for Brexit during the referendum campaign was the possibility that the United Kingdom will be free to make trade agreements on its own terms with foreign governments. An early indication of the terms upon which such agreements might be made available to us came in the speech of Mr Wilbur Ross, the American Commerce  Secretary to the CBI (see #CBI2017 Blog: Wilbur Ross speaks at the CBI Annual Conference 4 Nov 2017 CBI Blog). He warned Britain to avoid signing up to “hindrances” to trade in its Brexit negotiations and that a deal with the US will require lower tariffs and compromises in areas such as food regulation. As I noted in Between Scylla and Charybdis  10 Nov 2017 NIPC Brexit, Mr Ross's speech was picked up by Monsieur Michel Garnier who expressed concern. In that article I concluded that "we can have a preferential trade deal with Trump's America on Mr Ross's terms or a preferential one with our EU partners but not both. A growing fear for British businesses must be that we may well end up with neither."

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