Brexit Briefing March 2021

James Gilray The Plumb-pudding in danger; - or - State Epicures taking un Petit Souper

 

Jane Lambert

The rational argument over Brexit is summarized in this Gilray cartoon from 2 centuries ago. Is it better to be part of a large bloc with enormous bargaining power that has to take account of the interests of all its members some of which are irreconcilable or a medium-size entity with much less bargaining power but more agile in that it has only to take care of its own interests?

Up to now the disadvantages of leaving the EU have been more apparent than the advantages.  Inshore fishermen from certain waters have been unable to export their catch. Exporters of processed foods have been required to pay for health checks even on small consignments.  Hauliers from Ireland have found it more convenient to take a long sea crossing to the Continent than drive overland from Hollyhead to Dover.  British exports to the EU are said to have tailed off dramatically.  That is because The Trade and Cooperation Agreement has prevented tariffs but not non-tariff barriers that apply to all non-member states.

Now that might be a cost worth paying if the United Kingdom were to make up for more than it has lost in the fast-growing, emerging markets of Asia, Latin America and Africa.  That is, after all, the reason for the UK's application to join the Comprehensive and Progressive Trans-Pacific Partnership (see Brexit Briefing for January 2021 6 Feb 2021).  Now it has to be remembered that not all countries in the CPTPP are tiger economies.  Australia, Japan and New Zealand, for example. are mature services based economies not all that different from the member states of the European Union except in so far as they are much further away.

Far from negotiating a bilateral trade agreement with the UK in which former president Donald Trump expressed an interest, the government of the world's largest economy is contemplating the imposition of tariffs on a range of British experts unless the UK resolves its differences with the USA over digital services taxation.  Relations with the world's second-largest economy could hardly be frostier as a result of Brtish representations over the treatment of Uighurs in  Xinjiang and opposition activists in Hong Kong.

There has been one success that suggests that an agile national government can achieve more than a supranational bloc. That has been the procurement and deployment of COVID 19 vaccines.  The speed and efficiency with which the UK has vaccinated over 50% of its population with a first dose and a very large number with a second despite has made the Commission and EU member states appear flat-footed.  The government's performance has been trumpeted as a success of Brexit especially as some controls in the UK are easing just as many continental countries are re-entering lockdown.

Of course, procurement of supplies of vaccine over a very short period is not the same as negotiating trade agreements that are expected to stay in place for decades but it is an example of how agility and good organization can sometimes achieve better results than massive bargaining power.

Anyone wishing to discuss this article or any matter arising from it may call me on +44 (0)20 7404 5252 or send me a message through my contact page.

The Future Relationship with the EU The UK’s Approach to Negotiations - An Introduction and Overview

Jane Lambert

Except for the misleading and mischievous inference in paragraph 2 that the UK was somehow less than economically and politically independent while it was one of the most powerful and influential EU member states and the reference to a non-existent agreement between the EU and Australia in paragraph 7, the policy statement entitled The Future Relationship with the EU the UK’s Approach to Negotiations CP 211 is considerably less confrontational and better thought through than many of the documents emanating from our side than in the negotiations for the withdrawal agreement.  It is, of course, very different in form from the European Council's Decision authorising the opening of negotiations with the United Kingdom of Great Britain and Northern Ireland for a new partnership agreement.  A Council Decision is a legal instrument that binds the European Commission's negotiating team.  A policy statement binds nobody though a departure from its terms might have political consequences.

The policy statement proposes a comprehensive free trade agreement consisting of 33 chapters:

• Chapter 1: General Definitions and Initial Provisions 
• Chapter 2: National Treatment and Market Access for Goods
• Chapter 3: Rules of Origin
• Chapter 4: Trade Remedies
• Chapter 5: Technical Barriers to Trade (TBT)
• Chapter 6: Sanitary and Phytosanitary (SPS) Measures
• Chapter 7: Customs and Trade Facilitation (CTF) 
• Chapter 8: Cross-Border Trade in Services
• Chapter 9: Investment
• Chapter 10: Temporary Entry and Stay for Business Purposes
• Chapter 11: Domestic Regulation
• Chapter 12: Mutual Recognition of Professional Qualifications
• Chapter 13: Telecommunications Services
• Chapter 14: Delivery Services
• Chapter 15: Audio-Visual Services
• Chapter 16: Financial Services
• Chapter 17: Digital
• Chapter 18: Capital Movements, Payments and Transfers
• Chapter 19: International Road Transport
• Chapter 20: Subsidies 
• Chapter 21: Competition Policy
• Chapter 22: State Owned Enterprises, Enterprises Granted Special Rights or Privileges and Designated Monopolies
• Chapter 23: Intellectual Property
• Chapter 24: Good Regulatory Practice and Regulatory Cooperation
• Chapter 25: Trade and Sustainable Development
• Chapter 26: Trade and Labour
• Chapter 27: Trade and Environment
• Chapter 28: Tax
• Chapters 29-31: Administrative Provisions, Transparency, and Exceptions
• Chapter 32: Managing the Agreement
• Chapter 33: Final Provisions.

Some of the issues raised by the policy statement will be less controversial than others.  For instance, I can see no discernible difference between HM government's position on intellectual property than the Council's. On the other hand, there is a difference in approach to competition policy, particularly in relation to state aid.

The British government suggests separate agreements in relation to fishing, aviation, energy, mobility and social security coordination, continued participation in certain EU programmes such as Erasmus and Horizon, nuclear cooperation, law enforcement and judicial cooperation, asylum and migration, the security of information and other matters.

The paper also addresses technical and other processes beyond the scope of the future relationship negotiations such as third country listing and similar procedures for animals, plants and foodstuffs, data adequacy, equivalence in financial services and civil judicial cooperation.  I am heartened by the government's aspiration to contract to the Lugano Convention which would effectively continue the arrangements under the Brussels Convention.

Anyone wishing to discuss this article or the future relationship negotiations, in general, should call me on +44 (0)20 7404 5252 or send me a message through my contact form.

EU Preparations for a "No Deal" Brexit

Jane Lambert

Hardly a day goes by without an avalanche of emails from the Department for Exiting the European Union on HM Government's preparations for a "no-deal" exit from the European Union. By contrast, the European Commission's output is much smaller.  The reason for the disparity in volume is obvious.  As the Commission's press release of 12 June 2019 points out, a withdrawal without an agreement in accordance with art 50 (2) of the Treaty on European Union "will obviously cause significant disruption for citizens and businesses and would have a serious negative economic impact." However, the press release also notes that such serious negative economic impact will "be proportionally much greater in the United Kingdom than in the EU27 Member States."

According to its press release, the Commission has been preparing for such a scenario since December 2017:

"To date, the Commission has tabled 19 legislative proposals, 18 of which have been adopted by the European Parliament and Council. Political agreement has been reached on the remaining proposal – the contingency Regulation on the EU budget for 2019, which is expected to be formally adopted later this month. The Commission has also adopted 63 non-legislative acts and published 93 preparedness notices."

It summarized its preparations in a press release of 10 April 2019.

The Commission has reviewed its preparations in view of the extension of the notification period until 31 Oct 2019 and "concluded that there is no need to amend any measures on substance and that they remain fit for purpose." The press release adds that the Commission does not plan any new measures ahead of the new withdrawal date.   The Commission has also completed a tour of the capitals of the 27 remaining states and found a high degree of preparation by member states for all scenarios.

The press release has focused on the following topics that require continued and particular vigilance:

• Citizens' residence and social security entitlements, 
• Medicinal products, medical devices and chemical substances,
• Customs, indirect taxation and border inspection posts,
• Transport,
• Fishing, and
• Financial services.

For British citizens residing in the EU, the Commission has published a useful webpage on EU27 Member States measures on residence rights of legally residing UK nationals and social security entitlements related to the UK in case of no deal. As for other matters, border posts are in place, planes will continue to fly and land unhindered between the UK and EU member states for the time being and financial institutions in London are making such preparations as may be necessary to continue operations in the EU.

As many of these preparations will have to be implemented by member states, the Commission has a convenient portal to the national brexit preparedness websites of each of those countries.

Anyone wishing to discuss this article or brexit, in general, can call me during office hours on 020 7404 5252 or send a message through my contact page.