EU's Draft Agreement on a New Partnership with the UK

The White Cliffs of Dover seen from Cap Griz Nez

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Jane Lambert

Possibly because both sides' chief negotiators have tested positive for COVID-19 (Charlie Cooper UK chief Brexit negotiator self-isolates after showing COVID-19 symptoms 20 March 2020, Politico), the negotiations on the UK's new partnership with the EU has been put on hold since the beginning of this month (see Daniel Boffey UK-EU talks on post-Brexit relations 'in deep freeze'  26 March 2020 The Guardian).

That does not mean that there have been no developments. One of the most important was the delivery on 18 March 2020 of a comprehensive draft agreement to the British government from the European Commission (see Draft text of the Agreement on the New Partnership with the United Kingdom).  According to the Commission's website. that negotiating document was transmitted to the United Kingdom on 18 March 2020, following consultation with the European Parliament and Council. It was presented to the Council Working Party on the United Kingdom on Friday 13 March 2020.

Now anyone who has ever been involved in a negotiation will know that the party that produces the draft text first - whether it is a Tomlin order for the settlement of litigation or a turnkey contract for a new computer system - generally has the upper hand. That is more or less what happened in the withdrawal agreement negotiations.  The European Commission's draft agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 27 Feb 2018 was not substantially different from the Agreement on the withdrawal of the United Kingdom of Great Britain and Nothern Ireland from the European Union and the European Atomic Energy Community that the Prime Minister signed, and Parliament ratified with the European Union (Withdrawal Agreement) Act 2020, at the end of January.

The British negotiators ought to know that and they have promised their own draft agreement but nothing has materialized so far.  The Guardian reports that "UK officials said the legal text covering the outstanding areas would be produced at a time of the British government’s choosing, and attempts to find a new method of 'continuous dialogue' were being made" but, so far, nothing has been forthcoming.  Unless an agreement is reached by the end of the year this country loses preferential access to its nearest, largest and richest market under the terms of the withdrawal agreement and the statute.

Now that may suit some politicians' agenda.  The Guardian reports that Mr David Davis has said that the economies of the remaining EU member states will be so ravaged by the coronavirus menace that it will not matter much if the UK loses preferential access to that market because there will be so little trade to lose.  That may be true in the short term but it is one of the reasons that Fitch gave for downrating the UK's credit rating and keeping it on negative watch.  At a time when the UK will need every scrap of business and every penny of investment that it can get, erecting barriers to any trading partner does not seem a good idea.  Moreover, it is not likely that any other country will fill the trade gap. Certainly not the USA which has reported more confirmed cases than any other country and over 3 million unemployed, and probably not China if the British government insists on picking a quite unnecessary quarrel with that country (see Kate Procter Michael Gove appears to blame China over lack of UK coronavirus testing  29 March 2020 The Guardian).

In the hope that wiser counsels may prevail, it is worth looking at the draft partnership agreement. It is 436 pages long divided into 6 parts with some 36 annexes. Part 1 deals with definitions and interpretation and other common provisions, Part 2 with economy and trade, Part 3 with security, Part 4 with the UK's participation in the EU's programmes, Part 5 with institutional and horizontal provisions and Part 6 with final provisions. Readers are most likely to be interested in Part 2.  As it stretches over 202 pages divided into 17 titles it is by far the longest part of the draft agreement.  The titles cover transparency, good regulatory practices and regulatory cooperation, level playing field and sustainability which includes competition, state aid, social protection and climate change, trade in goods, services and investment, digital trade including data protection, capital movements, intellectual property, public procurement, mobility of natural persons, transport, energy and raw materials, civil nuclear and small and medium enterprises.  I have not had time to read every single provision but from the little I have seen which is IP, competition and data protection the draft is in line with the political declaration which the UK government has accepted.

Of course, there would be no point in negotiating terms for a future partnership if either side fails to implement the withdrawal agreement.  Art 164 (1) of that agreement established a Joint Committee comprising representatives of the EU and UK which shall be responsible for the implementation and application of the agreement.  Following telephone discussions between the Vice-President of the Commission and Chancellor of the Duchy of Lancaster. a meeting is scheduled for tomorrow.  Top of the agenda will be citizens' rights and the Northern Irish protocol.

Anyone wishing to discuss this article should contact me through my contact form.  During the coronavirus emergency, our clerks will be working from home in accordance with government requirements and calls to our landline will be diverted to their mobiles.   Readers are invited to contact me directly. If they want to chat I will call them back by phone or VoIP.

Brexit Briefing February 2020

Jane Lambert

One of the reasons why I have followed closely the negotiations on British withdrawal from the European Union and the United Kingdon's future relationship with the EU was to discern the likely future of the unitary patent and the Unified Patent Court.  Ever since HM Government signed the Agreement on a Unified Patent Court I have been tracking the progress of its implementation.  Both before and immediately after the referendum, I had expressed the view that the UK's participation in the project was incompatible with its departure from the EU (see Jane Lambert Were we to go - what would Brexit mean for IP 26 Feb 2016 NIPC Law and Jane Lambert What, if anything, can be salvaged from the UPC Agreement? 26 Jan 2018 NIPC Law).  Surprisingly, there were some, including the British government of the day, who took a contrary view (see Jane Lambert One Year to Brexit - Are Rumours of the Death of the Unified Patent Court Agreement Greatly Exaggerated? 29 March 2018). The only way to find out which view was right was to monitor the withdrawal and future relationship negotiations. This blog was, therefore, a spin-off from my tracking of the unitary patent and UPC's implementation.

I am very sorry to report that I have been proved right.   In an email to the IAM, a spokesperson stated:

“I can confirm that the UK will not be seeking involvement in the UP/UPC system. Participating in a court that applies EU law and bound by the CJEU is inconsistent with our aims of becoming an independent self-governing nation.”

As I said in Volte-Face on the Unified Patent Court Agreement. 29 Feb 2020 NIPC News, that objection was as clear on 26 April 2018 when the Foreign Secretary of the day, one Boris Johnson MP, deposited the instrument of ratification as it is now and the argument that the UPC Agreement was an international treaty outside EU law was untenable (see the IPO press release UK ratifies the Unified Patent Court Agreement  26 April 2018).  The decision to withdraw from the UPC Agreement is unlikely to be in the national interest. It will have been taken for political rather than economic reasons. That is the nature of the times in which we live.

The only other significant news is that the European Council has adopted a decision to negotiate a future partnership agreement with the UK (see Jane Lambert Future Relationship Negotiations: The EU sets out its Stall  26 Feb 2020).   Similarly, the Prime Minister has set out the UK's approach to the future relationship negotiations (see Jane Lambert The Future Relationship with the EU The UK’s Approach to Negotiations - An Introduction and Overview 27 Feb 2020). There is a lot of bluster about walking out of the negotiations and adopting an Australia style agreement if things do not go the government's way but can probably be discounted as strong meat for right-wing hacks and party activists.  It may well be that the EU needs access to the UK's market of 65 million but the truth is that British industry needs access to the EU's 450 million so much more,  Moreover, if one actually reads the addendum to the decision and the strategy document the two sides are not all that far apart.

Anyone wishing to discuss this article or any of the matters mentioned in it should call me on +44 (0)20 7404 5252 or send me a message through my contact page.

Brexit Briefing - April 2018

Jane Lambert

One European initiative upon which the United Kingdom has been consistently communautaire has been a single European patent for the whole European Union.  Her Majesty's government was one of the signatories to the Community Patent Convention in 1975 and one of the reasons for the Patents Act 1977 was to give effect to that Convention.  The Convention never came into force because other parties failed to ratify it.  Several attempts have been made to revive the initiative or to launch other initiatives through the European Union or the European Patent Convention. The British government has supported all of those initiatives but they have all come to nought.

The reason why the United Kingdom has supported those initiatives is obvious upon consulting TaylorWessing's Patent Map.  There is a comparison of the typical costs at first instance of an action for patent infringement in each of the jurisdictions of Europe and England and Wales is by far the most expensive. The cost of enforcement goes a long way to explaining why the United Kingdom consistently lags behind not only Germany and France with similar populations and GDP to ours in the number of European patent applications but also Switzerland with one eighth of our population and the Netherlands with a third (see European patent applications per country of origin on the European Patent Office website).  A single European patent covering the territories of the United Kingdom and those of its European partners with a single patents court for all those countries would level the playing field for British business.

As it did not prove possible to launch an EU patent because of objections from Spain and Italy the other member states decided to establish a single European patent for their territories by themselves through a procedure known as "enhanced cooperation" (see Jane Lambert The Community Patent is Dead - Long Live the Unitary Patent 29 April 2018 NIPC Law). The result was the Agreement on the Unified Patent Court ("the UPC Agreement") which was signed by Her Majesty's and other governments on 19 Feb 2013. The Agreement establishes a Unified Patents Court consisting of a Court of First Instance and a Court of Appeal and one of the sections of the Central Division of the Court Instance is to sit in London. The British government acquired premises for the new court in Aldgate and began to fit them out long before the Brexit referendum.

Art 89 of the UPC Agreement provides that it will come into force after 13 signatories including France, Germany and the United Kingdom ratify it.  Over 13 states including France have already done that.  On World Intellectual Property Day, which falls on 26 April. the Minister for Intellectual Property announced that the UK had also ratified the UPC Agreement (see Jane Lambert British Ratification of the UPC Agreement - Possibly the best thing to happen on World Intellectual Property Day 26 April 2018 NIPC News). The last remaining condition for the implementation of that Agreement is German ratification but that is delayed by litigation in the German Federal Constitutional Court.  The Alternative for Germany Party has also tried to repeal legislation to ratify the UPC Agreement that has been passed by both houses of the German Parliament and is now awaiting presidential assent.

It is not clear how long it will take for the Constitutional Court to determine the legal challenge to German ratification but it could easily exceed the time in which the UK will remain a member of the EU.  After that it is by no means clear whether the UK can remain a party to the UPC Agreement.  My own view is that it cannot but there is a contrary view held by, among others, the British government that the UPC Agreement is an international treaty that lies outside the EU.  The reason for my scepticism is that such a treaty would be incompatible with EU law for the reasons given by the Court of Justice of the European Union in Opinion 1/09 of 8 March 2011 (see Jane Lambert Court of Justice of the European Union holds European and Community Patent Court to be incompatible with EU Law 8 March 2011 NIPC website).

Our chances of remaining party to the UPC Agreement will depend in large part on whether we leave the EU with a withdrawal agreement and on our future relations with the remaining member states.  Although a lot of progress has been made in negotiations for a withdrawal agreement. Monsieur Barnier warned at the Hanover Trade Fair that it is not a done deal (see Jane Lambert Withdrawal Agreement - Not a Done Deal Yet 26 April 2018). He emphasized at the All-Island Civic Dialogue in Dundalk on 30 April 2018 that a likely stumbling block is the Irish border (see EU press release Speech by Michel Barnier at the All-Island Civic Dialogue of 30 April 2018 on the Commission website). British ideas for "maximum facilitation" and a "customs partnership" appear not to have been agreed even by the British cabinet let alone the EU. There are reports in today's Guardian that British civil servants have drawn up plans for customs checks between Great Britain and Ireland which would be in line with the draft withdrawal agreement (see Daniel Boffey Brexit plan drawn up for border checks between NI and rest of UK 4 May 2018 The Guardian).

Such a plan would be tantamount to the economic partitioning of the United Kingdom which could have all sorts of political and constitutional consequences beyond the obvious such as the withdrawal of DUP support for the Conservative administration and renewed requests by the Scottish government to remain in the single market and customs union. However, if it led to a free trade agreement that covered services it would be welcomed widely by the financial services industry.  Such an agreement is on the table (see the memorandum from the art 50 task force to the EU 27 Topics for discussions on the future framework at forthcoming meetings 4 May 2018). Monsieur Barnier made some encouraging remarks about London remaining an important financial centre after Brexit in his speech to the Eurofi think tank's high level seminar in Sofia on 26 April 2018 (see EU press release Speech by Michel Barnier at the Eurofi High-level Seminar 2018 at Sofia, 26 April 2018 on the Commission website).

Should anyone wish to discuss this briefing, the UPC Agreement or Brexit generally, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

Brexit Briefing - August 2017: Some Progress but probably not enough

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Jane Lambert

It is worth reminding ourselves what the art 50 negotiations in Brussels are intended to achieve. Much of our economic, industrial, international trade and social policies of the post war period have been founded on agreements and legislation made under the Treaty on European Union and the Treaty on the Functioning of the European Union ("the Treaties"). Art 50 (3) of the Treaty on European provides that those Treaties and everything that has been built up on top of them will cease to apply to the United Kingdom on the 29 March 2019 or sooner if we negotiate a withdrawal agreement "unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."

The purpose of the negotiations in Brussels between the Rt Hon David Davis MP and Monsieur Michel Barnier and their respective negotiating teams is to hammer out a withdrawal agreement that will allow British pensioners on the Costa to keep their homes, doctors and nurses from Ireland and the Continent to continue working for the NHS, commuters in Dundalk to go to work in Newry without showing a passport and for the United Kingdom to honour funding commitments it made before last June's referendum. What those talks are not about (and indeed cannot be about unless and until Monsieur Barnier receives a mandate from the Council under art 218 (2) of the Treaty on the Functioning of the European Union) is trade.

At the start of the negotiations, it seemed that the British government recognized that reality but the spate of position and future partnership papers on such matters as data protection and future customers arrangements suggest that it does not.  Those papers are all very worthy and I have reviewed some of them in New Position Papers from DxEU 26 Aug 2017 and HMG's Exchange and Protection of Personal Data Position Paper 26 Aug 2017 NIPC Data Protection). They may be useful for future negotiations but they are completely irrelevant to any of the negotiations that are in hand right now or indeed for the foreseeable future.

So where do those negotiations stand?  In his speech at the press conference of 31 Aug 2017 following the third round of Article 50 negotiations with the United Kingdom, Monsieur Barnier was careful to avoid saying that nothing had been achieved:

"This week, we made some useful clarifications on a lot of points, for example, the status of frontier workers, the aggregation of social security rights, and pending legal proceedings before the Court of Justice, to name but three.
But we made no decisive progress on the main subjects, even though – and I want to say so – the discussion on Ireland was fruitful.
On this subject – which I continue to follow personally, as all other areas – we made real progress on the question of the Common Travel Area, on the basis of guarantees by the United Kingdom, and we clarified, in a constructive manner, what remains to be done, particularly with regards to North-South cooperation in the Good Friday Agreement.
But, I repeat again, time is passing quickly for us to reach a global agreement.
At the current speed, we are far from being able to recommend to the European Council that there has been sufficient progress in order to start discussions on the future relationship, while we are finalising the withdrawal agreement throughout 2018."

In his speech at the same press conference, Mr Davis  seemed to agree:

"This week we have had long and detailed discussions across multiple areas and I think it is fair to say, that we have seen some concrete progress. I mean, Michel referred to one, but I think there’s been more than that.
However, as I said at the very start of this week, it is only through flexibility and imagination that we’ll achieve a deal that truly works for both sides.
In some areas we have found this from the Commission’s side, which I welcome, but there remains some way to go.
Talks this week have once again focussed on citizens’ rights, on financial matters, on Northern Ireland and Ireland, and on issues relating to our separation. I’m pleased to say we have engaged in detail on all of those areas."

Looking on the bright side, there is slightly more green ink on the Scott schedule on citizens' rights as of 31 Aug 2017 than there was on 19 July 2017 mainly in relation to frontier workers and healthcare but there still remains an awful lot of red. My view is that the sticking point will not be over financial contributions but over enforcement of any withdrawal agreement by individuals and companies once the rule in Francovich goes (see Dispute Resolution - A Potential Deal Breaker 4 Aug 2017 and HMG's Enforcement and Dispute Resolution Position Paper 23 Aug 2017). If we can't get agreement on that we won't get any kind of withdrawal agreement let alone a favourable trade agreement.

Regrettably, I have no progress to report on the unitary patent and Unified Patent Court. German ratification appears to have stalled over a constitutional objection that has prevented the President from signing into law legislation that has already cleared both houses of the German federal legislature, I asked Markus Grampp what the objection was all about at the Cambridge IP Law Summer School which we both addressed, but neither he nor any of the other German lawyers at the event seemed to know.

One reasonably certain consequence of Brexit is that we lose not only the European institutions in London which I mentioned in my last Brexit briefing of 5 Aug 2017 but also jobs in the financial serviced industry to Frankfurt and other financial centres. They, on the other hand, will do very well out of Brexit (see How Frankfurt could benefit from Brexit: WHU-Otto Beisheim School of Management Study 29 Aug 2017).

A lot will be happening in September. Parliament will begin discussion on the European Union (Withdrawal) Bill when it returns for a few days before the party conferences. There could be all sorts of upsets at those conferences except perhaps for the LibDems, especially as Labour appears to have changed its tack on the single market and customs union. There will also be another round of negotiations between Mr Davis and Monsieur Barnier which will be particularly important for it will be the last chance for the Council to decide whether there has been sufficient progress on the Brexit terms to justify talks on the future relations.

On a more positive note, Helen Tse's Doing Business After Brexit for which I wrote the chapter on intellectual property and data protection is now on sale. It will be launched at a meeting of the Pro-Manchester SME Club on 20 Sept 2017.

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

New Position Papers from DxEU

Jane Lambert

Mr David Davis and his civil servants have been busy. While everyone else in England and Wales has been looking forward to the late summer bank holiday they have been preparing for the third round of talks with the Commission's Art 50 Task Force on 28 Aug 2017 (the programme for which is here). They have also produced a number of position papers and future partnership papers on data protection, enforcement and dispute resolution, cross-border civil judicial cooperation and future customs arrangements even though none of those "future partnership issues" is yet on the table.

The most interesting of the "future partnership" position papers is the enforcement and dispute resolution position paper which I discussed in HMG's Enforcement and Dispute Resolution Position Paper 23 Aug 2017 and the data protection paper which I discussed in HMG's Exchange and Protection of Personal Data Position Paper in my Data Protection blog today.

The enforcement and dispute resolution position paper has given rise to a lot of comment much of it uninformed because of the inclusion of the adjective direct in the first line of the paper.  The sentence reads:

"In leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU)."

The Court of Justice determines disputes that arise under the EU treaties which cease to apply to automatically under art 50 (3) of the Treaty of European Union or the coming into force of a withdrawal agreement whichever happens first. In that sense, the jurisdiction of the Court of Justice will end. It will no longer be possible for the Commission to take infringement proceedings against our government for failing to implement a directive or for an English court to refer an issue of Union law that arises in English litigation to the Court under art 267 of the Treaty on the Functioning of the European Union.  But the Court will continue to influence our law for many years to come and perhaps indefinitely by virtue of the incorporation of EU legislation and case law into our national law under the provisions of the European Union (Withdrawal) Bill. Moreover, as clause 6 (2)  of the Bill permits courts in the UK to have regard to decisions of the Court of Justice after we leave the Union its decisions will continue to have considerable persuasive authority indefinitely.

I criticized the position paper but on the grounds that it guarantees no rights for citizens including those of our own country to take proceedings against our government if they suffer loss or damage by reason of its failure to implement an obligation under any withdrawal agreement that we may make with the remaining member states or of any derogation that it may make from such agreement. To my mind, that is much more fundamental.

The data protection paper is much more sensible. We need to ensure the unrestricted flow of personal data between Britain and the UK if our service industries are to continue to do business in Europe. The same is, of course, true of the service industries of the remaining member states. The difference is that they could survive disruption much better than us because they could still do business freely with each other.  The financial services industries in say Frankfurt, Paris, Amsterdam, Dublin and Madrid might even do well if it became more difficult to exchange data with London. The European negotiators almost certainly know that and will be no hurry to do any favours for us unless and until they see some concessions on the issues that matter to them.

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