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 NegotiationsCP 211is 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.
Some marked the UK's departure from the EU with countdowns and flag-waving. Others, such as "Led by Donkeys", protested. I attended a concert by the European Union Chamber Orchestra at St George's Hall in Bradford, As its name suggests, this is an orchestra made up of artists from 10 countries which is funded by the European Commission, It describes itself on its homepage as a "musical ambassador" for the European Union.
As I listened to the music I would not help reflecting on the smoothness with which brexit had been achieved. Thanks to the Agreement on the withdrawal of theUnited Kingdom of Great Britain and Nothern Ireland from the European Union and the European Atomic Energy Community, the rules that have governed this country's relations with its nearest neighbours, closest allies and biggest market will continue to apply until the end of the year at least and in some respects beyond which gives businesses and individuals time to plan. However, I also reflected that achieving such continuity had been a close-run thing. The Agreement was signed only in the last few days of January and the legislation which implements it received royal assent only on 23 Jan 2020. For much of the period since the referendum, there was a very real danger that the rules governing the UK's relationship with the 27 remaining member states would simply cease to apply when it left the EU.
To reflect the change of focus I have removed many of the links on this website to resources on the withdrawal agreement negotiations and inserted links to resources on the future relationship. Anyone wishing to discuss this article should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page.
I have updated my pages on the European Union (Withdrawal Agreement) Bill which will ratify the draft agreement of 19 Oct 2019 on the terms of the United Kingdom's withdrawal from the European Union and the negotiations on the UK's future relationship with the EU in accordance with the political declaration. The bill completed its committee stage in the Lords and I have linked to the reports of the debates in Hansard. In the future relationship page, I have inserted links to the Commission's and the British government's press releases on Mr Johnson's meeting with President von der Leyen in London on 8 Jan 2020, transcripts of the President's press conference with the Irish Taoiseach or prime minister and Monsieur Michel Barnier's speech at the European Commission's representation in Stockholm on 9 Jan 2020.
In his speech, Monsieur Barnier described the withdrawal agreement as a kind of divorce:
"We have now organised an orderly divorce. But now, the UK will automatically, mechanically, legally, leave 600 international agreements.
And we will have, together – EU and UK, and the UK for its part, alone – to rebuild everything. That is what is at stake for the next stage of the negotiations.
So we have a huge amount of work ahead of us if we are to secure an ambitious new partnership between the EU and the UK."
He warned:
"If we fail, the transition period will end on 1 January 2021 without any arrangements for a new future relationship in place.
This would not affect the issues covered in the Withdrawal Agreement: the financial settlement, and, thankfully, the deal we have reached on the island of Ireland and on citizens would still stand.
But it would mean the return of tariffs and quotas: a total anachronism for interconnected economies like ours."
So, the European Commission is already preparing for the negotiations and has prepared documents on its position on
I shall be discussing some of those documents - in particular, those relating to intellectual property and data protection - in more detail in this and related publications over the next few months.
In his Stockholm speech, Monsieur Barnier said:
"Yes, the UK represents 9% of all EU27 trade.
But more significantly, the EU27 accounts for 43% of all UK exports and 50% of its imports.
So, it is clear that if we fail to reach a deal, it will be more harmful for the UK than for the EU27.
All the more so because EU Member States can rely on each other or on the many other partners that the EU has free trade agreements with."
It is important to note that the EU did not cave in to British demands over Northern Ireland. It was, as the DUP have said many times, the other way round.
Anyone wishing to discuss this article or brexit generally should call me on +44 (0)20 7404 5252 during normal business hours or send me a message through my contact page.
In Future Relationship Agreements with the EFTA States3 Jan 2018 I explained that future relationship agreements were required not just with the remaining member states of the European Union but also with the member states of the European Free Trade Association ("EFTA"). All the EFTA states except Switzerland are members of the European Economic Area ("EEA") which provides for free movement of labour. As a result, significant numbers of British citizens to live in Iceland, Liechtenstein, Norway and Switzerland and many Icelandic, Liechtenstein, Norwegian and Swiss citizens have moved here. As the current British government believes that the Brexit referendum result requires the UK to leave the EEA as well as the EU, provision has to be made for those expatriates as well as for the continuation of accrued rights of businesses and individuals that have been acquired under the EU legislation that extends to the whole of the EEA.
"Where a geographical indication within the meaning of Regulation (EC) No 110/2008 of the European Parliament and of the Council, pertaining to a product of an EEA EFTA State, is protected on the last day of the transition period by virtue of that Regulation, those persons who are entitled to use the geographical indication concerned shall be entitled, as from the end of the transition period, without any re-examination, to use the geographical indication concerned in the United Kingdom, which shall be granted at least the same level of protection under the law of the United Kingdom as under the following provisions:
(a) point (i) of Article 4 (1) of Directive (EU) 2015/2436 of the European Parliament and of the Council; and
(b) in view of the geographical indication concerned, the first subparagraph of Article 15 (3), Article 16 and Article 23 (1) of Regulation (EC) No 110/2008 and, in so far as to the extent related to compliance with those provisions of that Regulation, Article 24 (1) of that Regulation.
Where a geographical indication referred to in the first subparagraph ceases to be protected in the EEA EFTA States after the end of the transition period, the first subparagraph shall cease to apply in respect of that geographical indication.
The first subparagraph shall not apply where protection in the EEA EFTA States is derived from international agreements, other than the EEA Agreement, to which the EEA EFTA States are party.
This Article shall apply unless and until an agreement that supersedes this Article enters into force or becomes applicable."
Art 47 (1) of the Future Relationship Agreement requires no charge to be made for the registration, grant or protection of a geographical indication under the new British scheme. Indeed, art 47 (2) makes clear that it will not even be necessary to make an application or undertake any particular administrative procedure to gain protection under the new scheme. However, art 47 (3) reserves a right for the British government to charge renewal fees under its proposed new scheme and allows for the surrender of rights under such scheme.
Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ L 77, 27.3.1996, p. 20–28) required EEA member states to create a new intellectual property right known as "database right"to protect investment in obtaining, verifying and presenting the contents of a database. One of the conditions for the subsistence of database right is that the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation ("the maker") is a national, corporation or partnership that includes a national of a European Economic Area member state. In the absence of any agreement, nationals, corporations and partnerships from the UK will lose database protection in Iceland, Liechtenstein and Norway after the UK leaves the EEA and, conversely, databases made by makers in those states will lose their database rights protection here. Art 48 provides for the continued protection of the database rights of British makers in Iceland, Liechtenstein and Norway and for the continued protection of Icelandic, Liechtenstein and Norwegian makers here.
The doctrine of exhaustion of rights can be summarized as follows. Once a product that is protected by an intellectual property right ("IPR") has been sold by or with the consent of the owner of that right, the IPR right is said to be exhausted, that is to say, it can no longer be exercised by the owner of the right. A good example of that doctrine and its application to the EEA is provided by s.12 (1) of the Trade Marks Act 1994:
"A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent."
After the UK leaves the EEA this provision will no longer apply to Iceland, Liechtenstein and Norway in the absence of a specific agreement to the contrary. Art 49 of the Future Relationship Agreement provides that IPR which were exhausted both in those states and in the UK before the end of the transition period under the provisions of the EEA Agreement shall remain exhausted both in those states and in the UK.
The Future Relationship Agreement refers in many places to a transition or implementation period which will come into being only if the UK concludes the draft withdrawal agreement with the remaining EU member states. If the UK leaves the EU without such an agreement, the Future Relationship Agreement would require substantial last-minute modification if indeed it were to come into effect at all. The negotiations with the EEA states have been carried out without much fuss or publicity and the Future Relationship Agreement is a lot simpler and shorter so renegotiation may be possible if all parties retain the political will to do so.
Anyone wishing to discuss this article or Brexit generally should call me on 020 7404 5252 during office hours or send me a message through my contact form.
The draft withdrawal agreement provides for an implementation or transition period starting on 29 March 2019 and continuing until at least 31 Dec 2020 during which time the British government will try to negotiate a long-term agreement with the European Union on the lines of the political declaration. During that period, EU law will continue to apply to the UK although it will cease to be a member on 29 March 2019 and will have no representation in the Council or in any of the EU institutions after that date.
The draft agreement will avoid disruption of trade but it will leave the UK as a rule-taker rather a rule-maker during the implementation period. More importantly, it may require the UK to remain in regulatory alignment with the EU even after the end of that period until both sides agree otherwise to ensure an open border with the Republic of Ireland.
This draft is being debated by both Houses of Parliament as I write this briefing and it has already prompted several ministerial resignations. It is opposed by almost all the opposition parties and by many Conservative MPs on both sides of the Brexit debate. Though nothing is impossible in present circumstances, most commentators think it unlikely that it will be approved by either House.
The Prime Minister has warned that the alternatives to the draft agreement are an exit from the EU without any implementation period which could be very disruptive to business and the general public or maybe no Brexit at all. In that regard, the Court of Justice of the European Union is hearing a case that has been referred to it by the Court of Session under art 267 of the Treaty on the Functioning of the European Union, The case has been brought by Andy Wightman and others against the Secretary State for Exiting the European Union on whether the British government can unilaterally withdraw its notice of intention to leave the EU. The Advocate-General has opined that it can on certain specified conditions (see Case 621/18 Wightman and others v Secretary of State for Exiting the European UnionEU:C:2018:978, ECLI:EU:C:2018:978, [2018] EUECJ C-621/18_O). The full Court is expected to deliver its decision on Monday 10 Dec 2018.
Whether we leave the EU with an agreement or not, it is clear that Community designs and plant varieties and EU trade marks will be converted into British ones, that we shall have a British system of geographical indications very much like the EU system and a supplemental unregistered design right that will be similar to unregistered Community designs, Of course, none of that will be necessary if we remain in the EU. If we stay in the EU or even exit on the terms of the draft withdrawal agreement there is an outside chance that the Unified Patent Court and unitary patent will come into being and that we will participate in them. It is highly unlikely that will happen if we leave without agreement.
The British government ratified the United Patent Cout agreement on 26 April 2018 and the Minister with responsibility for Intellectual Property who deposited the instrument of ratification was Sam Gyimh MP. Mr Gyimak is one of the ministers who was felt obliged to resign over the terms of the draft agreement as did his predecessor in the role Mr Jo Johnson MP. Both were good ministers and it is sad to see them go.
Even though there are just a few weeks to go before the 29 March 2019 the best advice I can offer my clients is prepare for the worse and hope for the best. Anyone wishing to discuss this article or Brexit generally should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page, I wish all my readers a Merry Christmas and a happy New Year.
A lot happened in July. First, the resignations of the Rt Hon David Davis MP, the Rt Hon Boris Johnson MP and a number of other ministers. Secondly, the publication of white papers on The Future Relationship between the United Kingdom and the European Unionand Legislating for the Withdrawal Agreement between the United Kingdom and the European Union. Thirdly, the Prime Minister and her ministers have visited the capitals of other EU member states to canvass support for the future relationship white paper's proposals. Finally, active preparations have begun here and in the rest of the EU for the UK's withdrawal from the EU without a withdrawal agreement.
The procedure by which a member state withdraws from the European Union is set out in art 50 (2) of the Treaty of European Union:
"A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament."
The procedure was initiated by a letter from the Prime Minister to the President of the Council dated 29 March 2017 giving notice of the UK's intention to withdraw from the EU. The Council provided the guidelines on 29 April 2017 supplemented by others on 15 Dec 2017 and 23 March 2018. Negotiations on the terms of a withdrawal agreement began after the British general election a draft of which was published in February. About 80% of the text is now agreed but there are a number of sticking points one of which is the border between Northern Ireland and the Irish Republic.
The withdrawal agreement has to take account of the future relationship between the UK and EU. The Chequers statement which I reviewed in The Chequers Statement Explained8 July 2018 was an attempt to get agreement within the government on what that relationship should be. It did not survive the weekend as David Davis resigned on Sunday night and was followed by several other ministers including Johnson. The white paper on the future relationship was attacked by Brexiteers and remainers in the UK and given a lukewarm reception in Brussels. I discussed it in The White Paper on the Future Relationship between the UK and the EUon 21 July 2018. The EU's negotiator, Michel Barnier, set out his vision for the future relationship between the EU and UK in his op-ed An ambitious partnership with the UK after Brexiton 2 Aug 2018.
If a withdrawal agreement is concluded it will have to be incorporated into English and Welsh, Scots and Northern Irish law by statute. The government's proposals for legislation are set out in the white paper on Legislating for the Withdrawal Agreement between the United Kingdom and the European Union which I discussed in Today's White Paper on the Withdrawal Agreement - What's happened to Ireland?on 24 July 2018.
In Brexit - Why do I follow the Art 50 (2) Negotiations when I am an IP Lawyer?26 July 2018 NIPC Law I explained why the art 50 (2) negotiations are important and the likely outcomes if they are successful and also if they are not. I also described the negotiations as "finely balanced". There is an evens chance of their going either way.
Anyone wishing to discuss this article or Brexit generally should call me on +44 (0)20 7404 5252 or send me a message through my contact form.
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 Messe23 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 Brexit12 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 Last3 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.
Although nothing is agreed until everything is agreed and there are still a number of issues such as the border between Northern Ireland and the Republic of Ireland where the parties are as far apart as ever, March has been a quiet month in the Brexit negotiations. Contrary to initial indications, British negotiators were able to reach agreement with the Commission on many of the provisions of the draft withdrawal treaty. The other important development is that both the European Council and the Parliament have published guidelines for negotiations on the UK's future relationship with the EU.
In order to understand the significance of the draft treaty and the Council and Parliament's guidelines, it should be remembered that art 50 (2) of the Treaty of European Union requires the European Union to negotiate and conclude an agreement with a withdrawing state, setting out the arrangements for its withdrawal and taking account of the framework for its future relationship with the EU. The document published on 19 March 2018 is a draft of the agreement contemplated by art 50 (2). It covers the matters that were negotiated before Christmas, namely citizens' rights, the Irish border and the UK's financial contribution. It provides for a transitional or implementation period between 29 March 2019 and 31 Dec 2020 when the UK will cease to be a member of the EU but will continue to be bound by EU law. It makes arrangements for all kinds of matters from the protection of personal data to Community designs and EU trade marks. But it does not (and is not intended to) provide for the UK's relationship with the EU from 1 Jan 2021 though, of course. it is supposed to take account of it.
The draft agreement has attracted some criticism in the UK, especially for its Protocol on Ireland and Northern Ireland and the continuation of the common fisheries policy in British waters after 29 March 2019. Consequently, it is not a foregone conclusion that it will be signed. If the agreement is not signed, art 50 (3) makes clear that the EU treaties simply cease to apply to the UK on 29 March 2019 without anything taking their place. Despite the assurances that the government has given to businesses about a period of stability after the UK leaves the EU, my advice is to keep planning for the worst - that is to say, no agreement on anything after Brexit day - while, of course, hoping for the best - namely a withdrawal agreement substantially on the terms of the 19 March draft.
In the hope that we will conclude a withdrawal agreement in accordance with art 50 (2) the European Council which represents the 27 remaining member states published Guidelines for the negotiation of the future relationship between the UK and the EU on 23 March 2018. Paragraph 8 of those Guidelines states:
"As regards the core of the economic relationship, the European Council confirms its readiness to initiate work towards a balanced, ambitious and wide-ranging free trade agreement (FTA) insofar as there are sufficient guarantees for a level playing field. This agreement will be finalised and concluded once the UK is no longer a Member State. Such an agreement cannot however offer the same benefits as Membership and cannot amount to participation in the Single Market or parts thereof. This agreement would address:
i) trade in goods, with the aim of covering all sectors and seeking to maintain zero tariffs and no quantitative restrictions with appropriate accompanying rules of origin. In the overall context of the FTA, existing reciprocal access to fishing waters and resources should be maintained;
ii) appropriate customs cooperation, preserving the regulatory and jurisdictional autonomy of the parties and the integrity of the EU Customs Union;
iii) disciplines on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures;
iv) a framework for voluntary regulatory cooperation;
v) trade in services, with the aim of allowing market access to provide services under host state rules, including as regards right of establishment for providers, to an extent consistent with the fact that the UK will become a third country and the Union and the UK will no longer share a common regulatory, supervisory, enforcement and judiciary framework;
vi) access to public procurement markets, investments and protection of intellectual property rights, including geographical indications, and other areas of interest to the Union."
Other paragraphs cover continued cooperation in other areas such as law enforcement and security.
Over the last few months I have been focusing on the negotiations between the British government and the Commission and overlooked the European Parliament's role in the negotiations. I was reminded that the European Parliament's view matters by the Bar Council's representative in Brussels in the 141st Brussels News newsletter which was published yesterday. Under the heading "Why does the EP’s view matter?" the newsletter explains:
"The EP has a central role to play in the negotiations and how they turn out. Not only is its 6-member Brexit Steering Group in constant contact and influential with the Commission’s Task Force 50 (TF50), led by Mr Barnier, but the EP’s consent will be required for the final package: the Withdrawal Agreement (WA), including the transition period and the framework for the Future Relationship (FR). Indeed, leaving enough time for the EP to consider and vote on that package is one of the reasons the deal needs to be finalised by October of this year. Moreover, the EP’s formal consent is almost certainly going to be required, in accordance with the relevant Treaty articles (cited above), (cited above), to the detailed terms of the Future Relationship, whatever form it takes, (cited above), to the detailed terms of the Future Relationship, whatever form it takes, if and when we get that far."
Incidentally, the author adds:
"One should also not forget its potential influence on content: the EP sees itself as guardian of citizen’s rights, SMEs, consumers – basically any group that needs defending. Its presence in the negotiations therefore serves as a balance to big business interests that might otherwise dominate."
That short passage contains the answer to those who argue that the British market is so important to German car and Italian white goods manufacturers and French farmers that our negotiators can afford to play hard ball in order to pick some cherries or eat some cake. We may still be the 6th largest economy running a massive trade deficit with the 27 remaining member states but compared to those 27 the world's 6th largest economy is not all that big. In any case, there are interests to be considered other than those of big business.
foreign policy, security cooperation and development cooperation,
internal security, and
thematic cooperation.
On the first of those pillars, the European Parliament reiterates that continued membership of the single market and customs union would be the best option for both sides but, if that is not possible, it suggests at paragraph 14 an agreement based on the following principles:
"the level of access to the EU market must correspond to the degree of continued convergence with and alignment to EU technical standards and rules, with no provision for any sector-by-sector approach and preserving the integrity of the internal market,
the EU’s autonomy in setting EU law and standards must be guaranteed, as well as the role of the CJEU as the sole interpreter of EU law,
a level playing field is ensured and EU standards are safeguarded to avoid a race to the bottom and prevent regulatory arbitrage by market operators,
rules of origin are to be based on EU standard preferential rules and the interests of EU producers,
reciprocal market access must be negotiated in full compliance with World Trade Organisation (WTO) rules, including for goods, services, public procurement and – where relevant – foreign direct investment, and all modes of supply of services, including commitments on the movement of natural persons across borders (mode 4), and be regulated in full compliance with EU rules in relation to equal treatment principles, especially for workers,
regulatory cooperation should be negotiated, with a specific focus on SMEs, mindful of the voluntary nature of regulatory cooperation and the right to regulate in the public interest, while recalling that provisions on regulatory cooperation in a trade agreement cannot fully replicate the same frictionless trade as provided for by membership of the internal market."
As for services paragraph 16 underlines that under a free trade agreement ("FTA"). market access for services is limited and always subject to exclusions, reservations and exceptions. Paragraph 17 add that:
"..... leaving the internal market would lead to the UK losing both passporting rights for financial services and the possibility of opening branches in the EU subject to UK supervision; recalls that EU legislation provides for the possibility, in some areas, to consider third-country rules as equivalent based on a proportional and risk-based approach, and notes the ongoing legislative work and upcoming Commission proposals in this area; stresses that decisions on equivalence are always of a unilateral nature; stresses also that in order to safeguard financial stability and ensure full compliance with the EU regulatory regime and standards and their application, prudential carve-out and limitations in the cross-border provisions of financial services are a customary feature of FTAs."
Changing the subject dramatically, very little has been said about the Unified Patent Court Agreement o unitary patent up to now and I take that as a good sign. In One Year to Brexit - Are Rumours of the Death of the Unified Patent Court Agreement Greatly Exaggerated?29 March 2018 NIPC Law I noted that all the legislative hurdles to British ratification have been cleared. Also, there is only the challenge to the constitutionality and a motion in the federal parliament to rescind the ratification bills that have previously been passed that is delaying German ratification. It is still just possible that the UPC and unitary patent before 31 Dec 2020 if not 29 March 2019.
Anyone wishing to discuss this article should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.
Yesterday, in my October Brexit Briefing I mentioned Charles Grant's predictions on how Brexit will unfold. One of his predictions was that there will be no bespoke trade agreement between the EU and the UK. The deal that the British government would like would be one "that provides better market access than the Canada model (a free trade agreement with only limited provisions on services) but much less than the Norway model" but that is unlikely to happen. Grant offered two reasons for that. The first is that our government will avoid making detailed proposals for a future economic partnership because a detailed plan would be hard to get through a divided cabinet. The second is that the EU will require the British government to choose between full access to the single market on the Norwegian model, limited access on the Canadian model or no special terms at all.
"to lay a proper basis for our future relationship, we must all understand and explain objectively what it means to leave the European Union, the single market and the customs union. These choices have consequences.
It is not possible to be half in and half out of the single market.
It is not possible to end the free movement of persons, while retaining the free movement of goods, services or capital by means of a generalised system of equivalences.
It is not possible to leave the single market and continue to set the rules.
It is not possible to leave the customs union but expect to enjoy frictionless trade with the EU."
In other words, it is not possible to have your cake and eat it.
Grant notes that "the UK is counting on the unity of the 27 fracturing. It hopes those most dependent on UK trade will see that it is in their interests to give the British a better deal than the Canadians, that is to say one with more provisions on services." Or put another way, the Germans still want to sell us their cars and the Italians their prosecco.
That may happen though there are no signs of splintering yet. Not even among the smaller states that are most dependent on British trade such as Ireland. If anything, the Irish position on the border is hardening and a resignation at least among Irish business interests that the choice on offer is a hard border or the incorporation of Northern Ireland into the single market and customs union (see IBEC's Brexit Tracker for October 2017).
Important that the British market may be for Irish and Continental exporters its importance is not paramount. What is paramount is keeping the single market intact because it is, as Monsieur Barnier put it, "our main economic asset".
Earlier in the week, Wilbur Ross, the US Trade Secretary, addressed the CBI Conference on the terms of a trade deal with the USA (see Sarah Gordon Wilbur Ross outlines US terms for post-Brexit trade deal6 Nov 2017 Financial Times). In his speech 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.
That speech did not go unnoticed on the Continent. Monsieur Barnier referred to it specifically in the context of the possible future relationship negotiations that he may be called upon to conduct and whether it was yet another undermining factor:
"And when I hear the US Commerce Secretary Wilbur Ross, in London, call on the British to move away from Europe in order to move closer towards others – towards less environmental, health and food regulation, and no doubt financial, tax and social regulation too – I have my doubts."
It seems 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.
