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.

Future Relationship Agreements with the EFTA States

Jane Lambert

On 20 Dec 2018, the Department for Exiting the European Union announced that the government had reached agreement with the governments of the EFTA member states on the UK's relationship with those states after 29 March 2019.  As Switzerland is a full member of EFTA but not of the European Economic Area (EEA") separate agreements have been made with the EFTA states that are party to the  EEA Agreement - namely Iceland, Liechtenstein and Norway - and also with Switzerland.

EFTA
The European Free Trade Association was established on 3 May 1960 by countries that were unable or unwilling to join the European Economic Community ("EEC"). Its founding members were Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdon. Iceland joined them in 1970. Denmark and the United Kingdom left EFTA to join the EEC in 1973. They were followed by Portugal in 1986 and Austria, and Sweden in 1995. Iceland and Liechtenstein joined EFTA after the UK left. The current members are Iceland, Liechtenstein, Norway and Switzerland. They have a combined land area of 204,500 square miles which is slightly smaller than France and a population of just over 14 million which is about the same as the Istanbul metropolitan area.

The EEA
The EEA consists of the states that are party to the Agreement on the European Economic Area. They include all the states of the European Union plus Iceland, Liechtenstein and Norway.  It enables the contracting states to participate in the EU's single market and in some but no all other programs. Switzerland has not yet ratified that Agreement but it has a number of bilateral agreements with the EU that enable it to participate in the single market.

The Brexit Referendum
The EEA Agreement guaranteed free movement of people with the result that there are many British citizens in each of the EFTA states and citizens from each and every one of the EFTA states in the UK. The current British government interprets the results of the Brtish referendum on membership of the EU as a rejection of the right of free movement. It believes that the UK must leave the EEA as well as the EU. Agreement is therefore required as to what should happen to all those expatriates as well as rights that have been acquired under the EU legislation that extends to the EGTA member states after 29 March 2919.

The Agreement with Iceland, Liechtenstein and Norway
Those matters are addressed in the Agreement on arrangements between Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the United Kingdom of Great Britain and Northern Ireland following the withdrawal of the United Kingdom from the European Union, the EEA agreement and other agreements applicable between the UnitedKingdom and the EEA EFTA States by virtue of the UnitedKingdom’s membership of the European Union. The agreement is very much shorter than the draft withdrawal agreement from the EU. It is 69 pages long in contrast to the 585 of the withdrawal agreement and consists of 71 articles divided into 4 parts with 2 annexes.

Part 1 (arts 1 to 7) contains the objective of the agreement, definitions and similar provisions. Part 2 (arts 8 to 37) deals with citizens' rights.  Part 3 (arts 38 to 63) covers the treatment of goods on the single market during the implementation period in the withdrawal agreement which runs between the 29 March 2019 and 31 Dec 2020. Also covered are intellectual property, judicial cooperation in criminal and civil matters, data protection and public [rocurement. The last part (arts 64 to 69) sets up a joint committee which will deal with the interpretation and implementation of the treaty and dispute resolution.  The Department for Exiting the EU has published an explainer for that agreement.

The Agreement with Switzerland
The agreement with Switzerland is even shorter and deals with citizens' rights. There is also an explainer to that agreement.

Further Information
Both agreements will have to be ratified by the national legislatures of the contracting parties.  The European Union (Withdrawal Agreement) Bill proposed in the white paper Legislating for the withdrawal Agreement between the United Kingdom and the European Union (Cm 9674) is intended to be the instrument that ratifies the agreement in the UK.

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.