Brexit Briefing April 2021

Port of Dover

Author Raimond Spekking Licence CC BY-SA 4,0 Source Wikimedia Commons

 

Jane Lambert

The most significant events in April were the ratification of the Trade and Cooperation Agreement by the European Parliament, the Commission's recommendation that the UK should not be allowed to accede to the Lugano Convention and the fallout from the implementation of the withdrawal agreement and, in particular, the Northern Ireland Protocol. The month also marked the anniversary of British ratification of the Unified Patent Court Agreement in 2018 which was reversed by a note verbal and a written statement from Amanda Solloway MP 2 years later.

Ratification of the Trade and Cooperation Agreement

The European Parliament passed a resolution consenting to the agreement by a large majority on 28 April 2021 (see European Parliament legislative resolution of 28 April 2021 on the draft Council decision on the conclusion, on behalf of the Union, of the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, and of the Agreement between the European Union and the United Kingdom of Great Britain and Northern Ireland concerning security procedures for exchanging and protecting classified information (05022/2021 – C9‑0086/2021 – 2020/0382(NLE)). The United Kingdom Parliament ratified the Agreement by passing the European Union (Future Relationship)  Act 2020 at the end of last year.

The Trade and Cooperation Agreement has avoided tariffs on British exports which is something but not the need for customs formalities, health checks and all sorts of other non-tariff barriers to imports from third countries from which British exporters had previously been exempt. The result is that many firms have complained that it is considerably more difficult and expensive to supply customers in the EU than it had been before. It is too early to say whether those difficulties are temporary or long-term but if they are temporary there do not appear to be any solutions on the horizon.

The agreement covers goods but not services.   Before the expiry of the transition or implementation period, the British financial services enjoyed the highest level of access to the European single market known as "passporting rights".  These have now been lost but discussions have been taking place for the industry to be accorded equivalency rights that allow some access.  Those discussions have not yet resulted in an agreement.   As a result, some businesses have transferred some of their operations to one or more of the remaining EU member states.  There have been some job losses in London but not yet at a disturbingly high level.

The Lugano Convention

A sector that stands to lose even more from Brexit than financial services is the legal services industry and particularly intellectual property.  London was a convenient forum for the resolution of commercial disputes while Regulation (EU) No 1215/2012 applied to the UK. There is now uncertainty as to the ease with which English judgments can be enforced in the EU and the assistance that British courts can expect from EU courts. Many of those difficulties would cease were the UK to rejoin the Lugano Convention (Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 339, 21.12.2007, p. 3–41).  Accession requires the consent of the existing members and according to Lord Goldsmith, the former Attorney-General. the Commission has advised EU member states to refuse such consent on the grounds that it is not a member of the EU, the EEA or even EFTA (Lord Goldsmith UK Accession to the Lugano Convention 2007—View of the EU Commission 22 April 2021 Debevoise & Plimpton).

Fallout from the Northern Ireland Protocol

I mentioned the circumstances that gave rise to a letter of formal notice in The Commission's Second Letter of Formal Notice on 29 March 2021. HM Government had a month in which to answer that letter which has now expired.  The Northern Ireland Protocol was a concession that the previous Prime Minister, Theresa May, said that no British prime minister could ever make. She had negotiated a withdrawal agreement that required the whole United Kingdom to remain in sync with the internal market until some means could be found that would enable lorries to cross the border with the Republic of Ireland without customs formalities.  Such a requirement proved unacceptable to many Conservative and all Democratic Unionist politicians with the result that the agreement that she had negotiated could not be ratified.   As a result, the UK's withdrawal from the EU was postponed until 31 Jan 2020.

The concession enabled the UK to withdraw from the UK and the consequences of such withdrawal for Northern Ireland were delayed until the implementation or transitional period expired on 31 Dec 2020.  As the Northern Ireland Protocol required additional paperwork and customs inspections on imports from Great Britain it became increasingly difficult to supply distributors in Northern Ireland from that country.  That has led to shortages of some consumer goods which in turn has led to civil unrest. The government's response to that unrest was to delay the implementation of certain aspects of the Protocol which prompted the letter of formal notice from the Commission.   In a related development, the members of the largest party in the Northern Ireland assembly have forced the Chief Minister out of office.  

Vaccine Politics

With job losses and business failures in all sorts of industries from financial services to fishing resulting from the additional paperwork and costs of exporting to the EU, the problems in Northern Ireland, the highest number of deaths from COVID 18 and the worst economic downturn of any of the large European economies, the government might be expected to struggle in public opinion polls.  So far that has not happened and that appears to result from the early success of the National Health Service in vaccinating the most vulnerable age groups of the British population.  The government has given the impression that this success is a benefit of Brexit which will probably be debunked but not in time for the local authority and Senedd and Scottish Parliament elections on 6 May 2021.

The UPC Anniversary

To celebrate World Intellectual Property Day 2018, the Foreign Secretary, Boris Johnson deposited the UK's instrument of ratification.  Less than two years later Amanda Solloway MP, the Minister of State for IP reversed that decision. I had been looking forward to appearing with the Minister at a seminar to discuss IP law and FinTech at which I would have questioned her on her volte-face butt sadly she never turned up recording a video message instead (Jane Lambert IP Strategy for FinTech Start-ups and SMEs - and Other Matters 28 April 2021 NIPC London). London was to have hosted part of the Central Division of the Court of First Instance and considerable funds were invested in fitting out courtrooms for the new tribunal in Aldgate.  Those premises are now being for remote hearings in the Trade Marks Registry.  Meanwhile, the Dutch, French and Germans are bidding for London's legal work with new English speaking courts in Amsterdam, Paris and Germany (see Jane Lambert English Speaking Commercial Courts in France, Germany and the Netherlands bid for London's Work 2 April 2021).

Doing Business after Brexit

I am currently updating my contribution to Helen Wong's Doing Business after Brexit.  The first edition of that book was a great success as I mentioned at the time My contributor's deadline is 30 My 2021.  I do not yet have a publication date for the second edition but I shall let you know.  In my update, I shall mention the provisions of the withdrawal agreement and the trade and cooperation agreement relating to IP and data protection, the implementing legislation, the continuing persuasive authority of the Court of Justice's case law and the missed opportunity of the withdrawal from the Unified Patent Court Agreement.

Further Information

Anyone wishing to discuss this article or any topic arising from it should call me on 020 7404 5252 or send me a message through my contact page. 

Brexit Briefing January 2021

HMS Endeavour

Artist Samuel Atkins  (1760-1910) National Library of Australia Source Wikipedia 

 

Jane Lambert

One of the arguments for brexit is that the world's fastest-growing markets lie outside Europe and membership of the European Union has hampered the United Kingdom's opportunities to supply them. The proponents of that argument counter the contention that the bargaining power of 28 nations is considerably greater than that of one with the assertion that the need of EU negotiators to take account of the interests of all member states and not just those of one means that British interests are compromised before negotiations with third countries even start.  Such compromise, they say, more than offsets the advantage of being part of a large bloc.

That thinking was apparent in Liz Truss's announcement that HMG had applied to join the Comprehensive and Progressive Trans-Pacific Partnership on 30 Jan 2021:

“Joining CPTPP will create enormous opportunities for UK businesses that simply weren’t there as part of the EU and deepen our ties with some of the fastest-growing markets in the world.

“It will mean lower tariffs for car manufacturers and whisky producers, and better access for our brilliant services providers, delivering quality jobs and greater prosperity for people here at home."

This may possibly be true of financial and other services and some high-value luxury goods like whisky but it is hard to see the attraction of the CPTPP for car manufacturers most of which are foreign-owned who invested in the UK purely for access to the EU car market.

The price of this freedom to apply for membership of trading blocs on the other side of the world and the other measures that the government may have in store quickly became apparent when customs officers impounded the sandwiches of British lorry drivers, inshore fisheries encountered difficulties in supplying continental customers and supermarket chains delays and obstacles in stocking branches in Northern Ireland. A dispute between the European Commission and AstraZeneca Plc over the performance of a contract to supply vaccine prompted the Commission unilaterally to take measures to restrict transit of vaccines across the border between the Irish Republic and Northern Ireland under art 16 of the Protocol on Ireland/Northern Ireland to the withdrawal agreement. 

Such disruption was a foreseeable - possibly even deliberate - consequence of decoupling the British economy from the European single market in order to open it up to the world. It is the start of an economic and social experiment pf which many of those who voted for brexit on order to limit immigration are unaware and would not otherwise have approved.  It is a gamble and it may take many years before it can be known whether it has paid off.

The focus of this blog is, of course, intellectual property and not polemics.  As I noted in the January Brexit Briefing  EU legislation including regulations establishing the EU trade mark, Community designs, Community plant varieties and other intellectual property rights ceased to apply to the UK from 23:00 on 31 Dec 2020. They have been replaced by a thicket of secondary legislation which I did my best to untangle in How Brexit has changed IP Law on 17 Dec 2021 and in my presentations on the subject on 26 Jan 2021 (see my slides and handout.

The CPTPP agreement contains provisions on intellectual property as I noted in British Intellectual Asset Owners' Rights after Brexit: IP Provisions of Bilateral Investment Treaties and Free Trade Agreements on 17 Aug 2020,  So, too, do the bilateral agreements that have been agreed with countries like Japan which I discussed in An Introduction to and Overview of the Comprehensive Economic Partnership Agreement with Japan on 28 Oct 2020.  Progress on negotiations with Australia, the CPTPP, Japan, New Zealand and the USA is being monitored in the "Trade Negotiations" pages of this blog.

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

The Draft EU-UK Trade and Cooperation Agreement: What We Know So Far

Jane Lambert

The European Commission has just published the full text of the draft EU-UK Trade and Cooperation Agreement on its website.  Accompanying that draft are a draft EU-UK Security of Information Agreement, a draft EU-UK Civil Nuclear Agreement and draft EU-UK Declarations. Also worth reading are the Commission's press release of 24 Dec 2020, a Q & A on the draft agreement and a checklist entitled Big changes compared to benefits of EU membership which can be downloaded here.  On Christmas Day, the British government published a 34-page summary of the agreement and a statement from the Prime Minister.

.To understand the agreement it is necessary to refer to 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."

The agreement that set out the arrangements for withdrawal was, of course, the Withdrawal Agreement (Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community). It was concluded in January and implemented by the European Union (Withdrawal Agreement) Act 2020. 

Some of the provisions of the Withdrawal Agreement such as those governing the transitional or implementation period in which EU law continues to apply to the UK will lapse at 23:00 on 31 Dec 2020.  Other provisions such as those governing intellectual property or Northern Ireland will continue indefinitely.  The framework for the UK's future relationship with the EU was the Political Declaration setting out the framework for the future relationship between the European Union and theUnited Kingdom ("the Political Declaration"). The EU-UK Trade and Cooperation Agreement is intended to govern the UK's relationship with the EU from the end of the implementation period at 23:00 on 31 Dec 2020 in accordance with the Political Declaration.

The draft trade and cooperation agreement is 1,246 pages long and consists of the body and a very large number of annexes.   The body is just under 400 pages long and is divided into 7 Parts subdivided into Titles and in some cases further divided into chapters.  The remaining pages are the annexes.

The structure of the body is as follows:

• Part One: common and institutional provisions in the Agreement; 
• Part Two: trade and other economic aspects of the relationship, such as aviation, energy, road transport, and social security; 
• Part Three: cooperation on law enforcement and criminal justice; 
• Part Four:  thematic issues, notably health collaboration; 
• Part Five: participation in EU Programmes,
• Part Six: dispute settlement; 
• Part Seven: final provisions.

The most important economic provisions appear to be in Part Two. Title 1 of Part 2 covers trade in goods and Title II trade in services.  Services that are covered in this title include telecoms, financial services and legal services.  Provision is also made in Part Two for digital trade, capital m movements and intellectual property.

Because of the sheer length of the document, it will take me some time to read and digest it.  Anyone wishing to discuss this article or brexit generally may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page.  I take this opportunity of wishing all my readers a happy New Year.

The United Kingdom Internal Market Bill

 

Author Henry Holbein

Jane Lambert

The publication of the UK Internal Market white paper on 16 July 2020 and the subsequent consultation that ended on 9 Sept 2020 must be one of the least publicized announcements of government policy ever.  Although I have received a lot of emails from the government about brexit ranging from customs arrangements to information for British citizens who wish to continue to live in different EU member states I can't trace any notification about this one.   I can find nothing about the white paper in the press in the days following its publication.  The white paper's publication seems to have escaped other bloggers' attention including Professor Grey whose Brexit Blog rarely misses a truck.

According to the explanatory notes on the United Kingdom Internal Market Bill, the purpose of the legislation is to implement the proposals set out in the white paper.  Those proposals are said to be driven by "three overarching policy objectives:

a. to continue to secure economic opportunities across the United Kingdom; 

b. to continue to increase competitiveness and enable citizens across the UK to be in an environment that is the best place in the world to do business; and 

c. to continue to provide for the general welfare, prosperity, and economic security of all UK citizens."

The bill has already received considerable attention because of the language of clause 45 (1) that certain provisions will have effect "notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent ."   As the Northern Ireland Secretary admitted, that provision will breach a treaty, namely the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community which Her Majesty's government signed and Parliament ratified just a few months ago.  That clause has led to resignations from the government and the senior civil service, threats of legal action from the Commission and warnings from the Speaker of the House of Representatives and other senior US politicians of both parties.

The title of the bill is curious because the United Kingdom is and always has been a unitary state albeit with devolved administrations in Belfast, Cardiff and Edinburgh.   It is important to stress than devolution is not the same as federalism which is the pooling of sovereignty by sovereign states.    Devolution is the delegation of central government functions which theoretically (and in the case of Northern Ireland) has actually been recalled.   The expression "internal market" was originally interchangeable with the term "single market" which was the process by which the EU member states entrusted the regulation of the EU economy to the Commission.   It is as odd for a nation state to describe its domestic economy as an "internal market" as it was for Thomas Cronwell to declare the southern part of an offshore island as "an empire" in The Ecclesiastical Appeals Act 1532.  Perhaps rather more absurd for the policy of 1532 statute was to assert that the King of England was equal to the Pope and Holy Roman Emperor.  Possibly equivalent to British negotiators' insistence in the new partnership talks that the 66 million inhabitants of the UK and the 450 million inhabitants of the remaining EU member states are sovereign equals. 

The bill consists of 54 clauses divided into 7 parts and 2 schedules.   Part 1 (clauses 1 to 14) and Schedule 1 is concerned with "UK Market Access Goods", Part 2 (clauses 15 to 21) with "UK Market Services", Part 3 (clauses 22 to 28) and Schedule 2 with Professional Qualifications and Regulation, Part 4 (clauses 29 to 39) with Independent Advice and Monitoring of the UK Internal Market, Part 5 (clauses 40 to 45) with Northern Ireland, Part 6 (clauses 46 to 47) with Financial Assistance and Part 7 (clauses 48 to 54) with Final Provisions.   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 in so far as this bill purports to resile from the UK's treaty obligations.  As I am about to lose my right to represent clients in the Court of Justice of the European Union, the Boards of Appeal of the EU Intellectual Property Office and the Unified Patent Court as well as my rights under the Legal Services Directive, I wondered whether Part 3 would entitle me to practise in Edinburgh or Belfasr but it is clear from Schedule 2 that it would not.

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

European Commission - "Getting Ready for Changes"

By Rolf Süssbrich - Own work, CC BY-SA 3.0, 

https://commons.wikimedia.org/w/index.php?curid=863700

Jane Lambert

On 9 July 2020, the Commission published a communication entitled Getting ready for changes Communication on readiness at the end of the transition period between the European Union and the United Kingdom to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions (COM(2020) 324 final).  While negotiations for a new relationship between the UK and the EU are intensifying the communication nites that even if the parties were to conclude an ambitious partnership covering all areas agreed in the Political Declaration such an agreement would create a relationship which will be very different from the United Kingdom’s participation in the EU Single Market and Customs Union, and in the VAT and excise duty area.  It will inevitably create barristers to trade in goods and services and cross-border mobility and exchanges that do not exist today.

The communication considers the changes that will be required in the following sectors:

• Trade in goods
• Trade in services
• Energy
• Travel and tourism
• Mobility and social security coordination
• Company law and civil law
• Intellectual property
• Data protection
• International agreements.

For each of those topics, there is a statement of principle followed by "Advice to Businesses and Member State Administrations".   For "Intellectual Property", for instance, there is a statement that the exhaustion of rights principle will continue until 31 Dec 2020.  That is followed by the warning:

"As of 1 January 2021, traders in the European Union can no longer invoke exhaustion vis-àvis right-holders when sourcing products from the United Kingdom."

The advice to Businesses and Member State Administrations is:

"Businesses engaged in parallel trade from the United Kingdom should re-visit their business arrangements."

The communication also notes that while existing EU unitary intellectual property rights (EU trade marks, Community designs, Community plant variety rights and geographical indications) remain protected under the Withdrawal Agreement, any new EU unitary rights will have a reduced territorial scope as they will no longer have effect in the UK.

The British government has also started a publicity campaign to prepare the public for these changes.  Yesterday it distributed by email to my and other subscribers an op-ed that the Rt Hon Michael Gove MP had published in The Daily Telegraph entitled "Outside the EU, a bright future awaits Britain."

Anyone wishing to discuss this article or the legal consequences of the end of the transition period should call my clerk, Stephen, on 07986 948267 or send me a message through my contact page.

Negotiations on the Future Relationship between the UK and EU

Author Furfur Licence CC BY-SA 4.0 Source Wikimedia Brexit

Jane Lambert

The negotiations between the British government and the Commission on the relationship between the United Kingdom and the European Union began yesterday afternoon in Brussels with a bilateral meeting between the lead negotiators, David Frost and Michel Barnier (see AGENDA EU - UK Future Relationship 1st Round of Negotiations 2 - 5 March 2020).  I have already discussed the parties negotiating positions in Future Relationship Negotiations: The EU sets out its Stall 26 Feb 2020 and The Future Relationship with the EU The UK’s Approach to Negotiations - An Introduction and Overview 27 Feb 2020). I am also monitoring the negotiations on my EU Trade Negotiations page.

The negotiations are continuing today and tomorrow with negotiations between working parties on the following topics:

1. Trade in goods
2. Trade in services and investment and other issues
3. Level playing field for open and fair competition
4. Transport
5. Energy and civil nuclear cooperation
6. Fisheries
7. Mobility and social security coordination
8. Law enforcement and judicial cooperation in criminal matters
9. Thematic cooperation
10. Participation in Union programmes
11. Horizontal arrangements and governance

Particularly useful resources include The Future Partnership, The European Union and the United Kingdom – forging a new partnership, Documents related to the negotiations with the United Kingdom,
Questions & Answers on the draft negotiating directives for a new partnership with the United Kingdom and the Task Force for Relations with the United Kingdom on the Commission website and the link to member states' websites on brexit.  

Yesterday the British government also published the UK's approach to trade negotiations with the US in UK-USFree Trade Agreement which I shall discuss later.

Anyone wishing to discuss this article or the new relationship negotiations generally may call me on +44 (0)20 7404 5252 or send me a message through my contact page.