European Commission - "Getting Ready for Changes"

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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.

Brexit Briefing April 2020

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Jane Lambert

The world has changed since 23 June 2016 and indeed much of that change has occurred since 12 Dec 2019. The United States and the United Kingdom have suffered more deaths from CORVID-19 than any other country and a severe contraction of economic activity. The virus has affected other large countries but not to the same extent.  The other significant event that occurred in April was the announcement that China had overtaken the USA in the number of applications for patents through the Patent Cooperation Treaty for the first time ever (see WIPO PR/2020/848 7 April 2020).  In terms of domestic applications, China is considerably further ahead.  That country filed 1.5 million applications compared to the USA's 597,000 {see World Intellectual Property Indicators 2019 -Patents WIPO 2019).

Despite those changes, British officials are quietly pursuing negotiations that are likely to result in trade barriers with the UK's nearest and largest market from 31 Dec 2020 and an American administration in an election year that is struggling to control the pandemic and the resulting economic downturn.  Such policy would, of course, be justified by the 2016 referendum result and the 2019 general election though it is probably the case that the government won with remainder votes who were more afraid of Corbyn than they were of brexit.

The new relationship negotiations resumed in April as I noted on 18 April 2020 in Barnier and Frost talk at last and two rounds have actually taken place. In a press statement by Michel Barnier following the second round of future relationship negotiations with the UK on 24 April 2020, the EU chief negotiator warned of

"two very real deadlines that we are faced with and which have been set by law:

• 30 June 2020: Will we decide or not, before that date, and by joint decision with the British, to extend the transition period, according to the possibility that is foreseen in the Withdrawal Agreement?

• And, 31 December 2020 – the date of the ‘economic Brexit', following the ‘political Brexit' that took place at the beginning of this year: On this date, which will bring important and definite changes in many areas, will the United Kingdom leave the Single Market and Customs Union with or without an agreement with the EU?"

By a circular dated 29 April 2020, the Commission announced that it had reviewed and updated the plans that it had made for a British departure from the EU without a withdrawal agreement and has set them out in a number of sector readiness notices that can be found on its Getting ready for the end of the transition period page.

In his statement, Monsieur Barnier came close to accusing British officials of negotiating in bad faith. In the Political Declaration that accompanied the withdrawal agreement, both sides made commitments for the future framework that British negotiators refused to discuss except in the most general terms.  There is concern that the British government is failing to implement the provisions of the withdrawal agreement that would enable the border between Northern Ireland and the Republic of Ireland to remain open.  In order to monitor such implementation, the Commission has sought permission to open a representative office in Belfast which was refused by the Paymaster General on 27 April 2020 (see the letter from the Rt Hon Penny Mordaunt MP to Helga Schmid and Michel Barnier).  Further, the only British response to the draft treaty that the Commission proposed to the UK on 18 March 2020 has been a number of text proposals which Monsieur Barnier has been asked not to share with the member states or the European Parliament.

Negotiations began with the US Trade Representative on a trade agreement with the USA on 5 May 2020 after a two-month break with platitudinous statements on both sides (see Joint Statement of UK International Trade Secretary Liz Truss and USTR Robert Lighthizer  5 May 2020 Department for International Trade and Statement of USTR Robert Lighthizer on the Launch of U.S.-UK Trade Negotiations 5 May 2020 Office of the US Trade Representative).   It is worth remembering that any deal with the USA will have to be approved by the US Senate which will have concerns if a largely US brokered peace deal in Northern Ireland breaks down as a result of the failure to honour the commitments on Northern Ireland in the withdrawal agreement.

I shall be updating the EU new partnership negotiations page and the US trade agreement negotiations page.  Ideally, there should be a page on British involvement with the one belt one road initiative and the UK's relationship with China which is already providing much of the investment and technology for the UK's next generation of nuclear power stations, high-speed rail and 5G mobile communications but at the moment that relationship seems to be going nowhere.  Anyone wishing to discuss this article or any of the issues raised in it should call 020 3819 8725while lockdown continues or message me through my contact form.

Brexit Briefing - June 2019

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Jane Lambert

As the purpose of this website is to advise rather than to exhort, I will leave it to others to decide whether a Conservative leadership election is the best use of the time that the remaining 27 member states of the European Union allowed this country under art 50 (3) of the Treaty of European Union.  Having said that, the leadership contest cannot be ignored because both candidates seek to renegotiate the draft withdrawal agreement before that extension runs out.  Their respective plans for Bexit have been analysed succinctly by the YouTube channel TLDR (see Boris Johnson's Brexit Plan - Brexit Explained and Jeremy Hunt's Brexit Plan - Brexit Explained).

Even though both candidates stress that they hope to conclude a withdrawal agreement with the EU, preparations for the UK's departure without such as agreement are continuing in both the UK and the remaining member states.  On the whole, the EU appears to be more relaxed than the UK about the prospect probably because it believes that the UK will be hurt by a no-deal departure much more than the remaining member states (see my article EU Preparations for a "No-Deal" Brexit  2 July 2019). According to the Bank of England's Financial Stability Report and Record for July 2019, British financial institutions could probably survive the economic disruption and market volatility that is likely to result from a disorderly brexit. Indications of the preparedness of the rest of British industry are a lot less encouraging (see George Parker UK not ready for a no-deal Brexit, confidential cabinet note warns 12 June 2019 Financial Times).

One of the principal economic arguments for brexit has been that the UK could greatly increase its trade with the rest of the world if it were not obliged to impose the common external tariff (see Martin Howe QC Leaving the EU on WTO terms will pull down the barriers to world trade and cut prices for consumers 20 Aug 2019 Brexit Central).  Since the UK government served notice of its intention to leave the EU the Department for International Trade has concluded the following trade agreements:

• Andean countries
• CARIFORUM trade bloc
• Chile
• Eastern and Southern Africa (ESA) trade bloc 
• Faroe Islands
• Iceland and Norway
• Israel
• Liechtenstein
• Pacific states
• Palestinian Authority
• South Korea (agreed in principle and expected to sign shortly)
• Switzerland.

Note that those agreements make provision for intellectual property and geographical indications the latter of which I discussed in Geographical Indications after Brexit on 22 June 2019. The UK has also signed mutual recognition agreements with the United States, Australia and New Zealand.

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.

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.