Although there has been a lot of interest in the UK in the cabinet debate over the relative merits and demerits of maximum facilitation and the customs partnership and in the Lords' amendments to the European Unions (Withdrawal) Bill, there has not made much progress in the negotiations for a withdrawal agreement or a future partnership with the EU since April's Brexit Briefing. The stumbling blocks are, as they have always been, the border between Northern Ireland and the Irish Republic and the governance of any agreement that may be concluded between the UK and the remaining member states.
At the beginning of the month Ed Balls and Peter Sands of the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School published On the Rebound:Prospects for a US-UK Free Trade Agreementwhich concluded that a free trade agreement with the USA would be difficult to negotiate and probably not worth doing even if negotiations were successful (see Jane Lambert What Sort of Trade Deal (if any) could the UK negotiate with the USA?8 June 2018). The imposition of tariffs on imported steel and aluminium and the recriminations at the G7 meeting do not offer much reason for optimism.
It is stressed that nothing is agreed until everything is agreed. If an agreement over the stumbling blocks cannot be reached there will be no transition or implementation period. Without a withdrawal agreement, he UK will be in no more advantageous relationship with its former partners than any other third country and in a rather less advantageous position than some. There have already been warnings over the consequences of dropping out without an agreement such as shortages of food and medicines (see Civil Servants Warn of Food, Fuel, Medicine Shortages Without Brexit Trade Deal3 June 2018 Bloomberg) and the exclusion of British products under preferential rules of origin (see Notice to Stakeholders Preferential Rules of Origin 6 June 2018).
If there is to be an agreement with the EU it has to be reached by the Autumn otherwise there will be insufficient time for the parliaments of the member states and the European Parliament to consider it. It is by no means certain that that deadline will be met. While I continue to hope for the best it is increasingly important for clients and other readers to prepare for the worst.
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The argument for quitting the single market and customs union is that it will enable the British government to negotiate trade deals with countries outside the EU. On the face of it it is an attractive proposition as the economies of many of the countries in Asia and the Americas are growing more rapidly than those of our European neighbours.
Despite the rapid growth of China and India the largest of those countries remains the USA. With a GDP of US$19.4 trillion its economy is even larger than that of the EU and is currently growing more rapidly. It shares our language, common law and political traditions. We have been close allies since 1941 despite upsets like Suez and Grenada. It ought to be easy to negotiate a trade deal with the USA. Especially as the current incumbent of the White House has declared himself in favour of one.
At least that is what one might think but how far (if at all) is it a realistic expectation? Not very, according to On the Rebound:Prospects for a US-UK Free Trade Agreement, a report by Ed Balls and Peter Sands of the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School. Together with a team of research students from Harvard and King's College, London the authors interviewed senior British and American civil servants, experts, academics and business leaders and made the following findings:
"The UK needs a deal, but it is unclear how committed the US is",
"There is a clear power imbalance between the US and UK." Such imbalance lies not just in the relative economic disparity of the two countries but in the lack of experience of British officials in conducting trade negotiations.
"The UK must strike a deal with the EU before it can negotiate an FTA with the US."
The UK will have little to gain and will have to concede more on tariff reductions
than the EU offered in the Transatlantic Trade and Investment Partnership negotiations."
"The US demands on non-tariff and regulatory issues will be politically contentious
and difficult for the UK to meet."
"Negotiating non-tariff and regulatory issues will force the UK to choose between
regulatory alignment with the US or EU."
"The US cannot, or will not, concede on many British non-tariff and regulatory
objectives."
The researchers concluded that "a US-UK FTA is only going
to happen if the UK makes concessions that are unlikely to be politically acceptable and in any
case, promises relatively limited upside for UK business."
If Ed Balls and Peter Sands are right, there is no reason to suppose that negotiating a trade deal with the USA will be any easier than the negotiations over the withdrawal agreement and future partnership with the remaining EU countries. Even if terms can be agreed they are unlikely to be as favourable as those we enjoy with other EU states. Distance and freight costs will prevent manufacturers in the UK taking full advantage of the economies of scale that we enjoy right now. In other words even if an FTA with thre USA can be agreed it may not be worth the effort and concessions.
Should anyone 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.
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 originon 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 Patent29 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 Day26 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 Law8 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 Yet26 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 Dialogueof 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 UK4 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 meetings4 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.
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.
The most welcome aspect of the Prime Minister's Mansion House speech of 2 March 2018 were the following hard facts:
"Brexit will be no bed of roses: 'We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?
'Even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us.' Aside from the niggle that the initials 'ECJ' are no longer used as that tribunal is now known as the Court of Justice of the European Union ('CJEU') and has been for many years, I welcome that remark. It will make it easier to reach agreement on the withdrawal treaty and it may just make it possible for the UK to remain a party to the Uniform Patent Court Agreement. On the other hand, she omitted to say that the UK will lose its judge and advocate general on the Court who have hugely influenced its decisions since 1973.
No State Aids or Featherbedding: 'If we want good access to each other's markets, it has to be on fair terms. As with any trade agreement, we must accept the need for binding commitments - for example, we may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU's.'
Finally, some crumbs of comfort on the Uniform Patent Court ("UPC"). The first is that the legislative hurdles to British ratification of the UPC Agreement appear to have been cleared. Secondly, as I noted above, the Prime Minister is prepared to countenance some future role for the CJEU in British affairs after we quite the EU which removes one of the difficulties that I mentioned in my article What if anything can be salvaged from the UPC Agreement?26 Jan 2018 NIPC Law and my presentation to Queen Mary University London on 12 Feb 2018 (see My Contribution to the Discussion on the Implications of Brexit at Queen Mary University London on Monday 12 Feb 201817 Feb 2018). The third crumb is that the constitutional challenge to German ratification of the UPC agreement (Verfassungsbeschwerde gegen das Zustimmungsgesetz zu dem Übereinkommen vom 19. Februar 2013 über ein Einheitliches Patentgericht (EPGÜ)) has been listed for hearing in the German Constitutional Court in Karsruhe before Professor Dr Huber under case number 2 BvR 739/17. Fourthly, there was nothing unhelpful to the UPC in Title IV of Part 3 of the draft withdrawal agreement which covers intellectual property.
Anyone wishing to discuss this briefing or Brexit in general should call me on +44 (0)20 7404 5252 during normal office hours or send me a message through my contact form.
Jane Lambert
The Prime Minister's speech at the Mansion House on Friday has received a mixed reception. According to Toby Helm "most Conservative MPs and peers gave the prime minister a period of grace after Friday’s address." However, Lord Heseltine dismissed it as "more detail on a set of demands that the European Union had made clear all along it would never agree to" (see Tories’ Brexit unity fades as Heseltine slams May’s speech2 March 2018 The Guardian).
I hold no brief for the Prime Minister, but I think that is a little unfair. She did speak some home truths though I fear she may have pulled her punches:
Brexit will be no bed of roses: "We are leaving the single market. Life is going to be different. In certain ways, our access to each other's markets will be less than it is now. How could the EU's structure of rights and obligations be sustained, if the UK - or any country - were allowed to enjoy all the benefits without all of the obligations?"
"Even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us." Aside from the niggle that the initials "ECJ" are no longer used as that tribunal is now known as the Court of Justice of the European Union ("CJEU") and has been for many years, I welcome that remark. It will make it easier to reach agreement on the withdrawal treaty and it may just make it possible for the UK to remain a party to the Uniform Patent Court Agreement. On the other hand, she omitted to say that the UK will lose its judge and advocate general on the Court who have hugely influenced its decisions since 1973.
No State Aids or Featherbedding: "If we want good access to each other's markets, it has to be on fair terms. As with any trade agreement, we must accept the need for binding commitments - for example, we may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU's."
The reason Mrs May had to say these things is that there has been a lot of wishful thinking about Brexit. Some have argued that the shock of the departure of its third largest member state would rip the EU apart. That could happen but there are no signs of its happening yet. It is equally possible that the remaining member states could integrate more quickly and become stronger and more influential than ever. Another bit of wishful thinking is that German car manufacturers, Italian white goods makers and French farmers will force their governments to make concessions were we ever to play hardball. I have never understood that argument because we are not going to start making those goods in Britain or sourcing those goods from elsewhere. Tariffs might dent demand for EU goods and services but it won't destroy it and the business communities in those countries know it. The fact is that the UK is not negotiating from a position of strength and will on many issues have to take what the remaining member states have to offer or leave it.
Finally, the Institute for Government has produced an excellent, tabulated analysis of the PM's speech with "Area" in come column, "What the Prime Minister said" in another and "What this means" in the third (see The Prime Minister's Mansion House Brexit speech 2 March 2018 The Guardian). I was about to do my own analysis along similar lines but this is so much better.
Anyone wishing to discuss this article or Brexit in general should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.
The draft withdrawal agreement that the European Commission published on 28 Feb 2018 has to be welcomed. As every lawyer (if not every business person) knows, there comes a time in every negotiation when the provisions that appear to have been agreed must be committed to writing. Then and only then can potential deal breaking issues be identified and perhaps addressed. The sooner that is done the greater the chance of a successful outcome.
The thing that struck me most about the draft agreement is its length: 168 articles plus protocols on Ireland and Cyprus each with its own annexes compressed into 118 pages. I am surprised by how much has been agreed or is capable of agreement. Obviously there are a few hot issues such as those in the Protocol on Ireland that could scupper everything but there is so much more that has been, or can easily be, agreed.
The main body of the draft is divided into the following Parts:
Part 1 - Common Provisions
Part 2 - Citizens' Rights
Part 3 - Separation Provisions
Part 4 - Transition
Part 5 - Financial Provisions
Part 8 - Institutional and Final Provisions.
Part 1 consists of 7 articles the most important of which is art 1:
"This Agreement sets out the arrangements for the withdrawal of the United Kingdom of Great Britain and Northern Ireland ('United Kingdom') from the European Union ('Union') and from the European Atomic Energy Community ('Euratom')."
There follow definitions and interpretive provisions.
Arts 8 to 35 constitute Part 2 which are divided into 4 Titles. The first contains general provisions such as definitions and basic principles such as continuation of residence and non-discrimination. Title II divides into 3 chapters on rights related to residence, workers and the self-employed and recognition of professional qualifications respectively. Title III is on social security and Title IV contains final provisions.
The bulk of the draft treaty (arts 36 to 120) is in Part 3 which is also divided into Titles some of which are further subdivided into Chapters. Title I is on goods placed on the market. Title II on customs procedures, Title III on VAT and other duties, Title IV on intellectual property, Title V on police and judicial cooperation in criminal matters, Title VI on judicial cooperation in civil and commercial matters, Title VII on data protections, Title VIII on public procurement and similar issues, Title IX on Euratom and related issues, Title X on EU administrative and judicial procedures, Title XI on administrative cooperation, Title XII on privileges and immunities and Title XIII on other issues relating to the EU. Interestingly, the provisions of Title IV on intellectual property are silent on the Unified Patent Court and unitary patent. They cover the conversion of EU trade marks, registered Community designs and Community plant varieties into the corresponding British rights and the adaptation of provisions on supplementary protection certificates and the exhaustion of rights.
Part 4 contains 5 articles (arts 121 - 126) on the transition period.
Part 5 (arts 127 to 150) is divided into 7 Chapters covering currency (Chapter 1), the UK's contribution to the budget up to 2020 (Chapter 2), the European Central Bank (Chapter 3), the European Investment Bank (Chapter 4), European Development Fund (Chapter 5), Refugees in Turkey (Chapter 6) and Common Defence and Security (Chapter 7).
Part 6 spells out the continued jurisdiction of the Court of Justice of the European Union in the implementation period and beyond and the establishment at art 157 (1) of a joint committee to supervise and implement the agreement and resolve disputes.
This instrument is, of course, only a draft and it is likely to be changed over time but it sets out the likely framework of the withdrawal agreement contemplated by art 50 (2) of the Treaty on European Union as well as the transition or implementation period between 29 March 2019 and 31 Dec 2020. Should anyone wish to discuss this draft, he or she should contact me during office hours on +44 (0)20 7404 5252 or send me a message through my contact form.
"To my great surprise and joy our government's representatives achieved sufficient progress in their negotiations with the Commission on citizens' rights, the Irish border and the financial settlement for the Commission to recommend to the Council that "sufficient progress has been made in the first phase of the Article 50 negotiations with the United Kingdom" (see the Commission's press release Brexit: European Commission recommends sufficient progress to the European Council (Article 50)8 Dec 2017)."
Whether or not that is the case, Monsieur Michel Barnier, the Chief Negotiator for the Commission, does not appear to be buying any, In a speech that he delivered on 9 Feb 2018, Monsieur Barnier noted that both sides acknowledge the need to preserve the Good Friday agreement but added
"it is important to tell the truth. A UK decision to leave the Single Market and the Customs Union would make border checks unavoidable."
The British government appears to believe that there are "specific solutions to the unique circumstances on the island of Ireland" but it has not yet announced what they are. In the meantime, the Commission seeks to include in the withdrawal agreement a guarantee that there will be no hard border between Northern Ireland and the Irish Republic in any circumstances.
In the same speech, Monsieur Barnier made clear that the offer of a transition or implementation period between 29 March 2019 and 31 Dec 2020 "is not a given." He flagged up plenty of potential deal breakers of which the role of the Court of Justice of the European Union on the resolution of any disputes on EU law, the rights of EU citizens who enter the UK during the implementation period, the British government's insistence on rights to object to new laws affecting its interests and to opt into new laws on Justice and Home Affairs are just a few.
If negotiations break down, the country will exit the EU in just over 14 months time without a deal. That would be a problem for many in the remaining member states but not a disaster. For the UK it could well be worse. If the BuzzFeed disclosures are to be believed, that would be the worst possible outcome for many regions of the UK and much of British industry.
Anyone wishing to discuss this article or Brexit in general should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.
The month started quietly with a period of contemplation on the terms of the interim agreement on citizens' rights, the Irish border and the financial contribution and ended in a ruckus with BuzzFeed's publication of a leaked government memo that predicted bad outcomes for every type of Brexit (see Alberto Nardelli This Leaked Government Brexit Analysis Says The UK Will Be Worse Off In Every Scenario29 Jan 2018 BuzzFeed). That led to ministers' dissing their own civil servants and a back bench Tory MP accusing HM Treasury of all kinds of skulduggery.
That same back bencher provided the only drama of the month when he asked the Secretary of State for Exiting the European Union whether the UK would be a vassal state between 29 March 2019 and 31 Dec 2020 at a hearing of the House of Commons Select Committee on Exiting the European Union on 24 Jan 2018 (see Will the UK be a Vassal State during the Implementation Period?30 Jan 2018). Surprisingly Mr Davis came close to admitting to the committee that it would though only for a short period. Mrs May subsequently intervened to say that we would not admit new arrivals from the EU member states on the same terms as before and that we would seek a new mechanism to challenge any new laws that would harm our interests.
As to the relationship that will subsist between Britain and the EU after the 31 Dec 2020, the Chancellor of the Exchequer and the Secretary of State for Brexit called for "a new economic partnership with the EU – the most ambitious in the world – that recognises the extraordinary levels of interconnectedness and cooperation that already exist between us" in a joint article for theFrankfurter Allgemeine Zeitung." To continental eyes that looks very like cherry picking or having your cake and eating it. Michel Barnier anticipated that speech and warned
"A country leaving this very precise framework and the accompanying supervision gains the ability to diverge from it but by the same token loses the benefits of the Internal Market. Its financial service providers can no longer enjoy the benefits of a passport to the Single Market nor those of a system of generalised equivalence of standards."
On 17 Dec 2017 Daniel Alexander QC, Chair of the Intellectual Property Bar Association, together with the Chair of the IP Law Committee of the Law Society of England and Wales and the Presidents of the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys ("CIPA") and the IP Federation, signed a memorandum to the Government entitled Intellectual property (IP) law and Brexit Summary of main requests for the UK government a copy of which can be downloaded from the CIPA website (see IP and Brexit - Key Requests to Government). One of those requests is ratification and continued UK participation in the Unified Patent Court but that looks increasingly unlikely as exit day approaches. The question for now is what if anything can be salvaged from the UPC Agreement. I wrote about that topic on 26 Jan 2018 in NIPC Law and I am due to talk about it to Queen Mary University London on 12 Feb 2018 (see Implications of Brexit on Intellectual Property Law19 Jan 2018 NIPC Law).
Anyone wishing to discuss this article or Brexit in general should call me on +44 (0)29 7404 5252 during office hours or send me a message through my contact form.
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