Thursday, 26 April 2018

Withdrawal Agreement - Not a done deal yet

Hanover from space
Author NASA/Chris Hadfield
Licence Copyright waived by copyright owner



























Jane Lambert

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 Messe 23 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 negative the progress that has already been made and warned 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 afterwards proponents of British withdrawal from the EU 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 as to 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 the EU than trade with the EU.  Professor Grey suggested a possible third in Business gets vocal about Brexit 12 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  a supranational institution like the Commission listen to those of its several 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 Last 3 March 2018). But there again it may not.  My advice to British business is the same as Monsieur Barnier's to businesses in the 27 remaining states: "waste no time and prepare for all scenarios."

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.

Wednesday, 4 April 2018

Brexit Briefing - March 2018


Standard YouTube Licence


Jane Lambert

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.

The European Parliament's Guidelines on the framework of future EU-UK relations European Parliament pursuant to its resolution of 14 March 2018 on the framework of the future EUUK relationship propose that any future relationship should be based on the following four pillars:
  • trade and economic relations,
  • 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."
It is perhaps for  that reason that the Fourth Report of Session 2017–19 on The future UK-EU relationship by the Exiting the EU Committee of the House of Commons published on 4 April 2018 keeps as many options on the table as possible.

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.

Wednesday, 7 March 2018

Brexit Briefing - February 2018

Author Mikelo 
Licence Creative Commons Attribution Share Alike 2.0 Generic
Source: Wikimedia Commons



















Jane Lambert

The most significant event last month was the publication by the European Commission of a draft agreement for the withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community on 28 Feb 2018.  It has not yet been presented to the British government as it must first be discussed by the governments of the remaining member states and the Brexit steering group of the European Parliament,  I sketched out its structure and main provisions in The Draft Withdrawal Agreement: Getting Down to Business at Last 3 March 2018.

There has been some grumbling from the British side, particularly over the border between Ireland and Great Britain and no doubt some concessions will be made here and there by both parties but the basic shape and content of the agreement contemplated by art 50 (2) of the Treaty of European Union is unlikely to be very different.  There is not much room for movement on the European side because the Commission's negotiators are bound by the Council's Guidelines of the 29 April 2017.  Moreover, the draft is said to be based on the Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union (see No Fudge - the Next Stage of Negotiations between the EU and UK 12 Feb 2018).  So if we want a trade deal of any kind with the remaining member states of the European Union we will have to accept something like that draft. The alternative is no deal at all.

The most welcome aspect of the Prime Minister's Mansion House speech of 2 March 2018 were the following hard facts:
  1. "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?
  2. '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. 
  3. 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.'
There are still folk who think that cake exists for eating and cherries for picking but it does not appear that the Prime Minister is one of them (see Mrs May's Mansion House Speech: Some Home Truths At Last 4 March 2018).

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 2018 17 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.

Sunday, 4 March 2018

Mrs May's Mansion House Speech: Some Home Truths At Last


Source Guardian,  Standard YouTube Licence

 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 speech 2 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:
  1. 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?"
  2. "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. 
  3. 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.

Saturday, 3 March 2018

The Draft Withdrawal Agreement: Getting Down to Business at Last

Jane Lambert











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.

Monday, 12 February 2018

No Fudge - the Next Stage of Negotiations between the EU and UK

Author Siona Watson (originally posted to Flickr as STP62099)
Licence CC BY 2.0
Source Wikimedia Commons
















Jane Lambert

In my December Brexit Briefing 9 Jan 2018 I wrote:
"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)."
There are some, particularly in the UK, who regard  Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union that made it possible for the negotiations to move beyond citizens' rights, the financial settlement and Ireland as something of a fudge.

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.

Tuesday, 6 February 2018

Brexit Briefing - January 2018

Michel Barnier
Author Foto-AG Gymnasium Melle
 Licence CC BY-SA 3.0
Source Wikimedia Commons























Jane Lambert

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 Scenario 29 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 the Frankfurter 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."
In other words we can have a free trade agreement and it may even have some provisions for the supply of services but it will fall far short of the frictionless trade conditions that we now enjoy (see Davis and Barnier set out their Negotiating Strategies for the Next Phase of Brexit Talks 11 Jan 2018).

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 Law 19 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.

Tuesday, 30 January 2018

Will the UK be a Vassal State during the Implementation Period?















Jane Lambert

On 24 Jan 2018 the Rt Hon David Davis MP, Secretary of State for Exiting the European Union, gave evidence to the House of Commons Select Committee on Exiting the European Union. You can follow the proceedings on the parliamentlive.tv player. At about 10:40 Mr Jacob Rees-Mogg asked the Secretary of State whether he would agree that between 23:00 on the 29 March 2019 and the 31 Dec 2020 the United Kingdom would be a vassal state of the European Union.

Of course, Mr Davis did not agree but I did not find his reasoning particularly convincing and neither (so it would appear) did Mr Rees-Mogg. Indeed, I have seen at least one newspaper report that even Sir Nick Clegg agreed with Mr Rees-Mogg on that point.  As I remarked in Sur Le Pont David Non ...... Mr Davis's "Bridge 26 Jan 2018,  I don't agree with Mr Rees-Mogg on much but it is hard to disagree with his description of a status by which we shall be subject to laws of which we shall have no part in making.

That was only the first of several questions that Mr Rees-Mogg asked Mr Davis about the negotiations and Mr Davis's answers to the other questions were less than convincing. Mr Davis looked very uncomfortable throughout Mr Rees-Mogg's questioning.  Now Mr Davis is not an unintelligent man. He must have anticipated that line of questioning. Why, then, did he put himself through that ordeal?

I think at least part of the answer lies in an undated letter to business leaders that Mr Davis signed together with the Chancellor of the Exchequer and the Secretary of State for Business, Energy and Industrial Strategy which appeared on the Department for Exiting the EU's website on 26 Jan 2018.  In that letter the ministers acknowledged that many businesses  need time to adjust to the terms of the UK's new relationship with the EU and to put in place new arrangements. This is why the UK’s and EU’s access to each other’s markets should continue on current terms, so that there will only be one set of changes at the end of the implementation period.  It is hard to deny that the UK will be a vassal state during the implementation period but if that  is what it takes to maintain business confidence, then so be it.

The representatives of the governments of the 27 remaining member states have now agreed Supplementary directives for the negotiation of an agreement with the United Kingdom of Great Britain and Northern Ireland setting out the arrangements for its withdrawal from the European Union and they are substantially on the lines mentioned in Sur Le Pont David Non ...... Mr Davis's "Bridge".  The Commission has warned the British negotiators that there can be no backsliding from the Christmas agreement.  Also, Monsieur Barnier has noted in his press statement on the adoption of negotiating directives on transitional arrangements that the withdrawal negotiations are not yet settled and that "sufficient progress" does not mean "full progress". In order to hold us to our promise, the Commission requires us to put them into writing.   For that reason the Commission has announced that it will publish in due course a draft legal text of the withdrawal agreement, of which the transitional arrangements shall form part.

Should anyone wish to discuss this article or Brexit in general, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

Friday, 26 January 2018

Sur Le Pont David Non ...... Mr Davis's "Bridge"

By Chiugoran (Own work) 
CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)
via Wikimedia Commons



















Jane Lambert

In my December Brexit Briefing 9 Jan 2018 I listed the terms of the transitional or implementation period between 30 March 2019 and 31 Dec 2020:
  • "There should be no "cherry picking": The United Kingdom will continue to participate in the Customs Union and the Single Market (with all four freedoms). 
  • The Union acquis should continue to apply in full to and in the United Kingdom as if it were a Member State. Any changes made to the acquis during this time should automatically apply to the United Kingdom.
  • All existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will apply, including the competence of the Court of Justice of the European Union.
  • The United Kingdom will be a third country as of 30 March 2019. As a result, it will no longer be represented in Union institutions, agencies, bodies and offices.
  • The transition period needs to be clearly defined and precisely limited in time. The Commission recommends that it should not last beyond 31 December 2020."
Mr Jacob Rees-Mogg MP has described that as vassal status and while I don't agree with him on much it is hard to disagree with his description of a status in which we shall be subject to laws of which we shall have no part in making.

It is the Rt Hon David Davis MP's job to dislodge the remaining 27 EU member states from that position or to sell that deal to the British people if he is unable to shift the remaining states. In a speech in Teesport entitled Implementation Period – A bridge to the future partnership between the UK & EU 26 Jan 2018 the deal selling process appears already to have begun.

Mr Davis described the implementation period as a "bridge ....... to our new relationship with the European Union after Brexit." Mr Davis's former colleague, Stephen Dorrell, lambasted that bridge on tonight's Any Questions as a bridge with missing arches and that put me in mind with that famous bridge in Avignon where they lead a merry dance round and round (my translation of On y danse tous en rond).

And this is how Mr Davis proposes to sell the above terms:
"For such a period to work, both sides must continue to follow the same, stable set of laws and rules.
Without compromising the integrity of the single market, and the customs union to which we will maintain access on current terms.
Maintaining the same regulations across all sectors of the economy — from agriculture to aviation, transport to financial services, as part of a new international treaty.
In keeping with the existing structure of EU rules that will allow a strictly time-limited role for the European Court of Justice during that period.
During this implementation period, people will of course be able to travel between the UK and EU to live and work.
And as agreed in December, we will fulfil the financial commitments we have made during the period of our membership."
Mr Davis acknowledges that
"Of course, we will leave the institutions of the Union next March"
But that won't matter because "it usually takes around two full years for major legislation to make its way through the European Union system into law – virtually all of the laws that will come into effect during this time will have been drafted while the United Kingdom was a Member State." Not necessarily, Mr Davis. When the EU wants to do something it can move very quickly indeed.  Remember the export bans on British beef after the bovine spongiform encephalopathy outbreak or the livestock movement restrictions to contain foot and mouth disease.

It is clear from the slides that the Commission has uploaded to its website on police and judicial cooperation, security, defence and foreign policy, governance, aviation and fisheries that we can expect no special favours as a third country whether during the implementation period or afterwards.

Should anyone wish to discuss this article or Brexit in  general, call me on +44 020 7404 5252 during office hours or send me a message through my contact form. 

Thursday, 11 January 2018

Davis and Barnier set out their Negotiating Strategies for the Next Phase of Brexit Talks


Both Mr David Davis MP and Monsieur Michel Barnier have been on their travels. Mr Davis to Germany and Monsieur Barnier to Belgium.  Both had something to say about Brexit. Mr Davis published an article in the Frankfurter Allgemeine Zeitung calling for a deep and special partnership with the EU which he wrote with the Chancellor of the Exchequer (a translation of which appears on the Department for Exiting the EU website) on 10 Jan 2018.  The day before, Monsieur Barnier made a speech at the Trends Manager of the Year event which anticipated and answered the article by Mr Davis and Mr Hammond (see Commission press release Speech by Michel Barnier at the Trends Manager of the Year 2017 event 9 Jan 2018).

The British argument is encapsulated in the following words:
"As two of Europe’s biggest economies, it makes no sense to either Germany or Britain to put in place unnecessary barriers to trade in goods and services that would only damage businesses and economic growth on both sides of the Channel.
So as Brexit talks now turn to trade, the UK will look to negotiate 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.
When we leave the European Union, we will leave the Customs Union and Single Market, but in agreeing a new model of cooperation, we should not restrict ourselves to models and deals that already exist.
Instead we should use the imagination and ingenuity that our two countries and the EU have shown in the past, to craft a bespoke solution that builds on our deeply integrated, unique starting point to maximise economic cooperation, while minimising additional friction.
The economic partnership should cover the length and breadth of our economies including the service industries — and financial services.
Because the 2008 Global Financial Crisis proved how fundamental financial services are to the real economy, and how easily contagion can spread from one economy to another without global and regional safeguards in place."
By publishing that article in an influential newspaper the Secretary of State and Chancellor were appealing to the German public and in particular to those German businesses that have invested in the UK, export a lot of goods to us or hope to raise capital in London.  The message is that we are an important market and London is an important financial centre and you wouldn't like anything nasty to happen to either of those, would you?  So come on, chaps. Be sensible.  Have a word with Mrs Merkel particularly while she needs all the support that she can get to form a government and get her to rein in the attack dogs in the Commission art 50 task force.

The principal attack dog has already thought of that and this is his answer.  He gave it in a country "which has long had close commercial and political ties with the United Kingdom." As Monsieur Barnier acknowledged, those ties go back a long way:
"There was a time when England's prosperity depended on the wool trade, particularly with Flanders. A reduction in the supply of English or Scottish wool yarn could threaten the jobs of thousands of Flemish artisans.
And some centuries later, it was an Englishman, William Cockerill, who imported the first machines for spinning wool to Verviers, in 1799, and then the steam engine to Seraing, making Liège the starting point for the industrial revolution on the Continent."
And, as he also acknowledged, the link between Belgium and the United Kingdom is still important:
"Today the UK is still an important partner for your country, representing 7 % of Belgian trade in goods."
But not that important.
"But, at the same time, 61 % of your trade is with the other Member States of the European Union. Almost 10 times more!"
As he added a few lines later:
"Our Single Market will still have 440 million consumers and 22 million businesses after the UK's departure."
And that gives it bargaining power not only in the Brexit negotiations but in all the markets outside Europe with which our Department for International Trade wish to enter trade deals including the former dominions in the Antipodes:
"by continuing to build a 'global Europe', which is preparing to offer our businesses new opportunities to export to Australia and New Zealand."
In their article Messieurs Davis and Hammond call for  "a deep and special partnership" with the EU but nobody on our side has actually spelt out what that means.  "However", as Barnier observed, "we can proceed by deduction, based on the Union's legal system and the UK's red lines." He added:

"By officially drawing these red lines, the UK is itself closing the doors, one by one."
The British government wants to end the free movement of persons, which is indivisible from the other three freedoms. It has therefore indicated its intention of leaving the Single Market.
The British government wants to recover its independence to negotiate international agreements. It has therefore confirmed its intention of leaving the Customs Union.
The UK no longer wishes to recognise the jurisdiction of the Court of Justice of the European Union, which guarantees the application of our common rules.
It follows that the only model possible is a free trade agreement, which could obviate the need for trade barriers, such as customs duties, and could facilitate customs procedures and product certification.
This will of course be adapted to the specificities of the relationship between the EU and the UK, in the same way that our agreement with Canada is not identical to our agreements with Korea or Japan."
It is obviously in the interests of all parties that we negotiate a comprehensive an agreement as possible  but, as Monsieur Barnier observed, "a free trade agreement, however ambitious, cannot include all the benefits of the Customs Union and the Single Market." With regard to financial services, a free trade agreement may include provisions on regulatory cooperation as is the case with Japan or a regular dialogue like the one with the United States but
"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."
As Monsieur Barnier added, it is not a question of punishment or revenge but a trading relationship with a country that does not belong to the European Union can never be frictionless.

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.


    Withdrawal Agreement - Not a done deal yet

    Hanover from space Author  NASA/Chris Hadfield Licence Copyright waived by copyright owner Jane Lambert ...