Caribbean Trade Law and Development

Year: 2016

  • What may a Trump presidency mean for future US-Caribbean relations?

    What may a Trump presidency mean for future US-Caribbean relations?

    Alicia Nicholls

    In what for many pollsters and poll watchers was an astounding turn of events reminiscent of the June 23rd Brexit vote decision in the United Kingdom (UK), the American people have chosen the Republican presidential nominee, Mr. Donald J. Trump, to become their 45th president. Mr. Trump, a billionaire real estate developer who has never held elective office, beat veteran campaigner and Washington establishment favourite, former Secretary of State, Mrs. Hillary Clinton despite late polls predicting a slim victory for Mrs. Clinton.  In addition to winning the White House, the Republicans have also retained control of both houses of Congress.

    The merits and demerits of a Trump presidency will dominate news headlines for the next few days and perhaps years. However, we in the Caribbean must now pivot from our fascination with what was a surprising conclusion to the US Presidential Election campaign of 2016, to consider what will be the possible implications of a Trump presidency for future US-Caribbean relations.

    Many may wonder why we in the Caribbean, like other parts of the world, so keenly follow the US presidential elections. After all, unlike Mexico, Syria, Russia and Iran, Caribbean countries did not feature in any of the major foreign or economic policy discussions, and the region has lost much of its geostrategic importance to Washington since the end of the Cold War.

    The reasons why the US elections matter to us are simple. Firstly, the US is a major trading partner for many Caribbean countries, a provider of foreign aid and a foreign policy ally. Secondly, for several Caribbean countries, the US is also the largest source market for tourist arrivals.  Thirdly, the US is home to the largest population of persons of Caribbean descent living outside of the Caribbean.  As such, any change in US foreign, economic and commercial policy will have implications for the small open economies of the Caribbean region.

    Trade Policy

    A central plank of now President-elect Trump’s campaign to “Make America Great Again” is to “negotiate fair trade deals that create American jobs, increase American wages, and reduce America’s trade deficit”.It is expected that there will be dramatic changes to US trade policy under a Trump Presidency towards a more zero-sum, protectionist approach. This will have implications for US-Caribbean trade relations, which have not always been smooth.

    Outside of the Dominican Republic which is a party to the US-Central America and Dominican Republic Free Trade Agreement (CAFTA-DR), Caribbean States do not have a free trade agreement with the US. Most Anglophone Caribbean countries, however, benefit from unilateral access to the US market for most goods under the Caribbean Basin Initiative, a legacy from the Reagan era. The preferences extended under CBERA are non-reciprocal; Caribbean countries do not have to confer reciprocal access to US originating goods. They are also unilateral which means preferences can also be unilaterally revoked by the US. Some Caribbean countries also benefit from the United States’ Generalised System of Preferences (GSP), another unilateral, non-reciprocal regime.

    It is unclear what would be the future of these unilateral non-reciprocal preference schemes under a Trump presidency. Perhaps one saving grace is that these programmes are generally seen to be a benefit to US manufacturing and jobs, and the region has a trade deficit with the US. According to the Report to Congress released in December 2015, “[t]he value of U.S. exports to CBERA beneficiary countries grew 2.5 percent in 2014, exceeding the growth rate for total global U.S. exports, which grew 2.1 percent”.

    On a more sober note, US-Caribbean trade relations have encountered many bumps over the years, including the famous bananas wars in which the US and Latin American countries successfully challenged the European Union’s preference regime for bananas from African, Caribbean & Pacific (ACP) countries in the World Trade Organisation (WTO).

    More recently, Antigua & Barbuda challenged the US’ restriction on the cross-border supply of online gambling services from Antigua & Barbuda in the World Trade Organisation’s dispute settlement mechanism. After the US lost its appeal and failed to comply with the Appellate Body’s ruling, Antigua & Barbuda was authorised to retaliate through the suspension of concessions and obligations to the United States in respect of intellectual property rights. However, to this day Antigua & Barbuda has not received any compensation from the US following the rulings.

    There has been little progress on either the US-Antigua gambling dispute or on the rum dispute which Caribbean states have been hesitant to take to the WTO. It remains to be seen whether any progress will be made under a President Trump whose only stated concern in regards to trade relations is for “American jobs, wages and trade deficit” and who has hinted at withdrawing the US from the WTO.

    Immigration and Race Relations

    Much of Mr. Trump’s anti-immigrant rhetoric has been against Mexicans, as exemplified by his promise to build a wall along the US’ border with Mexico. The Caribbean diaspora in the US, however, may be impacted by his immigration policies as well. In an interesting article on Caribbean migration to the US, Zong and Batalova noted that “the United States is the top destination for Caribbean emigrants, accounting for more than 60 percent of the 6 million Caribbean emigrants worldwide”.

    Immigration has for quite some time been a touchy subject in US-Caribbean relations, mainly in regards to the mass deportation of those Caribbean nationals who have committed crimes in the US. The main argument advanced by Caribbean governments is that many of the deportees were socialised in the US and are sent back to the Caribbean after serving time in US prisons as hardened criminals. They also argue that these deportees have little to no cultural or familial ties to the Caribbean which makes their integration into Caribbean society difficult. Such deportations have been blamed by regional politicians for the increase in criminality in the region.

    Mr. Trump’s 10-point plan for immigration, includes not only increasing the deportation of criminals, but establishing immigration controls, ensuring that open jobs are offered to American workers first, banning immigration from certain countries, ending sanctuary cities and reforming legal migration. Not only will those living illegally be affected, but there may be implications for that vast majority of Caribbean immigrants living legally and making a solid contribution to US society. He has spoken of a “complete and total shutdown of Muslims entering the US”. What does that mean for the Muslim minority in some Caribbean countries who may wish to visit or migrate to the US?

    A less discussed issue is that of Trump’s possible impact on race relations in the United States. Most Caribbean immigrants are either mainly black or Latino so this dovetails with the immigration issue. Mr. Trump has had a checkered past on race issues, including, inter alia, calling Mexican immigrants “rapists”, supporting the Birther Movement which sought to discredit America’s first African-American president (President Obama) as a foreigner, and being prosecuted by the US Justice Department along with his father for refusing to rent to black tenants during his early years. To what extent can a Trump presidency, whose open endorsement by the KKK and other white nationalists raised concerns, begin to mend race relations? For instance, what will be his future policies on stop and frisk and on police brutality against minorities, particularly against African-American males?

    Climate Change

    Climate change is an existential issue for the world, and particularly for small island developing states in the Caribbean, which, despite their negligible contribution to global greenhouse gas emissions, have been the most vulnerable to the adverse and deadly effects of climate change.  As I indicated in a previous article on this subject, the election of Mr. Trump, a climate change sceptic, will be weighing on the minds of officials at the climate talks in Marrakech, Morroco over the next weeks.

    Mr. Trump, has famously called climate change a “Chinese hoax” and has gone as far as threatened to cancel the Paris Agreement. Although it would take about four years before the US can formally withdraw from the Paris Agreement, in the intervening time President Trump can still undo the US’ progress on climate change action by overturning the executive actions President Obama has implemented to fight climate change, cancelling funding for clean energy initiatives, and reducing and eliminating aid to developing countries for climate change adaptation and mitigation.

    It also means that there may be little to no US support for global climate change action, a frightening prospect if the international community is to meet the Paris Agreement’s goal of “holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius”.

    Foreign Aid

    According to a 2016 report “US Foreign Assistance to Latin America and the Caribbean: Recent Trends and FY2016 Appropriations”, since 1946, the LAC region has received more than $160 billion of assistance (in constant 2013 dollars. This aid has included assistance in fighting crime and drugs trafficking, as well as for climate change mitigation and adaptation.  However, foreign aid saw spending cuts under President Obama as the US sought to rein in its budget deficits.

    Mr. Trump has not said much in his campaign plans on his views towards foreign aid, though one can conclude that his more inward looking policies would suggest that he will probably be in favour of less aid for the region if this is not in sync with his wider foreign policy goals. It will be left to be seen the extent to which the LAC region will continue to receive aid under a Trump presidency and what would be the aid priorities.

    Withdrawal of Correspondent Banking

    Indigenous banks in the Caribbean have been seeing the restriction or termination of correspondent banking relationships by international banks, many of which are US-based. Caribbean governments have been engaging in high-level advocacy and have targeted relevant US departments. There has so far been limited success. To what extent will Mr. Trump and his future Secretary State and Treasury Secretary be concerned with the problems of Caribbean economies which face exclusion from the global trade and financial system if this issue goes on unabated?

    Cuba-US Relations

    President Obama’s presidency saw a rapprochement in US-Cuba relations. Since the early 1960s, successive US governments have imposed an illegal economic, commercial and financial embargo on Cuba which is not only contrary to international law but has hindered the country’s economy development.  In December 2014 US Mr. Obama outlined a new direction to normalise Cuba-US relations. Efforts at normalisation since 2014 have included, inter alia, the removal of Cuba from the US State Sponsors of Terrorism List in May 2015, the re-opening of embassies in July 2015 and the progressive relaxation of some sanctions.

    The prospect of normalisation of US-Cuba relations appears bleak now as President-elect Trump has consistently supported the embargo against Cuba. However, it remains to be seen whether he will reverse some of the executive actions President Obama has made and whether he will impose additional sanctions.

    So what does this mean for future US-Caribbean relations?

    The American people have made their choice and while it may not have been an internationally popular one, what is done is done. What Caribbean leaders need to consider going forward is what will be the priorities for them in regards to their relations with the Trump White House. And how will they create constructive dialogue and meaningful action on issues such as the on-going gambling and rum trade disputes, security, deportations, correspondent banking and climate change?

    It is no secret that since the end of the Cold War the Caribbean has lost much of its geostrategic significance to Washington. However, the geographic proximity of the Caribbean as the US’ “backyard” means that US-Caribbean cooperation remains crucial to US national security on issues of mutual interest such as drug enforcement, transnational organised crime, money laundering and terrorist financing. In June 2016  H.R. 4939 – United States-Caribbean Strategic Engagement Act of 2016, a bi-partisan bill sponsored by New York Representative Eliot Engel (Democrat) passed without objection in the House and was referred to the Senate Committee on Foreign Relations. The objective of the law is “to increase engagement with the governments of the Caribbean region, the Caribbean diaspora community in the United States, and the private sector and civil society in both the United States and the Caribbean, and for other purposes”. What will be the future of this initiative?

    What is clear is that there needs to be constructive dialogue and re-engagement with the US. How successful will this be under a Trump presidency is anyone’s guess. His campaign rhetoric appears to foreshadow a future US foreign policy that will be a lot more isolationist, inward-looking and protectionist than seen in recent times. With a Republican majority in Congress, Mr. Trump will likely have unfettered power to push through his agenda, however good or bad.

    On the flip side, it is entirely possible that Mr. Trump may soften his stance on some of his most contentious issues. For instance, in his victory speech he adopted a more conciliatory tone both towards to his opponent Mrs. Clinton and towards the international community, stating “All people and all other nations. We will seek common ground, not hostility; partnership, not conflict.” Another thing is that Mr. Trump’s policy proposals have been generally vague on specifics. There are many unknowns at this stage. We also have no idea as yet, besides speculation, on who will be the members of his cabinet, including key posts such as Secretary of State and Treasury Secretary. It is also unclear where Mr. Trump stands on some issues with importance to the region, including on offshore financial centres and the withdrawal of correspondent banking.

    While President-elect Trump’s campaign proposals and rhetoric give us much food for thought, there remains much uncertainty about what a Trump presidency may actually portend for the region. What is certain, however, is that there will likely be a new tone set for US-Caribbean relations going forward. Caribbean leaders will need to be pro-active, united and strategic as they seek to engage constructively with what will be at least a four-year Trump administration when Mr. Trump assumes office in January 2017.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Paris Climate Change Agreement Enters into Force: What next?

    Paris Climate Change Agreement Enters into Force: What next?

    Alicia Nicholls

    “Humanity will look back on November 4, 2016, as the day that countries of the world shut the door on inevitable climate disaster and set off with determination towards a sustainable future.” – Joint Statement by Patricia Espinosa, UNFCCC Executive Secretary and Salaheddine Mezouar, President of COP22 and Minister of Foreign Affairs and Cooperation of the Kingdom of Morocco

    It is with these poignant words that United Nations (UN) Climate Chief, Patricia Espinosa, and President of COP22 and Minister of Foreign Affairs and Cooperation of the Kingdom of Morroco,  Salaheddine Mezouar, heralded the entry into force of the Paris Agreement just shy of twelve months after it was agreed to by nearly 200 parties at the UNFCCC’s Twenty-first Conference of the Parties (COP-21) in Paris, December 2015. November 4 was indeed a momentous day for the global community and planet Earth and the Agreement’s early entry into force signals countries’ strong stated commitment to global climate action. However, the hard work now begins.

    Background

    The historic Paris Agreement sets the overarching framework for global climate action. It is the culmination of years of hard-fought negotiations and compromise. Inter alia, countries around the world have committed themselves to “holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5  degrees Celsius.”

    This more ambitious latter threshold of “1.5 degrees Celsius” was strongly advocated for by Small Island Developing States (SIDS) which, despite their negligible contribution to global greenhouse gas emissions, are the most vulnerable to the adverse and deadly effects of climate change. This harsh reality was reiterated in October 2016 when Haiti was struck by Hurricane Matthew, which took 1,000 innocent lives and has left 800,000 persons without food. The Bahamas, parts of Cuba and also of the southeastern United States also felt some of Matthew’s fury. Outside of more devastating weather events and changing weather patterns, some of the other effects of climate change include coral bleaching, sea level rise and beach erosion, which have implications for fisheries, tourism and agriculture, industries upon which many small states’ economies and livelihoods depend.

    This universally accepted climate change accord was signed by over 190 parties on Earth Day (April 1, 2016). However, the Agreement could have only entered into force once at least 55 countries accounting for at least an estimated 55% of global greenhouse gas emissions had ratified the Agreement. This threshold was reached on October 5, 2016 and the Agreement entered into force 30 days later on November 4, 2016. According to UNFCCC, ninety-seven (97) countries accounting for an estimated two-thirds of global greenhouse gas emissions have ratified. Most major  greenhouse gas emitting parties, including the US, China, the European Union and India, have ratified the Agreement.

    It’s Show time!

    It is one thing to sign off on the dotted line. It is another thing to actually implement the Agreement. In regards to the fight against climate change, we are quickly reaching the point of no return. Here are some not so fun stats:

    • Global greenhouse gas emissions, including CO2 emission levels, have continued to rise. The World Meterological Organisation (WMO) reported that globally average CO2 levels reached 400 parts per million for the first time in 2015 and in 2016 again due to El Nino.
    • 2015 was the hottest year on record, surpassed only by the first six-months of 2016.
    • According to NASA, global  surface temperatures continue to rise, while “[f]ive of the first six months of 2016 also set records for the smallest respective monthly Arctic sea ice extent since consistent satellite records began in 1979”.

    As United Nations Secretary General, Ban Ki-Moon is reported to have said, “[w]e remain in a race against time”.

    Even more concerning is that current emissions reduction targets pledged  by counties in their Nationally Determined Contributions are not enough to maintain the temperature increase to the ambitious levels set by the Paris Agreement. This was reconfirmed by the United Nations Environment Programme (UNEP) in its most recent Emissions Gap Report released the day before the Paris Agreement entered into force, which stated as follows:

    Even if fully implemented, the unconditional Intended Nationally Determined Contributions are only consistent with staying below an increase in temperature of 3.2°C by 2100 and 3.0°C, if conditional Intended Nationally Determined Contributions are included (page xvii).

    Another issue which is critical for developing countries’ efforts towards transitioning to low carbon and climate-resilient development is that of climate change financing. This is particularly important for SIDS, some of which are highly-indebted and with limited capacity to mobilise adequate domestic financing to fund their climate change adaptation and mitigation needs. Reiterating a promise made at Copenhagen and Cancun, developed countries have pledged in the Paris Agreement to jointly mobilise US$100 billion a year in climate change finance by 2020 from a variety of sources.

    However, some non-governmental organisations (NGOs) have argued that the US$100 billion annual goal is not nearly enough. There may be some merit to this argument. For example, a 2013 report by the World Economic Forum (WEF) estimated that “[i]nfrastructure investment required for sectors such as agriculture, transport, power and water under current growth projections stands at about US$ 5 trillion per year to 2020.”

    There is, however, some encouraging news. The Global Trends in Renewable Energy Investment Report 2016 reported that in 2015, investments in renewable energy reached nearly $286 billion, more than six times more than in 2004. Moreover, for the first time, more than half of all added power generation capacity came from renewables.

    So what is next?

    The modalities for the Agreement’s implementation will be top of mind when the latest round of UN Climate talks commence this week in Marrakech, Morocco. Three critical sets of UN climate meetings will be occurring:

    • The twenty-second session of the Conference of the Parties (COP 22)
    • The twelfth session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 12)
    • The first session of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA 1).

    The provisional agendas for each set of meetings are available on UNFCCC’s website. In regards to CMA1’s agenda, they are expected to “consider and adopt decisions on the modalities, procedures and guidelines on the implementation of the Paris Agreement” in addition to organisational and other matters.

    The elephant in the room is the upcoming US presidential election. The US is the world’s largest greenhouse gas emitter, accounting for an estimated 17% of global greenhouse gas emissions. Its future climate action will be determined by the results of Tuesday’s poll. President Obama has pledged to cut U.S. Climate Pollution by 26-28 percent from 2005 levels by 2025.

    In complete contrast from current US climate policy, the Republican presidential nominee, Mr. Donald Trump, has famously called climate change a “Chinese hoax” and has gone as far as threatened to pull the US out of the Agreement. Although it would take about four years before the US can formally withdraw from the Paris Agreement, in the intervening time, Mr. Trump could still undo the US’ progress on climate change action by overturning the executive actions President Obama has implemented to fight climate change, cancelling funding for clean energy initiatives, and reducing and eliminating aid to developing countries for climate change adaptation and mitigation.

    Therefore, as I argued in a previous post, the future of US and global climate action, will depend significantly on the outcome of Tuesday’s poll.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Caribbean Trade and Development Digest: October 30-November 5, 2016

    These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of October 30-November 5, 2016. 

    For past issues, please visit here.

    REGIONAL

    Dominican Republic certified against freight risks, illegal trade 

    DominicanToday: The international certification issued by the Business Alliance for Secure Commerce (BASC) to the Dominican Republic establishes a robust system of control and security management in companies, based on risks and proactive controls to mitigate contamination of freight and illegal trade. Read more

    Dominicans can benefit from Brexit’s trade possibilities

    DominicanToday: UK Minister for Europe and the Americas, Alan Duncan on Friday headed a breakfast hosted  by the British Chamber of Commerce of the Dominican Republic (Britcham) where he analyzed the new post Brexit opportunities his country offers the world. Read more 

    Barbados workshop to equip statisticians to better monitor CSME implementation

    JamaicaObserver: Barbados will host a two-day workshop next week aimed at better equipping statisticians from across the region to measure and monitor effectively the implementation of the Caricom Single Market and Economy (CSME). Read more

    INTERNATIONAL

    Brexit Court Defeat for UK Government

    BBC: Parliament must vote on whether the UK can start the process of leaving the EU, the High Court has ruled.This means the government cannot trigger Article 50 of the Lisbon Treaty – beginning formal exit negotiations with the EU – on its own. Read more

    Paris Climate deal enters into force

    BBC: The Paris agreement on climate change has come into force. Governments have agreed to keep the global temperature rise to two degrees Celsius above pre-industrial levels – and preferably 1.5 degrees. Read more

    Brexit Ruling and BOE decision send pound surging

    FinancialTimes: The pound soared to a four-week high on Thursday after the High Court ruled the government must seek parliamentary approval for triggering Article 50 and the Bank of England said the post-referendum economy was “notably stronger” than it expected. Read more

    Will a new model investment treaty boost India’s FDI?

    East Asia Forum: India’s investment regime is under stress from its new bilateral investment treaty (BIT) framework. Spurred by a flood of claims from foreign investors against India in the recent years, the new BIT framework was approved by the cabinet in December 2015 after a four-year review. Read more 

    PM vows to carry out Brexit

    BBC: Theresa May has vowed to carry out Brexit “in full” despite the High Court ruling on leaving the EU. The prime minister said the government needed to “get on with the job” and MPs should “accept” the referendum result. Read more

    Japan Starts Process of Ratifying TPP

    StraitTimes: Japan set the cogs in motion for the ratification of the 12-nation Trans- Pacific Partnership (TPP) trade treaty, with the Bill clearing its first hurdle at a special parliamentary committee on Friday. Read more 

    Director-General selection process launched; Azevedo willing to serve 2nd term

    WTO: General Council Chairperson, Ambassador Harald Neple of Norway, informed WTO members on 3 November of the process to appoint the WTO Director-General after the current term of office comes to an end on 31 August 2017. The incumbent Director-General, Roberto Azevêdo, confirmed his willingness to serve a second term in the role. Read more 

    The White House is hoping this new argument for a trade deal with Asia will finally work

    WashingtonPost: The White House on Thursday estimated that more than $5 billion in U.S. exports and millions of jobs could be threatened if Japan strikes a new trade deal with China without a similar agreement in place with the United States, part of the administration’s last-ditch efforts to push President Obama’s politically embattled plan to deepen economic ties with Asia. Read more 

    Kenya, Tanzania Aim to Reset Economic Partnership

    VOA: Tanzania’s president is making his first state visit to Kenya since taking office last October, in a bid to improve relations strained by economic competition. Read more

    WTO issues new editions of Trade Profiles and World Tariff Profiles

    WTO: The WTO issued on 2 November new expanded editions of two of its annual statistical publications, Trade Profiles and World Tariff Profiles. Read more 

    Sri Lanka has its trade policy review

    WTO: The fourth review of the trade policies and practices of Sri Lanka takes place on 1 and 3 November 2016. The basis for the review is a report by the WTO Secretariat and a report by the Government of Sri Lanka. Read more 

    UK PM Seeks to Boost Trade Ties with India before Brexit

    Reuters: British Prime Minister Theresa May will use her first bilateral trade trip since taking office to try to boost ties with India before leaving the European Union.Read more

    Colombia President welcomes Brexit trade prospects

    BBC: Trade between Colombia and the UK has the potential to grow after Brexit, the country’s president has suggested.Juan Manuel Santos said a new agreement could be better than Colombia’s current free trade deal with the EU.Read more

    Iceland Ratifies Trade Facilitation Agreement

    WTO: Iceland has ratified the Trade Facilitation Agreement (TFA), becoming the 96th member of the WTO to do so. Read more

    NEW ON CARIBBEAN TRADE LAW & DEVELOPMENT

    Paris Climate Change Agreement Enters into Force: What Next?

    Brexit High Court Ruling: What does it mean?

  • Brexit High Court Ruling: What does it Mean?

    Brexit High Court Ruling: What does it Mean?

    Alicia Nicholls

    In a landmark decision handed down today, the London-based UK High Court in R (Miller) v Secretary of State for Exiting the EU, has held that the Theresa May-led UK Government cannot begin the formal process of leaving the European Union (EU)  without first seeking parliamentary approval.

    As a bit of context, on June 23, 2016 52% of the British electorate voted for the UK to withdraw from the EU. However, for Brexit (British exit from the EU) to formally begin, notification of such intention by the UK must be made pursuant to Article 50 of the Treaty on European Union (Lisbon Treaty). This came into effect in 2009 and  gives an EU member state the express right to withdraw from the 28-member bloc in accordance with its own constitutional requirements and with the provisions contained in said Article. A useful synopsis of the Brexit process can be found here.

    EU leaders have stated that they do not intend to begin negotiations with the UK until Article 50 is triggered. This probably explains why British Prime Minister Theresa May has indicated that she wishes to make the Article 50 notification by March 2017.

    This latest chapter in the Brexit saga is an unexpected bump in the road for the conservative government. While Mrs.May had been part of the “Remain” camp while serving as Home Secretary in the cabinet of then Prime Minister David Cameron, she has since upon becoming Prime Minister stated in pellucid language that she intends to respect the will of the British people. She has famously stated that  “Brexit means Brexit”.

    The Issue

    Simply stated, the central issue before the High Court was whether under UK constitutional law, the Crown (as embodied by the executive) has prerogative power to make a notification pursuant to Article 50. Prerogative powers, also known as the Royal Prerogative, are residual legal powers which are vested in the Sovereign but are exercised primarily by the executive. One of such prerogative powers is the power to engage in international relations, for example, through the conclusion of treaties.

    Arguments

    The crux of the Government’s argument was that the Crown under its prerogative powers could make the Article 50 notification without Parliamentary approval and that this had to have been the intention of Parliament under the European Communities Act of 1972 (ECA 1972). The Government argued that neither the ECA nor any other primary legislation has removed the Crown’s prerogative power to withdraw from the Treaty on European Union (Lisbon Treaty) or any other treaties. The Secretary of State, David Davis, also argued that Parliament would have its say on the withdrawal agreement in any case.

    However, not everyone was happy with Mrs. May’s stated intention to by-pass Parliament and effectively take away legal rights accruing to the  British people under the EU treaties. A legal challenge against the Government’s policy position was led by investment fund manager, Mrs Gina Miller, and supported by London-based Spanish hairdresser, Deir Dos Santos, and other interested parties. They referred to the fundamental principle in UK constitutional law that rights under the law of the UK cannot be varied by the Crown in exercise of its prerogative powers unless Parliament has expressly or impliedly given the Crown this right. They, therefore, argued that Parliament has not given such authority (whether expressly or impliedly) in neither the ECA 1972 nor in any subsequent Acts.

    The Judgment

    The 30-plus page judgment was delivered by Lord Thomas of Cwmgiedd, Lord Chief Justice of England and Wales. The court relied primarily on law from England and Wales but also from other Scottish and Welsh law. Referring to the common ground between the claimants, the court noted that they both acknowledged that a UK withdrawal from the EU would change domestic law in each of the UK’s jurisdictions and that once notice pursuant to Article 50 is given, it is irreversible.

    Going back to first principles and with reference to decided cases, the Court delineated several fundamental and long settled tenets of UK constitutional law. Importantly, they reiterated that sovereignty of the UK parliament was a cornerstone of UK constitutional law. The Court noted that while the ECA 1972 was an exception to the supremacy of primary legislation (Acts of Parliament), it is Parliament which made this decision and only Parliament has the power to repeal this Act if it so chooses.

    Additionally, the Court went on to reiterate that primary legislation cannot be displaced by the Crown in the exercise of prerogative powers. In other words, the Crown cannot change domestic law by exercising its prerogative powers, nor can it confer or deprive individuals of rights without Parliamentary action. Recall that the ECA 1972 gives effect to EU law in domestic law, including rights.

    In summary, the two main reasons presented by the Court for its ruling were that:

    (1) there is nothing in the text of the ECA 1972 to support that the Crown can exercise prerogative powers in such matters. Indeed, the Court methodically laid out several instances in which Parliament intended that EU law be introduced into domestic law in such a way that it could not be undone by the Crown in the exercise of its prerogative powers,

    (2) it is contrary to the constitutional principles of parliamentary sovereignty and of the inability of the Crown to change domestic law through the exercise of prerogative powers

    In summary, the Court ruled in favour of the claimants and held that the Crown had no prerogative power to give notice of withdrawal under Article 50.

    Reactions to the Ruling

    As one would expect, the ruling has brought mixed reactions. For Brexiteers and for Mrs May, the disappointment was palpable. They have viewed this defeat as undermining the will of the people. For their part, EU envoys do not appear to welcome the delay either.

    For the Pro-EU supporters, the ruling is a small victory. After all, it is one more hurdle in the road towards Article 50. Ms. Miller in her speech after the ruling reiterated that the case was about “process and not politics” and urged the Government not to appeal the ruling. First Minister of Scotland, Nicola Sturgeon welcomed the ruling which she termed “hugely significant”, according to media reports.

    What does this ruling mean?

    So what do we know? Firstly, we know from the ruling that the Crown has no prerogative power to trigger Article 50 and that parliamentary approval is needed. But what form of approval should this take? Should there be just a yes or no vote or should there be a fuller debate on the scope of the negotiations as some are suggesting?   The ruling also appears to confirm that the referendum was merely advisory and not mandatory.

    Does this ruling stop Brexit? No. The Court went to great pains to explain that what it was being called upon to decide  was a question of law and not the merits or demerits of a UK withdrawal from the EU. The court has not, nor was it its role to, decide on the political issue of whether there should be a Brexit.

    But lest, we think this ruling has settled the matter of who is responsible for triggering Article 50, it should be noted that the Government has been granted leave to appeal to the UK Supreme Court which will hear the matter in December. The Supreme Court’s ruling is final. Therefore, it could either uphold the ruling of the lower court or it could overturn the lower court’s ruling and hold in favour of the Government.

    Assuming that the Supreme Court upholds the High Court’s ruling and the question goes to Parliament for a vote, there are two possible scenarios. If the members of Parliament and the Peers decide to support the wishes of the British electorate and support making the notification, then the Government is free to make its Article 50 notification. However, if the Parliament votes against the triggering of Article 50, then the situation is less clear. My own view is that if the referendum is merely advisory, then would not Parliament have the final say? It will be interesting to see what happens in such a case. But will it be a simple yes or no vote or will Parliament seek to delineate the parameters under which the negotiations take place?

    Here is another thing. It puts a spanner in the works of the quick Brexit Mrs. May was envisioning and the feasibility of the posited March 2017 deadline. There is no telling how long it will take for the question to be laid before parliament and for both houses of Parliament to debate and vote on the issue. What is certain though is that there will be more uncertainty. Some have speculated that Mrs. May may be forced to call an early general election.

    But there is one bit of good news! On the back of this news, the value of UK Pound Sterling rose to GBP to 1.25 USD, still low but higher than the slump it has endured for the past few weeks when it appeared the Government was going for a “hard” Brexit. The rationale is that Parliamentary involvement would lead to a “soft” Brexit (where the UK remains in the single market and accepts the free movement of persons) as opposed to a “hard” Brexit which Mrs. May appeared to be supporting by her statements on immigration.

    Suffice it to say, we have a long way to go before this issue of triggering Article 50 is resolved. And that is just the beginning of the Brexit process! It will be interesting to see whether the UK Government will rely on the same arguments it made in this case or whether it will change its pleadings when it makes its submissions before the Supreme Court in December. Interesting times are ahead!

    The full judgment may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.