Caribbean Trade Law and Development

Tag: United Kingdom

  • The Draft Brexit Withdrawal Agreement: What implications for future CARIFORUM-UK Trading Relations?

    The Draft Brexit Withdrawal Agreement: What implications for future CARIFORUM-UK Trading Relations?

    Alicia Nicholls

    After nearly two years of negotiations between the European Union (EU-27) and the United Kingdom (UK), European leaders endorsed the “The Draft Agreement on the Withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community”and the “Political Declaration Setting out the Framework for the Future Relationship between the European Union and the United Kingdom” at a special meeting of the European Council on November 25, 2018.

    This process is taking place pursuant to Article 50 of the Treaty on European Union (TEU), which sets out the terms and timelines for the withdrawal of any Member State from the EU. The text of the UK’s draft Withdrawal agreement, which was released on November 14, 2018, delineates the terms of the UK’s withdrawal from the EU, while the Political Declaration outlines broad aspirations for the constitutive elements of the two parties’ future trading relationship.

    This article takes a brief look at what possible implications the draft Brexit Withdrawal Agreement may have for future CARIFORUM-UK trading relations, which are currently under negotiation and are reportedly close to being finalised.

    Essential Elements of the Withdrawal Agreement

    The UK ceases to be an EU Member State on March 29, 2019. During the transition period (March 29, 2019 to December 31, 2020), and subject to certain limited exceptions, EU law and the EU institutions and agencies will continue to be applicable to the UK, although it will no longer be an EU Member State. The UK will, however, be ineligible to be represented on, or participate in the decision-making processes of these institutions. This arrangement was deemed necessary to ensure a ‘smooth’ transition and provide for some certainty for traders while the parties hammer out the details of their future trading relationship. The Joint Committee may extend the transition period only once and this must be exercised before July 1, 2020.

    The Protocol on Ireland and Northern Ireland includes the controversial “backstop” option, whereby in the event that the EU and UK fail to negotiate an agreement which prevents a ‘hard border’ between Northern Ireland (a country of the UK) and the Republic of Ireland (an EU Member State) within the transition period, the UK will be part of a single UK-EU customs territory until such an agreement is made. However, both the EU and UK have expressly stated their intention to conclude such an agreement by July 1, 2020.

    Both the EU and UK Government have openly stated that they consider the negotiations on the two agreements closed, and have argued that the deal was the best that could be achieved in the circumstances. Although EU leaders endorsed both agreements, approval and ratification by the UK parliament is also needed under the EU (Withdrawal) Act 2018. UK House of Commons support appears questionable at this stage given the fervent opposition by both Remain and Leave MPs to the current Withdrawal Agreement. The House of Commons will debate the deal on December 11, 2018.

    Implications for CARIFORUM-UK Trading Relations

    Traders from CARIFORUM currently have preferential access to the UK market under the CARIFORUM-EU Economic Partnership Agreement (CARIFORUM-EU EPA). While CARIFORUM-EU trading relations will remain unchanged once the UK leaves the EU, the same cannot be said for CARIFORUM-UK relations.

    For most Anglophone CARIFORUM countries, the UK is their main trading partner within the EU, as well as a major source market for tourism and investment. It has been reported that UK-CARIFORUM bilateral trade totaled £2.1 billion in 2016.

    Under the Withdrawal Agreement, the UK remains bound to all EU international agreements, including trade agreements such as the CARIFORUM-EU EPA, to which it is party by virtue of being an EU Member State. However, during the transition period, the UK must not engage in actions deemed “likely prejudicial to EU interests” and its representatives will be barred from participating in the work of any bodies established pursuant to such agreements, unless it does so in its own right or upon invitation by the EU. This would include any bodies, such as the Joint CARIFORUM-EU Council, established pursuant to the CARIFORUM-EU EPA.

    The Withdrawal Agreement does not preclude the UK from negotiating, signing and ratifying its own trade agreements with third States or groupings, such as CARIFORUM, during the transition period. But the entry into force and application of said agreements during the transition period would be subject to EU authorization. With respect to CARIFORUM, the grouping is currently negotiating a roll-over of the EPA concessions with the UK to minimize any disruption to CARIFORUM-UK trade. Such a CARIFORUM-UK trade agreement, therefore, would be subject to EU authorization if it is to enter into force during the transition period. In any case, as noted above, the UK will remain a party to the EPA and bound to apply EPA concessions to CARIFORUM traders during the transition period.

    But what about the UK’s future trading relations with the EU? A ‘no deal Brexit’ is still a possibility as the draft Withdrawal Agreement needs ratification by each of the EU 27 countries. There is also still that pesky question of the negotiation of the future UK-EU trading relationship. The Political Declaration envisions a UK-EU free trade agreement, the terms of which remain to be negotiated.

    A ‘no deal Brexit’ would make it difficult for CARIFORUM firms looking to use the UK as a stepping stone to EU markets, which means a climate of uncertainty will continue to prevail for Caribbean firms seeking to use the UK as a conduit for accessing the EU market until the full details of future UK-EU terms of trade are agreed.  It was recently reported that the agreement between the UK and CARIFORUM was close to being reached and has taken into account the possibility of a ‘no deal Brexit’.

    The climate of uncertainty may also impact CARIFORUM-UK trade and investment from the UK side. Although some UK businesses have by now conducted risk assessments and built in Brexit contingency plans, the continued political and economic uncertainty and volatility of sterling will continue to weigh on their export, hiring and investment decisions.

    The Withdrawal Agreement takes us one step closer to some idea of what the future UK-EU relations will be, but a climate of political and economic uncertainty will remain for some time, which may have an impact on CARIFORUM-UK trading relations.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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.

  • 5 things the UK’s EU (Withdrawal) Act of 2018 does

    5 things the UK’s EU (Withdrawal) Act of 2018 does

    Alicia Nicholls

    After months of heated debate, the United Kingdom’s European Union (Withdrawal) Bill, more colloquially called the ‘Brexit Bill’, received the Royal Assent on June 26th, transforming it into law.

    Here are five quick things the EU (Withdrawal) Act of 2018 does:

    1.Defines Brexit or ‘Exit day’

    The UK’s official ‘exit day’ from the EU is now defined in statute as March 29, 2019 at 11:00 pm. However, the Act allows amendment of this date via regulation to ensure it conforms with the date on which the EU treaties are to cease to apply to the UK as per Article 50(3) of the Treaty on European Union (Lisbon Treaty), that is, from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification of withdrawal unless the European Council, in agreement with the UK, unanimously decides to extend this period.

    2.Repeals the European Communities Act, 1972 on ‘exit day’

    The European Communities Act (ECA), 1972 provided for the UK’s accession to the European Communities. Per the EU (Withdrawal) Act, the ECA will be deemed repealed on March 29, 2019 at 11:00 pm (Exit Day).

    3.Saves EU-derived domestic legislation and direct EU legislation with exceptions

    The Act saves EU-derived domestic legislation and direct EU legislation which is in operation immediately before exit day, meaning it continues to have effect in domestic law on and after the exit day, but does not include any enactment in the European Communities Act, 1972 (which would be repealed). It also provides a guide for the interpretation of EU derived law.

    But there are important exceptions. For instance, the rule of supremacy of EU law and the Charter of Fundamental Rights will obviously no longer apply on and after exit day. Additionally, while there is nothing preventing UK courts from having regard to EU courts’ interpretation of retained EU law, they will no longer be bound to principles decided by the European Court and will no longer refer matters to the court.

    4.Parliamentary Approval Required for Outcome of EU Negotiations

    The Act mandates parliamentary approval for the ratification of the withdrawal agreement and outlines a detailed process at section 13(1) for same.

    5.Makes some prescriptions

    With respect to the UK’s future relationship with the EU, the Act requires the Government to lay before both Houses of Parliament before the end of October 31, 2018 a written statement outlining the steps taken towards negotiating a customs arrangement as part of the post-Brexit EU-UK relationship. Another example is the requirement placed on the Government to seek to negotiate on the UK’s behalf an agreement with the EU dealing with family unity for those seeking asylum or other protection in Europe.

    The full text of the European Union (Withdrawal) Act may be viewed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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.

  • PM May calls snap election: Pros and Cons

    PM May calls snap election: Pros and Cons

    Alicia Nicholls

    United Kingdom (UK) Prime Minister, Theresa May, has today ‘reluctantly’ announced that Britons could be going to the polls in a general election on June 8, 2017, three years shy of the due date of May 2020.

    The UK has a parliamentary system of government. Since 2011, parliamentary elections are fixed for every five years pursuant to the Fixed-Term Parliaments Act. However, early general parliamentary elections may be called before the five year period, inter alia, where two-thirds of the House of Commons (including vacant seats) vote in favour of same. In the UK parliamentary system (also known as the ‘Westminster System’) and in most British-inherited parliamentary systems like those in the Caribbean, the Prime Minister is not directly elected. In practice, though, it is the person who leads the party which wins the majority of seats in the House of Commons who becomes the Prime Minister.

    The announcement of an early poll is surprising for two main reasons (1) it comes after months of denials by Mrs. May that she would be calling an early election, and (2) it also comes less than a month after the May Government made the UK’s notification under Article 50 of the Treaty on European Union (Lisbon Treaty) of its intention to withdraw from the EU.

    Pros

    So what are the upsides? Firstly, it is likely that in light of the disarray of the Jeremy Corbyn-led Labour Party, the Prime Minister is anticipating a stronger Conservative working majority in Parliament, reducing the likelihood of the final Brexit deal being voted against.

    The Tories currently have a 17-seat working government majority in the House of Commons following the 2015 poll, which is a slim majority when one considers that there is a total of 650 seats in the House of Commons. After all, what Prime Minister would not want a more comfortable majority at home when facing difficult negotiations with the EU for the next (at least) two years? Prime Minister May said as much in her statement when she noted that “Division in Westminster will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country”, and warned that “If we do not hold a general election now, [Opposition Party] political game-playing will continue.”

    Polls already show a Tory sweep, but let us also remember polls had predicted a “No” win in the Brexit referendum.

    Secondly, it should be recalled that Mrs. May became Prime Minister in July 2016 not through leading the party in a general election, but after then Prime Minister David Cameron resigned following his Brexit defeat.  If Mrs May leads the Conservative Party to victory in the June 8, 2017 poll, she would have:

    (i) won a ‘direct mandate’ from the British people to pursue her own domestic agenda, which frees her from pursuing some of the policies promised by the then Cameron-led government.

    (ii) This mandate, she would hope, would help quell the dissenting factions in her own party who disagree with her handling of Brexit thus far.

    (ii) She would not be legally required to call another general election until June 2022, by which time the messiness of Brexit would be largely past (hopefully). Recall that Brexit negotiations could be extended up to 4 years, at which time the May Government would not wish to negotiating a final deal with the EU-27 while having to worry about an election at home which could be lost due to an unpopular final deal.

    A third pro is likely economic. Although predictions of a British recession following the Brexit vote have not come to past, there is no telling what would happen to the British economy once the Brexit negotiations are underway. It makes more sense for Mrs. May to seek an election now than wait until things take a turn for the negative.

    Cons

    Firstly, on the flipside, calling a snap election after having made the Brexit notification and ahead of the negotiations with the Europeans risks adding even more uncertainty to an already uncertain political climate.

    Secondly, although polls favour a Tory win, what happens if the polls are wrong and the Tories lose to an anti-Brexit Labour?  Or what if Labour and the Liberal Democrats expand their number of seats, further reducing the already slim Tory majority?

    Thirdly, she risks dealing with ‘voter fatigue’.

    Calling the election at this time is a risky move but one, which like all high risks, could have big rewards if the May-led Tories win and expand their mandate. In anticipation of a Tory win, markets took the news of the snap election quite enthusiastically. Sterling appreciated  against the US dollar to 1.26. However, it is also potentially a big gamble and the decision to hold the poll after triggering Article 50 is curious. It will be up to British voters to decide whether to reward or reject the gamble.

    What is next?

    When the House of Commons meets, they will need to deliberate and vote (as required under the Fixed-Term Parliaments Act) on whether they are in favour of an early election. A two-thirds majority will be needed. For his part, Labour leader Mr. Corbyn has supported the decision to go to the polls in his statement released on his official Facebook page following the Prime Minister’s announcement.

    For Prime Minister May’s full statement, please see 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.

  • Brexit White Paper Released by UK Government

    Brexit White Paper Released by UK Government

    Alicia Nicholls

    The Theresa May Government has today released its Brexit White Paper . The official policy document, which is entitled “The United Kingdom’s Exit from and new partnership with the European Union“, was introduced into Parliament today by Brexit Secretary, David Davis.

    The House of Commons yesterday voted overwhelmingly for the Brexit Bill to proceed to the second parliamentary stage – the Committee Stage where it will be subjected to increased scrutiny by Members of Parliament next week. Already, a number of amendments have been tabled for discussion. However, once the bill becomes law, the Government will have the legal authority to make the UK’s notification of withdrawal from the EU under Article 50 of the Treaty on European Union (Lisbon Treaty).

    Setting out the Government’s strategy for its expected upcoming exit negotiations with the EU, the White Paper mostly elaborates on the 12 priorities which had been outlined by Mrs. May in her major Brexit address delivered at Lancaster House last month. The paper reiterated that the objective was not only to build a new partnership with Europe, but to build a “stronger, fairer, more Global Britain”.

    Among the priorities identified in the Brexit Strategy are taking control of its own laws, controlling immigration, pursuing a free trade and new customs union agreement with the EU, securing rights of EU nationals in the UK and for UK nationals in the EU, securing new trade agreements with other countries, inter alia. The Plan has received mixed reviews from parliamentarians.

    The full White Paper 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.