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Forty-nine individuals and organisations, “involved in some of the most notorious human rights violations and abuses in recent years,” are now subjected to asset freezes and travel bans.

The sanctions have been imposed by UK Government under the ‘Global Human Rights Sanctions Regulations 2020’.  This is secondary legislation using powers granted within the Sanctions and Anti-Money Laundering Act 2018.  These are the first new sanctions created using the UK’s standalone sanctions regime.  Prior to leaving the EU, the UK had generally created sanctions using powers in the European Communities Act 1972 – which will be fully repealed by the end of the transition period.

As well as being the UK’s first new sanctions since Brexit, they are the first classified as ‘Magnitsky’ sanctions – named after Sergei Magnitsky, a Russian tax adviser who died in a Moscow prison after discovering a massive fraud conducted by Russian state officials.  Magnitsky legislation provides for sanctions against officials who carry out gross human rights abuses

The list of sanctioned individuals includes: Saudi Arabians allegedly involved in the killing of journalist Jamal Khashoggi in the Saudi Embassy in Istanbul; and Russian officials allegedly involved in the mistreatment of Sergei Magnitsky; and two high-ranking generals from Myanmar.  The two sanctioned organisations are both branches of the North Korean Ministry of People’s Security.

In its 2019 manifesto, the Conservative Party promised to “further develop an independent Magnitsky-style sanctions regime to tackle human rights abusers head on.”  The Global Human Rights Regulations 2020 set out the human rights sanctions framework in full.

While debating the Sanctions and Anti-Money Laundering Bill, UK Parliamentarians argued that the Bill should contain the specific purpose of deterring gross human rights abuses.  Various amendments to this end were added during its passage through the Commons.

Announcing the sanctions in the House of Commons, Foreign Secretary Dominic Raab said: “These sanctions are a forensic tool, they allow us to target perpetrators without punishing the wider people of a country that may be affected.”

‘Magnitsky’ sanctions target individuals and organisations.  By contrast, ‘trade’ sanctions ban certain transactions with an entire country.  The economic damage caused by trade sanctions impact the entire population of the target country – and hurt vulnerable but innocent people.

The measures represent a significant departure from the EU – and were made without overt or formal co-ordination with allies.

Sanctions policy has been an important part of the Brexit discussions concerning the future relationship between the UK and the EU.  The EU proposed co-ordination on sanctions policy as part of its draft partnership treaty with the UK.  The UK does not view co-operation on provisions covering foreign affairs and defence as requiring a new treaty framework.

External expert commentators, however, contend that to be effective as well as independent, sanctions should be imposed in co-ordination with allies.  Analysts at the Royal United Service Institute (RUSI) argued: “The consideration of sanctions coordination should be an important – and urgent – priority for the UK government as it considers its future independent sanctions policy.”

Time will tell.

 

Just 878 firms have received assistance with preparing for Brexit – out of the Government’s estimate of 250,000 businesses that need to make changes if they are to continue to trade with the EU – from 1 January 2021 to trade between Britain and Northern Ireland, and vice versa.

The British Chambers of Commerce says the government has “not invested enough” in training for companies faced with new customs requirements and paperwork to complete.

Companies presently trading outside the EU will have some experience of completing the regulatory checks, reporting requirements and, where necessary, the dealing with payment of trade tariffs. HMRC estimates, however, that between 150,000 and 250,000 companies who presently trade only within the EU will be filling in customs forms for the first time.

Planning for Brexit is “not possible” at the same time as navigating the coronavirus crisis according to Alex Veitch, head of international policy at the Freight Trade Association. Jobs which are crucial to preparing Brexit have been furloughed.

Liam Smyth, director of international trade at the British Chambers of Commerce: “Whilst traders are focussed on survival and working out how to deal with the impact of coronavirus, the problem of making millions more customs declarations at the end of the transition period has not gone away.” Traffic will grind to a halt if goods cannot clear by new customs requirements.

For a fee, businesses without in-house capacity to fill in customs paperwork may use an ‘intermediary’ to help them after the end of the transition period. 403 of the 878 companies to have received assistance to date are customs intermediaries. Brexit Minister, Michael Gove, endorsed a suggestion that the UK could well need a further 50,000 customs agents.

Meanwhile, with just 8 months to go until Brexit, the first meeting of the joint UK and EU committee on implementing a Brexit deal in Northern Ireland has been held. Northern Ireland will operate under different trade regulations to other parts of the UK. The UK has said that this approach “will be focused on protecting the Belfast/Good Friday Agreement and gains of the peace process” – while preserving Northern Ireland as an integral part of the United Kingdom.

At the end of the Brexit ‘transition period’ on 31 December, the England, Wales and Scotland will leave the EU’s customs union. Northern Ireland, on the other hand, will continue to follow EU rules on agricultural and manufactured goods – and will also continue to enforce the EU’s customs code at its ports. This effectively sets up a new customs frontier for all good moving between mainland Britain and Northern Ireland – and vice versa.

If there is ‘no-deal’ between the UK and EU, a ‘hard’ border for goods will need to be established between Ireland and Northern Ireland. People may still be able to travel across the border under the ‘Common Travel Area’ arrangements set up in 1922.

We reported in a previous article that the EU has expressed concerns that the UK is not moving quickly enough to prepare for new checks. Michel Barnier: “The exchanges in the specialised committee now urgently need to be followed up by tangible measures”.

The outcomes of the Joint EU-UK Committee meeting were subject to Parliamentary scrutiny on 30 April by the Northern Ireland Affairs Committee. MPs called on industry experts and HMRC to give evidence. The two-hour detailed session highlighted the fact that there are many key issues need to be resolved by Government if internal flow and trade between Northern Ireland and the rest of Britain is to continue anywhere near as freely as it does today.

This throws doubt on the Prime Minister’s and Michael Gove’s repeated assertions that there would be “unfettered access” inside the United Kingdom.

The committee looked at customs arrangements for goods moving in both directions between Northern Ireland and Great Britain under the revised Northern Ireland Protocol. This includes:

• import-export requirements and customs checks, processes and declarations;
• whether the revised Northern Ireland Protocol will allow goods produced in Northern Ireland unfettered access to the rest of the UK internal market;
• what customs checks, processes, declarations and infrastructure improvements will need to be implemented under the revised Protocol by businesses and customs authorities in Northern Ireland mainland Britain in order to export goods between Northern Ireland to Britain and vice versa;
• whether the UK has sufficient customs agents, customs officials, and veterinarians to facilitate the new customs arrangements;
• what effect the new customs arrangements will have on the volume and profitability of trade between Northern Ireland and Great Britain and vice-versa;
• what potential economic effects the revised Protocol will have on Northern Ireland; and
• any other issues and challenges arising from the implementation of the Northern Ireland Protocol.

It was clear that witnesses agreed with EU’s chief Brexit negotiator, Michel Barnier, that with Northern Ireland being at he same time part of EU Customs Union while also part of UK customs area is “very complex” from Customs point of view.

It will have to operate two sets of standards in parallel – especially onerous for food, chemicals and animal related products under ‘Sanitary and phytosanitary’ (SPS) requirements. There is clear evidence that the additional costs of dealing with regulations will drive up costs – in a region where the general population has a lower disposable income compared to the remainder of the UK. Goods moving for retail sale accounts for 70% by value of goods entering Northern Ireland.

The impact was illustrated by taking a lorry heading to a supermarket at random – and looking at its manifest. There were 1392 products on board.

As far as declarations and paperwork are concerned, in extremis, each will need a separate ‘export declaration’ which presently costs between £15-£56 per item. Of the 1392 items, 500 were of animal origin, requiring an SPS based ‘export health certificate’ – presently each costing around £200.

As far as trade tariffs are concerned, items fell into many different WTO ‘tariff codes’ – payable by the importer at the point of entry – and not, as with some other taxes, paid at the point of sale – resulting in a significant cashflow issue.

In addition to certification costs, many more staff are needed to complete the paperwork. The additional new costs will mean goods becoming unprofitable.

The UK Government’s mixed messages are creating confusion – several references were made to the Prime Minister’s repeated assurances of “unfettered access”. The reality is different – no clear indication as to how the new regime will work, not how the additional costs might be met. There has been little engagement with the trade bodies in Northern Ireland – and none with UK businesses trading with the Province according the MPs on the scrutiny committee. Discussions have been kept within the civil service and what information has been forthcoming about how future arrangements might look was said to be “bureaucratic and civil service heavy”.

There was reference to responding to Covid-19, necessarily, taking up all available energy and focus, “an interrupt to preparations”.

HMRC reported that they were aiming for “minimum intervention”. The Protocol allows them to grant ‘unfettered’ movement of goods providing it is intra-UK and with an end destination of Northern Ireland. However, they conceded that there is no way to know this from looking at the outside of a wagon. They will need at least some ‘basic data’ in order to make a judgement. As the end destination is immaterial within EU at present, there is no recorded data to that might help assess the extent of future reporting requirements.

HMRC conceded that as present, there were no thoughts yet on how “Red” and “Green” lanes will operate in ports on either side of the Irish Sea – ‘procedurally, legally or practicality’.

There was speculation as to whether the ‘Trusted Trader’ scheme could be used – although it was pointed out that this a costly process and registration can take up to a year.

Good in transit between the UK and Ireland often use the shorter crossing between the mainland and Northern Ireland. Any additional burdens of costs and delays will drive transport towards direct crossings to Ireland and impact on the Northern Ireland ports and economies. Additionally as the UK begins to conclude trade deals beyond the EU, there will be a requirement for proof of origin in order to comply with WTO rules.

Chair of the Committee, Simon Hoare MP, noted the heartfelt “cri-de-coeur” for information from all sides.

There was no witness able to represent the Northern Ireland Fishing Industry which the Chairman noted as a gap to be addressed.

It was clear that the revised ‘Protocol’ of October 2019 – with its promise of ‘unfettered access’ – may have to begin operation ‘working by exception’ in January 2021 – allowing free movement of good unless HMRC have a specific reason to believe it is not an intra-UK movement – albeit that there is not yet a published list of what will comprise a reportable product.

There was an acceptance that the Protocol as part of an overall UK and EU Brexit ‘deal is better than a ‘no-deal’ scenario – but not much better.

‘No-deal’ means that the Protocol won’t apply. This will mean implementing a ‘hard border’. A number of observations on the UK stance – as viewed from outside the negotiating team – felt like the UK Government was “running down the clock” on reaching a deal with the EU. There were stark warnings that the socio-economic impact of a no-deal Brexit will “hit the people of Northern Ireland hardest”.

There was unanimity that Brexit must not carry a “penalty for being a citizen of Northern Ireland – effectively a ‘tax on citizenship’.

There was doubt expressed that there is time to recruit and enough vets and customs officers before the end of the year. And the inevitable conclusion drawn between more officers meaning more bureaucracy leading to more costs. In 8 months. Trade that is not ‘unfettered’ means the process has failed.

The impact of Covid-19 should not be ignored nor underestimated: it has demonstrated the ‘fragility of supply chains and consumed resources needed to prepare for Brexit. The impact will not be evident by December, nor yet will we know the ‘new normal’. The Northern Ireland economy is “about slots on boats, and a missed boat isn’t only cost – it’s about broken supply”.

References:

https://www.parliamentlive.tv/Event/Index/667f5b0e-2e89-463c-a9ce-e71737c9c572

Figures obtained by the BBC under freedom of information show 878 firms have received assistance with preparing for Brexit.

 

Following the UK’s departure from the EU with effect from 1 February 2020, the European Parliament has now set out a tough position for the negotiations on the future relationship between the UK and EU.

MEPs have put the price of Prime Minister Johnson’s ‘ambitious free-trade deal’ such that the UK must follow EU policies in a host of areas. These range from chemicals regulation to climate change, food labelling and subsidies for companies. Further, there will need to be ‘dynamic alignment’ – with the UK adopting European rules as they are introduced.

The wide-ranging resolution also called for measures to ensure that Brexit does not cause gender discrimination, for a crackdown on all British overseas territories that may act as ‘tax havens’, and for a joint UK-EU position at the upcoming UN climate conference in Glasgow in November.

The European Parliament is establishing the mandate for the EU’s chief negotiator, Michel Barnier. They go further than Barnier’s own draft, published in early February, where there was no mention of alignment – and definitely not the automatic kind.

A first revision came from EU from national governments. It added a reference to the need for a ‘level playing field’ – commitments by the UK to fair economic competition to prevent European businesses being undercut by their British rivals. The goal of ‘building on’ existing access to British waters for European fishing boats was upgraded to ‘upholding’ it; and the UK’s participation in the Galileo satellite positioning system was downgraded from ‘should’ to ‘could.’

MEPs have now gone a step further. The European Parliament can be ‘bad cop’ – allowing Barnier to say he can’t agree certain things ‘because the Parliament won’t accept them.’

Whilst MEPs were not willing to oppose the divorce deal, they will be tougher on any trade agreement that touches on Europe’s values and social model.

European integration started in the 1950s as a way for Germany to atone for its own nationalist and belligerent past. Its citizens were eager to subsume part of their identity in a ‘post-nationalist, rules-based, non-militarist and largely mercantile entity’ – in return for being accepted again by their neighbours. Occupied at the time by three of the Allied Powers, they had surrendered national sovereignty – so did not worry about ceding more of it to Brussels.

Meanwhile, post-Brexit, the agreed ‘financial settlement’ – often labelled the ‘exit bill’ or ‘divorce bill’ – is has come into operation.  The settlement is part of the Withdrawal Agreement, which is the legally binding treaty setting out the negotiated terms of the UK’s departure from the EU.

It sets out how the UK and EU are settling their outstanding financial commitments to each other – which financial commitments will be covered, the methodology for calculating the UK’s share and the payment schedule.

There is no definitive cost to the settlement. The final cost to the UK will depend on future events such as future exchange rates and EU budgets. Present estimates suggest a net cost to the UK of around €33 billion (£30 billion).

Much of this cost will come in the early years of the settlement, but the Office for Budget Responsibility – the UK’s public finances watchdog – has forecast that relatively small payments will continue until the mid-2060s.

The UK and EU have formally agreed some principles for the settlement:

• no EU Member State should pay more or receive less because of the UK’s withdrawal from the EU;
• the UK should pay its share of the commitments taken during its membership; and
• the UK should neither pay more nor earlier than if it had remained a Member State. This means that the UK will make payments based on the outturns of EU budget.

The settlement can be split broadly into three components:

1. During the transition period, until the end of 2020, the UK will pay into the EU budget almost as if it were a Member State. The UK will also receive funding from EU programmes– such as structural funding – as if it were a Member State.
2. EU annual budgets commit to some future spending without making payments to recipients at the time. The commitments will become payments in the future. The UK will contribute towards the EU’s outstanding commitments as at 31 December 2020. Recipients in the UK will also receive funding for outstanding commitments made to them.
3. The UK will share the financing of some EU liabilities as at the end of 2020, and any materialising contingent liabilities, and will receive back a share of some assets. The pensions of EU staff are likely to be the most significant liabilities for the UK, while the most significant item being returned to the UK is the capital it paid into the European Investment Bank (EIB).

Beyond these three components the UK has, for instance, agreed to continue to contribute to the EU’s main overseas aid programme – the European Development Fund – until the current programme ends. This programme is funded directly by Member States, rather than through the EU budget. Any UK contribution made via the EU will count towards its commitment to spend 0.7% of national income on overseas aid.

The UK net payments to the EU are estimated by the OBR as totalling £30 billion between 2020 and 2064:

• 2020: £8 billion
• Between 2021 and 2028: a total of £20 billion
• Between 2029 and 2064: a total of £2 billion

Sources include: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8822?utm_source=R%26I+%28business+communications%29&utm_campaign=be6cf81b59-EMAIL_CAMPAIGN_2020_02_17_10_07&utm_medium=email&utm_term=0_4957411bec-be6cf81b59-102508873&mc_cid=be6cf81b59&mc_eid=1037596b66

The UK is no longer a member of the European Union.

From the outset of discussions in 2017, both sides agreed that it was wise to allow a ‘status quo’ period of time after the UK left to settle the future long-term relationship. Three years was offered by the EU – but the UK Government has since legislated to limit this ‘transition’ period to 11 months, ending at 23:00 GMT on 31 December 2020 – whether or not an agreement is reached.

From that moment, the UK will no longer be treated as an EU member with free movement of people, goods, capital and finance.

As soon as Brexit was enacted, the European Commission – the body responsible from the EU side of the negotiations – has issued a recommendation to the European Council (comprising the 27 Heads of EU States) that sets out the terms of reference allowing them to open negotiations with the UK.

The principles are governed by Article 218 of the Consolidated Treaty on the Functioning of the European Union. Contact us if you want full details on the scope and terms of reference for negotiating with a ‘third country’ – and the UK became a ‘third country’ on 1 February 2020.

The next step is for the European Council to formally adopt the draft negotiating directives. This will formally authorise the Commission to open the negotiations as Union negotiator. Watch out for the EU ‘red lines’ – already in conflict with the UK’s own ‘red lines’.

The Commission’s recommendation is based on the existing European Council guidelines and conclusions – but takes into account the ‘Political Declaration’ that was negotiated and agreed between the EU and the UK in October 2019.

It includes a comprehensive proposal for negotiating directives, defining the scope and terms of the future partnership that the European Union envisages with the United Kingdom. These directives cover all areas of interest for the negotiations, including trade and economic cooperation, law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence, participation in Union programmes and other thematic areas of cooperation. A dedicated chapter on governance provides an outline for an overall governance framework covering all areas of economic and security cooperation.

Michel Barnier, the European Commission’s Chief Negotiator, said: “We will negotiate in good faith. The Commission will continue working very closely with the European Parliament and the Council. Our task will be to defend and advance the interests of our citizens and of our Union, while trying to find solutions that respect the UK’s choices.”

As the body delegated to be the EU negotiator, the European Commission intends to continue work in close coordination with the European Council and the European Parliament – as was the case during the negotiations for the Withdrawal Agreement.

President of the European Commission Ursula von der Leyen said: “It’s now time to get down to work. Time is short. We will negotiate in a fair and transparent manner, but we will defend EU interests, and the interests of our citizens, right until the end.”

This came as the European Commission on Monday, 3 February 2020 published a set of ‘Questions & Answers’ regarding the draft negotiating directives for a new partnership with the United Kingdom. For the avoidance of doubt, we publish them in full, below.

For insight and interpretation of these Q & As – and what it means for business, commerce and finance – please contact us for the implications on your sector and organisation.

POLITICAL ASPECTS

What has the Commission adopted today?

The European Commission has today adopted a recommendation to the Council to authorise it to open negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland, in accordance with Articles 218(3) and (4) TFEU and Article 101 EAEC.

This recommendation is based on existing European Council guidelines and conclusions, as well as the Political Declaration agreed between the EU and the United Kingdom in October 2019. It includes a comprehensive proposal for negotiating directives, defining the scope and terms of the future partnership that the European Union envisages with the United Kingdom.

What is the scope of these draft negotiating directives?

In line with the European Council guidelines of 23 March 2018 and the European Council conclusions of 13 December 2019, the directives cover all areas of interest for the negotiations, including trade and economic cooperation, law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence, participation in Union programmes and other thematic areas of cooperation. A dedicated chapter on governance provides an outline for an overall governance framework covering all areas of economic and security cooperation.

Have you agreed with the United Kingdom yet about practical arrangements for the negotiations, such as language regime?

Practical issues, such as language regime and negotiation structure, will be agreed jointly between the EU and UK negotiators.

What are the next steps?

The recommendations are now with the Council for adoption. The General Affairs Council is scheduled to adopt the Decision authorising the opening of negotiationsand providing negotiating directives to the Commission on 25 February. Once this decision is adopted by the Council, the European Union will be ready to begin formal negotiations with the United Kingdom.

When will negotiations start?

The Commission is ready to begin negotiating once the Council authorises the opening of the negotiations. The first formal meeting between the EU and the UK negotiators is likely to take place at the beginning of March.

GENERAL QUESTIONS

Can you really negotiate everything by the end of the year?

The Commission intends to achieve as much as possible during the transition period. We are ready to work 24/7 to make the best out of the negotiations. It is possible to extend the transition period by 1 to 2 years. This decision must be taken jointly by the EU and the UK before 1 July.

Extending the transition period: if no decision is taken by July 2020, surely there is an alternative mechanism, if needs be?

If no decision has been taken by the Joint Committee before July 2020, there is no other legal basis for extending the transition beyond 2020.

Is there still a risk of a “no-deal” scenario at the end of the year?

As in every negotiation, the risk of not reaching an agreement is there. Regardless of whether a future partnership will be in place, all businesses need to prepare now for the end of the transition period, as the UK will no longer be in the Single Market or the Customs Union.

Will all issues in the negotiating directives be negotiated in parallel?

We will work on all topics in parallel. We will be particularly vigilant to progress in areas where the risk of disruption at the end of the transition period is particularly high, in case no agreement has been reached.

Why was this legal basis chosen for the negotiations? Does that mean that the agreement does not need to be approved by national parliaments?

Given the scope of the envisaged partnership, at this stage, the choice of Article 217 of TFEU as a legal basis is the most natural since it is the widest legal basis possible. It is also suitable in order to provide for an overarching governance framework, which is one of the EU’s objectives. Obviously, the legal basis can only be final once we know the content of the final agreement. What is important is to ensure that the future agreement can enter into force on 1 January 2021.

Will there be one agreement or several agreements?

The aim is to negotiate an ambitious and comprehensive partnership with the United Kingdom that can enter into force by the end of the transition period. The Commission’s intention is to negotiate that partnership as a package that comprises three main components:

• general arrangements (including provisions on basic values, essential principles and on governance);
• economic arrangements (including provisions on trade, level playing field guarantees and fisheries); and
• security arrangements (including provisions on law enforcement and judicial cooperation in criminal matters, as well as on foreign policy, security and defence).

Will the new partnership be an ‘association agreement’ and how will such an agreement be ratified?

‘Association agreement’ is the term used in Article 217 of the Treaty on the Functioning of the European Union for an agreement ‘establishing an association involving reciprocal rights and obligations, common action and special procedure’. Article 217 TFEU allows for the closest possible partnership with a country that is not an EU member. There are many different types of association agreement, but what they all have in common is their comprehensive nature and the fact that they establish a long-term institutional framework. An association agreement must be approved by unanimity in the Council and requires the consent of the European Parliament before it can enter into force. Whether the future partnership must be ratified by national parliaments depends on its final content and can only be determined at the end of the negotiations.

How will you ensure unity during these negotiations?

Just as with the Article 50 negotiations on the UK’s withdrawal from the EU, the Commission will conduct these negotiations in continuous coordination with the Council and its preparatory bodies. It will consult and report to the preparatory bodies of the Council in a timely manner, and will provide all the necessary information and documents relating to the negotiations. The Commission will also keep the European Parliament fully informed of the negotiations. For Common Foreign and Security Policy matters, the Commission will furthermore conduct negotiations in agreement with the High Representative of the Union for Foreign Affairs and Security Policy.

Will EU negotiating positions be made public?

Yes, the Commission’s aim will be to ensure full transparency. This is also why the Commission has made today’s recommendation public.

What is the purpose of the High-Level Conference between the EU and the UK in June 2020?

The High-Level Conference in June, as foreseen by the Withdrawal Agreement, aims to take stock of the progress in negotiations. The Commission will also use the Conference to take stock of the state of implementation of the Withdrawal Agreement, in particular when it comes to citizens’ rights and the Protocol on Ireland and Northern Ireland.

Will the future agreement supersede the Protocol on Ireland and Northern Ireland?

Unlike earlier versions, the Protocol on Ireland and Northern Ireland agreed in October 2019 and which is a part of the Withdrawal Agreement is not a “backstop”. It was conceived as a stable and lasting solution. The Protocol will apply alongside any agreement on the future relationship. Nevertheless, it is clear that the terms of the future trading relationship between the EU and the United Kingdom – in terms of the shared ambition to have zero customs duties and quotas between the EU and the United Kingdom – will have some bearing on the practical application of the Protocol.

GOVERNANCE

How to ensure effective implementation of any future agreement?

For the agreement to be correctly implemented and applied, there must be effective governance arrangements with credible enforcement and compliance mechanisms, as of 1 January 2021. Where the future partnership relies on EU law, there must be a role for the European Court of Justice. Only the European Court of Justice can interpret EU law.

What would happen if the United Kingdom were to breach the future agreement?

Many international treaties have rules on how disputes between the parties must be resolved. The future agreement should also have such rules. The typical process is that the parties must first attempt to resolve their differences amicably through a process of ‘consultations’. If those attempts are unsuccessful, the dispute may be brought before an arbitration panel for a binding ruling. If a party continues to infringe the agreement, the other party can take action to safeguard its interests and to urge compliance. In certain situations, there should be a possibility for a party to act quickly to avoid irreparable harm. An important part of the negotiations with the United Kingdom will be about making sure that the rules governing disputes between the parties are clear and effective and that breaches can be remedied quickly.

What will be the role of the European Court of Justice?

The European Court of Justice is the final arbiter when it comes to the interpretation and application of rules of Union law. The future agreement must respect this by making sure that no other court, tribunal or arbitration panel set up by the parties may encroach upon the role of the Court of Justice. The precise role of the European Court of Justice under the future agreement will depend on the content of the future relationship with the United Kingdom.

Will there be sanctions if the UK does not play by the rules?

We are looking at the best possible safeguards to allow for a quick reaction and protection of the EU’s interests. The precise details and scope of the overall governance framework will depend on the content of the future relationship.

ECONOMIC PARTNERSHIP

How does the European Commission envisage the future economic partnership?

The envisaged partnership should contain comprehensive arrangements including a free trade area, with customs and regulatory cooperation, underpinned by robust commitments ensuring a level playing field for open and fair competition, as well as by effective management and supervision, dispute settlement and enforcement arrangements, including appropriate remedies.

What kind of customs cooperation do you foresee?

Within the framework of the EU’s Customs Code, including customs checks and controls and all other controls such as systematic sanitary and phytosanitary controls at the border, the envisaged partnership should aim at facilitating legitimate trade by making use of available facilitative arrangements and technologies and, while ensuring proper implementation of the Union Customs Code, where justified.

Customs authorities must be able to take effective measures at the border to enforce legitimate public policies (protection of health and safety of consumers, protecting businesses, for example regarding enforcement of intellectual property rights) and protect financial interests. Therefore, the customs cooperation that we envisage is, as is the case with our existing free trade agreements, limited and in any event cannot be described as going in the direction of frictionless trade. Only membership of the Single Market and the Customs Union can ensure such frictionless trade.

Will a free trade agreement (FTA) allow goods to be exchanged between the UK and the EU as they are today?

Trading under FTA terms, even a so-called “best in class” FTA, will be of a very different nature compared to the frictionless trade enabled by the EU’s Customs Union and Single Market. In an FTA context, rules of origin and customs formalities will apply; all imports will need to comply with the rules of the importing party and will be subject to regulatory checks and controls for safety, health and other public policy purposes.

That being said, the proposal we are ready to table, as the Political Declaration already announced, will be of an unprecedented nature for an FTA: no tariffs and no quotas across all goods, including agricultural and fisheries products.

Because these conditions are exceptional, this is conditioned on the existence of robust provisions ensuring a level-playing field, guaranteeing competition between economic operators from both sides. In addition, these exceptional conditions of no tariffs and no quotas across all sectors can only be tabled if a fisheries agreement that includes provisions on access to waters is concluded.

Without an FTA in place by the end of transition, tariffs and quotas will apply to all trade in goods between the EU and the UK. In this scenario, we must apply what is known as “MFN tariffs” to the UK. Indeed, under the WTO Most Favoured Nation (MFN) principle, benefits given to one trading partner need to be extended also to others and only a trade agreement or Customs Union can be an exception to that rule. Therefore, without an FTA in place as of 1 January 2021, economic operators and consumers should not expect privileged treatment when dealing with the UK.

What does “level playing-field” mean?

The EU is ready to offer a high-ambition trade deal, with zero tariffs and zero quotas on all goods entering our single market of 450 million people. However, because of our high levels of economic inter-connectedness, the value of trade and geographical proximity, the draft negotiating directives also make clear that this exceptional offer is conditional on robust level playing field safeguards to avoid unfair competitive advantages the UK could derive from regulatory divergence (lowering of standards) or subsidisation of UK operators. In the Political Declaration, the EU and the UK already agreed that they would avoid unfair competitive advantages. We must now agree on effective assurances to guarantee high standards on social, environmental, tax and state aid matters.

What if the UK will not commit to any level playing field guarantees?

We agreed in the Political Declaration that the scope and depth of the future relationship will depend on the level playing field commitments that the UK is willing to undertake. The EU will not agree on an FTA without solid level playing field guarantees and an agreement on fisheries. Our geographic proximity and economic interconnectedness are such that it is in our mutual interest to agree on fair competition standards between us, as well as on their effective enforcement. Given the current very close integration of British companies with the Single Market and the UK’s desire for zero tariffs and zero quotas for goods, it is only fair that the EU requires commensurately strong level playing field guarantees. This will also be in the interest of British consumers and businesses. The EU is by far the greatest export market for UK businesses and most UK imports are from the EU.

Will sanitary and phytosanitary requirements (SPS) change?

There will be no changes to the Union’s food safety standards. Union law, including systematic controls, will fully apply to imported food, animals and plants without exceptions or equivalency. High-level SPS standards will be safeguarded. As in existing FTAs, relations will be built on and will go beyond existing multilateral instruments [World Trade Organization (WTO), Codex Alimentarius, International Plant Protection Convention (IPPO) and World Organisation for Animal Health (OIE)] recommendation and requirements. Co-operation should be ensured in combating antimicrobial resistance as well as protecting animal welfare and ensuring sustainable food systems.

Will the EU allow for mutual recognition of rules and standards?

By choosing to leave the Single Market, the UK has opted to have the status of a third country regarding EU law. The EU and UK will therefore form separate markets and distinct legal orders, after the end of the transition period. The future relationship will therefore result in a lower level of integration than is the case today. The future economic partnership on goods will seek to facilitate trade as far as possible but this cannot be expected to replicate the same frictionless conditions of trade that exist between EU Member States. Such conditions are based on adherence, by Member States, to a full ‘ecosystem’ of rules, including the Treaties, and their supervision and enforcement, including the jurisdictional system under the Court of Justice of the EU. Mutual recognition can only be granted between participants to that ecosystem.

What can be achieved on services in the context of an FTA?

We can aim at a level of liberalisation of trade in services beyond the baseline provided by our existing WTO GATS commitments, similarly to the approach in our most recent FTAs. As requested under GATS rules, the FTA would need to cover most services sectors, such as telecommunication services or business services to name a few. But, as in any FTA negotiated by the EU, there will be exceptions: for instance, the EU normally excludes audiovisual services from the provisions on liberalisation. Under its FTAs, the EU maintains its right to regulate its own markets and its full regulatory autonomy. We will be particularly attentive to include provisions that preserve the EU’s public services. This preservation of our right to regulate will be paramount in all sectors, and a good illustration is financial services. Indeed, in that area, the key instruments the EU and the UK will use in this area are their respective unilateral equivalence frameworks, as laid down in their legislation. The FTA will cover financial services, but it will not go beyond what the EU offers in its FTAs with other third countries. It will also contain the prudential carve-out.

Finally, it should be recalled that while free trade agreements’ provisions are important in the area of services, a number of other rules impact trade in services. Some of them imply unilateral decisions such as EU regimes on data protection and financial services regulation and supervision. The EU intends to assess the UK for adequacy on data protection and equivalence on financial services. That is what we have agreed in the Political Declaration. Decisions should be reciprocal. Services are also closely linked to the free movement of people (professionals such as lawyers, consultants, accountants etc.), which the UK explicitly intends to stop post-Brexit. Those elements should be taken into account too when assessing priorities for the coming negotiations.

Will audiovisual services and public services be covered?

The EU always excludes certain sectors (e.g. audiovisual, public services) from its FTAs and considers carefully any commitments made in the other sectors. The EU also needs to consider the Most Favoured Nation commitment it has taken that would extend the benefits of the agreement with the UK to other FTA partners such as Canada, Japan and Korea.

What about roaming?

The provisions on roaming-like-at-home will stop applying in respect of the UK. When traveling to the UK, the situation will be similar to that of travelling to Switzerland: roaming changes may apply. Telecoms operators have obligations to be transparent as to the tariffs they charge.

What do you foresee on digital trade?

The objective is to facilitate digital trade, such as e-commerce, while respecting consumer rights and personal data protection rights. This is something that the EU has been doing in its FTAs for long time.

Will financial services be covered by the FTA?

Yes, we usually cover financial services in EU FTAs. The standard approach is to have limited market access commitments, notably on cross-border supply of financial services. In addition, even where there is market access the EU will continue to apply its host state-rules to incoming providers. Finally, like in all FTAs we will have a prudential carve-out that allows to Union to adopt any measure for prudential reasons.

The EU’s equivalence regimes are the instruments that the EU will use to regulate interactions with the UK in the financial services area. The EU’s equivalence frameworks only provide for the possibility to give market access in a few cases (investment firms, trading venues, central clearing parties). They do not cover all financial services. The granting (or not granting) of equivalence is a unilateral measure by the EU. Equivalence can be withdrawn at any time. Decisions should be reciprocal.

What are you proposing on geographical indications, and how does that differ from the Withdrawal Agreement?

All EU geographical indications registered on 31.12.2020 (the “stock”) will be protected in the United Kingdom as a result of the Withdrawal Agreement. However, beyond this, the future FTA should provide a framework to ensure the protection of newly registered geographical indications at the same level as that guaranteed by the Withdrawal Agreement.

What are you proposing on public procurement?

We aim at securing procurement opportunities on top of those guaranteed by the UK’s accession to the WTO Government Procurement Agreement (the UK is in the process of acceding to that agreement).

Mobility: will EU and UK citizens still be able to move freely?

The UK has decided to end the free movement of persons and has limited ambition for specific arrangements with the EU on the mobility of persons.

This does not mean that mobility will stop. Today, citizens move from one country to another to live, work, study and carry out research. However, after the end of the transition period, mobility to and from the UK will be different and will happen under different rules than before when free movement rules applied. What exactly those rules will be depends on the outcome of the negotiations but our objective is to ensure reciprocity and no discrimination between EU nationals.

How about short-term trips by EU citizens to the UK and by UK nationals to the EU?

After the end of the transition period, the EU will not require visas for short stays (less than 90 days in 180 days) for UK nationals independently of the purpose of the trip (except in case of paid work), so short-term tourists, students, journalists, trainees, etc. from the UK will be able to come visa free.

This arrangement is dependent on the UK also granting full visa reciprocity to the nationals of all EU Member States travelling to the UK.

Will there be different entry checks on UK nationals when entering the EU?

Yes, UK nationals will be treated as third-country nationals as of the end of the transition period. There is no legal alternative under the Schengen acquis. This means that the entry conditions for third-country nationals and the procedures applicable to the crossing of the EU external borders will also apply to UK nationals.

Concretely, this means that: UK nationals will no longer be able to use the designated lanes at Border Crossing Points (EU, EEA, CH); their passports will be subject to stamping upon entry and exit from the Schengen Area; they will be subject to checks including checks against databases upon entry and exit; they will be subject to the EU’s Entry/Exit-System (EES) and the European Travel Information and Authorisation System (ETIAS) when these systems will be deployed in the future.

The entry checks on UK nationals will include verification of the possession of a valid travel document for crossing the border; the duration of the stay; the purpose (e.g. tourism or work) and the conditions of the intended stay (e.g. accommodation, internal travels); the existence of sufficient means of subsistence (i.e. having sufficient means to pay for the intended stay and return travel).

How about the possibility of EU citizens to move to the UK and UK nationals to the EU for longer terms (longer than 90 days)?

After the end of the transition period, mobility to and from the UK will be different and will happen under different rules than before when EU free movement rules applied. What exactly those rules will be depends on the outcome of the negotiations.

Nevertheless, even in the absence of specific provisions, the default rules of the EU and the UK would cover the entry and stay for different purposes. On the EU side, national rules and the EU’s legal migration acquis for long stays sets out the conditions of entry and stay in the EU for categories such as students, researchers, some types of workers, family members, long-term residents, au pairs, volunteers etc. These rules apply in the same way to citizens of all third countries, including the UK when it becomes a third country. For stays of less than 90 days in a 180-day period, the Schengen acquis applies. On the UK side, its national migration regime would apply.

What do you foresee on mobility of citizens within the FTA?

As regards mobility, FTAs only deal with the entry and temporary stay of natural persons for business purposes in defined areas. However, host State rules continue to apply as regards conditions for entry and stay, access to labour market and working conditions.

What do you foresee on social security coordination?

In order to facilitate the future mobility of persons, appropriate social security coordination will also need to be agreed. The scope of social security coordination rules in the future relations with the UK should take into account the extent of the specific mobility arrangements that will be agreed with the UK. These social security coordination arrangements should be based on non-discrimination between EU Member States and full reciprocity.

It is noted that one of the stated objectives of Brexit was to stop the free movement of citizens. This means that in any event, the situation on citizens’ mobility after 1 January 2021 will be very different compared to today.

Will smooth transport links still be ensured?

In the future relationship, the EU will aim to ensure a continued flow of goods and persons between the UK and the EU, but the UK, as a third country, does not have the same rights as a Member State.

The situation is very different depending on the mode of transport: Ensuring connectivity for air traffic and road haulage will require an agreement, e.g. on market access. Without an agreement, there is no fall-back to allow traffic to continue.

What kind of an air transport agreement do you foresee?

In terms of air transport, UK operators currently benefit from full market access in the EU: a UK airline can offer air services within the EU without restrictions. Without an EU-UK partnership in aviation, and in absence of unilateral contingency measures, no flight would take place between the UK and the EU as the WTO does not offer any fall-back for air services.

We are aiming for an aviation relationship that allows for continued connectivity and ensures a high level of aviation safety and security standards, air traffic management, and sector specific level playing field provisions to allow for open and fair competition, including appropriate and relevant consumer protection requirements and social standards.

What do you foresee on road transport?

In the area of road transport, we are aiming for a system of open market access allowing journeys between the UK and the EU, while preserving the integrity of the internal market for road haulage services. We also need to ensure sector specific level playing field provisions, in particular as regards the rules that affect our operators, our drivers and our vehicles.

Will you need an agreement on energy?

The negotiating directives foresee cooperation in the area of energy. An important pre-condition for cooperation in this area is to ensure we have robust level playing field requirements. In particular carbon pricing (Emission Trading System – ETS) and provisions on State aid are both a pre-condition for future cooperation on energy.

In the area of electricity and gas, there is no precedent for this type of arrangement.

As regards Euratom issues, the EU has experience regarding Nuclear Cooperation Agreements with other third countries.

What about climate change?

In the introductory paragraphs of the negotiating directives, five binding political clauses underpinning the all-encompassing relationships between the EU and third countries are highlighted, namely: the respect for and safeguarding of human rights, democracy and the rule of law; support for non-proliferation of weapons of mass destruction; the fight against terrorism; prosecution of those accused of the most serious crimes of concern to the international community; small arms and light weapons. The fight against climate change has been added as an essential element of the envisaged partnership.

Will the UK continue to participate in the ETS system?

In line with the Political Declaration, the negotiating directives foresee the possibility of a so-called linking agreement by which the EU and the UK could link their respective emission trading systems.

Will EU fishermen continue to have access to UK waters?

Access to each other’s waters will be negotiated as part of the provisions on fisheries, which should provide for continued reciprocal access, in line with the objectives set out in the March 2018 European Council Guidelines.

Will the EU impose tariffs on UK fisheries products?

The envisaged partnership should include, in its economic part, provisions on fisheries setting out a framework for the management of shared fish stocks, as well as the conditions on access to waters and resources. The intention is to have fully liberalised market access across all goods, which will be guided by the agreement on fisheries.

What happens if there is no agreement on fisheries by July 2020?

The Political Declaration includes a joint commitment on best endeavours to reach an agreement on fisheries by 1 July 2020. The time to negotiate such an agreement will be very short (four months), but it is in our mutual interest to conclude the fisheries agreement in due time, so it can be implemented as of 1 January 2021 in view of ensuring sustainable fisheries management.

Union programmes: will the UK still get grants and subsidies from the EU? Will they contribute to the EU budget?

As set out in the Withdrawal Agreement, UK beneficiaries will continue to benefit from programmes under the Multi-annual framework for 2014-2020, even where this continues after the end of the transition period.

The UK will be treated as a third country for the purposes of the next Multiannual Financial Framework (MFF) 2021-2027. If the UK requests participation in some areas, the EU could consider participation in accordance with the MFF rules for third country participation.

What about Erasmus?

Activities under the current Erasmus+ (2014-2020) programme are covered by the Withdrawal Agreement, and will continue without interruption until their closure. For the future Erasmus programme, under the next Multiannual Financial Framework (2021-2027) it will depend on the possible participation of the UK in Union programmes.

Will the United Kingdom be able to continue to participate in EU regulatory agencies as a third country?

No. These agencies have been set up to support the EU and its Member States to develop and implement EU rules. A third country leaving these rules, and their supervision, can no longer participate in these agencies..

Will our data still be safe if transferred to the UK and processed there?

In view of the importance of data flows, the envisaged partnership should be underpinned by a high level of personal data protection. The adoption by the Union of adequacy decisions, if the applicable conditions are met, should be an enabling factor for cooperation and personal data flow, in particular in the area of law enforcement and judicial cooperation in criminal matters. The Commission endeavours to adopt such decisions by the end of 2020, if applicable conditions are met.

Would the UK still be able to use the European Arrest Warrant? How would criminals be extradited between the EU and the UK?

The European Arrest Warrant is an internal EU instrument, used exclusively among Member States. Therefore, it will no longer be used with the UK.

The draft negotiating directives propose new and effective arrangements between the United Kingdom and EU Member States to render criminals swiftly to justice. This would be an ambitious scheme, based on streamlined procedures and strict deadlines, subject to judicial control. It would be conditional upon robust safeguards on fundamental rights and the role of Court of Justice.

At the same time, it will offer flexibility to each Member State and to the United Kingdom to decide how far they wish to go in common relations. It will help, for example, to address constitutional constraints related to extradition of own nationals in some Member States.

Why do you have reference to “UK continuous commitment” to the European Convention on Human Rights? Why would cooperation cease if the UK leaves the Convention?

The draft negotiating directives propose close relations with the UK on law enforcement and judicial cooperation in criminal matters. It would cover, amongst other things, ambitious extradition or exchange of sensitive information that may impact human lives or rights (e.g. deprivation of liberty). Such relations require a high degree of confidence that the human rights concerned will be upheld. We need a common understanding on how we protect those rights. Within the Union we have the Charter of Fundamental Rights. This is a part of our Treaties. With regard to the UK, the negotiating directives propose a strong commitment to respect the European Convention on Human Rights (ECHR), a common pan-European instrument applied for over 70 years by the United Kingdom and other countries across Europe. Commitment to ECHR is also set out in the Good Friday (Belfast) Agreement.

Will Passenger Name Records (PNR) continue to be exchanged to prevent, detect and investigate terrorism and other forms of serious crime?

The negotiating directives foresee that arrangements should be established for timely, effective, efficient and reciprocal exchanges of Passenger Name Records (PNR). This means that arrangements need to be made for two situations: first, for exchanges between EU27 Member States’ and UK Passenger Information Units and, second, for transfers of PNR data by air carriers to the UK authorities for flights between the United Kingdom and EU27 Member States. There are examples of cooperation with third countries on PNR transfers: the EU has PNR agreements with the USA and Australia; there is a draft negotiated text with Canada and a mandate for negotiations with Japan. An essential precondition for any such arrangements is that the UK applies data protection standards essentially equivalent to those set out in the EU’s standards, i.e. the GDPR and Law Enforcement Directives, and complies with specific additional data protection standards stemming from the CJEU opinion on EU-Canada PNR agreement (opinion 1/15).

Will DNA, fingerprints and vehicle registration data be exchanged between the UK and EU for law enforcement purposes? (Prüm)

The negotiating directives provide that arrangements should be established for timely, effective, efficient and reciprocal exchanges of data on DNA, fingerprints and vehicle registration (so- called ‘Prüm data’). However, there will be no direct access to such sensitive personal data but only through a decentralised system based on a “hit/no hit” model. After a “hit”, i.e. a confirmation that something is available, this needs to be followed up by a request to receive this data from the Member State concerned.

The EU currently has concluded Prüm-agreements with Schengen Associated Countries (Iceland, Norway, Switzerland and Liechtenstein), but the model is open to third countries outside Schengen.

Essential preconditions for any such arrangements are that the UK applies data protection standards essentially equivalent to those set out in the EU’s Law Enforcement Directive standards, and provides reciprocal access to EU Member States of data available at UK national level in the same way as EU27 Member States do.

Will the UK keep access to the Schengen Information System (SIS)?

Non-Schengen third countries do not have access to SIS. SIS is a measure that contributes to security within the EU, in which there are no internal borders. It is intrinsically linked to the free movement of persons. The Court of Justice has consistently defended the coherence of the Schengen acquis.

We need to set up new effective ways of data sharing on wanted and missing persons and objects, while taking into account the UK’s future status. This would be achieved via different complementary tools. These are: making full use of Interpol, the Europol access to SIS to verify links between data provided to Europol with SIS data. Finally, streamlined bilateral exchanges of information between law enforcement authorities, based on specific standard forms, strict deadlines and secure communication channels to facilitate and speed up cooperation.

What would the UK role in Europol be?

The negotiating directives provide for cooperation between Europol and the United Kingdom law enforcement authorities. This will be done in line with the rules for third countries established in EU legislation.

In practice, this means that the UK would be able to:

• share any relevant data, initiate new cases, use common secure communication channel – as it is the case now;
• participate in all Europol analysis projects where Europol, Member States and other partners cooperate on ongoing live-investigations, if Member States participating in such analysis projects agree; and
• take part in common operations, get analytical support from Europol, keep its Liaison Officers at Europol and be informed about relevant data concerning the UK. However, it would not get access to the Europol Information System or have any role in governance of the EU agency.

The negotiating directives propose an ambitious law enforcement and judicial cooperation in criminal matters, guaranteeing at the same time security and fundamental rights of our citizens. Cooperation will, however, be different from what we have today. This is a logical consequence of the UK’s decision to withdraw from the EU. The UK will leave the common rules-based system underpinned by shared principles, common obligations and enforcement.

Will the EU and the UK continue to cooperate on sanctions?

EU sanctions will continue to be driven solely by EU interests. However, cooperation is important to maximise the impact of our sanctions. We should cooperate with the UK the same way we cooperate with other like-minded third countries.

Will UK participation in EU missions and operations have to stop?

The UK will be invited to participate by the Union in its missions and operations on a case-by-case basis (no standing invitation), following the existing rules and preserving the independence of the Union’s decision-making process.

Will you continue to cooperate in third countries on development cooperation?

The EU will maintain its autonomy and strategic programming of development priorities. The EU and the UK will continue to cooperate on the ground to maximise the impact of development cooperation. The UK will be able to make use of existing mechanisms for third countries’ participation, including with regard to any proposals for development cooperation instruments.