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Global Britain: Future ambitions and strategy to be set by Parliament

 

In the first session of 2021 – and the first since Brexit – the House of Commons will set the strategy for achieving the UK’s aspirations and goals.

Foreign Secretary, Dominic Raab, described the Government’s vision of a “truly global Britain” as having three ‘pillars’:

  • “to prove that we are the best possible allies, partners and friends with our European neighbours;”
  • “the UK’s role as an energetic champion of free and open trade;” and
  • “the UK as an even stronger force for good in the world.”

The Parliamentary library briefing for MPs, ahead of the debate adds that the ‘Foreign, Commonwealth and Development Office’ was established in September 2020 with the aim of “focusing the UK’s soft power and use of development aid.”  Unfortunately, this was immediately undermined by the Chancellor’s ‘Autumn Spending Review’ – in which the Government announced a big reduction in the ‘overseas aid budget’ – a core spending commitment for the betterment of the World that had been respected by successive Governments for over the last several decades.

Other issues identified in the briefing that MPs will have to take into account are:

  • the UK’s relationship with the United States under a new President;
  • ongoing tensions with China over Hong Kong are two obvious topics;
  • the impact of the Covid-19 pandemic on international relations – and on the UK’s future financial commitments;
  • a shift in the international order – marked by intensifying great power competition and a shift in the world’s economic centre of gravity towards Asia;
  • the increasingly tangible effects of climate change;
  • an increasingly complex global economic context; and
  • increasing instability and challenges to global governance.

Establishing the goals as an independent sovereign state – and then demonstrating leadership by committing and implementing the strategy are key to establishing credibility.  The UK holds the Presidency of the G7 this year – the first time since 2013.  Glasgow will host the UN climate change conference COP26 in November.

Background

The Political Declaration (PD) on the future UK-EU relationship, agreed by the UK and EU alongside the Withdrawal Agreement in October 2019, indicated that a future relations agreement would cover co-operation in ‘foreign policy and defence’.  However, the present UK Government decided that ‘foreign policy and defence’ does not require a treaty framework – excluded it from negotiations and the ‘Trade and Co-operation Agreement’, announced on 24 December 2020, did not make any such explicit provision.

There are a number of ‘Common Provisions’ between the EU and the UK with an international dimension:

  • the principles of democracy, the rule and law and respect for human rights (including respects for various international human rights’ instruments including the Universal Declaration of Human Rights);
  • the fight against climate change, and commitment to the Paris Agreement on climate change in particular;
  • countering proliferation of weapons of mass destruction;
  • implementing obligations to counter the illicit trade in conventional weapons;
  • co-operation to combat acts of terrorism in accordance with international law; and
  • global co-operation on issues of shared economic, environmental and social interest, including the two parties endeavouring to co-operate on global issues and to co-ordinate positions in multilateral organisations including the United Nations, the G7, G20, OECD, IMF, World Bank and WTO.

Government Vision

There is no clear view from the Government, now that Brexit has happened, as to what ambitions and targets the nation should set for its future as a ‘Global’ player.

The Parliamentary briefing for MPs lists and quotes from speeches from the Prime Minister, and others, when the phrase ‘Global Britain’ has been used in recent months.  All are short on detail, any sense of direction or strategy, and set no quantifiable goals or targets.

There are links to newspaper and academic articles that implore MP’s to take action quickly or risk drifting along – a situation that means the country suffers all the costs and disadvantages from leaving the EU ‘single market’ and ‘customs union’ – with none of the benefits that were claimed by the ‘Leavers’ as a Brexit dividend.

The latest Government forecast anticipates an overall reduction of 4.4% per annum in economic activity and GDP compared to remaining a full member of the EU.

The BBC ‘fact check’ on the four claims so far made by the Prime Minister as being possible “only because we have taken back control of our sovereignty” came back as ‘untrue’.  Each could have been implemented whilst an EU member state – proven by the fact that other EU nations have done just that.

  • “They’ve already got substantial amounts of money coming back into this country, as a result of leaving the EU.”  In fact the Treasury has re-calibrated the ‘Brexit settlement costs’ and the UK will pay net £33.4 billion to the EU.
  • “One of the first things we’ve done on day one is get rid of pulse trawling.”  France and Belgium had already outlawed the practice within their territorial waters.
  • “We will be able to ban these huge hoover trawlers that come in and hoover everything off the bottom of the sea.”  Note that Johnson is thought to be referring to ‘super trawlers’ – “hoover trawlers” isn’t a widely recognised term.   The UK Marine Management Organisation has already granted temporary licences to at least seven super trawlers – six of which are registered in the EU – to continue fishing in UK waters beyond 31 December 2020.
  • “One of the things you can do is have free ports.”  In fact, there are more than 80 ‘free ports’ operational across the EU.  The UK had a number until 2012 when it elected to close them.

Postscript

During the 2 hour discussion led by Secretary of State, Lizz Truss, nothing new with regard to actions or achievements with respect to Global Britain.  Truss in summarising her speech:  “At this tough time, we need to embrace our future as a confident, optimistic and outward-looking global Britain,
delivering jobs and prosperity at home while helping lead the fight for free and fair trade abroad.”

References

https://hansard.parliament.uk/pdf/Commons/2021-01-11

MP’s Pre-debate briefing for 11 January 2021:  Global Britain

Brexit Eve: Government needs to move quickly if UK is to capitalise on Sovereignty – Europartnership

Brexit: Boris Johnson’s claims about its benefits fact-checked – BBC News

e-Guide – “UK – EU: Doing Business in the Post-Transition World that began on 1 January 2021”

Our downloadable e-Guide – UK – EU: Doing Business in the Post-Transition World that began on 1 January 2021 has now been updated to incorporate the UK-EU Trade Agreement that underpins the ‘EU (Future Relationship) Act’.

There is a summary of the key elements from the 1255 page ‘Trade Agreement’ – along with commentary and pointers to Post-Brexit changes that business and citizens all need to make.

There are sections on the Northern Ireland Protocol, Gibraltar, the latest post-Brexit economic forecasts, and the £33.4 billion cash ‘settlement’ that the UK has agreed to pay to the EU.

The guide aims to help business quickly check or identify the changes with greatest impact on them – so they can plan and implement a rapid response.

PostTransitionBusinessGuideV7

Northern Ireland ‘Brexit Protocol’ now fully implemented

The rules agreed by an EU-UK ‘Joint Committee’ on how goods will move between Northern Ireland and Great Britain – including how they can avoid tariffs – came into effect at 23:00 GMT on 31 December 2020.

The parties have also agreed some ‘temporary grace periods’ for goods such as Agri-food and medicines – in order to “give Northern Ireland businesses time to prepare for the new rules and checks”.

There were some immediate issues on 1 January 2021 at Holyhead where a number of freight vehicles were refused passage to the Province for non-compliance with the new customs regulations and documentation.

The Protocol on Ireland/Northern Ireland (the Protocol) is part of the Withdrawal Act that has international Treaty status.  It sets out the relationship Northern Ireland will have with the EU – and Province’s relationship with ‘Great Britain’, that is, the rest of the UK.

The principal purpose of the Protocol is to maintain an open border that currently exists between Ireland and Northern Ireland – with unfettered movement of goods and people on the island of Ireland.  This means that Northern Ireland will follow:

  • the EU’s ‘customs union’ code for bringing goods in and out of the EU; and
  • many EU ‘single market’ rules for goods.

Great Britain, meanwhile, left both the EU ‘single market’ and the EU ‘customs union’ on 31 December 2020 – and is free to set its own custom and regulatory rules.

Key to the implementing the Protocol is the introduction of a new regime of checks and controls for goods moving both from Great Britain to Northern Ireland – and, vice versa, from Northern Ireland to Great Britain.

In May 2020, the UK Government sent a ‘command paper’ to the Joint Committee requesting some flexibility on implementing the Protocol:

  • “Not requiring NI business complete export and exit summary declarations when sending goods to Great Britain; and
  • Decreasing the frequency and complexity of checks on Agri-food moving from Great Britain to Northern Ireland.”

When these were not agreed to by the EU, the UK decided to introduce two pieces of legislation that would “allow it unilaterally deal with the areas of concern it raised in the Command Paper.”

In September 2020: The ‘UK Internal Market Bill’ would have granted the Government powers to unilaterally decide to waive exit declarations for NI firms and reinterpret the Protocol’s State Aid rules.  It was openly acknowledged by the Government that this “would break the UK’s legal obligations under WA and international law.”

In December 2020: The ‘Taxation (Post-transition period) Bill’ aiming to empower Ministers NOT to collect tariffs on “at risk” goods if agreement could not be reached in the Joint Committee.  ‘At Risk’ goods are those moved between Northern Ireland – but which subsequently end up in Southern Ireland.

The EU objected to these laws in the strongest terms, and the House of Lords repeatedly stripped out parts of the Bills that related to the Protocol, with the Government continuing to reinsert them.  Michael Gove, on behalf of the the UK Government, conceded the principle to the EU in Brussels on 17 December 2020 – and the Government removed the offending clauses from the Bills.  In so doing the UK removed a major obstacle to the EU concluding both the ‘Northern Ireland Protocol’ and the ‘EU–UK Trade and Cooperation Agreement’.

A Joint Committee protocol which was duly implemented on 31 December.  It would have applied whether or not the UK concluded a Brexit trade agreement with the EU.  It covers:

  • Definitions of “At risk goods”;
  • Agricultural subsidies – set at £382.2 million per annum; and
  • Presence of EU representatives in the Province – e.g. the EU Customs Declaration Service.

There remain “areas where the UK sought easing and reinterpretations of EU rules under the Protocol”.  Unilateral declarations have been used here instead.  Whilst not legally binding, they aim to aid ‘understanding’ on how the UK aims to interpret Treaties.  They cover:

  • Declarations on export declarations.  HMRC will, instead, collect “equivalent” information from sources such as shipping manifests.  It is not clear to what extent this will decrease administrative burdens for firms compared to having to fill out the EU’s customs declarations;
  • Declarations on agri-food products.  Supermarkets and their suppliers bringing agri-food products into Northern Ireland, have been given a three-month grace period before they must comply with the EU’s full Sanitary & Phytosanitary (SPS) regime;
  • Declarations on chilled meats.  Supermarkets will benefit from a six-month grace period before having to comply with EU SPS rules for bringing in certain types of chilled meats, such as sausages, from Great Britain to Northern Ireland.  These products must clear through Border Inspection Posts, have official certificates from UK authorities – and carry a label saying, “these products from the United Kingdom may not be sold outside Northern Ireland”; and
  • Declarations on human & veterinary medicines.  Northern Ireland has a year-long grace period for implementing in full the EU’s rules on testing and selling human and veterinary medicines.

For its part, the EU made a Unilateral Declaration clarifying its position regarding ‘State Aid’.  As the ‘Court of Justice of the European Union’ is the body with ultimate jurisdiction over EU State Aid matters, it not clear how this could be applied.

Reference:

Joint Committee decisions on the Northern Ireland Protocol – House of Commons Library (parliament.uk)

UK payment to the EU as a ‘Brexit settlement’ confirmed at £33.4bn

A Post-Brexit briefing to MPs from the Office of National Statistics confirms the cost of Brexit payable as a ‘cash settlement’ to the EU at £33.4 billion.

The basis and principles of the settlement were agreed during withdrawal negotiations and form part of the ‘Withdrawal Agreement’ – a legally binding Treaty that sets out the negotiated terms of the UK’s departure from the EU.

There are four elements to the settlement:

  1. The UK left the ‘political’ union in January 2020.  However, during the 11-month ‘transition period’ that ended on 31 December, the UK continued to pay into the EU budget ‘almost as if it were a Member State’.  In return, it received funding drawn from EU programmes – such as ‘structural funds’ and ‘farming subsidies’ – as if it were a Member State.
  2. EU annual budgets commit to future spending without member states making cash payments up front.  Before leaving the bloc in January 2020, the UK had ‘signed up’ to a number of commitments. They agreed to honour committed payments when they become due.  In return, the UK recipients will receive funding on where commitments were made to them by the EU.
  3. The UK will share the ‘financing of some EU liabilities as at the end of 2020’ – and ‘any materialising contingent liabilities.’  It will receive back a share of some assets.  The pension fund of EU staff is likely to be the most significant of these liabilities.  The most significant item likely to be returned to the UK is the capital it paid into the European Investment Bank.
  4. The UK has agreed to continue contributions 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.  The UK’s contribution counts towards its commitment to spend 0.7% of national income on overseas aid.

Some uncertainties remain, for instance the cost of the settlement in sterling is dependent on the £-€ exchange rate.  The lower the pound falls, the more it costs in sterling to buy the euro needed.

The ONS has prepared a detailed spreadsheet – available online – that lists all the elements and calculations.

The £33.4 billion estimate comprises:

£   8.5 billion:        Net contribution through the ‘transition period’ to 31 December 2020

£ 19.8 billion:        Net sum ‘commitments’ to EU programmes

£   5.1 billion:         Net sum of future non-programme liabilities

 The bulk of the payments will be made to programmes running within the present EU budget cycle – that is, by 2025.  The final liability ends on the retirement of the youngest EU employee in the current pension scheme – and that could be as far away as 2065!

Reference:

https://researchbriefings.files.parliament.uk/documents/CBP-8822/CBP-8822.pdf

Future of Gibraltar settled on eve of Brexit

In the final hours before Brexit, Spain and Britain concluded an Agreement to avoid a ‘hard’ border between Gibraltar and Spain.

The deal was announced by Spanish Foreign Minister, Arancha González Laya – and later confirmed by the UK Foreign Office on 31 December 2020.

Citizens of Gibraltar – a  British Overseas Territory – had voted 96% to ‘remain’ in the EU in the 2016 referendum.  The future of the territory had been addressed in some detail in the 2019 Withdrawal Agreement – but was not included in the scope of the Brexit trade negotiations.  Instead, the EU had requested that UK and Spain negotiate a bi-lateral agreement on a ‘political framework to form the basis of a separate treaty between the UK and the EU regarding Gibraltar’.

Now – under arrangements broadly similar to Northern Ireland on the island of Ireland – Gibraltar will join the EU’s ‘Schengen’ zone – and will follow other EU single market and customs union rules for free movement of goods and services.  The ‘Rock’ is a centre for financial activity and a conduit for financial services, with many Gibraltarians and EU citizens employed in the sector.  About 15,000 Spanish workers travel there to work every day.

Pending the drafting and signing of the formal Treaty, the border will be open – allowing unfettered travel between mainland Spain and Gibraltar.

Without agreement, sales and provision of goods and services would have been hampered by the shift from ‘passporting’ to the ‘equivalence’ – as has happened to UK businesses and institutions.  Border controls would have made daily travel impossible – and the 90 in every 180 days limit on citizens would have rendered employment impractical leading to potentially thousands of job losses.

Commenting on the agreement, Ms González Laya: “the fence is removed, Schengen is applied to Gibraltar… it allows for the lifting of controls between Gibraltar and Spain.”

The EU will send ‘Frontex’ border guards to facilitate free movement to and from Gibraltar for the next four years.

Constitutionally, Gibraltarians are British citizens.  They elect their own representatives to the territory’s ‘House of Assembly’ – whilst the Queen appoints a ‘Governor’.

Home to a British military garrison and naval base, Gibraltar is self-governing in all areas apart from defence and foreign policy.

As a member of Schengen, border guards will be now required to protect the zone’s ‘external border’ – at Gibraltar’s airport and seaport.  Gibraltar joins 22 other EU states in the passport-free Schengen zone along with Norway, Switzerland, Iceland and Liechtenstein.

Gibraltar businesses must continue to comply with EU fair competition rules in areas such as financial policy, the environment and the labour market.  For all practical purposes, they simply continue meeting the regulatory standards under which they have operated whilst the UK was a member state.

UK Foreign Secretary, Dominic Raab MP on reaching the Agreement with Spain said: “We will now send this to the European Commission, in order to initiate negotiations on the formal treaty.  In the meantime, all sides are committed to mitigating the effects of the end of the Transition Period on Gibraltar, and in particular ensure border fluidity, which is clearly in the best interests of the people living on both sides.”

On the previous day, 30 December 2020, addressing House of Commons during the Brexit debate, Conservative MP, Bob Neill had reminded Parliament that the UK had a “political and moral obligation” to secure a post-Brexit deal for Gibraltar.  He said: “We gave a clear undertaking to the people of Gibraltar, who although they voted overwhelmingly to remain in the European Union are equally determined to remain part of the British family, that we would not leave them behind and would not leave the European Union without securing a deal for them too.”

Although it came – literally – ‘late in the day’, we welcome the continuity for Gibraltarians and Spanish co-workers in the territory.  Anything less would have been a travesty of justice and democracy.

Reference:

UK-Gibraltar-Spain agreement: statement from the Foreign Secretary – GOV.UK (www.gov.uk)

Brexit Transition tomorrow: ‘EU Future Relationship’ Act – passed in a day

Picture: 16:00 on 30 December 2020.  Boris Johnson Tweet.  Signing the TCA…choosing to ignore the democratic process – and putting himself above the Law, Parliament and the Constitutional requirements of the United Kingdom – prior to the ‘Bill’ completing the process to become an ‘Act’.

30 December 2020:  Parliament was recalled for just one day to pass legislation required to implement the draft agreement ‘Trade and Cooperation Agreement’, reached between the UK and European Union on Christmas Eve.

Without this ‘ratification’ the UK would have left the EU at 23:00 GMT 31 December 2020.

Before any international agreement can be ratified, the Law requires ‘21 Parliamentary sitting days’ – allowing time for scrutiny and open discussion.

As the Government ‘concluded’ negotiations on a trade deal only on 24 December – it then decided to ‘bypass’ the requirements of the ‘Constitutional Reform and Governance Act’, 2010.  The ‘European Union (Future Relationship)’ Bill completed all of the 12 Parliamentary stages through the House of Commons, House of Lords, Committees and Royal Assent in one day.  Indeed, as Boris Johnson’s Tweet shows – he chose not to wait even for this process to complete.

Embarrassingly for every British citizen that believes and has put their trust in democracy, the Prime Minister in a ‘travesty’ of a lawful and constitutional process put himself above Parliament and the British constitution by signing a Treaty mid-process.  The deal was signed whilst the House of Lords were in session and working through the details of the draft Agreement.

A cross-party House of Commons ‘Committee on the Future Relationship with the EU’ had worked through the night and published- in a unanimously agreed report –  an initial assessment of the 1,246-page draft ‘Agreement’ as an briefing for MPs overnight.  The report’s key findings include:

  • Having an agreed deal in place is better than no deal.  The Committee welcomed an outcome that “ensures UK businesses and consumers will not face the prospect of tariffs from 1 January.  Considering the interconnectedness and geographic proximity of the two markets, and their common interests, the importance of the agreement should not be underestimated.”
  • Significant change is still coming on 1 January.  The Agreement “does not preserve current trading arrangements.  It is therefore critical that the Government is clear in its communications to businesses, traders and communities about the terms of the deal and its implications.”
  • Both sides should implement the Trade and Cooperation Agreement – and get on with addressing the remaining uncertainties.  The Committee urges “both sides to proceed with implementation and establish the new institutional arrangements set out under the Agreement.  Priority should also be given to outstanding areas of uncertainty, such as equivalence for financial services and a data adequacy decision.”
  • The Committee calls on the “relevant authorities on both sides to support businesses through the implementation of new arrangements, rather than punishing them for unintended non-compliance.”
  • The “compressed timetable for ratification is concerning”.  The complexity of the Agreement means that it will take more than a day for its contents and implications to be fully understood.  MPs “have been left with very little time in which to read the TCA and the accompanying Future Relationship Bill and reach a judgement on their contents.”  The Bill will not be subject to detailed scrutiny before a vote.

Committee Chair, Hilary Benn MP, said that businesses: “will not have to face the economically damaging consequences of tariffs that would have resulted from no deal.  Reaching an agreement allows for future cooperation between the UK and EU on matters of mutual interest.  Uncertainty remains in areas such as financial services and data adequacy as the full implications of the end of the transition period become clear.”

Meanwhile, the EU has similarly not constitutionally been able to ‘fully ratify’ the Agreement in the time available.  The European Parliament will not vote until the New Year.  Instead, the 27 Member State governments agreed yesterday – 29 December 2020 – to ‘provisionally’ apply the deal, pending the consent of the European Parliament in the new year.

The treaty was, therefore, signed on behalf of the EU by European Council President, Charles Michel, and European Commission President, Ursula von der Leyen, on 30 December 2020.

A Royal Air Force plane immediately transported the text from Brussels to London – and the Prime Minister signed it immediately after stage 4 of the Parliamentary process – rather than waiting for the completion of the 12 required stages through Parliament.

The Government had already engineered Parliament into making a stark choice – accept and ratify a ‘thin’ deal – or face the cliff-edge of a ‘no-deal’.

The price of using constitutional breach to force through and ‘get Brexit done’ may yet prove to be a high one for democracy.

This legislation will underpin the most important Treaty for 47 years – one that will govern every aspect of the UK’s future relationship with the EU for decades to come.  It has been forced through parliament in an all-time record time of one day – and just one day before it takes effect.

The First Reading of the Bill dispensed with, the Second Reading was allowed 5 Hours, the ‘Commons Committee’ stage just 4 minutes, and Third Reading was put to a vote without allowing any debate.  The passage of the Bill moved on to the House of Lords at 3:00 o’clock.

Boris Johnson then, in a demonstration of utter contempt for the constitution of the United Kingdom and democracy, choose not to wait for even for this ‘charade’ to run its course – he signed the Treaty with Europe immediately after the House of Commons vote.

He tweeted: “By signing this deal, we fulfill the sovereign wish of the British people to live under their own laws, made by their own elected Parliament.”

Irrespective of the democratic outcome in the UK – the Agreement will then take effect from 1 January 2021.

What does Johnson’s deal mean according to the ‘Lords’ – 23 new joint UK-EU ‘Working Groups’, 250,000 additional customs declarations per year, 50,000 new customs and border agents to be recruited and trained, a new requirement for customs declarations for goods moving between Great Britain and Northern Ireland,…their verdict on Boris Johnson’s ‘getting Brexit done’.

The House of Commons Speaker, Sir Lindsay Hoyle, informed MPs that the European Union (Future Relationship) Act 2020 – ratifying the UK’s trade deal with the EU  – been granted royal assent by the Queen in the early hours of New Year’s Eve.  The Act comes into force at 23:00 GMT on 31 December 2020.

Recalled for the day, MSPs in the Scottish Parliament debated and voted to reject the post-Brexit trade deal agreed between the UK and the EU:  Nicola Sturgeon: “While a no deal outcome must be avoided”, the deal that has been negotiated with EU leaders will “cause severe damage to Scotland’s environmental, economy and social interests”.

And we cannot end without noting, for the record, that the Trade and Cooperation Agreement could not have been concluded without the UK yielding to the EU on the sovereignty of Northern Ireland – an action completed by Michael Gove in secret in Brussels on 17 December – with Parliament only informed as the ‘treaty-breaching’ clauses were withdrawn from the ‘Internal Market’ Bill on his return.  This move means that the Province remains in the EU customs union and there is the introduction of a new ‘hard’ border between Northern Ireland and Great Britain.

References:

The UK-EU future relationship: the Trade and Cooperation Agreement [PDF]

Committee on the future relationship with the European Union

Bypass of the Constitutional Reform and Governance Act 2010

Member State governments agreed yesterday to provisionally apply the deal

Brexit Transition in 2 Days: EU announces a €5 billion ‘Brexit Adjustment’ fund for EU businesses

On Christmas Day 2020, the European Commission announced a ‘Brexit Adjustment Reserve” – a fund of €5 billion available to support to businesses across the 27 Member States.

It was published in Brussels just one day after the EU concluded a draft trade deal with the UK.

Brexit Adjustment Reserve

At 23:00 GMT on 31 December 2020 – midnight in Brussels – Great Britain leaves the EU ‘single market’ and EU ‘customs union’.

Even with the new ‘EU-UK Trade and Cooperation Agreement’ in place, there will be big changes on 1 January 2021.  There will be disruption to smooth operations and ‘business as usual’ for millions of companies and hundreds of millions of citizens.

The EU ‘Brexit Adjustment Reserve’ will: “provide support to Member States, regions and sectors, in particular those that are worst affected by the adverse consequences of the withdrawal of the UK from the Union, mitigating thus its impact on economic, social and territorial cohesion.”

It aims to fund “specific measures set up by the Member States to help businesses and economic sectors, workers, regions and local communities suffering from the impact of the end of transition period”.

The Brexit Reserve will apply across all 27 Member States – with up to €5 billion in total available.

Its allocation method, architecture and functioning have been designed to focus support to those that are “worst affected”.  It has been set up as a “special instrument” – and is, therefore, additional to the EU budget ceilings set in the ‘Multiannual Financial Framework 2021-2027’.

Financial support will be disbursed in two allocation rounds.  The first – and more substantial one – will be activated in 2021.  The amount per Member State will be determined “taking into account the relative degree of economic integration with the UK, including trade in goods and services” – and an amount to reflect the “losses that some Member States will suffer from the limitations in accessing the UK waters for fishing activities”.

The second payment round will be disbursed in 2024 as based on the expenditure incurred and declared to the Commission – and how the initial tranche was put to use.

The Reserve will support “measures specifically set up in relation to the withdrawal of the UK from the Union.”  Measures can include the following:

  • support to economic sectors, business and local communities, including those dependent on fishing activities in the UK waters;
  • support to employment and reintegration in the labour market of citizens returning from the UK, including through short-time work schemes, re-skilling and training; and
  • ensuring the functioning of border, customs, sanitary and phytosanitary and security controls, fisheries control, certification and authorisation regimes, communication, information and awareness raising for citizens and businesses.

Each Member State can design and implement “necessary measures aimed at stemming the immediate impact of the withdrawal.”

The withdrawal of the UK from the EU: “poses specific risks to the fisheries sector in terms of less favourable access to the UK waters.”  This has been taken into account in calculating the initial disbursement to Member States.

Member States must: “respect of the principles of sound financial management, transparency and non-discrimination and the absence of conflict of interest.”   The Commission’s proposal sets out requirements for the: “management, control and audit of the financial contribution under the Reserve” – striking the right balance between legality and regularity of expenditure on the one hand and simplification on the other.

Member States may use “existing systems already used for the management and control of cohesion policy funding or the European Union Solidarity Fund.”

The Brexit Adjustment Reserve will be made available “as soon as possible” to address the immediate consequences of the withdrawal.

Background

Free movement of persons, goods, services and capital between the EU and UK ends as the UK leaves the EU.  For the avoidance of doubt this means: the EU single market; the EU customs union; all EU regulatory regimes; and all EU ‘international agreements’.

The EU and the UK will, from 1 January 2021,  form two separate markets – two distinct regulatory and sovereign legal spaces.  This will, according to the European Commission: “recreate barriers to trade in goods and services and to cross-border mobility and exchanges that have not existed for decades”.  It impacts “public administrations, businesses, citizens and stakeholders on both sides”.

There is no equivalent financial support proposed by the UK Government to businesses in Great Britain.

Reference

com_2020_854_final_act_v1.pdf (europa.eu)

e-Guide “UK – EU: Doing Business in the Post-Transition World”

Our downloadable e-Guide – “UK – EU: Doing Business in the Post-Transition World that began on 1 January 2021” has been updated to incorporate the UK-EU Trade Agreement that underpins the ‘EU (Future Relationship) Act’.

There is a summary of the key elements from the 1296 page ‘Agreement’ – along with commentary and pointers to Post-Brexit changes business and citizens all need to make.

There are sections on the Northern Ireland Protocol, Gibraltar, the latest post-Brexit economic forecasts, and the £33.4 billion cash ‘settlement’ that the UK has agreed to pay to the EU.

It aims to help business quickly check or identify the changes with greatest impact on them so they can plan and implement a rapid response.

PostTransitionBusinessGuideV7

Brexit Transition in 4 Days: The rest of ‘the deal’

This post completes a review of the ‘UK-EU Trade and Cooperation Agreement’ completed on Christmas Eve and – assuming it completes the ratification process in the next 72 hours – sets the terms as the UK leaves the EU ‘single market’ and ‘customs union’.

For an overview:  Brexit Transition in 6 Days: Overview of the ‘deal’ and immediate next steps in order to ratify it – Europartnership

For matters relating to trade plus some specific aspects such as aviation, energy and road transport: Brexit Transition in 5 Days: With only hours remaining – focus on high impact changes – Europartnership

In this post:  social security; cooperation on law enforcement and criminal justice; “thematic” issues, notably health collaboration; UK participation in EU Programmes; dispute settlement; and territorial limits.

Part 2 (continued from yesterday’s post)

Social Security Coordination and Visas for Short-term Visits:

  • Workers and employers are only liable to pay social security contributions in one state at a time. ‘Generally, this will be in the country where work is undertaken’;
  • where the UK or an EU Member State is responsible for the healthcare of an individual, they will be entitled to reciprocal healthcare cover.  Healthcare provisions – akin to those provided by the European Health Insurance Card (EHIC) scheme – continue.
  • the UK will treat the each of the EU 27 states ‘as a bloc’ with respect to ‘short-term visit visas’;

Fisheries

  • The UK’s leaves the EU’s Common Fisheries Policy.  It has a ‘new identity as a sovereign independent coastal State’ with ‘the right to manage the resources in its waters’;
  • UK and EU share a ‘commitment to sustainable fisheries management’ alongside shared principles of ‘promoting long-term environmental, social and economic sustainability’;
  • Whatever value of fish is caught by EU vessels in UK waters, British fishers will be allowed to catch 25% in value of that sum in EU waters;
  • the new quota arrangements will be phased in over five years to allow the respective fleets time to adapt to the changed ‘opportunities’;
  • a specialised ‘Committee on Fisheries’ will provide a forum for the UK and the EU to discuss and cooperate on a range of fisheries matters.  These include, but are not limited to: cooperation ahead of annual fisheries consultations, multi-year strategies, data-sharing and monitoring and compliance;
  • EU vessels may fish in ‘Crown Dependency waters to levels consistent with historic patterns of fishing’;
  • the Agreement can be terminated at any point with nine months notice.

Part 3 – Law Enforcement and Judicial Cooperation in Criminal Matters

  • DNA and fingerprint data will continue to be exchanged through the Prüm system;
  • the Agreement: enables the exchange of vehicle registration data in the future; provides for transfers of Passenger Name Record data from the EU to the UK; and information sharing ‘in response to requests’, as well as the ‘spontaneous provision of information, including that which relates to wanted and missing persons and objects’;
  • the Agreement does NOT: provide for the UK to continue membership of either Europol or Eurojust.  It is possible that the UK may be allowed to ‘second’ liaison officers to each of Europol and Eurojust.
  • the Agreement means that the UK is no longer a member of the EU-wide ‘arrest warrant’ scheme, but will have extradition arrangements, similar to the EU’s ‘Surrender Agreement’ along with Norway and Iceland;
  • the Agreement ‘supports effective cooperation on mutual legal assistance in criminal matters’;
  • the Agreement provides for the ‘fast and effective exchange of criminal records data between the UK and individual EU Member States’;
  • the Agreement ‘commits the UK and EU to support international efforts to prevent and fight against money laundering and terrorist financing’;
  • the Agreement ‘supports effective cooperation on asset freezing and confiscation’;

Part 4 – Cooperation

Cooperation on Health Security: 

  • the Agreement supports effective arrangements and information sharing between the UK and the EU in the event of a serious cross border threat to health – particularly important in the context of Covid-19;
  • the EU may invite the UK to participate in the EU Health Security Committee to support the exchange of information and facilitate coordination in relation to specific serious cross-border threats to health.

Cooperation on cybercrime:

  • the Agreement provides a framework for UK-EU cooperation in the field of cyber security;
  • the UK may voluntarily participate in the activities of expert bodies including the European Union Agency for Cybersecurity (ENISA) and the Network and Information Systems (NIS) Cooperation Group.  It may voluntarily cooperate with the EU’s Computer Emergency Response Team (CERT-EU).

Part 5 – UK participation in EU programmes such as Space exploration and Nuclear Energy

  • The Agreement sets out the arrangements for any UK participation in EU programmes and ‘access to programme services’ – including ‘how the UK’s financial contribution will be calculated’.
  • The UK has stated its intention to participate in: ‘Horizon Europe’, ‘Euratom Research and Training’, and ‘Copernicus’.  Details will be added in a protocol to the main Agreement when they have been finalised.

Part 6 – Disputes Resolution

  • The Agreement includes ‘dispute resolution mechanisms’ that are appropriate for a relationship between sovereign equals.
  • There is no role for the Court of Justice of the European Union.
  • There is restatement by both UK and EU of their existing commitments to ‘human rights, the rule of law, the fight against climate change and countering the proliferation of weapons of mass destruction’.
  • Both the UK and EU have restated their ‘commitment to high personal data protection standards’.
  • In the event that ‘serious economic, societal or environmental difficulty arises’ between them, the UK or the EU may unilaterally take ‘strictly proportionate and time-limited measures to remedy the situation’.

Part 7

  • The Agreement is subject to review every five years, or should a new country accede to the EU.
  • Territorial Scope of the Agreement includes Great Britain, Northern Ireland, Gibraltar, and the 50 Worldwide ‘UK Overseas Territories and Crown Dependencies’

Related Agreements

  • The UK and the European Atomic Energy Community (Euratom) have agreed a separate Nuclear Cooperation Agreement (NCA).
  • An Agreement on ‘Security Procedures for Exchanging and Protecting Classified Information’ will supplement the Trade and Cooperation Agreement.

Contact me by Email or LinkedIn for further detailed insight or potential mitigation action.

Brexit Transition in 5 Days: With only hours remaining – focus on high impact changes

 

The changes for ‘businesses and citizens’ resulting from leaving the EU ‘single market’ and ‘customs union’ are unparalleled.  No country has ever left the EU before.  New rules apply to the relationship between Great Britain and the 27 EU states from 1 January.  The rules and penalties will be strictly applied across Europe – and there will be, according to the UK Government, “friction” in many aspects of life and work.

The relationship will be governed by an Agreement that will – if and when it is ratified – be the basis for an International ‘Treaty’.  The new regime is forecast to last for “decades”.

The UK negotiators wanted individual agreements on the many aspects of the separation, allowing areas to be ‘tuned’ in the light of experience.  They have had to settle for a comprehensive multi-provision agreement – the EU simply wanting to settle the terms of the split and move on to focus on its own agenda and priorities.

The UK has chosen to become a ‘third country’ – and the EU will want to divert as little attention as possible on a nation that has – according to the Prime Minister’s foreword in the 34 page summary of the ‘UK-EU Trade and Cooperation Agreement’: has implemented “the instruction of the British people – expressed in the referendum of 2016 and the general election last year – to take back control of our laws, borders, money, trade and fisheries.”

The full details of the Agreement – which we are told will run to 1200 pages – will be structured into 7 ‘Parts’.  My intention in this summary post is to allow business to home in on the areas that will impact them for further study and rapid response.

  1. common and institutional provisions in the Agreement;
  2. trade and some specific aspects of the relationship such as aviation, energy, road transport, and social security;
  3. cooperation on law enforcement and criminal justice;
  4. “thematic” issues, notably health collaboration;
  5. participation in EU Programmes, principally scientific collaboration through Horizon;
  6. dispute settlement; and
  7. final provisions.

In parallel, there is a separate ‘Nuclear Cooperation Agreement; and an agreement on ‘Security Procedures for Exchanging and Protecting Classified Information’.

Details

Part 1 – Institution

The relationship between the UK and the EU will be based on in ‘international law’ and not ‘EU law’.  A joint ‘Partnership Council’ will ‘supervise’ the Agreement.

Part 2 – Trade

  • The Agreement establishes ‘zero tariffs or quotas’ on trade between the UK and the EU where ‘goods meet the relevant rules of origin’.
  • The EU may apply ‘preferential tariff rates’ e.g. non-UK components in UK manufactured products such as electric cars that support a move towards a carbon ‘Net Zero’ future.
  • ‘EU inputs and processing’ may be counted as ‘UK input’ in UK products exported to the EU – and vice versa under ‘Rules of Origin’.
  • The Agreement ‘envisages’ arrangements to share information on dangerous and non-compliant products on the UK and EU markets.
  • There are Annexes detailing specific arrangements for: medicinal products; motor vehicles, equipment and parts; ‘organic’ products; wine; and chemicals.
  • Provision is made for ‘rapid notification and emergency measures’ to ‘protect consumers, animals and plants during disease and pest outbreaks’ and ‘food and feed safety incidents’.
  • The Agreement ‘ensures that the customs authorities of both Parties remain able to protect their respective regulatory, security and financial interests’.  There will, however, be ‘mutual recognition’ through ‘trusted trader’ schemes – aiming to support: efficient documentary clearance, transparency, advance rulings and non-discrimination. There may be measures in the longer term to promote ‘cooperation at roll-on roll-off ports like Dover and Holyhead’ aimed at reducing administrative burdens on business – such as sharing import and export declaration data.
  • An Annex provides for the mutual recognition of the Parties’ respective ‘Authorised Economic Operator’ – AEO – security and safety schemes.  AEOs will face ‘fewer’ controls relating to safety and security when moving their goods between the UK and the EU.
  • The EU and UK will both comply with existing international agreements such as the OECD ‘Convention on Mutual Administrative Assistance in Tax Matters’. UK and EU authorities will cooperate and exchange information relating to VAT for the purpose of combating VAT fraud.  Either Party may request the other to recover unpaid customs duties, excise or VAT on its behalf.

The Agreement on Trade also includes:

  • provisions on ‘cross-border trade in services and investment’ that will secure continued market access across a broad range of sectors, including professional and business services, financial services and transport services – and will support new and continued foreign direct investment;
  • a framework for ‘the recognition of professional qualifications between the Parties’ – based on the EU’s recent FTA agreements;
  • provisions on authorisations, access to and use of telecoms networks, interconnection, fair and transparent regulation and the allocation of scarce resources;
  • provisions on ‘authorisations, access to and use of telecoms networks, interconnection, fair and transparent regulation and the allocation of scarce resources’;
  • promotion of trade in ‘postal and delivery services’;
  • commitments on non-discriminatory access to ports; use of port infrastructure; use of maritime auxiliary services such as storage and warehousing; customs facilities; and the assignment of berths and facilities for loading and unloading;
  • protections to ensure ‘regulatory and supervisory authorities will be able to act to ensure financial stability, market integrity and protect investors and consumers’;
  • UK solicitors, barristers and advocates having the right to advise their clients across the EU on UK and public international law;
  • cooperation on ‘digital trade issues’, including emerging technologies;
  • commitments on the ‘free flow of capital and payments for goods and services in order to facilitate trade and investment’;
  • mechanisms for ‘cooperation and exchange of information’ on Intellectual Property issues;
  • requires both sides to be transparent about the subsidies they grant.  Either side may ‘take rapid action where a subsidy granted by the other Party is causing – or is at serious risk of causing – significant harm to its industries’;
  • commitment of both Parties to ‘uphold global standards on tax transparency and fighting tax avoidance’;
  • reciprocal commitments ‘not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade’;
  • reciprocal commitments ‘not to reduce the level of environmental or climate protection’ – this includes meeting ‘cross-economy greenhouse gas emission reduction targets’.

Aviation

  • Majority owned and controlled UK airlines as at the end of December 2020 may continue to operate air transport services between the UK and the EU.  Majority owned and controlled EU/EEA/EFTA airlines may continue to operate air transport services between the UK and the EU.
  • There is a framework for future ‘cooperation on aviation safety’.  These will be detailed in a series of Annexes on such matters as airworthiness certification.

Road Transport

  • Operators will continue to be able ‘to move goods to, from and through each other’s territories with no permit requirements, and make additional movements within each other’s territories’.
  • Standards apply to international journeys – including ‘restrictions on driver hours, requirements about professional qualifications and tachographs and vehicle weight and dimension limits’.
  • Passenger transport operators continue to be covered by the multilateral ‘Interbus Agreement’ – and will be able to run ‘occasional services to, from and through each other’s territories’.
  • Passenger transport services on the island of Ireland will be able to pick up and set down passengers in both Ireland and Northern Ireland – enabling ‘cross-border services to continue with no restrictions’.

The following Parts of the Agreement will be dealt with in our next post:

Part 2 – Trade

Social Security Coordination and Visas for Short-term Visits;

Fisheries

Part 3 – Law Enforcement and Judicial Cooperation in Criminal Matters

Part 4 – Cooperation

Cooperation on cybercrime;

Cooperation on Health

Part 5 – UK participation in EU programmes such as Space exploration and Nuclear Energy

Part 6 – Disputes Resolution

Part 7 – Territorial Scope of the Agreement

Great Britain, Northern Ireland, Gibraltar, and the 50 Worldwide ‘UK Overseas Territories and Crown Dependencies’

Contact me by Email or LinkedIn for further detailed insight or potential mitigation action.