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Post Brexit – “Rien ne va plus” for the end of transition period

“Rien ne va plus” – not my words, but those of Prime Minister, Boris Johnson during a presentation to 250 invited business and industry-association leaders this week.  The event was hosted by Michael Gove and scheduled to last an hour.  Johnson was present for less than 15 minutes and the meeting closed after 21 minutes with no opportunity for questions.

Tuesday’s ‘call to arms’ followed the Prime Ministers announcement on Friday of the failure in the UK and EU negotiations to reach agreement on a trade deal to come into effect on 1 January 2021 after the UK has left the single market and customs union, stating that: “the UK must prepare for the transition to end without a Brexit trade deal, and with a default to World Trade Organisation terms for trading with the EU.” –

Although no-deal is widely predicted to be the most economically damaging outcome, Johnson told participants: “Our job is to create the platform for dynamic businesses such as yours to compete and to grow.”

“It is vital that everybody on this call takes seriously the need to get ready, because whatever happens – whether it’s Canada or Australia – change is going to happen.”

“There is a big opportunity for this country, and we want to help all of you to seize that opportunity.”

Gove said: “I am hugely appreciative of the efforts that so many companies have made over the course of this year, both to help us deal with the Covid crisis and also to prepare for the end of the transition period.”

“We know that this December 31 we will be leaving the customs union and single market come what may.  It’s in law, and it’s a fact that the EU and UK accept as immoveable, and that means we need to make sure we’re ready.”

Attendees later described the short call with the Prime Minister and the Cabinet Office Minister Michael Gove as “terrible”, “disappointing” and “more of a lecture”.

Others said that: “It felt like a box ticking exercise – so they [the Government can say – ‘yep’, we’ve spoken to business”.

The Prime Minister, in using his ‘Roulette’ analogy, can see that the ball has landed in the ‘hard’ Brexit slot.  The options of a soft Brexit – favoured by industry, academics and middle ground politics – ruled out by the Government in discarding continued membership of the single market and customs union; and the option of a favourable trade ‘deal’ – seen as simple and straightforward to negotiate by the Government – ruled out by inability of the UK to understand and work around the EU clear and long-published ‘red lines’.  EU Red lines were established and written into the negotiating brief after unanimity amongst the European Parliament, European Council and the Parliaments of 27 EU member states– and amendment of which would require communication and unanimous agreement to the changes before the European Commission team could discuss them with the UK.

The Prime Minister acknowledged that Covid had created “too much apathy” in the business community and they “needed to get ready” for Brexit.  And thus, he shifted the onus for any disruption to continuity of trade at the end of the Brexit transition from Government to industry.

Gove ended the call by describing ending the largest single market and customs union in the World as “a bit like moving house – a bit of disruption till you get used to a bigger and better house”.

The meeting also comes a week after Cabinet Office Minister, Lord Agnew, criticised businesses for their lack of preparations and for taking a “head in the sand approach” to the new and untested regulatory and operational post-Brexit trading environment – adding that traders “really must engage in a more energetic way” if they are to be ready for the end of the transition period on 31 December.

Meanwhile, as organisations begun to digest the 270-pages of guidelines that the UK Government published at the beginning of October, trade consultants Blick Rothenberg advised that thousands of UK businesses may need to set up an EU presence if they want to continue to export goods to European markets.  Both EU and UK law will require companies to “have a door to knock on” if there are any disputes over payments and compliance with the new customs regulations as the UK becomes a ‘third-country’ from 1 January 2021.

The reality is that EU companies will not want the additional risk and cost of being responsible for compliance with customs procedures will amend contracts with UK suppliers.  They will contract for goods and products to be delivered to their warehouse door – with the UK exporter taking that responsibility.

There is always the option to pay a recognised ‘distributor’ – or a customs and freight forwarding agent – in the EU to prepare and manage the new paperwork and ensure that payment obligations are satisfied.  A BBC investigation found that the combination of uncertainty and complexity in the new regulatory regime, few agents will be prepared to take that risk – and that those willing to take a risk will likely charge a “king’s ransom” to do so.

Simon Sutcliffe of Blick Rothenberg told the BBC: “Any agent will be ‘joint and severally liable’ for any customs debt should something go awry – or should the local fiscal authorities find a problem with the consignment.  Understandably, these agents charge a lot of money to bear that risk.”

Another option will be for UK exporters to set up a registered office in the EU – with the staff and technical resources necessary to file the relevant paperwork and keep relevant records.

EU companies exporting to the UK face even greater problems.  At least the EU rules and procedures are known and have been operational for decades dealing with all other ‘third-countries Worldwide.  The UK Government is making up rules and regulations where none have existed since the early 1990’s – whilst also trying to recruit up to 5,000 new customs and excise staff to oversee compliance and commissioning new forms, systems and procedures for customs clearance and payment of duties.

Consider UK supermarkets.  They will not want to take responsibility for completing the customs import procedures for tens of thousands of EU suppliers – the additional operational costs will put up prices – and for any goods on restricted lists, such as some sanitary and animal products, there will be certification procedures and costs of ensuring ‘trace-ability’ not required whilst the UK was an integral part of the single market and customs union with ‘free’ movement of goods.

Sutcliffe concludes that thousands of businesses on each side of the channel “just don’t realise the implications of trading with each other from 1 January – and they have very little time to work it out.”

‘Rien ne va plus’, Prime Minister?

Post Brexit: prepare for transition to end with ‘no-deal’ in 76 days

On Saturday 17 October 2020, UK Prime Minister Boris Johnson wrote an open letter to the nation:

“Since the outset of our negotiations we were totally clear that we wanted nothing more complicated than the relationship the EU has with Canada.

One based on friendship and free trade.

But for much of the last few months the EU have refused to negotiate seriously.

Demanding the continued ability to control our legislative freedom and our fisheries in a way that is completely unacceptable to an independent country.

Which is why yesterday [16 October 2020] I decided that we should get ready for the end of the transition period on January 1st with arrangements based on the simple principles of global free trade, like Australia’s relationship.

For whatever reason the EU are not willing to offer this country, after 45 years of membership, the same terms as they did to Canada.

So now is the time to prepare.

And with you by our side we can do that with high hearts and complete confidence.

By embracing this alternative path we will prosper mightily as an independent free trading nation, controlling our own borders, our own fisheries and setting our own laws.

Boris Johnson

Prime Minister

The UK-wide referendum vote in June 2016 returned a wafer-thin majority in favour of Brexit.  Devolved regions, including Scotland – and British Overseas Territories, including Gibraltar – voted, some of them overwhelmingly, in to ‘remain’.

Over the last three-and-a-half years, the UK has struggled to come to terms with the outcome of the vote.  Initial discussion focussed on how profound the split should be.  A minimal split – with the UK in a similar position to other EU neighbours, such as Norway, allied within an economic but non-political ‘European Economic Area’.  This was favoured by business, commerce, central and left leaning political parties.  Or, whether to make a total break – leaving the UK outside: the ‘Single Market’; the ‘Customs Union’; and other forms of shared activities – such as anti-criminal, scientific, environmental and educational cooperation – the stance favoured by the ‘hard-line’ Brexit proponents.  In the end, the UK has chosen to sever all ties and leave on ‘third-country’ status.  This is entirely the UK’s own decision.  Whenever the subject has been raised, every EU representative has consistently expressed regret – firstly about the UK decision to leave at all, and then for the conditions under which the UK has chosen to leave.

Throughout the three-and-a half year Brexit process, the EU has shown patience with the UK – given that the decision to quit the bloc is one that can only weaken the strength of Europe and one that will harm its future – directly through the need to apply ‘third-country’ conditions to all dealing with the UK from 1 January 2021, and indirectly from the lack of the leading contribution from the UK to all aspects of social, economic, financial and scientific life in Europe.

UK management of the leaving process and timetable

Following the Brexit vote, the UK began to consider the terms on which it wished to end its membership of the EU.  Nine months after the referendum, Article 50 of the Consolidated EU Treaty was invoked by the UK on 29 March 2017 – triggering the minimum 2-year ‘notice period’ required by the treaty.

During the notice period, the UK remained a full and active member of the EU with all the rights and responsibilities – along with the freedoms and constraints – that it had been party to developing during its 47-year membership.  It continued to be represented and participate within each of the three ‘EU pillars’: the European Council, European Parliament the European Commission.

Towards the end of the minimum notice period, instead of a leaving on 29 March 2019, an extension of two weeks was requested by the UK Government in order to give the House of Commons time to reconsider its rejection of the negotiated withdrawal conditions.  The revised leaving date, 12 April 2019 – was again postponed.  This required the EU to accept the UK’s request for a ‘flexible’ extension with an end-date of 31 October 2019.

Between April and October 2019, a 500 page ‘Withdrawal Agreement’ was negotiated between the UK and EU.  In the end, this Agreement was subsequently ratified by the UK and European authorities during January 2020 and passed into UK Law and then formalised in an International ‘Treaty’.

The UK ended its membership of the EU at 23:00 GMT on 31 January 2020 after 47 years.

From 1 February 2020, the UK – whilst no longer a member of the EU – has been allowed to operate as if had remained an integral part of the European Union’s ‘Single Market’ or ‘Customs Union’.  The ‘transition period’ established in the Withdrawal Agreement allowed the UK time to negotiate future trading terms and to prepare for leaving the Single Market and Customs Union.

The length of the Transition Period was always the UK’s to set.  Any time until at least until the end of 2022 was an option – simply by naming the date.  The Conservative Government in its election manifesto, however, had stated that it would deliver the end of transition in the shortest possible practical time – claiming that it had an ‘oven-ready’ deal requiring minimal negotiations and a straightforward implementation – and did not need longer.

An end to the transition period was set as 23:00 GMT on 31 December 2020 by the UK Government – and immediately enshrined in UK law, leveraging the Government’s 80 seat majority in the House of Commons.  And so, the transition end-date became a constitutionally unchangeable event.

UK negotiations on terms of trade and the relationship with the EU post-transition

Between June 2016 and October 2020, a series of UK Ministers responsible for Foreign and EU affairs have held responsibility for overseeing the UK’s departure from the EU: setting the strategic direction; defining the ‘red lines’ without which there could be no deal; steering the decisions through Parliament in Westminster; negotiating the ‘Withdrawal Agreement’ with counter-parties from the EU; attempting to negotiate a ‘deal’ with Europe for the end of transition; replacing EU law and regulations with domestic equivalents – eight major Acts of Parliament and 600 ‘statutory instruments’ – and; preparing civil service, UK businesses and citizens for the end of the ‘4 freedoms’ –  free movement of goods, services capital and people.

The optimism maintained by successive Ministers since 2016 is little short of heroic.  The success that the same Ministers have achieved in securing and preparing for a ‘smooth’ transition is a long way short of heroic…and include: David Davies, Dominic Raab, Stephen Barclay, David Jones, the Baroness Anelay of St Johns, the Lord Callanan, the Lord Bridges of Headley, Steve Baker, Suella Braverman, Chris Heaton-Harris, Kwasi Kwarteng, James Cleverley, Robin Walker, and James Duddridge.

The European Commission has been directed and led by European Commission Chief Negotiator, Michel Barnier, throughout.

The EU set out its brief to its negotiating team in February 2020 – and the UK a month later.

The UK’s ambition was for a trade deal on the most favourable terms in place with any third nation – with some additional agreements on recognition of each other’s regulatory standards.  David Davies spoke of it as “Canada + +”.  The EU never acknowledged that this could or would be politically or operationally feasible.

Ending transition without a deal for trade in goods in place means hard borders, trading under WTO terms with tariffs and quotas, and no automatic recognition and acceptance of UK qualifications, certification, or standards.  Further, without a deal for trade in goods as a foundation, it is all but impossible to imagine agreement on services, finance, education, scientific and anti-crime cooperation.

During the early years of negotiations, the EU published a guidelines for smoothing some of transition issues – especially those needing time to make adjustments – for instance in aerospace, the airline and haulage industries.  With the UK initial vacillation on what it wanted, compounded by the series of arbitrary delays, and the final insistence by the UK on its red lines for the fishing industry and non-acceptance of the EU rules on non-intervention and government subsidies in competitive industry.

The concessions – unilaterally offered by the EU to make UK’s leaving easier – were not indefinite.  Timed to run from the UK’s notice of leaving in 2019, they had fixed end dates – depending on the complexity of achieving a smooth transition – after 3-6 months.

It is significant that EU attitudes and patience with the UK have hardened.  By the end of transition on 31 December 2020 all the concessions have ‘expired’ – and have not been renewed by the EU.  The ‘cliff edge’ so feared by Theresa May is looming.  It is almost incredulous that the UK Government is deaf to the concerns raised by 70 business groups united with the voices of trades unions and academic experts alike.

How will history judge the hard-line Brexiteers?  Perhaps, ‘be careful what you wish for’.

Post Brexit Transition: Europartnership’s Guide for UK Businesses from 1 January 2021

With less than 3 months to go until the end of the Brexit ‘Transition Period’, Europartnership has published the first of a series of guides for businesses in the UK.

The UK’s ties to Europe were severed on 31 January 2019.  A ‘Withdrawal Treaty’ signed between the UK and EU allowed almost every aspect of life and business to continue as it had been – giving the sides time to negotiate and attempt to reach an agreement for the end of transition, 23:00 GMT on 31 December 2020…the exact moment that the clocks in Brussels ring in 2021.

Click the link to see see the introduction to this 23 page guide updated to 10 October.

20201010_PostBrexitBusinessGuideIntro

Contact john.shuttleworth@europartnership.com for a copy of the full guide or ‘Brexit final preparation’ checklists.

 

 

Post Brexit: State Aid and a ‘level playing field’

A fundamental principle of free trade is that Governments must not subsidise companies or business sectors that would give any advantage when trading in a partner state.

The UK – as a member of the EU – was party to:

  • the EU bloc-wide regime on restricting trade-distorting ‘state aid’; and
  • the EU umbrella agreement with the WTO on Subsidies and Countervailing Measures.

The UK has never had its own domestic legislation addressing state aid – and operates under the EU-wide state aid rules.

EU and WTO state aid rules apply to the UK till the end of the transition period on 31 December 2020.  Thereafter, the UK government has announced that its commitments under the WTO will be the foundation for a future UK independent subsidy ‘regime’.

Although the Government intends to set independent UK subsidy regime, both EU state aid rules and the WTO Agreement on subsidies and countervailing measures will remain relevant in the UK.  The extent of this effect will depend upon the result of the UK-EU future relationship negotiations.

This briefing looks at: what EU state aid rules mean; some recent changes brought about in response to the coronavirus outbreak; state aid rules during the transition period – and the settlement of ‘ongoing’ disputes; and the main principles of the WTO Agreement on Subsidies and Countervailing measures.

EU and ‘State Aid’

EU Member States sometimes use public resources to intervene in their national economies by assisting companies or industries.  This can range from a government tax relief scheme for investors, to a local authority giving a subsidy to a property developer.  Such ‘state aid’ is normally prohibited if it threatens to distort trade and competition between firms, through for example, discouraging investment and increasing costs to consumers.  EU state aid rules aim to create a level playing field so that, for example, French firms can compete fairly with German ones.

The EU and its Member States also use state aid as a policy tool.  Exemptions to the EU state aid rules allow for certain beneficial interventions. For example, state aid might be necessary and justified to address a market failure, as when small and medium enterprises (SMEs) have difficulties finding investment capital.   It may also be necessary to achieve policy goals such as regional economic development or environmental protection.  Governments can, for instance, use state aid to stimulate businesses to invest in less developed areas or the development of advanced environmentally friendly technologies.

The European Commission is empowered to assess cases of state aid.  It can ‘approve’ them, or it can enforce stringent ‘claw-back’ mechanisms when state aid is deemed unlawful.

An EU Member State cannot pay out state aid unless a scheme or an aid measure is approved by the European Commission.  Policymakers must ensure that support is legal and compliant with EU guidelines.  However, there are many exemptions, including the ‘de minimis’ rule (assistance worth less than €200,000 over three years) and the General Block Exemption Regulation.  These exemptions generally allow smaller schemes to be set up without a prior notification in Brussels.  In addition, EU state aid rules do not restrict support are open to all businesses – such as a general reduction in rates of corporation tax, or changes in employment law.

The European Commission is presently re-evaluating state aid rules.  This is expected to result in amended rules in several areas, including energy and environmental aid.  There will also be more flexibility towards transnational projects supporting strategically important technologies and value chains.

The EU has temporarily relaxed the usual state aid restrictions to give Member States more flexibility to support their economies in response to the coronavirus outbreak.

During its time as an EU Member State, successive UK governments have supported rigorous state aid controls – and have avoided subsidising particular industries or companies.

The UK public sector has spent less in business support than most other EU countries.  In 2018, the UK spent 0.38% of GDP on state aid (excluding railways, and agriculture and fisheries), while France spent 0.79% and Germany 1.45%.

During the transition period, the UK continues to apply EU state aid rules and regulations and the EC continues to assess and approve UK state aid measures.  The Commission will be able to finish ongoing procedures and take follow-up action for up to four years beyond the end of the transition.  After that date, the Commission will also have power to initiate new examinations of UK aid, which authorities may have paid to businesses prior to the end of transition.

The Protocol on Ireland and Northern Ireland foresees that EU state aid law will apply in Northern Ireland with regard to trade in goods and electricity between Northern Ireland and the EU.  The European Commission remains the enforcement authority.

World Trade Organisation – Agreement on Subsidies and Countervailing Measures

In addition to EU state aid rules, the UK is party to the WTO Agreement on Subsidies and Countervailing Measures and the UK government has announced that its commitments under the WTO will play an important role in the future UK subsidy regime.

Under the Agreement, some subsidies are prohibited outright while the remainder are ‘actionable’ – meaning that the subsidy is allowed but other countries can take certain actions if the subsidy ‘harms’ them.  Other countries can protect their industries by taxing imports of subsidised goods – known as imposing a ‘countervailing duty’.

The definition of a ‘subsidy’ under the WTO regime is broadly similar to ‘state aid’ in EU law.  The EU rules are, however, a lot more stringent than the WTO rules on subsidies.  The key differences are:

  • The default position under WTO rules is that subsidies are generally allowed, while EU rules consider subsidies to be generally unlawful;
  • WTO rules apply only to goods.  EU rules also apply to services;
  • EU rules are applied ‘prospectively’ – legality must be proven before the awarding any support.  WTO rules are ‘reactive’ and only triggered if a member country lodges a complaint;
  • WTO rules rely on state-to-state enforcement.  EU rules provide for remedies to businesses and individuals;
  • Under EU rules, each recipient business has to repay illegal state aid.  There is no such mechanism to redress anti-competitive effects under the WTO rules.

In 2018, the UK committed to uphold and trade within WTO rules in its own right as an independent state.  If the UK and the EU do not reach a free trade agreement by 31 December, WTO rules will apply equally to all trade in goods – be it with an EU member or any of the other 160+ WTO member states across the rest of the World.

References

http://researchbriefings.files.parliament.uk/documents/SN06775/SN06775.pdf

The UK-EU future relationship negotiations – ‘Level playing field’ https://commonslibrary.parliament.uk/research-briefings/cbp-8852/

https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm#:~:text=The%20United%20Kingdom%20has%20been%20a%20WTO%20member,Communities%20for%20legal%20reasons%29%20in%20its%20own%20right.

Post Brexit: As time runs out to reach a ‘deal’, no shift in UK’s approach despite “significant areas of disagreement”

The next – and ninth – negotiating round on the future relationship resumes in Brussels between 28 September and 2 October.  The results feed directly into the 27 European Heads of State – meeting as the ‘European Council’ on 15-16 October – when they are scheduled to decide whether a ‘deal’ has been reached in time for implementation at the end of the ‘transition period’ midnight (CET) 31 December.  ‘No-deal’ remains the default if there is no agreement on all negotiating points or the EU Council, each of the 27 EU states, the European Parliament – and not forgetting Parliament in the UK.

After eight negotiating rounds between March and September 2020, both sides acknowledge that whilst progress has been made, “significant areas of disagreement remain”.  The three key areas are: ‘Level playing field and state aid’; ‘fisheries’; and ‘governance’.  These are further detailed, below.

At the end of ‘Round 8’, the EU’s chief negotiator Michel Barnier accused the UK of “refusing to include indispensable guarantees of fair competition in our future agreement, while requesting access to our market”.  He said the UK had “not engaged in a reciprocal way on fundamental EU principles and interests”.

Lord Frost, the UK’s chief negotiator, said the UK had “consistently made proposals which provide for open and fair competition, on the basis of high standards, in a way which is appropriate to a modern free trade agreement between sovereign and autonomous equals”.

The EU has stated that an agreement needs to be reached by the end of October 2020 to allow time for ratification before the end of the transition period on 31 December 2020.  Boris Johnson has said that if agreement is not reached by the time of the European Council meeting on 15 to 16 October 2020, both sides should accept there will be no agreement and “move on”.

If there is no agreement, the UK Government has stated that their trading relationship with the EU would rest on the withdrawal agreement and “would look similar to Australia’s.”  Australia has no free trade agreement with the EU – although negotiations for one have been ongoing since July 2018.  An ‘Australia-style’ arrangement would mean the UK would trade with the EU on WTO terms.

Johnson says that a trading arrangement like Australia’s would be a “good outcome” for the UK – although the Government would “continue to work hard throughout September to reach a deal with the EU.”

This was within days of the Government laying the ‘UK Internal Market Bill’ before Parliament – which has instantly and dramatically affected the atmosphere of negotiations.  The bill contains measures that would enable ministers to disapply or reinterpret aspects of the Northern Ireland Protocol that was agreed between the UK and the EU as part of the Withdrawal Agreement – enshrined into an EU-UK Treaty in October 2019.  Ministers may involve these measures “notwithstanding any relevant or international or domestic law with which they may be incompatible or inconsistent”.  The Northern Ireland Secretary has acknowledged that “this does break international law in a very specific and limited way”.

Some aspects the protocol are still to be agreed by the Joint Committee established under the Withdrawal Agreement.  Boris Johnson has argued that the controversial provisions in the bill are needed because negotiations in the Joint Committee “risk coming unstuck”.  He said: “We are now hearing that unless we agree to the EU’s terms, the EU will use an extreme interpretation of the Northern Ireland Protocol to impose a full-scale trade border down the Irish Sea”.  Mr Johnson told the Commons Liaison Committee he did not believe the EU was negotiating in good faith.

Ursula von der Leyen, President of the European Commission, spoke about trust between the UK and the EU in her State of the Union address this week.  She said it was: “a matter of law, trust and good faith” that the Withdrawal Agreement could not be “unilaterally changed, disregarded, disapplied”.

Maroš Šefčovič, the EU co-chair of the Joint Committee, said the Government had “seriously damaged” trust between the UK and the EU by putting forward the bill – calling on the UK Government to withdraw the measures from the bill by the end of September at the latest.  He said that the EU would “not be shy in using” mechanisms and legal remedies in the withdrawal agreement to address any violations of its provisions.

Our view is that unless the bill it is withdrawn from Parliament, the EU will take the UK to court.  We see no sign that the Government is considering such a withdrawal.

Background

The UK and the EU set the framework for the future relationship negotiations in a political declaration that set the parameters of: “an ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced free trade agreement at its core, law enforcement and criminal justice, foreign policy, security and defence and wider areas of cooperation”.

The ”significant areas of disagreement” in more detail

Level playing field and state aid: The EU is seeking level playing field commitments to ensure common standards in areas such as state aid, workers’ rights and the environment. It says these are necessary to prevent trade distortions and unfair competition, particularly given the proximity and interconnectedness of the UK and EU economies. The UK maintains it will not accept provisions that bind it to EU laws and standards. It says the proposals it has put forward are closely modelled on arrangements the EU has already agreed with similar countries such as Canada.

Fisheries: The EU wants to maintain its access to UK waters on the basis of historic fishing patterns. The UK emphasises its sovereign control over its own waters, and wants fishing quotas to be negotiated on an annual basis.

Governance: The UK has proposed separate governance arrangements for the various draft agreements it tabled. The EU is seeking an overarching governance structure for the future relationship with “horizontal dispute mechanisms” that would allow cooperation to be suspended in one sector in response to an unresolved dispute in another area.

What the UK and the EU each wanted from a ‘deal’

The UK negotiating brief was to achieve a Canada-style free trade agreement – with other areas of cooperation covered in separate treaties:

“As [the political declaration] makes clear, a Comprehensive Free Trade Agreement (CFTA) should be at its core.  This Agreement should be on the lines of the FTAs already agreed by the EU in recent years with Canada and with other friendly countries […]  The CFTA should be supplemented by a range of other international agreements covering, principally, fisheries, law enforcement and judicial cooperation in criminal matters, transport, and energy […]  All these agreements should have their own appropriate and precedented governance arrangements, with no role for the Court of Justice.”

In written statements, Boris Johnson set out the UK’s red lines: “Any agreement must respect the sovereignty of both parties and the autonomy of our legal orders.  It cannot therefore include any regulatory alignment, any jurisdiction for the CJEU [Court of Justice of the European Union] over the UK’s laws, or any supranational control in any area, including the UK’s borders and immigration policy.”

He also said some areas of future cooperation would not need to be managed through an international treaty. The UK would develop its own separate and independent policies in areas such as immigration, competition and subsidy, the environment, social policy, procurement and data protection.

The EU explained it intended to negotiate the future partnership as a package covering general arrangements (values, principles and governance), economic arrangements (trade, level playing field guarantees and fisheries) and security arrangements (law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence).

References

https://lordslibrary.parliament.uk/the-uks-approach-to-negotiating-the-future-relationship-with-the-eu/?utm_source=UK+Parliament&utm_campaign=ecde383ce9-eudigest_210920&utm_medium=email&utm_term=0_77d770157b-ecde383ce9-102411877&mc_cid=ecde383ce9&mc_eid=1037596b66

https://commonslibrary.parliament.uk/research-briefings/cbp-8920/

Post Brexit: Road, Rail and Maritime Transport

The House of Lords has the task of forensically examining all aspects of the Government’s plans and preparations for the end of the Brexit transition period – 23:00 GMT on 31 December 2020 – now just 15 weeks away. They will re-visit the subject on Monday 21 September 2020.

Their work to date has assumed – as set out in the formal response in July to their previous report from Chris Grayling, then Secretary of State for Transport – that there will be a “smooth and orderly withdrawal” from the EU, including agreement on road, rail and maritime matters.

Their scope was “surface transport issues – primarily in the context of a negotiated Brexit” – but they also examined ‘no-deal’ preparations on both sides of the Channel.

They reported that some of the contingency options to maintain connectivity in a no-deal scenario – or in a negotiated Brexit that did not include comprehensive transport arrangements – were already established and “could be relied upon over the long term” (for example those in relation to some international bus travel).  Other contingencies took the form of “temporary legislative measures designed to avoid a ‘cliff edge’”.  Examples of the latter included measures allowing temporary market access for hauliers.

The report highlighted routes by which both types of arrangements could be improved, whether in the context of a negotiated or no-deal end to Brexit transition.

Report in summary

The report included 43 detailed conclusions and recommendations spanning a variety of issues relating to surface transport.  These included issues not only affecting the road, rail and maritime sectors, but also those relating to the specific situation on the island of Ireland and certain “cross-modal” matters such as communication with businesses, passenger rights and infrastructure investment.

In respect of rail and maritime matters, the committee noted the then Government’s stated intention to pursue bilateral agreements on UK-EU rail links, namely the connection between Kent and northern France and the Belfast-Dublin Enterprise Line.  It also noted that maritime transport is largely underpinned by international law, meaning that after Brexit UK and EU maritime operators would, in most respects, be able to access each other’s ports as had been the case during the UK’s membership of the bloc.

However, on road transport the committee said that it was “difficult to overstate the importance of future arrangements to preserve UK-EU market access for hauliers” and called on the Government to work closely with the road haulage industry to make clear its priorities for future arrangements.  It also urged an agreement on reciprocal market access for bus and coach travel; the principle of seeking agreement on mutual recognition in vehicle standards; and continuity in the present arrangements for private motorists.

On the specific circumstances on the island of Ireland, the committee called on the Government to seek agreement on maintaining the existing rights of bus and coach operators and hauliers.  On other matters, the committee urged the Government to continue its “high level of engagement” with stakeholder groups.

Background

The renegotiated Withdrawal Agreement and associated Political Declaration of October 2019 included reference to modes of surface transport in line with its predecessor document.  It stated the following in respect of future road, rail and maritime arrangements:

Road: “The parties should ensure comparable market access for freight and passenger road transport operators”, subject to certain underpinnings and obligations, and “should consider complementary arrangements to address travel by private motorists”.

Rail: “The parties agree that bilateral arrangements should be established, as appropriate, for cross-border rail services, including to facilitate the continued smooth functioning and operation of rail services, such as the Belfast-Dublin Enterprise Line and services through the Channel Tunnel”.

Maritime: “The parties note that passenger and cargo connectivity in the maritime transport sector will be underpinned by the international legal framework” and “should also make appropriate arrangements on market access for international maritime transport services”. In addition, the future relationship “should facilitate cooperation on maritime safety and security […] consistent with the United Kingdom’s status as a third country”.

However, neither the UK nor the EU brief to their respective negotiating teams featured maritime or rail issues prominently.  Road transport, on the other hand, received more attention.

The UK position was essentially that UK and EU road haulage and passenger transport operators “should be entitled to provide services to, from and through each other’s territories with no quantitative restrictions”.

By contrast, the EU position was that while it envisaged open market access for bilateral road freight transport, UK road haulage operators “should not be granted the same level of rights and benefits” as those enjoyed by EU hauliers when travelling within the territory of a member state or from one member state to another.  It called for level playing field rules to apply to operators and drivers, and non-regression on current standards.

Status of UK-EU negotiations with 100 days until the end of transition arrangements

Transport has been the subject of talks during several rounds of the negotiations to date.  However, it has been reported that road haulage remains a “point of friction”.

On 2 September 2020 the EU’s chief negotiator, Michel Barnier, elaborated on the EU’s reservations about the UK’s requests in this area during a speech at the Institute of International and European Affairs in Dublin.  He noted that while the UK wanted a “clean break” from the EU, this did not appear to extend to areas such as transport in which British negotiators were “still seeking continuity”.  Arguing that UK demands on road haulage were too close to single market rights, Mr Barnier said:

“The UK Government is still looking to keep the benefits of the EU and of the single market, without the obligations.  The UK often says it would be in the EU’s interest to grant it a special status in these strategic areas of cooperation [transport, energy, goods conformity assessments and on aspects of police and judicial cooperation].  But, frankly speaking: is it really in the EU’s long-term economic interest?  For instance, …British proposals on road transport would allow British truckers to drive on EU roads without having to comply with the same working conditions as EU drivers.”

In a post-negotiation statement on the eighth round of talks issued on 10 September 2020, Barnier said that the UK; “had not engaged on … level playing field requirements” in connection with transport matters.

The UK’s chief negotiator, Lord David Frost, set out the Government’s position on the state of the negotiations generally. He is reported as having said the Government was “not going to accept provisions that lock [the UK] into the way the EU do things”.

There is a perfect storm brewing combining the effects of:

  • a no-deal end to Brexit transition;
  • a new set of requirements for goods movements reporting – along with a supporting software system that it appears will not be ready, let alone tested, by 31December;
  • potential interruptions due to response to terrorist threats – such as occurred on 16 September causing “operation stack” to be deployed; and
  • increasing reluctance of drivers to travel for extended periods abroad due to Covid-19 concerns.

Transport, logistics and supply chains will be severely stretched and tested in the Christmas and New Year period between Great Britain and Europe.  Delays and disruption to continuity are now all but inevitable – it is a question of degree with ‘deal or no-deal’ a key factor.  The situation between Great Britain and Northern Ireland, and between Northern Ireland and Ireland is even more fraught.

References

https://old.parliament.uk/documents/lords-committees/eu-internal-market-subcommittee/future-uk-eu-transport-arrangements/190720-ChrisGrayling-BaronessDonaghy-Gov-Response-to-Transport-Report.pdf

https://www.brexit-partners.com/blog/2020/8/19/uk-government-unveils-strict-new-cross-border-plans-from-1-january-2021-deal-or-no-deal

https://www.brexit-partners.com/blog/2020/5/11/parliamentary-scrutiny-highlights-continuing-brexit-uncertainty-for-business-and-citizens-in-britain-and-northern-ireland

Photo:  PA/BBC

Post Brexit: ‘Trade Bill’ aiming to support UK’s future ‘independent trade policy’ moves a step closer

On 8 September 2020 the House of Lords picks up the passage of a Trade Bill that, if it becomes law, aims to support “continuity agreements” – as the Government is calling them.  It seeks to allow the UK to replicate the existing network of trading relationships with the EU’s current partner countries.

The bill would enable:

  • the UK to meet any obligations arising under International Government Procurement Agreement – presently covered under UK membership of the EU;
  • the UK to implement in domestic law obligations that may arise under international trade agreements signed between the UK and countries having an existing international trade agreement with the EU;
  • establishment of a new UK Trade Remedies Authority;
  • HMRC to collect information on the number of exporters in the UK; and
  • data sharing between HMRC and other private and public sector bodies in order to fulfil ‘public functions’ relating to trade.

The bill does NOT address:

  • any agreement that may be reached between the UK and EU about their future trading relationship; nor
  • any powers to implement new free trade agreements between the UK and any countries that do not currently have a free trade agreement with the EU.

Background

Whilst the UK was a member of the EU, it was party to many trade agreements with ‘third’ (every other non-EU) countries by virtue of its EU membership.  It did not have an independent trade policy – and was, indeed, precluded from negotiating its own trade agreements.  The Withdrawal Agreement continued this arrangement until the end of the ‘transition period’ that ends on 31 December 2020.

The Government cited the ability for the UK to control its own trade policy, set its own tariffs and do its own trade deals as one of the benefits of Brexit.  However, the Government is also seeking ‘continuity’ of existing EU and third country trade relationships post-transition.

By the end of August 2020, the Government has signed ‘continuity agreements’ with about three-quarters of EU trading partners – accounting for £110 billion of trade in 2018.  They come into effect on 1 January 2021.  A list of countries and trading blocks and countries that have already signed continuity agreements – and those “still in discussion” is set out, below.

Significantly, the EU does not have a free trade agreement with the US – so the powers in this bill may not be used to implement a free trade agreement between the UK and the US.

International relations – including making treaties—is a ‘reserved’ matter within the devolution settlements; meaning that the UK Government negotiates and enters into such agreements on behalf of all nations within the UK.

The Government Procurement Agreement (GPA) falls within the framework of the World Trade Organisation.  It consists of 20 parties covering 48 WTO members.

WTO explains the purpose of the GPA as follows: “to mutually open government procurement markets among its parties…worth an estimated US$1.7 trillion annually to international competition.

The UK expects to join the GPA in its own right at the end of the transition period – on substantially the same terms.  However, the Government has stated that it may take up to 30 days to come into force after 31 December 2020.

Overseas businesses will be able to bid for £67 billion worth of public sector contracts in the UK every year.  In return, British suppliers will be able to bid for £1.3 trillion worth of government contracts overseas in a wide range of sectors from large infrastructure to professional and business services.

Trade negotiations are new for the UK

Countries that are experienced in trade negotiations, typically implement domestic reforms that precede commitments in trade agreements.  In other words, they try to work out what reforms they want to pursue – and then identify how entering into treaty commitments can underpin and lock in these reforms.  The UK’s has yet to set its aims and policies in this respect.

Trade policy in the 21st Century is both cross-cutting and fast-moving.  For instance, in the decarbonisation and the ‘green’ agenda.  The UK has its net zero-emissions target, but the pursuit of climate and environmental objectives will require a mix of policy instruments such as standards, subsidies, and environmental/ emissions taxes.  In turn this raises the question of how these all relate to agreements and multilateral trade rules.  How will the UK government manage differences between countries around the World in terms of ambitions regarding environmental and climate objectives?

Trade agreements also need to address digitisation in production and trade.  Distinctions between ‘goods’ and ‘services’ – and between traditional industry sectors – are breaking down.  It is vital that the UK gets its policy right in a world of evolving patterns including: the regulation and taxation of digital platform and network services; data protection and privacy; support for sectors and regions in accessing technological innovation; and consumer protection.

In an increasingly digital, networked, globally connected world, “lock-in” of the wrong policy settings will be somewhere between detrimental and catastrophic.

Status of UK trade ‘continuity’ negotiations at August 2020

The UK has signed ‘continuity agreements’ with: Andean countries (Columbia, Ecuador and Peru); CARIFORUM trade bloc (Antigua and Barbuda, Barbados, Belize, Bahamas, Dominica, the Dominican Republic, Grenada, Guyana, Jamaica, St Christopher and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago – whilst Suriname has approved in principle); Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama); Chile; Eastern and Southern Africa (ESA) trade bloc (Madagascar, Mauritius, Seychelles, Zimbabwe); Faroe Islands; Georgia; Israel; Jordan; Kosovo; Lebanon; Liechtenstein; Morocco; Pacific States (Fiji and Papua New Guinea); Palestinian Authority; South Korea; Southern African Customs Union and Mozambique (SACUM) trade bloc (Botswana, Eswatini, Lesotho, Namibia, South Africa and Mozambique); Switzerland; Tunisia.

The Government is ‘in discussion with’ the following countries that currently have existing EU trade agreements in place: Albania (Western Balkans); Algeria; Bosnia and Herzegovina (Western Balkans); Cameroon (Central Africa); Canada; Cote d’Ivoire; East African Community (EAC) (Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda); Egypt; Ghana (Western Africa); Mexico; Moldova; Montenegro (Western Balkans); North Macedonia (Western Balkans); Serbia (Western Balkans); Singapore; Turkey; Ukraine; Vietnam.

Reference: http://researchbriefings.files.parliament.uk/documents/LLN-2020-0119/LLN-2020-0119.pdf

Post-Brexit: UK Government unveils strict new cross-border plans from 1 January 2021 – deal or no-deal

The UK has a Brexit negotiating team of 50 civil servants in Brussels today.  They are led by Britain’s chief negotiator, David Frost – who met European Commission chief negotiator, Michel Barnier for an informal dinner last night.  This is for Round 7 of the UK-EU Brexit talks on setting the terms for future trade and cooperation to come into effect on 1 January 2021.

Even if the two sides can reach a free trade agreement in sufficient time to get all EU central institutions and each of the 27 states to sign-up – businesses should take note that the UK plans to adopt the strict border controls in any event.

With 4 months to go, the Government has just announced a month-long consultation on a blueprint for a traffic management system designed to limit tailbacks for vehicles heading to Dover and Eurotunnel.

Department of Transport said in a statement: “Something akin to Operation Brock will need to be confirmed for use at the end of the transition period.”   The DoT anticipates disruption at the cross-Channel ports as “clearly a possibility.”

The new rules are complex and detailed.  They introduce ‘pre-registration’ of the journey and details of goods carried.  In a no-deal scenario the complexity of declarations will be compounded by tariff and quota declarations.  The chances of getting something wrong are manifest – especially in the early months of 2021.

There is an increasing risk that, whether based in the EU or the UK, haulage companies at corporate level – and drivers as individuals – will simply consider the risks and costs outweigh the rewards, compared to shipping and driving across the Channel today.

Trucks without the right documents risk “being held at port until the relevant paperwork has been provided, and in some circumstances having their goods seized or destroyed,” the government said in the consultation.

Truck drivers who don’t comply with the system could personally face a Fixed Penalty Notice of £300 under the government’s plan.

UK trucker furthermore face prosecution and the fine rising £1,000 unless paid within 28 days.

Non-UK drivers will be fined using “a financial penalty deposit notice and would have had to make an on-the-spot payment.  If drivers chose not to pay, they would have been at risk of having their HCV impounded.” [HCV = Heavy Commercial Vehicle, previously known as an HGV]

Under a new ‘Smart Freight System’, hauliers will have to fill in details on a government website showing they have the correct documents to enter the EU.  Then they will be issued with a permit giving permission to proceed to the port – and a window sticker for the police and port authorities to view in whilst in transit and customs clearance.

Rod McKenzie, Managing Director of policy and public affairs at the Road Haulage Association: “There is an overload of new systems coming to operate the border…It is essential that all systems work together to minimize bureaucracy and duplication, and that is not happening at the moment.”

The Government’s own analysis from October 2019 – when Operation Brock was trialled in anticipation of the UK leaving the EU without a deal – showed that hauliers were poorly prepared for the new customs checks.  As their attention is presently on dealing with the consequences for supply chains and logistics due to coronavirus, it would be prudent to assume that’s still the case.

We publish an extract from the Government website as an illustration of one element of the regulations coming in on 1 January 2021 – simply to show the complexity and underline how difficult it will be for hauliers and drivers to avoid finding themselves out of compliance – and in deep trouble.

In addition to the new ‘Smart Freight System’ for outgoing goods, a new ‘Goods Vehicle Movement Service’ (GVMS) means imports from the EU to the UK will also face full customs checks.   We cannot emphasise enough that with only 4 months to go, both the SFS and GVMS are still being developed and untested in live operations.  A failure in: the systems software; or the operation of the systems by hauliers and regulatory authorities means that goods movements come to a standstill.

Extract from UK Government’s “Proposed legislative amendments on enforcing Operation Brock” published on 4 August 2020

“Being border-ready

While it is the responsibility of the trader (or the trader’s agent, such as a customs agent or freight forwarder) to provide the necessary documentation to the HCV driver, it is the HCV driver who must present the documentation at the EU ports.

Being border-ready means that an HCV driver is carrying all the necessary documentation to get through the GB and EU port (or has been provided with the appropriate information to get the documentation).

This includes:

  • customs documentation:
    • a master or movement reference number (MRN) from an import declaration if the goods are going to stay in the country of disembarkation (for example, goods going from GB to France), or a transit accompanying document if the goods are either staying in the country of disembarkation or going to move beyond it (for example, goods going from GB to Spain via France)
    • an admission temporaire/temporary admission (ATA) carnet if the goods are temporarily going abroad (for example, goods going from GB to France and then back to GB)
    • a transports internationaux routiers (TIR) carnet if goods are sealed and/or going to non-Common Transit Convention (CTC) member countries (for example, GB to India overland).
  • import and export documentation depending on what goods are carried (it is possible that a free trade agreement or sectoral deal may change some of the requirements for import and export documentation). For example, EU member state authorities will check for the following on arrival at the EU port:
    • products of animal origin require an export health certificate
    • plant and plant-based products require a phytosanitary certificate
    • fish require a catch certificate, export health certificate and where appropriate a captain’s certificate.

Some documentation could be electronic or physical (like the MRN barcode) while others would need to be physical (like the ATA carnet). Please note that the list is not exhaustive; for more information, please refer to the Border Operating Model published on 13 July 2020.

In addition, there may be other forms of import/export documentation that an HCV driver will need to carry on behalf of their trader which would not be checked at the ports. An HCV driver using the accompanied roll on roll off (RoRo) route would need a safety and security declaration before arriving in the EU. However, EU rules mean that they can be completed shortly before arriving in the EU.

Some EU member states have additional national requirements for goods arriving from GB, for example:

  • France requires the use of the SI Brexit system, and the MRN barcodes for multiple consignments must be compiled in to a single ‘envelope’ MRN that will be scanned
  • the Netherlands and Belgium require that all movements are pre-notified using the Portbase and RXSeaport systems respectively; HCVs that are not pre-notified will not be allowed to leave Dutch or Belgian ports”

Commentary

After 40 years membership of the European Union including decades of free and unfettered trade and logistics, the UK is shifting to a ‘3rd country’ set of border controls at 23:00 GMT on 31 December 2020.

We have already reported on the lack of progress in the recruitment and training of up to 6,000 customs and border officers needed to police the new regulations.

We have already reported on the lack of testing and communications with hauliers on operating and complying with the new regulations.

We note that new issues are only now coming to light – such as the need to meet EU regulations on the construction and certification of palettes arriving in Europe from 3rd countries, such as the UK.  A regulation that is simply not relevant today – and which needs to be added to the changes that hauliers need to understand and adapt to.  There is presently no need and therefore no expertise or infrastructure in the manufacture and certification of EU compliant palettes in the UK – and less than 4 months to understand, adapt and implement.

Reference: https://www.gov.uk/government/consultations/enforcing-operation-brock-plans-in-2021/proposed-legislative-amendments-on-enforcing-operation-brock

Post Brexit: Freedom of movement between UK and EU for citizens will end on 31 December

The UK Government bill ending rights for free movement of all UK and EU citizens has now completed its passage through the House of Commons, by 342 votes to 248.

Amongst its provisions, the ‘Immigration and Social Security Co-ordination (EU Withdrawal) Bill’ will enact this aspect of the Government’s Brexit policy on 31 December 2020.  The one exception is a continued right for Irish citizens to enter and to work in the UK.

Present EU law governing coordination of social security provisions – as with many other laws and regulations that were jointly established across the 28 EU states – is ‘retained’ for now.  The Bill, however, explicitly provides power to amend these provisions in future ‘via regulations’ at the Government’s discretion.

The bill’s two main purposes are:

  • to repeal retained EU law on free movement to bring EU, EEA EFTA (Iceland, Liechtenstein and Norway) and Swiss citizens within a single UK immigration system (part 1 and schedule 1); and
  • to provide a power to amend, via regulations, retained EU law governing social security coordination (part 2 and schedules 2 and 3).

After 31 December 2020, EEA and Swiss citizens will be subject to a new single immigration system that would apply to all arrivals in the UK.

The Government intends to introduce a new points-based immigration system, which would take effect from January 2021 and apply to anyone wishing to come to the UK as set out in a policy statement published on 19 February 2020:

“We will replace free movement with the UK’s points-based system to cater for the most highly skilled workers, skilled workers, students, and a range of other specialist work routes including routes for global leaders and innovators.  We will not introduce a general low-skilled or temporary work route.  We need to shift the focus of our economy away from a reliance on cheap labour from Europe and instead concentrate on investment in technology and automation.  Employers will need to adjust.

The settlement scheme for EU citizens, which opened in March 2019, has received 3.2 million applications from EU citizens who will be able to stay and work in the UK.  This will provide employers with flexibility to meet labour market demands.

The SSC regulations provide for a reciprocal framework but do not provide for a single EU system.  The European Commission has explained that there are four main principles:

  • You are covered by the legislation of one country at a time so you only pay contributions in one country.  The decision on which country’s legislation applies to you will be made by the social security institutions.  You cannot choose;
  • You have the same rights and obligations as the nationals of the country where you are covered.  This is known as the principle of equal treatment or non-discrimination;
  • When you claim a benefit, your previous periods of insurance, work or residence in other countries are taken into account if necessary; and
  • If you are entitled to a cash benefit from one country, you may generally receive it even if you are living in a different country.  This is known as the principle of exportability.”

The bill’s explanatory notes further explain that: “the SSC regulations provide for member states to consider periods of work, insurance or residence in another member state when determining entitlement to benefits, which is known as ‘aggregation’.  The SSC regulations also enable individuals, in certain circumstances, to receive certain benefits from the UK irrespective of where they, or the person they are claiming in respect of, reside in the EEA (i.e. UK nationals and EEA citizens can export benefits from the UK).

The bill allows the Government (or, where appropriate, a Northern Ireland department) to make regulations to implement new policies on social security coordination that might be necessary subject to the UK’s negotiations on its future relationship with the EU.

Background:  House of Commons debate on the second reading of the bill

Priti Patel, the Home Secretary, said that the bill delivered on the Government’s promise to end freedom of movement, “take back control of our borders and restore trust in the immigration system”.  She argued that the bill would pave the way for the Government’s new points-based immigration system.  This would be “firmer, fairer and simpler”.  The Home Secretary referred to the bill’s provisions on Irish citizens, saying that the Government was “enormously proud of our deep and historical ties with Ireland” which was why the bill would protect the rights of Irish citizens.  She said that the Government had been clear that any future arrangements on social security “must respect Britain’s autonomy in setting its own rules”.  As a result, arrangements would change.  Patel said that the right to export child benefits would end as announced in the budget, for example.  She stated that the bill would enable the Government to deliver on that commitment.

Speaking for the Opposition, Nick Thomas-Symonds, Shadow Home Secretary, argued that the bill sent a message that “the 180,000 EU nationals in the NHS and the care sector” were “no longer welcome”.  Citing a labour force survey by the Institute for Public Policy Research, he expressed concern that 69% of EU migrants who currently work in the UK would not be eligible for a visa if the Government’s proposed immigration system applied to them.

Symonds also expressed concern about the scope of the powers in the bill: “the bill allows the Government to create a new system through statutory instrument.  Ministers are asking this House for a blank cheque, for the trust of Members to go away and implement a new system, and for an executive power grab that reduces the role of this House in shaping it.  He said that Labour would be voting against the bill.

Stuart C McDonald, Shadow SNP Spokesperson for Immigration, Asylum and Border Control, argued that the bill would make it hard to recruit NHS, social care and other staff.  He argued that freedom of movement has worked well.  Instead of continuing this he argued the bill would “expand the reach of the UK’s domestic rules—a complicated mess of burning injustice and bureaucracy”, which is why the SNP would vote against the bill.

Christine Jardine, Liberal Democrat Spokesperson for Home Affairs, said she was disappointed that the Commons had been presented with a bill that would end freedom of movement “without offering a fair, compassionate and effective alternative”.  She argued that the bill could have “profound” and negative effects on society and culture which is why she would be voting against it.

There was no debate at third reading.  The bill was passed by 342 votes to 248 and is now with the House of Lords for scrutiny.

Post Brexit: UK first standalone ‘human rights’ sanctions announced

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.