"Talking Heads" (- of Brexit)

For further Brexit understanding is “Talking Heads”: aiming to briefly set the history whilst canvassing the turbulent Brexit questions. It identifies possible directions for the Brexit issue. It suggests a couple of solutions that should be kept in mind.

“TALKING HEADS”

Understanding both the road to where we now find ourselves and understanding how we got here aptly aids Brexit impact appreciation. Brexit–wise, what are: at stake; possible future directions; and do any solutions exist?

History:-

UK creation starts with the Kingdom of England (927) who conquered Wales for King Henry VIII (1536) to also become Wales’ King. Then it added Scotland (1707) and (the island of) Ireland (1800): the later separating (1922) as to become (Republic of) Ireland and Northern Ireland (1922).

EEC and UK: The EEC? UK PM Attlee did not want; MacMillan wanted, but French Pres. de Gaulle (fearing US meddling) not wanting that blocked UK 1961 and 1967 applications to EEC. UK finally joined in 1973. A UK 1975 Referendum resulted, “Stay”.   UK PM Thatcher was pro EEC but moods change: EEC Commission Pres. Delors’ “The Social Dimension” speech outlining, inter alia, his views for the internal market, EU identity and labour conditions and a single currency prompted a swift retort per Thatcher’s Bruges Speech “Britain and Europe” (September 1988)[1]. Tensions were highlighted under “Up your Delors” headline of “The Sun” on 1 November 1990[2]. The relationship was “unsteady”: but not bloody as, to stabilise and promote peace on the Irish island, the 1998 Good Friday or Belfast Agreement between the UK and Republic of Ireland was made[3]. 

Brexit: UK PM Cameron’s 2016 “Remain or Leave” (the EU) narrowly meant, but with geographic differences, “Leave”[4]. He resigns and successor PM May triggers Art. 50 TEU (added due to Lisbon Treaty and provided first Treaty mechanism for EU Member State departure) (29 March 2017) providing an automatic up to two (2) year period (unless extension agreed) until exist. In November 2018 EU Commission and UK PM May agree: draft Withdrawal Agreement with three (3) Protocols[5] one being for the Irish Ireland to respect the 1998 Good Friday/Belfast Agreement and thus creating the “Backstop”[6] [“WA”]; and a Political[7] Declaration (for manner of negotiations for long-term EU-UK relations) (collectively “the package”) which are thrice rejected by UK House of Commons[8]. First two (of three) UK requested Art. 50(3) extensions agreed[9]. In July 2019 UK PM May resigns so Johnson steps in. A revised WA and new Protocol for the Irish island and a new Political Declaration are agreed: creating a new withdrawal package with a transition period (during which the UK must abide EU law, contribute to the EU budget, whilst having no active say in policy or legislative matters and that, prior to 1 July 2020, can be extended only once for up to two (2) years) is set 31 December 2021. The Political Declaration set a June 2020 stock take review of future relationship negotiations[10]. Third UK requested extension granted 31 January 2021. The withdrawal package passes UK House of Commons and EU Parliament later approves it so Brexit date is set as 31 January 2021. 1 February 2021 UK is a non-EU or third country.

On 17 June, 2020 both the UK and EU Commission announce that there will be no extension of the transition period from 31 December 2020: ambitiously giving six (6) months to agree the long-term relationship deal. Above contextually sets a tall order: failure means WTO system rules the EU27–UK relationship.

Already EU agencies have already moved from the UK to the EU27, including: the European Medicines Agency (“EMA”) to Amsterdam and the European Banking Authority (“EBA”) to Paris.

Negotiation approaches:

The EU’s “Nothing is agreed until everything is agreed” approach to prevent “cherry picking” contra the UK’s “Discrete segment” approach with “Red lines”. Clearest current disagreements between the two include: Jurisdiction of the European Court, application of aspects of EU Single Market (free movement of person, competition and state aids (e.g. recall recent Air France loans or state guarantee funds) and the level playing field); judicial and civil and security informative cooperation; and fisheries. All trade agreements require an arbiter or dispute settlement system and as yet nothing very viable alternative has come to light: perhaps prompting the announcement of no extension during the June stock take of the negotiations.

Types of trade agreements: What options?  

Earlier in this series we met some, including WTO, Tariff, Benelux, ECS, and EEC and they were bilateral or multilateral[11]. We now can also note: that a prohibition on raising tariffs for a defined period can create business certainty; and more contemporary trade agreements irregularly define time duration. 

Relevantly by whom:-

The EU position: The Common Commercial Policy (or External Trade Policy) of the EU is an exclusive competence of the EU: as are Customs Union, internal market competition rules, euro monetary policy, conservation of marine biological resources under common fisheries policy. It is unlawful for an existing EU Member State to commence a Trade Agreement with a third country for they gave that competence to the EU. Member States have, by the Treaties, conferred that competence to the EU and hence Member States can no longer in that scope of power without the permission of the EU and the other Member States[12].

The Third Country Position: Effectively any Country that has not assigned, conferred or relinquished to another its own competence to enter into a trade agreement may do so consistently with its own Sovereign powers. The scope and terms of any assignment, conferral or relinquishment will limit the Country’s ability to enter an agreement. 

The Current UK Position: The UK now a non-Member is entitled to make negotiations for trade agreements with other non-EU countries but no agreement can come into effect during the transition period (or extension) without consent of the EU. 

Types of: 

Numeric classification is unilateral (one country alone and non-reciprocal: such a developed country sets lower tariffs for goods from a developing country) as are Preferential Trade Arrangements under the WTO[13]; bilateral (between two contracting parties); Multilateral more than two contractors. Geographic classification as for regional trade agreements. Purposively classified as for mutual recognition, tariff reduction, increased investment, and trade in goods or services.

The EU recognises content classification, relevantly including Free Trade Agreements [“FTA”] between developed countries and emerging economies aimed to reciprocally open their markets by preferential access to markets.  Mutual Recognition Agreements [“MRA”] are to ease market access, reduce Technical Barriers to Trade [“TBTT”], promote and simplify international trade (more usually in goods). Countries A and B enter an agreement so, before export from A to B, country B will accept country A’s testing, assessment, certification and marking of the good, done in A, to the effect that export good satisfies all requisites (e.g. standards) of country B. On arrival in country B there is no necessity for recheck of the country A good. Being mutual the vice versa applies. They may be multilateral (even between regions) and are usually sector specific. EU MRAs exist with Australia, Canada, Israel, Japan, New Zealand, Switzerland and USA[14].

Various types of long-term agreements the EU-UK options are stated, including: Australia, Norway, Switzerland, Canada and Japan. Four comments: Norway, being an EFTA country so thus part of the EEA, is part of the European Single (Internal) Market with its four freedoms and abides the Schengen acquis but not part of the EU Customs Union and can thus then enter bilateral third country trade deals; Switzerland participates in the Single Market and Schengen acquis but only by a series of bilateral agreements with the EU; Turkey is part of the EU Customs Union (but not for all goods such as agriculture) but is not part of the Single Market; and, Australia, those already listed aside, Australia-EU no concluded agreement exists.

Prior to Brexit, the EU27 and the UK was collectively a single unit, a single member of WTO. Consequently, relevantly what does Brexit mean?

In June 2018 the European Council authorised the European Commission to commence negotiations with other WTO members to split of pre-Brexit EU tariff rate quotas between the post-Brexit EU27 and the UK. Likewise the EU will also have to modify its WTO schedule and commitments to reflect UK’s departure. More difficult splitting arises for WTO volume schedules (contra set tariff rates) already defined by EU28 as a whole: a UK to EU27 ratio consumption volume may be required to set a new schedule. Post-Brexit, UK “bound” commitments may not yet be formally set by the requisite WTO members so some WTO members may complain that due to the UK’s not being formally bound the UK can not rely on WTO rights. To clear such a hurdle the UK can undertake to abide “draft schedules” prior to formal WTO approval. Such an undertaking is likely to permit reliance on WTO rules against other WTO members.  For some types of goods including waste and hazardous goods, the EU requires import or export licences: so post-Brexit such licences would be required for UK exports to the EU27 and vice versa.

Interesting intellectual property positions:

Under the WA the UK Intellectual Property Office [“UKIPO”], at the transition period’s end, itself ensures that all EU Trademarks [“EUTM”] and Registered Community Designs [“RCD”] will enjoy comparable UK rights to be similarly enforceable within the UK (strictly not the EU right applicable throughout the EU27) as though registration was applied for and obtained in the UK. Similarly, without needing to do anything both the filing application and priority dates in UKIPO will be the same as the EUTM and RCD. Thus any EUTM or RCD holder need not do anything. For those with an EUTM and/or a RCD application filed before and still pending at the end of the transition period, then, an UK comparable application may be filed with 9 months from the end of the transition period: the UK filing date and priority dates will be the same as those EU dates. Currently and if there is no transition period extension, such pending EUTM and RCD holders have no prospect of an UK comparable right for failure to so apply in the UK by 30 September 2021. Beyond that dual UK-EU filings should be considered. Instances of existing licences and agreements should be reviewed to ensure re/defined “EU”. Clearly copyright law will diverge: the UK announced it would not transpose the EU Digital Single Market Copyright Directive (required by 7 June 2021).

What to do? Stay Tuned.

History has again been turbulent even before Brexit. That continues. Heads have been talking: some inaccurately, perhaps due to pressure (with Corona virus ready to blow). Yet we know not where they will lead. We wait to see any agreement. Pre-emptive intellectual property action can prevent possible loss. Should no deal be made, WTO problems may possibly be cured.

[1] See respectively, Bouremouth, UK, 8 September, 1988, at https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_88_66

 and College of Europe, Bruges, Belgium, 20 September 1988, at https://www.margaretthatcher.org/document/107332

[2] See: 1 November 1990, “The Sun” headline at https://news.bbc.co.uk/nol/shared/spl/hi/pop_ups/06/programmes_enl_1146754853/img/1.jpg

[3] 10 April 1998.

[4] 23 June, 2016, Referendum “Remain or Leave”: a turnout of 72.2% and being, 17,410,742 or 51.9% “Leave” contra 16,141,241 or 48.1% “Remain”: see further https://www.electoralcommission.org.uk/who-we-are-and-what-we-do/elections-and-referendums/past-elections-and-referendums/eu-referendum/results-and-turnout-eu-referendum

[5] Protocols being for each of Ireland (and Northern Ireland) to respect the 1998 Good Friday/Belfast Agreement and thus creating the “Backstop”, Gibraltar and Cyprus.

[6] 14 November, 2018 see https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AC%3A2019%3A384I%3ATOC

[7] 22 November 2018.

[8] 15 January, 12 and 29 March, 2019.

[9] First UK request Art. 50(3) extension granted on 21 March 2019 to 22 May 2019; with the second granted on 10 April 2019 to 31 October 2019.

[10] Para. 141 of the Political Declaration.

[11] “Milestones or Millstones” and “Lest We Forget”

[12] See Arts. 3, 4, 207 and 216 TFEU.

[13] E.g. see: REGULATION (EU) No 1029/2012 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October, 2012 introducing emergency autonomous trade preferences for Pakistan at https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:316:0043:0053:EN:PDF

[14] EU MRAs are based upon Arts. 207 and 218 TFEU. E.g. Australia- EU: Agreement on Mutual Recognition in relation to Conformity Assessment, Certificates and Markings: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:01998A0817(01)-20130101; also see Australia-EU: Trade in Wine Treaty: being bilateral for the promotion of wine trade safeguarding EU geographical indications and Australia’s protection of tradition EU expressions, labelling, packaging, presentation, description, and Trade-Related Aspects of Intellectual Property Rights under WTO [“TRIPs”] [signed 1 December, 2008: in force from 1 September, 2010]: https://ec.europa.eu/world/agreements/downloadFile.do?fullText=yes&treatyTransId=14283