Brexit: Where Do We Stand? Conference Report

 Leonardo Pasqui, Erasmus + Trainee at King’s College London

The text below is a report of the Young European Lawyers (YEL) event, held at King’s College London (KCL) on 19 October 19 2018. The event was introduced by Professor Andrea Biondi, Director of the KCL Centre of European Law. The panel included Dr Maria Laura Marceddu, Dr Simon Tans, and Dr Gabriele Gagliani

The three speakers discussed the uncertainties arising out of Brexit in trade related fields: the future relations of the United Kingdom (UK) with the European Union (EU), the freedom of movement of workers, and the rules on intellectual property.

At the outset, the speakers clarified that they acknowledge and respect the will of the British people to leave the EU. Their presentations should thus be read as neutral legal considerations of the consequences of the Brexit vote.

Chartering Brexit – Dr Maria Laura Marceddu

On 23 June 2016, through a referendum, the British people chose to leave the EU. The UK is the first EU Member State to have decided to withdraw from the EU Treaties, and this constitutes the Brexit process unchartered territory, both legally and politically.

From a legal point of view, the process of withdrawing from the EU, outlined in Article 50 of the Treaty of the European Union (TEU), is now fleshed out in practice for the first time. Under Article 50(2) TEU, a Member State intending to leave the EU should first notify the EU Council of its intention to do so. From the moment of the conclusion of a withdrawal agreement between the Member State and the EU or, in any case, after two years since the date of notification, the EU Treaties cease to apply to the Member State leaving the EU (Article 50(3) TEU).

As the UK notified its intention to leave the EU on 29 March 2017[1], the country has five months to conclude an agreement with the EU on the terms of its exit from the EU legal system (so called “Withdrawal Agreement”) before the two-year period under article 50(3) TEU expires. . On 29 March 2019, the so-called “Brexit Day”, EU law will cease to apply in the UK. Subsequently to the Withdrawal Agreement which only sets the “terms of the divorce”, the EU and the UK will then have to negotiate a separate treaty, which will be a trade agreement, setting out their future relations.

Yet, before starting to discuss a trade agreement, to date the EU and the UK still have not agreed on the content of the Withdrawal Agreement. It is fair to say that it took some months for the British Government to outline its exit strategy. This impasse was ultimately overcome in July 2018 with the sc. so-called “Chequers Plan”[2]. However, while the plan is a stepping stone towards a Withdrawal Agreement, it is not an ‘agreed deal’, as it only lays down the UK’s proposal on its legal relations with the EU, and thus, this is only the starting point of the negotiations with the 27-member block.

In order to avoid the possibility of the UK ending up in a normative vacuum between Brexit Day, when according to Article 50 TEU the EU Treaties will cease to apply to the UK, and the day the Withdrawal Agreement comes into force, the EU and the UK have decided to extend the application of most EU law provisions to the EU-UK relationship until 31 December 2020 (“Transition” or “Implementation” period). However, not all EU law will continue to apply. For instance, under the terms of the agreement on the Transition period[3], the UK will not be represented in EU Institutions during such period.

The “legal fiction” of the Transition period raises a number of questions. From a standpoint of constitutional EU law, it remains debatable whether the EU has the competence to agree on it and whether the lack of representation of the UK in EU Institutions after Brexit Day is compatible with EU law. From a more practical standpoint, doubt exists as to how the UK and the EU will manage to conclude a trade agreement in less than 2 years (March 2019 – December 2020) when they failed to reach a withdrawal agreement in the last 19 months. Besides, it is not clear whether after Brexit day, third countries will accept to consider the UK as an EU country for the duration of the Transition period. After all, this period is a mere legal fiction and has only an internal value as between the EU and the UK.

All these questions remain, for the moment, unsolved. There will probably not be a unitary solution to all the problems regarding Brexit and the UK-EU relations in the short-term. The issues arising from the divorce, and the future relationships of the 27-member block and the UK will rather be dealt with in time as they emerge.

 

Free Movement of Workers – Dr Simon Tans

One of the most important themes of the future EU-UK trade relations will be the free movement rights of persons and, in particular, of workers. Currently, the EU internal market guarantees that people[4], workers[5] and services[6] can circulate across 28 EU territories without restrictions. These rights are ensured by means of the direct effect[7] of EU law, and enforced throughout the complete legal system of judicial protection of the EU[8]. However, once the UK leaves the EU, these provisions will no longer apply. The free movement rights will be replaced by whatever other provisions will be negotiated in the future between the EU and the UK. In turn, these provisions will be enforced by means of another dispute settlement mechanism, which is likely to be state-to-state (thus not directly accessible by individuals).

As an EU-UK trade agreement is far from being negotiated and concluded, one may attempt to outline the possible future regulation of free movement of workers referring to existing legal frameworks.

To begin with, one will consider the GATS/WTO provisions (Mode 4)[9], which also regulate the supply of services and access of workers to foreign countries for that purpose. The protections guaranteed under this framework are not comparable to the current EU protections. Under the WTO rules, suppliers’ access to market for the provision of services remains mostly subject to national immigration rules, often restrictive. For instance, immigration rules often require as a condition for entering a foreign market the presence of a “sponsor” in the host state who can assume responsibility for the foreign workers.

The second legal scenario to take into account is a bilateral trade agreement. As things stand now, the future EU-UK relationships after Brexit will be regulated by a Free Trade Agreement (FTA) rather than WTO rules. It is currently under discussion whether this deal should be similar to the one that the EU has just agreed with Canada (CETA)[10], although in a more advanced form, often referred to as “CETA+++”[11]. The +++ means that the links between the EU and the UK will be even stronger than those included in the already very advanced CETA, including in terms of free movement of workers and services. However, even a CETA+++ is likely to fail in addressing the issue of the movement of workers, which remains likely to be subject to national immigration rules. Indeed, FTAs do not normally address obstacles resulting from a sluggish, bureaucratic or unnecessary burdensome immigration system, such as the sponsoring system. The EU-UK FTA may also create another direct consequence. Due to the increasing number of international FTAs on a global level which frequently include the ‘Most Favoured Nation’ clauses – it is likely  that the +++ provisions characterizing the special future relationship of the EU and the UK will automatically be granted to other states with which the EU (and the UK) have FTAs (“Spaghetti Bowl Effect”). As this may not be in the interest of the EU and the UK, it remains unlikely that the two parties will want to relax their respective immigration regimes. Yet, that appears to be the only way to facilitate the movement of services after Brexit, resembling the current EU regime.

 

Trade and Intellectual Property Rights – Dr Gabriele Gagliani

Brexit impacts on nearly all aspects of trade in manners that are still unknown. One of these aspects where some consequences can already be seen is intellectual property, including patents and trademarks.

In July 2018, the British Government maintained its commitment to remain part of the European Patent Organization (EPO). On April 2018, it also ratified the Unified Patent Court Agreement[12]. The EPO, which includes 38 contracting states, including all EU countrie,  aims at granting European patents in all contracting states through a unitary procedure[13]

The EU has also taken steps towards the creation of a unitary patent system. The EU patent system will allow patent holders to obtain one single European patent, instead of a bundle of patents in each Member State as in the case of EPO[14]. The British Government has expressed mixed views on the unitary patent system, clarifying that it would like to remain a member of the system, although without submitting itself to its future dispute settlement system, the to-be unitary patent court. At the moment, it remains uncertain whether the European Union will accept the British position.

As for trademarks, it seems already clear that the European Union Trademarks (EUTM)[15] and the Registered Community Design (RCD)[16] will not be valid in the UK. This position of the UK sits uncomfortably with its intention to remain part of patents’ regimes. At the same time, oftentimes states are driven by political considerations rather than reasons of legal coherence when approaching regulation of intellectual property rights. This is for instance the case of the debate at WTO-level about the Geographical Indications (GIs). On the one hand, the EU defends the GIs in the interest of some of its Member States (e.g. France, Spain and Italy). On the other hand, countries like the United States take the opposite stance. It remains to be seen where the UK, which also has some products whose GI remains valuable (i.e. Traditional Cumberland sausages or Scotch Whisky), will stand after Brexit.

 

Conclusion

The UK Government has decided to keep an important connection with EU law, in particular in regards to the various disputes that will still be under the jurisdiction of the European Court of Justice after Brexit Day[17]. The post-Brexit challenges faced by the UK in the field of trade are not easy to address. The UK will need to design and implement its position in the international arena from outside the EU. This will mean striking a renewed balance between the needs of the market, on the one hand, and the protection of individual rights, on the other hand.

 

 

[1] UK Government, Prime Minister’s letter to Donald Tusk triggering Article 50, 29 March 2017, www.gov.uk/government/publications/prime-ministers-letter-to-donald-tusk-triggering-article-50

[2] UK Government, The future relationship between the United Kingdom and the European Union, 12 July 2018, https://www.gov.uk/government/publications/the-future-relationship-between-the-united-kingdom-and-the-european-union

[3] European Council (Art. 50), Guidelines for Brexit negotiations, 15 December 2017, EUCO XT 20011/17, https://www.consilium.europa.eu/en/press/press-releases/2017/12/15/european-council-art-50-guidelines-for-brexit-negotiations/

[4] Article 26(2), Treaty on the Functioning of the EU (TFEU)

[5] Article 45, TFEU

[6] Article 49, TFEU

[7] Case C-26/62, Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECLI: ECLI:EU:C:1963:1

[8] Case C‑112/00 Schmidberger [2003] ECLI: ECLI:EU:C:2003:333, [73]; Case 294/83 Les Verts [1986] ECLI: ECLI:EU:C:1986:166, [23]

[9] General Agreement on Trade in Services, Annex on Movement of Natural Persons Supplying Services Under the Agreement, Art. 2(d)

[10] Council Decision (EU) 2017/38 of 28 October 2016 on the provisional application of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and the EU countries [2016], OJ L 11/1080

[11] In particular, the former Secretary of State for Exiting the European Union, David Davis, held this position https://www.bbc.co.uk/news/uk-politics-42298971

[12] UK Government, UK signals green light to Unified Patent Court Agreement, 26 April 2018, https://www.gov.uk/government/news/uk-ratifies-the-unified-patent-court-agreement

[13] European Patent Convention 1973, Art. 2(2): ‘The European patent shall, in each of the Contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that State, unless this Convention provides otherwise.’

[14] Parliament and Council Regulation (EU) No 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection [2012] OJ L 361/1 and Council Regulation (EU) No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements [2012] OJ L361/89

[15] Parliament and Council Regulation (EU) 2017/1001 of 14 June 2017 on the European Union trade mark [2017] OJ L 154/1; The EUTM creates a unitary system thanks to which one registration gives protection in all the EU Member States.

[16] Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs [2001] OJ L/003; The Community Design guarantees unitary protection in all the EU Member States. There are two different kinds of protection:

  • Unregistered Community Design lasting 3 years, and
  • Registered Community Design lasting 25 years.

[17] Joint report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom’s orderly withdrawal from the European Union, Art. 38, published on 8 December 2017 at <https://ec.europa.eu/commission/publications/joint-report-negotiators-european-union-and-united-kingdom-government-progress-during-phase-1-negotiations-under-article-50-teu-united-kingdoms-orderly-withdrawal-european-union_en>

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