Brexit round-up – 11/12/20

UK Internal Market Bill considered by House of Commons and returned to House of Lords

The United Kingdom Internal Market Bill 2019-21 completed its third reading on 2 December in the House of Lords. The Lords’ made amendments to the bill including the removal of Part 5 of the Bill, which gives ministers the power to unilaterally interpret, modify the application of or disapply parts of the Northern Ireland Protocol, notwithstanding their obligations under relevant international and domestic law. Other key amendments included provisions to ensure that the Bill does not undermine the common frameworks process, making the Office for Internal Market independent from the Competition and Markets Authority (CMA) and requiring the consent of the devolved administrations for its board appointments, removing the provisions that would reserve subsidy control to the UK parliament and allow the Government to spend on specified purposes throughout the UK. Instead, if the devolved administrations so agree, the OIM could be appointed to investigate problematic state aid practices of the UK administrations, ensuring representation of the devolved administrations on the CMA board and requiring the Secretary of State to consult with them before setting penalty levels for non-compliance, removing the Secretary of State’s powers to modify certain aspects of the Bill, including the power to amend the definition of a “relevant requirement” for goods and the exceptions to the market access principles for goods and services and introducing a general principle that for the market access principles to be disapplied to a new piece of legislation, it must both be in pursual of a legitimate aim and a proportionate way of meeting that aim. On 7 December 2020, the House of Commons considered the amendments proposed by the House of Lords. The Commons rejected the deletion of controversial powers for ministers to unilaterally interpret, modify the application of or disapply parts of the Northern Ireland Protocol. However, following an agreement in principle by the joint UK-EU committee, the Government will withdraw these provisions from the Bill. Other proposals to remove powers delegated to the Secretary of State were rejected, adding a requirement that, when advising on and monitoring the UK internal market, the CMA must consider the interests of all parts of the UK and act even-handedly towards the relevant national authorities. The CMA must also lay its annual plan before the devolved legislatures, as well as the UK Government in Westminster and requiring the Secretary of State to seek the consent of the devolved administrations to Office for the Internal Market appointments, although if consent is not given within a month the Secretary of State can make the appointment anyway. The Bill has now been returned to the House of Lords.

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EU publishes contingency plans in event of no-deal Brexit

The EU has published contingency plans in case of the possible collapse of Brexit trade talks with the UK. The plans aim to ensure smooth UK-EU air and road travel, as well as allowing the possibility of fishing access to each other’s waters. EU chief Ursula von der Leyen said “Our responsibility is to be prepared for all eventualities, including not having a deal in place.” The EU has therefore proposed four contingency measures in the event a deal is not reached with the UK by the end of the transition period. These are to ensure the provision of “certain air services” between the UK and EU for six months, provided the UK does the same, to allow aviation safety certificates to be used in EU aircraft without disruption to avoid grounding, to ensure basic connectivity for road freight and passenger transport for six months, provided the UK does the same and to allow the possibility of reciprocal fishing access for UK and EU vessels in each other’s waters for one year, or until an agreement is reached. The commission said its offers on road and air transport would depend on the UK providing “fair and equal opportunities”, and said that “A level playing field requires that, even after the end of the transition period, the United Kingdom continues to apply sufficiently high and comparable standards.”

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Differences still remain after further talks

Following a meeting this week between Prime Minister Boris Johnson and EU chief Ursula von der Leyen, differences still remain and no agreement is yet to be reached. They both agreed that “by Sunday a firm decision should be taken about the future of the talks.” Foreign Secretary Dominic Raab said it was “unlikely” the negotiations would be extended beyond Sunday and Mrs von der Leyen said the two sides were still “far apart.” There continue to be major disagreements on fishing rights, business competition rules and how a deal will be policed. Talks between the UK’s chief negotiator Lord Frost and the EU’s Michel Barnier will now resume in Brussels.

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Prime Minister warns no-deal is “strong possibility”

Prime Minister Boris Johnson has said that there is a “strong possibility” the UK will fail to strike a post-Brexit trade deal with the EU. Following failing talks between him and EU chief Ursula von der Leyen this week, a deadline for a deal has been set for 13 December 2020. Mr Johnson has now warned firms and people to prepare for a no deal outcome and said that it was vital the UK prepares for the “Australian-style option” of not having a free trade deal with the EU.

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UK signs continuity trade agreement with North Macedonia

On 3 December 2020, the UK and North Macedonia signed a “Partnership, Trade and Cooperation Agreement” (UK-North Macedonia Agreement) to replace the existing EU-North Macedonia Stabilisation and Association Agreement (EU-North Macedonia Agreement) at the end of the UK-EU transition period. The EU-North Macedonia Agreement forms part of the EU’s “stabilisation and association” process for the Western Balkans, established with the aim of eventual EU membership. The UK-North Macedonia Agreement has not yet been published, but it is expected to follow the model of other replacement trade agreements negotiated by the UK by using the text of the existing EU agreement as a basis and making mostly technical amendments to ensure that the replacement agreement works in a UK-specific context. The UK-North Macedonia Agreement is expected to provide for free movement of goods, and to also contain commitments on establishment, movement of workers, supply of services, and movement of capital. Obligations in the EU-North Macedonia Agreement requiring North Macedonia to approximate its laws to those of the EU are not expected to be replicated in the replacement agreement. The Government’s announcement indicates that the replacement agreement “sets the foundations for an even more ambitious relationship between our countries.”

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Association Agreement with Egypt signed

The British Ambassador to Egypt, Sir Geoffrey Adams, signed an agreement this week with Egypt’s Assistant Foreign Minister for Europe, Badr Abdelatty to strengthen political and trade ties between the two countries. The agreement will provide tariff-free trade on industrial products, as well as liberalisation of trade in agriculture, agri-foods and fisheries which will make trade easier and deliver significant savings to businesses in both the UK and Egypt. International Trade Secretary, Liz Truss said “This agreement is a clear signal of the UK’s enduring commitment to our close bilateral relationship with Egypt and will help strengthen trade and investment ties in the future. It will help provide both British and Egyptian businesses with new opportunities and provide them with the certainty they need to keep trading.”

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UK and Switzerland agree Services Mobility Agreement

The UK has this week secured a key services agreement with Switzerland which will allow UK professionals and other service workers to continue travelling freely to Switzerland and work visa-free for up to 90 days a year after the UK leaves the EU. The agreement builds on the existing UK-Switzerland trade deal which will enter into force from 1 January 2021. Antony Walker, Deputy CEO techUK said “This is an excellent outcome for the UK tech sector which serves and collaborates with many of Switzerland’s most innovative businesses in key growth sectors like Financial Services and Pharmaceuticals. The agreement delivers on the key asks that techUK members called for ahead of the negotiations. It ensures continuity in existing business arrangements and provides a strong basis for what we hope will be an equally ambitious future FTA.”

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UK signs trade agreement with Kenya

The UK has this week signed an Economic Partnership Agreement with Kenya which will ensure that all companies operating in Kenya, including British businesses, can continue to benefit from duty-free access to the UK market. The deal was signed in London by International Trade Minister Ranil Jayawardena and Kenya’s Cabinet Secretary for Trade, Minister Betty Maina. Mr Jayawardena said “I am delighted that today we have signed a trade agreement with Kenya. This deal makes sure businesses have the certainty they need to continue trading as they do now, supporting jobs and livelihoods in both our countries. Today’s agreement is also a first step towards a regional agreement with the East African Community, and I look forward to working with other members to secure an agreement to forge ever-closer trading ties.”

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UK signs trade continuity agreement with Iceland and Norway

The UK has this week signed a trade continuity agreement with Iceland and Norway which covers trade in goods, and ensures 95% of goods trade with Norway and over 90% with Iceland will remain tariff-free, providing businesses with certainty that they can continue to operate on the same terms as they do today when the transition period ends. International Trade Minister Ranil Jayawardena said “Today’s agreement locks in tariff-free trade for businesses worth over £20 billion between our countries, supporting jobs and livelihoods across Britain and beyond. I look forward to finalising a comprehensive trade agreement on goods and services with our longstanding partners Norway, Iceland and Liechtenstein to enter into force in 2021 that delivers on our shared commitment to free and fair trade.”

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UK secures new continuity trade deals with Singapore and Vietnam

International Trade Secretary Liz Truss has signed a Free Trade Agreement with Singapore this week and will now travel to Vietnam to conclude another rollover trade agreement. These agreements bring the UK a step closer to joining the Trans-Pacific Partnership (CPTPP), a high-standards agreement of 11 Pacific nations. International Trade Secretary, Liz Truss, said “Both these agreements are vital for the UK’s future as an independent trading nation. Not only do they lock in billions of pounds worth of trade, they also pave the way for new digital partnerships and joining the Trans-Pacific Partnership. This will play to the UK’s strengths, as we become a hub for tech and digital trade with influence far beyond our shores, defining our role in the world for decades to come.”

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If you have any questions about any of the issues which are raised, or would like to discuss your own organisation’s options during the Brexit process, please do not hesitate to get in touch.