Government says UK & EU will be “stronger acting together” on sanctions & foreign policy post Brexit

Maya Lester QC

The Department for Exiting the European Union has published a position paper today (one of a number of its Brexit position papers) entitled ‘Foreign policy, defence and development: a future partnership paper’ in which it “discusses options for foreign policy, defence and development collaboration in the future partnership”.  Link here. Key points in the paper are that:

  1. The UK has been central to EU foreign policy, including as regards sanctions where the UK:
  • “has been the most active Member State in proposing autonomous EU sanctions as a foreign policy tool”;
  • “has also been able to encourage cooperation between the EU and like-minded partners, including the United States, increasing the reach and impact of agreed measures”; and
  • many of the asset freezes applied to terrorist organisations by the EU are based on UK national proscriptions or asset freezes.
  1. “The UK and EU will be stronger acting together.” “Given the shared threats and challenges we face, and the UK’s deep commitment to European values, it is in the interests of both the UK and the EU to continue to work together to meet the challenges of the day, including by “upholding the rules-based international order through aligning sanctions regimes”. “The UK and the EU should remain close partners in foreign policy issues.”
  2. The UK “is establishing its own national legal framework for sanctions” (see previous European Sanctions blog) “but continues to see a strong mutual interest in cooperation and collaboration with European partners.” This could be done through “regular dialogue and specific cooperation. The UK and the EU should have regular close consultations on foreign and security policy issues, with the option to agree joint positions on foreign policy issues. This could include cooperation on sanctions listings, including by sharing information and aligning policy where appropriate.”

Report on Brexit and competition law

Maya Lester QC

The Brexit Competition Law Working Group has just published its conclusions and recommendations, link here. In summary, the report states that:

1. The interests of the UK economy, and those of businesses and consumers within it, will be best served by continuity of UK competition law and policy, so far as is possible following Brexit.

2. Brexit does not give cause for radical reform of the principal UK competition statutes, nor of the role of the competition authorities. But primary legislation will require amendment. In particular, the report recommends that the duty in section 60 of the Competition Act for the UK authorities and courts to act consistently with EU becomes simply a duty to ‘have regard to’ that jurisprudence. It recommends repeal of section 10 the the Competition Act so that future EU block exemptions from the competition rules are not automatically imported into the UK; they would instead become a matter for the UK to decide. To preserve continuity of the ability of private parties to bring actions for damages in the UK for breaches of EU (as well as UK) competition law, the report recommends retaining sections 47 and 58 of the Act.

3. For mergers and market investigations it recommends retaining the existing statutory criteria, notably the ‘substantial lessening of competition’ test for mergers, and not to vary the existing public interest criteria. For market investigation references, while the CMA should not have an unfettered discretion in its choice of legal instrument when investigating agreements that might be harmful to competition, the Working Group recommends against retaining a domestic analogue of the current EU provision that precludes remedies relating to agreements between firms that go further than the antitrust rules.

4. The report includes recommendations on the carrying forward of commitments from past antitrust and merger cases, and of leniency arrangements, and for mergers that ‘straddle’ the date of Brexit, and (in the longer run) parallel UK/EC investigations, both of mergers and antitrust issues. It also addresses the need for more resources for the CMA.

Leading EU lawyer and former Commission official looks at UK’s post-Brexit free trade options

Former EU Commission director, and leading lawyer and academic, Dr John Temple Lang, looks at the UK’s post-Brexit free trade options, including the Single Market, Customs Union, EEA, WTO, and bespoke agreements. His paper is attached below.

JohnTempleLangpaper

House of Lords inquiry into post-Brexit competition policy

Maya Lester QC

The EU Internal Market Sub-Committee of the House of Lords has just launched an inquiry into UK competition policy after Brexit. The closing date for written submission is Friday 15 September 2017. The Sub-Committee is asking for written evidence on particular questions by 15 September 2017. Link to the questions here and form to submit answers here. It will hold oral evidence session in October. The Sub-Committee is chaired by Lord Whitty and its members are listed here.

The inquiry will explore:
• Opportunities and challenges in re-shaping UK competition policy post-Brexit;
• The implications of Brexit for the application and enforcement of competition law in the UK;
• Whether UK authorities have the capacity and resources to cope with additional responsibilities and a greater caseload;
• Potential state aid obligations in any UK-EU free trade agreement;
• Future cooperation between the UK and the EU on investigations and enforcement actions.

Parliament debates post-Brexit sanctions

The House of Commons is debating the implications of sanctions policy today. Debate pack of background material and details are here, and live feed on Parliament TV here.  This follows a public consultation on the future legal framework for imposing and implementing sanctions and the announcement of new sanctions legislation in the Queen’s Speech. Tomorrow the EU External Affairs Sub-Committee of the House of Lords will hear evidence as part of its inquiry into UK sanctions policy after Brexit, including from Maya Lester QC. Details here and coverage here.

EU trade deals and the death of Investor-to-State Dispute Settlement

Aidan Robertson QC

The EU is about to sign a free trade agreement with Japan and it has released, in the last few days, a short FAQ document. Usually such agreements included investor-state dispute resolution mechanisms such as UNCITRAL, ICSID, and so on. The EU’s policy on this is made clear on page 6 of the recent FAQ: http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155684.PDF

“A new system – called the Investment Court System, with judges appointed by the two parties to the FTA and public oversight – is the EU’s agreed approach that it is pursuing from now on in its trade agreements. This is also the case with Japan. Anything less ambitious, including coming back to the old Investor-to-State Dispute Settlement, is not acceptable. For the EU ISDS is dead.”

Thus, even if the UK secures a trade deal with the EU, disputes will not (on the EU’s approach) go to UNCITRAL or ICSID or anywhere else but the Investment Court System that is outlined in the FAQ.

The future of CAP subsidies in the UK

Aidan Robertson QC

The Common Agricultural Policy accounts for nearly 40% of EU expenditure during the 2014-2020 budget period.

http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06455#fullreport

UK agriculture receives approximately €3bn CAP funding annually in various forms.

http://researchbriefings.files.parliament.uk/documents/CBP-7602/CBP-7602.pdf

The new Secretary of State for Environment, Food and Rural Affairs, the Rt Hon Michael Gove MP, was questioned on Radio 4’s Today Programme on 13 June 2017 on the future of CAP subsidies in the UK, being asked ‘can you guarantee them to the scheduled end of this Parliament’ i.e. 2022? Mr Gove replied ‘yes – that is a manifesto commitment’.

http://www.bbc.co.uk/programmes/b08tbdxw at 2:19:30.

This appears to give broad continuity of funding for the agriculture sector in the immediate post-Brexit years.

It is, however, important to appreciate that the legal environment for the agriculture sector is nevertheless likely to change on Brexit, whatever the terms of the forthcoming (one still assumes) Great Repeal Bill. Until now, agriculture has enjoyed a limited degree of protection from the full application of EU rules on competition conferred by Article 42 TFEU. This provides that Union rules on competition apply to production of and trade in agricultural products only to the extent determined by secondary legislation, account being taken of the objectives of the common agricultural policy set out in Article 39 TFEU. The extent of that protection is currently under consideration by the Court of Justice of the EU in the Endive Cartel case (Case C-671/15 APVE). Advocate General Wahl’s opinion was delivered on 6 April 2017 and the Court’s judgment is awaited.

http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=c-671/15&td=ALL

That protection will cease to apply once the TFEU itself ceases to apply on Brexit, thus exposing the agriculture sector to the full application of the UK’s domestic competition law. I will examine the potential implications in a future blog, after the Endive Cartel judgment has been handed down.

The CJEU rules that the EU is more competent than previously thought

Aidan Robertson QC

In earlier blog posts (here and here) I explained that the Court of Justice of the European Union (CJEU) was due to rule on the extent of the Union’s exclusive competence to negotiate trade deals in a case in which the Commission was seeking an opinion on the EU/Singapore trade deal (Opinion 2/15) and that this would be significant for the trade deal that the UK is hoping to negotiate with the EU.

The CJEU’s Opinion was handed down on 16 May 2017. The CJEU has ruled that the extent of the EU’s exclusive competence is much broader than the Court’s Advocate General had advised in her opinion handed down on 21 December 2016. In that opinion (see https://brexit.law/2016/12/) AG Sharpston had identified several areas where the EU did not have exclusive competence, albeit none of these would likely be core to any trade deal.

The CJEU has now ruled that EU’s competence is broader than its Advocate General had advised. The only areas in the EU/Singapore free trade agreement which the CJEU identified as falling within shared competence with Member States were the fields of non-direct foreign trade investment and the regime governing dispute settlement between investors and Member States.

This means that any trade deal struck between the EU and the UK, even if it covers those two areas of mixed competence, can enter into force on the basis of provisional application even without ratification by all Member States (including regional parliaments where relevant). Member State ratification will only be required to give effect to the two areas of mixed competence, if they form part of an EU/UK agreement. This should simplify the task of negotiation of a new trade agreement.

The CJEU’s press release is here.

The CJEU’s Opinion is here.

Consultations on post Brexit UK sanctions law and policy

Maya Lester QC

There are currently 2 major consultations into the shape of UK economic sanctions post Brexit:

1. The Foreign & Commonwealth Office has published a white paper consulting on the legal powers it will need to be able to continue imposing and implementing sanctions once the UK leaves the EU.  Its focus is on the legal powers necessary to operate UK sanctions and not on the shape of UK sanctions policy in the future or other policy issues. Comments on the questions for consultation should be sent to the FCO by 23 June 2017 (details on the consultation paper).

2. The House of Lords EU External Affairs Sub-Committee is undertaking an inquiry into UK sanctions policy after Brexit.  The inquiry will hear oral evidence and take some written evidence by the end of June, and will explore the advantages and disadvantages of future co-operation between the UK and the EU on sanctions policy and how co-operation might take place, the current EU sanctions regime and how this will be transposed into UK law, and the impact of a separate UK sanctions regime on the UK’s ability to achieve its foreign policy goals. The UK Sub-Committee’s page giving information about the inquiry is here.

This follows also the call from the House of Commons Foreign Affairs Committee for the FCO to clarify by March 2018 “how the UK will impose sanctions post-Brexit, explain whether Brexit would entail changes from the current sanctions regime and analyse the costs and benefits of the possible models for future UK-administered sanctions”.  This was in the Committee’s report on the UK’s relations with Russia (link here).

These follow 2 other recent UK sanctions consultations:

3. A consultation by HM Treasury’s Office of Financial Sanctions Implementation (OFSI) on its new powers to impose civil monetary penalties for sanctions breaches, which led to new guidance and a consultation response (link here).

4. A report by the House of Lords EU Justice Sub-Committee on the legality of the EU sanctions listing procedure (link here).  The purpose of this inquiry was to understand why EU targeted sanctions were being struck down by the EU courts, and whether improvements could be made to the sanctions listing process, and the report makes a number of recommendations to Government (consultation response here).

Further details and links on www.europeansanctions.com