Government publishes white paper on Brexit and future relationship with EU

The government has published its white paper on Brexit and the future relationship between the UK and EU.

Key aspects of the white paper:

Mutual market access

Trade in services

Broadly, on trade in services, the paper says 'the UK is world-leading in many services sectors, including legal, business and financial services.' The paper also says the UK’s proposal includes:

    1. General provisions that minimise the introduction of discriminatory and non-discriminatory barriers to establishment, investment and the cross-border provision of services, with barriers only permitted where that is agreed upfront.
    2. A system for the mutual recognition of professional qualifications, enabling professionals to provide services across the UK and EU.
    3. Additional, mutually beneficial arrangements for professional and business services.
    4. A new economic and regulatory arrangement for financial services.

    WTO's GATS provisions

    On the Word Trade Organisation’s (WTO) General Agreement on Trade in Services (GATS) provisions, the UK is proposing arrangements with broad coverage, ensuring that service suppliers and investors are allowed to operate in a broad number of sectors without encountering unjustified barriers or discrimination unless otherwise agreed. Specifically, the UK is seeking:

    1. Broad coverage across services sectors and the modes of supply, in line with GATS obligations.
    2. Deep market access commitments, eliminating, among other things, explicit restrictions on the number of services providers from one country that can operate in another.
    3. Deep commitments on national treatment, to guarantee that foreign service providers are treated the same as equivalent local providers, with any exceptions kept to a minimum.
    4. Provisions to ensure the free and timely flow of financial capital for day-to-day business needs, including payments and transfers.
    5. Best-in-class arrangements on domestic regulation, which ensure that all new regulation is necessary and proportionate.

    Summarising GATS’ four modes of services supply, a lawyer is referenced as the example for providing cross-border services: 'a service provider crossing a border to a consumer (for example, a lawyer going to another country to provide legal advice to a client).'

    Professional and business services

    On professional and business services, there are additional paragraphs:

    The UK and EU economies rely on the cross-border provision of professional services. This includes legal services, where the UK is the destination for 14.5 per cent of total EU legal services exports. It also includes accounting and audit services. In 2016, UK firms provided over 14 per cent of EU27 audit and accountancy imports.

    In addition to the general services provisions, the UK proposes supplementary provisions for professional and business services, for example, permitting joint practice between UK and EU lawyers, and continued joint UK-EU ownership of accounting firms.

    The supplementary provisions would not replicate single market membership, and professional and business service providers would have rights in the UK and the EU which differ from current arrangements.

    Mutual recognition of professional qualifications

    On mutual recognition of professional qualifications, the white paper recognises that 'the EU regime for the recognition of professional qualifications enables UK and EU professionals to practise across both the UK and the EU on a temporary, longer-term or permanent basis, without fully having to retrain or requalify,' adding that 'since 1997 the UK has recognised over 142,000 EU qualifications, including for lawyers, social workers and engineers.'

    The white paper states that the UK’s arrangements with the EU should not be constrained by existing EU Free Trade Agreement (FTA) precedents and says that the Comprehensive Economic and Trade Agreement (CETA) does not go far enough. The government proposes a system that:

    1. Is broad in scope, covering the same range of professions as the Mutual Recognition of Qualifications Directive.
    2. Includes those operating either on a permanent or temporary basis across borders.
    3. Is predictable and proportionate, enabling professionals to demonstrate that they meet the necessary requirements, or to undertake legitimate compensatory measures where there is a significant difference between qualifications or training, in a timely way.
    4. Provides transparency, with cooperation between regulators to facilitate the exchange of information about breaches of professional standards, and to review changes to professional qualifications over time.

    Future mobility arrangements

    On future mobility arrangements, the white paper says 'the UK will make a sovereign choice in a defined number of areas to seek reciprocal mobility arrangements with the EU, building on current WTO GATS commitments.'

    Specifically, the UK’s future economic partnership should therefore provide reciprocal arrangements, consistent with the ending of free movement, that:

    1. Support businesses to provide services and to move their talented people.
    2. Allow citizens to travel freely, without a visa, for tourism and temporary business activity.
    3. Facilitate mobility for students and young people, enabling them to continue to benefit from world leading universities and the cultural experiences the UK and the EU have to offer.
    4. Are as streamlined as possible to ensure smooth passage for legitimate travel while strengthening the security of the UK’s borders.
    5. Provide for other defined mobility provisions, including arrangements to ensure that UK citizens living in the EU, in future, continue to benefit from their pension entitlements and associated healthcare.

    Civil judicial co-operation

    The UK is seeking to join the Lugano Convention and is exploring a new bilateral agreement with the EU on civil judicial cooperation, covering a coherent package of rules on jurisdiction, choice of jurisdiction, applicable law and recognition and enforcement of judgments in civil, commercial, insolvency and family matters.

    The UK Government is exploring options on intellectual property including participation in the Unified Patent Court and unitary patent system.

    The government notes that the Unified Patent Court has a unique structure as an international court that is a dispute forum for the EU’s unitary patent and for European patents, both of which will be administered by the European Patent Office. The UK will therefore work with other contracting states to make sure the Unified Patent Court Agreement can continue on a firm legal basis.

    Security co-operation

    The paper discusses an ambitious partnership with the EU that goes beyond existing precedents in this area. It reiterates previous papers on the security partnership not it should cover:

    1. Mechanisms for rapid and secure data exchange.
    2. Practical measures to support cross-border operational cooperation.
    3. Continued UK co-operation with EU law enforcement and criminal justice agencies.

    Type of agreement and dispute resolution

    The institutional framework

    The UK Government says there should be one overarching institutional framework and precedent suggests that the UK’s proposal would take the form of an association agreement between the UK and the EU.

    The future relationship is likely to consist of a number of separate agreements, each covering different elements of economic, security and cross-cutting cooperation.

    The details of each individual agreement will be subject to negotiation with the EU, but some should be legally binding; for instance, components of the economic partnership (such as a core FTA) and of the security partnership (such as internal security). Other components should be based on political commitments, for instance components of external security cooperation. The majority of these individual agreements should sit within the overarching institutional framework.

    This framework should also facilitate many of the different forms of dialogue that would manage and administer the relationship, with a governing body providing political direction and a joint committee to underpin its technical and administrative functions.

    Resolving disputes

    Where informal discussions did not resolve a particular issue, a formal dispute would be raised in the joint committee.

    Should efforts to resolve a dispute by negotiation fail after a defined period of time, it would make sense in some cases for either party to have the option of referring the issue to an independent arbitration panel, which would include members from both parties.

    The common rulebook

    Where the UK and the EU had agreed to retain a common rulebook, it is possible that a dispute could relate to whether these rules had been interpreted correctly.

    The UK recognises that only the Court of Justice of the European Union (CJEU) can bind the EU on the interpretation of EU law, and therefore in these instances there should be the option for a referral to the CJEU for an interpretation, either by mutual consent from the joint committee, or from the arbitration panel.

    The CJEU would only have a role in relation to the interpretation of those EU rules to which the UK had agreed to adhere as a matter of international law.

    The joint committee or arbitration panel would have to resolve the dispute in a way that was consistent with this interpretation. This would respect the principle that the court of one party cannot resolve disputes between the two.

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