Annex – Towards A Workable Transition Agreement That Respects Sovereignty
Area of concern
Maintenance of trade, threats of deprivation
The EU might be blustering when it says that any free trade agreement should be balanced, ambitious and wide-ranging, but cannot, however, amount to participation in the Single Market or parts thereof, as this would undermine its integrity.
Like the UK, the EU is signed up to WTO treaties with goals of trade barrier reduction and liberalisation, and provisions that regional unions should not have adverse effects on other WTO members.
The EU has been a keen supporter of the WTO and liberalisation in practice, for instance allowing extensive access for financial services to Singapore and considering a more extensive agreement with Chile. EU courts also accept that the goals of treaties are binding.
No "cherry picking" on the four freedoms
Vicky Ford MP has shown how cherry picking is allowed in practice.
The EU Free Trade Agreement with Singapore shows how extensive access for goods and services can be customised for non-EU parties without an extensive requirement for immigration or payment.
EEA members such as Norway have some rights to curtail free movement of labour or to reject new EU legislative proposals.
Overbearing EU insistence on the full acquis as a condition of transition
The EU wants the whole ‘acquis communautaire’ imposed. This has previously been defined widely to include treaties and Case Law as well as Directives and Regulations. The EU also wants a blank cheque for acceptance of new laws, regardless of consequence.
The EU might know that this is a try-on as the small print in its draft guidelines qualifies: “To the extent necessary and legally possible”. All EU members and the EU accept the UN Charter, obliging members to develop friendly relations based on equal rights and self-determination.
The UN Charter explicitly prevails over any later treaty. UN Resolution 2625 bans the use of economic, political or other types of measures to coerce another State to subordinate the exercise of its sovereign rights.
Fairness (to both the EU and the UK)
The EU claims to want a result that is fair and equitable for all and a level playing field. This would be difficult to achieve with EU institutions making laws and adjudicating over a powerless UK. The Canada and Singapore FTAs have open and balanced means of dispute resolution, such as arbitration panels.
A UK-EU withdrawal agreement could be adjudicated at the UN, or selectively at the WTO, arbitration bodies such as UNCITRAL, or the International Court of Justice by agreement with the EU27.
Legal stability, standards and divergence
In practice, the EU has had divergence provisions in other agreements. There is no reason why the UK should not be able to diverge in its practices, so long there is no discrimination against EU exporters. The UK could also undertake to recognise EU standards as a valid alternative.
Under the WTO Technical Barriers to Trade provisions, the EU has agreed that localised regulation can be superseded by new international or industry standards as a default. This would also apply to the UK, but shows that EU standards are not sacrosanct, and there may be no great divergence problem in practice. Around 80% of Single Market standards are reckoned to originate from other regional or global bodies, making the EU increasingly a rule taker. Outside the EU, the UK should have the same rights as other non-EU countries to influence the rules.
To facilitate trade, the EU has concluded liberalised agreements such as on simplified Rules of Origin and product conformity testing.
UN CHARTER AND RESOLUTION REFERENCES
UN Charter text (cf. Articles 1, 2, 55, 103)
UN Resolution 2625 is accepted as a valid lens for interpreting the UN Charter in international law.
“No State may use or encourage the use of economic, political or other types or measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights or to secure from it advantages of any kind.”
The UN Charter holds “All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations. (Article 2.4)
“In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail.” (Article 103)
WTO TRADE POLICY OBLIGATIONS
Binding interpretations on goals and obligations of trade treaties (references 8, 9, 11, 13)
“arrangements entered into by Members be reciprocal and mutually advantageous concessions made by WTO Members should be interpreted so as to further the general objective of the expansion of trade in goods and the substantial reduction of tariffs… “security and predictability of ‘the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade’ is an object and purpose of the WTO Agreement….
“[regional trade agreements] the purpose of such agreements should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other Members with such territories; and that in their formation or enlargement the parties to them should to the greatest possible extent avoid creating adverse effects on the trade of other Members;”
WTO Trade Facilitation Agreement, customs co-operation
WTO Agreement on Technical Barriers to Trade
WTO Director-General Robert Azevedo
In an interview with Sky News, the WTO boss said he was not of the opinion that the Brexit vote was "anti-trade" and added that the UK would not suffer trade setbacks during or after its negotiations with the EU.
EU TRADE POLICY ON GOODS AND SERVICES
The EU wants to free up global trade in goods and services both through the WTO negotiations and through bilateral and regional trade agreements. (21 August 2014)
“The EU is firmly committed to the promotion of open and fair trade with all its trading partners.
The EU has specific trade policies in place for all its partners and abides by the global rules on international trade set out by the World Trade Organisation.”
See also “Trade Policy as a core component of the EU's 2020 strategy”
European Commission, DG Trade, Management Plan, 2015
"DG Trade is committed to liberalising world trade"
"Bilateral free trade negotiations will remain the core of our work."
“…the EU has an important role to play in shaping globalisation and ensuring that all groups in society benefit, by taking the lead in the WTO as well as through the negotiation of ambitious, balanced and comprehensive plurilateral and bilateral agreements. The EU's trade agenda should seek to open markets…
https://www.eu2017.ee/trio-programme (EU Council Presidency 2017-18, document POLGEN83)
European Court of Justice rulings on binding Treaty goals; (Cases 11/00, 15/00)
EU Trade Commissioner Cecilia Malmstrom speech, 2017
“Free trade, fair trade is not just a slogan for Europe; it is in our DNA, since our foundation in 1957, I think that is very much in your DNA as well. Our society and economy are fundamentally open, and rely on openness for their survival.”
EU Brexit negotiating documents
Divergence (p40), Rules of Origin (cumulation, e.g. p23)
Rules of Origin (p4), Conformity Testing (p5)
EEA/Single Market standards; EU as rule-taker
EU RELATIONS WITH NORWAY (EEA), SINGAPORE, CANADA
(EEA Agreement, Article 112)
EU AND CHILE
The EU seeks an EU-Chile free trade area in goods and services via a modernised Association Agreement.
Directive for modernisation, 13553/17, 22 January 2018
The Modernised Agreement should be based on respect for democratic principles, the rule of law, human rights and fundamental freedoms, as enshrined in particular in the UN Charter
…The Agreement should advocate the widest possible scope for cooperation from which no field of activity should in principle be excluded.
…The objective of the trade and investment part of a modernised Agreement should be to reach a high level of ambition in all areas of the Agreement. It should provide additional and comprehensive reciprocal liberalisation of trade in goods and services,
…Furthermore, the Agreement should aim at removing unnecessary obstacles to trade and investment, including existing non-tariff barriers (NTBs), through effective and efficient mechanisms, and seek an ambitious level of regulatory coherence for goods and services, including through enhanced cooperation between regulators.
…The Agreement should aim at full tariff liberalisation,
…The Parties should conclude comprehensive provisions on Technical Barriers to Trade (TBT), building on and going beyond the WTO Agreement on Technical Barriers to Trade (TBT Agreement). These provisions should aim at, inter alia, seeking compatibility and convergence of technical regulations through the application of international standards,
…In line with Article V of the General Agreement on Trade in Services (GATS), the Agreement should have an extensive sectoral coverage and should cover all modes of supply. The Agreement should have no a priori exclusion from its scope other than the exclusion of audio-visual services which will not be covered by the chapters on trade in services and establishment of this agreement.
…The dispute settlement mechanism should be transparent, open (including as regards hearings) and based on experience gained in the WTO and in other Free Trade Agreements. It should include provisions for a flexible and rapid mediation mechanism.
This webpage is available as a PDF, www.newalliance.org.uk/annex218.pdf