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29 March 2017

So, the A50 starting gun has been fired. A shell has been launched into a landscape with very few ‘known knowns’ (a village), a plethora of ‘known unknowns’ (a town) and more open space of ‘unknown unknowns’ than one can shake a stick at (a veritable ocean).A divorce is never easy, but this one has the added dimension that there are a lot of dependants (30 to be precise – 27 EU members and the devolved administrations of Scotland, Wales and Northern Ireland) who will want a say on the terms of parting, including the financial settlement. A fiendishly complex and challenging process. Tricky.Three things to think about in that complexity and trickiness:-

  • The UK Government lost round one of the constitutional battle, with representative Parliamentary democracy vanquishing the executive in the Courts in the decision of the Supreme Court in the “Miller” case. How will it fare in round two?Forty years of EU membership has produced thousands and thousands of laws and regulations covering everything from farms to pharmaceuticals, from fisheries to car safety, from our daily conditions of employment to the quality of water that enters and leaves our taps and the food we find on the supermarket shelves. As the Government introduces its draft ‘Great Repeal Bill’ (a political title if ever there was one) the challenge of extracting essentially new English law from the synthesised body of European law should not be underestimated. It will be a mammoth uncoupling exercise. Decisions are going to have to be made on what EU law we keep and what we don’t, and for those laws we are going to keep, decisions are going to have to be made on the form in which it is done. Because Parliament will struggle with managing the enormity of the process, the Government can be expected to ask for substantial devolved powers (including law making powers) to undertake the task. There lies the rub. How ready is Parliament to leave the job to the executive – diluted scrutiny? There again, it probably has little choice.

  • There are some 33 European regulatory and other bodies which oversee UK plc activity and to which UK businesses look for licences and authorities. Those bodies which conduct the tedious but important work of administering and enforcing the applicable legal frameworks currently do so under the ultimate jurisdiction of the European Court of Justice (the CJEU). Let us speculate for a moment that either in the deal done with the EU or if there is no deal, the UK decides to extract itself from a framework and the CJEU in respect of that arena. Will that mean the UK will not want that field of activity regulated? Doubtful, I venture. If it is to continue to be regulated or administered, a new establishment will be needed or the activity will need to be transferred to a body which already has responsibilities in the field. The bad news is the cost – more expensive administration to be paid by the public purse. On the plus side, plenty of opportunities ahead for able regulatory lawyers.

  • Following the divorce, what will establishing new trading relationships involve? Whilst the World Trade Organisation (WTO) regime (with its 164 members responsible for 95% of the world’s trade) provides the UK with a useful framework for re-negotiation of its trade relationships with and outside the EU, unless realpolitik permits, the UK is likely to struggle to negotiate its post-Brexit arrangements in parallel with the Article 50 mandated negotiations. The starter gun for those future trade negotiations could be a fair way down the tracks – two years or possibly more. Although when the UK leaves the EU, in principle it will lose its status as a member of the WTO through the EU, it is also a member of the WTO in its own right, so the theory is that the default position in the event of ‘no deal’ is the UK falling back on its individual State membership. However, although it has separate membership, it has been operating in the WTO under the EU’s ‘schedules’ - the commitments that set the terms of EU tariffs, its quotas and limits on subsidies. On leaving the EU on a deal or without a deal, the UK will have to agree new schedules of its own. Cutting and pasting from the EU schedules may work up to a point in respect of tariffs, but the job is unlikely to be so easy when it comes to quotas and subsidy limits which are currently shared. In that arena, our negotiators will be looking at a three-way negotiation – UK, EU and WTO. So, if you thought the divorce from the EU would be difficult with 30 dependants wanting a say, negotiating with just short of 200 States might take a while…quite a while.

For further information, contact Dominic Hopkins, Head of Disputes and Litigation at Hewitsons

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