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Grayling's Brexit Bulletin - 25 August 2017

25th August 2017


 

The BREXIT Bulletin: Winter is coming
 

Whilst most of the EU have been sunning themselves on the beach, the UK has stepped into the breach and published a number of position papers, one a day this week, on some key issues linked to Brexit - more about which you can read below.

The UK has so far been on the receiving side of some harsh press which has criticised it for its alleged lack of preparation and laissez-faire attitude.

The EU by contrast has deliberately portrayed itself as being calm, organised, and emotion-less in its approach. All the Member States appear to be perfectly aligned, both with each other and with the EU institutions.

But winter is coming. And we all know what that means.

Come October, the EU needs to decide whether to move to phase 2 of the negotiations, based on their assessment of whether sufficient progress has been made during phase 2. 

Here the dragons lurk.

Some countries will be keen to move to trade talks as soon as possible, whilst others will insist on there being some evidence of the UK's willingness to pay a divorce bill, and an indication of how much this may be.

Up to now the EU has managed its role very well - but it's been quite an easy role, all told.

Now things will get difficult, and splits may emerge within the supposed EU consensus.

This is where the UK could step in and divide and rule within the EU. Up to now the EU has been able to successfully mask any internal differences, but this will not be the case for much longer.

 



If you have any suggestions about the Brexit Bulletin or want to find out more about a specific aspect of Brexit, please do let us know. Please visit the Grayling Brussels website, follow us on Twitter @TheEULobby, and don't forget to check out our Brexit Papers and Timeline. 
 



This week's contents:
 

Sectoral Insight - 

UK Highlights -

Member State Highlights - 

Our Read of the Week - 

 

Grayling Brexit Unit Events 

5 September 2017 - 3rd Installment of the Grayling Brexit Breakfast Club

Venue: Grayling’s Brussels Office, Floor 4, 46 Avenue des Arts, Brussels 1000

28 September 2017 - Grayling Brexit Seminar - 'The Weakest Link? Brexit and Your Supply Chain'

Join us to discuss Brexit's supply chain challenges for business. Confirmed speakers include Patrick Keating, European Government Affairs Manager at Honda Motor Europe, and a Senior Civil Servant from the UK's Department for Business, Energy and Industry Strategy.

Venue: Grayling’s Brussels Office, Floor 4, 46 Avenue des Arts, Brussels 1000

For more information contact Nick Crosby - nick.crosby@grayling.com

 

Sectoral Insight: 

Contributed by Clara Saintigny, Senior Consultant in Grayling Brussels' New Technologies Practice and Member of the Grayling Brexit Unit

UK wants to maintain a strong future data relationship after Brexit
In a position paper published on 24 August, the UK is proposing to maintain a “strong future data relationship” with the EU after exiting the bloc. The position paper indicates that the UK basically wants to stay aligned with EU data protection rules as much as possible in order for the “secure flow of data to be unhindered in the future as we leave the EU”, in the words of UK Digital Minister Matt Hancock.
 
The UK is also willing to see its national data watchdog, the Information Commissioner’s Office (ICO), play an “ongoing role” in EU regulation. The UK is seeking to replicate its existing data protection arrangements with Europe via a new model under which its membership of the EU’s General Data Protection Regulation (GDPR) will be replaced with a bespoke partnership that will involve the UK implementing GDPR rules into British law.
 
London hopes that its close alignment with EU rules will enable the partnership to go beyond existing “adequacy” models that currently govern EU data protection arrangements with third countries.
 
The Grayling View
Despite the UK’s best efforts, there could be a little setback with regard to its Investigatory Powers Act, which came into force at the end of last year, as it seems to violate EU fundamental rights and will cause problems for any eventual arrangement on data flows post-Brexit. In addition, if the UK wants to remain aligned with EU data laws, it would also have to continue to implement upcoming rules on cybersecurity. The Directive on the security of network and information systems will also have to be transposed into national law by 9 May 2018. It includes an obligation for companies to report when they have been hacked. Overall, data seem to be one of many instances where the UK will have to remain compliant with stringent EU law if it is to continue doing business with the EU, even post-Brexit.
 



The highlights from the UK:
 

Positioning, positioning and more positioning
The UK Government has continued to publish Brexit position papers on an almost daily basis this week, with documents published on the ‘status of goods’, confidentiality and access to documents, cross-border civil judicial cooperation, and dispute resolution. The papers which have received the most attention have been those regarding ‘goods’ and the future legal frameworks. Although their importance is significant, they prove to be somewhat dry reads. 
 
The paper on the ‘status of goods’ states that its aim is to ensure a smooth withdrawal whilst supporting the freest possible future economic relationship. To achieve these objectives, the UK has proposed four principles. First, goods placed on the Single Market before exit should continue to circulate freely in the UK and the EU, without additional requirements or restrictions. Second, where businesses have undertaken compliance activities prior to exit, they should not be required to duplicate these activities in order to place goods on the UK and the EU market after exit. Third, that any agreement should facilitate continued oversight of goods. Fourth, that where goods are supplied with services, there should be no restriction to the provision of these services that could undermine the agreement on goods.
 
Two papers have been published regarding future legal cooperation. The first of these papers concerns cross-border civil judicial cooperation. The paper commits the UK to continuing to collaborate at bilateral, regional and multilateral levels by building on the strong foundation of existing cooperation and belief in shared values. It states that the UK will seek a framework that allows for close and comprehensive cross-border civil judicial cooperation “on a reciprocal basis, which would mirror closely the current EU system”. The paper also underlines the importance of an interim period and calls for an agreement on high-level principles in the event of no agreement on the future framework.
 
The second paper is on dispute resolution and enforcement. “Purely illustratively” it cites the Comprehensive Economic and Trade Agreement (CETA) arbitration model and the European Free Trade Association (EFTA) Court as examples of approaches to international dispute resolution with the EU that do not involve the European Court of Justice (ECJ). It also continues to commit to ending the “direct” jurisdiction of the ECJ, although it adds that this will not weaken existing individual rights or alter the UK’s commitment to complying with its obligations under international agreements. Pre-existing ECJ case law will receive the same precedent status in UK courts as decisions of the Supreme Court under the terms of the EU (Withdrawal) Bill, and it is suggested that there could be a mechanism for voluntary references to the ECJ for a determination of the meaning of substantive EU law.
 
The Grayling View:
The ‘goods’ paper does provide some further clarity on the UK’s position, although many will be disappointed with the lack of specificity. However, given the range of goods effected by the UK’s withdrawal, providing a high number of examples or case studies would have been challenging and would not necessarily have added further insight into the UK’s position. The majority of the positions advocated in the paper amount to agreeing the continuation of regulatory equivalence, thereby allowing the internal market to continue to operate as at present for pre-Brexit goods. Although a great number of regulatory requirements such as type approvals receive their first explicit recognition in the paper, businesses would be well advised to ensure that UK officials are aware of all of the various regulations covering their business.
 
In terms of future cross-border civil judicial cooperation, the paper is light on specific content and leaves the UK with a bit of wiggle room in the negotiations. For example, it explicitly commits the UK to remaining part of certain international instruments (e.g. Rome I and II) but doesn’t mention others (Brussels Ia). This could be an attempt to make the UK’s courts an even more attractive place to choose to litigate. Some commentators have also argued that the paper isn’t explicit that all EU law will be kept and have raised concerns that it doesn’t provide a solution to laws (or their judicial interpretation) changing in the future. Similarly, although the paper on future dispute resolution analyses and develops a number of options on the UK and EU’s future legal relationship, it provides few concrete proposals. However, the paper does interestingly indicate that the current UK preference would be an agreement closely aligned to the EFTA Court, a proposal that has gained widespread backing from Brexit supporting UK parliamentarians.
 
All three papers provide useful further guidance on the UK’s position and most take a practical approach to a number of the challenges arising as a result of the UK’s decision to leave the EU. Although much of the media attention over the previous two weeks has focused on the ‘goods’ and customs papers, any UK/EU future relationship will need some arbiter for a great deal of the areas where agreement may be struck. In this regard, the softening of the UK’s position on some form of ECJ jurisdiction is perhaps the most important development in the UK position and one which significantly increases the chances of a future relationship agreement being reached.  

 


The highlights from the Member States:

No 'big' Brexit surprises in the German Election?
One month before the German Federal Election on 24 September, Brexit lurks only in the shadows of what has so far been an uneventful campaign.
 
This is reflected in the policies of the two major parties. Angela Merkel’s Christian Democratic Union (CDU) and her main rival, former President of the European Parliament Martin Schulz’s Social Democratic Party (SPD), seem to agree on almost everything related to the EU and to Brexit.
 
Most significantly, the CDU and the SPD concur that the UK will not be able to cherry pick aspects of EU membership, even if the mighty German automotive industry may pressure the Chancellery for special treatment.   
 
Perhaps the only difference is the use by SPD leaders of language indicating that they would prefer that Brexit wasn’t happening. In April 2017, Katarina Barley, the SPD’s former Secretary General, stated that the UK should hold another referendum before Brexit is finalised, and on 8 August the Foreign Minister Sigmar Gabriel stated that in the absence of a clear negotiating strategy “the best thing to do would be to stay”. However, although they would prefer that Brexit wasn’t happening, the Party remains firm on the principle that the UK cannot enjoy the advantages of EU membership as a third-country.

The Grayling View:
Often hailed as the world’s most powerful woman, Angela Merkel strolled onto the campaign trail projecting an air of quiet confidence, sending a message of stability and continuity in a world unsettled by Brexit and Donald Trump.
 
The striking thing about the election campaign is the lengths at which the opposition parties are being made to go to differentiate their offerings and escape the large shadow of the CDU. Recent polling showing the CDU on 38% and the SPD on 24% suggest that the opposition are not succeeding. A major change of philosophy in the Chancellery during the Brexit negotiations is therefore extremely unlikely.
 
So what impact will the German Election have on Brexit?
 
The answer lies in the make-up of the CDU governing coalition. The current CDU-SPD grand coalition is a clumsy, unloved compromise; neither party has much appetite for its prolongation. If it doesn’t survive, the liberal FDP are waiting in the wings. Comparatively Eurosceptic for Germany, could this lead to a slight change in the hue of the Chancellor’s Brexit position? 

 



Dates for your diary

w/c 28 August 2017 - Third Negotiating Round
5 September 2017 -
GBU Brexit Breakfast Club
7 September 2017 - European Union Withdrawal Bill Second Reading
11 September 2017 - European Union Withdrawal Bill Second Reading - Vote
w/c 18 September 2017 - Fourth Negotiating Round
24 September 2017 - German Federal elections
28 September 2017 -
GBU Seminar - 'The Weakest Link? Brexit and your Supply Chain'
w/c 9 October 2017 - Fifth Negotiating Round
11 October 2017 -
GBU Brexit Breakfast Club
8 November 2017 - GBU Brexit Breakfast Club
19-20 October - European Council Summit
1 January 2018 - Bulgarian Presidency of the Council
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
Autumn 2018 - Spring 2019 - Possible Scottish independence referendum
1 January 2019 - Romanian Presidency of the Council
March 2019 - UK expected to leave EU

 


 

Grayling Brexit Unit

Our Grayling Brexit Unit brings together the very best consultants from across the Grayling network and includes those who have direct experience of working alongside the leading political figures charged with negotiating Brexit in London and Brussels.

The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.

Please contact Robert Francis Tel +32 2739 47 34 (robert.francis@grayling.com) in our Brussels team or Jonathan Curtis (Jonathan.Curtis@grayling.com) in London for more information, and check out our brochure.

 

 

 

 #Brexit Papers 


Brexit Negotiating Documents
The 'Great Repeal Bill'
Brits working in the EU institutions
Article 50

Sir Julian King - The Last UK Commissioner
David Davis – UK Brexit Secretary.
Sir Keir Starmer – Shadow Brexit Secretary.
Sir Tim Barrow – UK Permanent Representative.
Michel Barnier – EU Chief Negotiator.
Sabine Weyand – Barnier’s Deputy.
Guy Verhofstadt – EP Brexit Lead


Updated Timeline

 

Robert Francis

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