STATE OF PLAY

In the UK

This week, Cabinet Minister Michael Gove gave evidence to the House of Commons’ Committee on the Future Relationship with the European Union on progress made in the negotiations for a new trade agreement with the EU.

Of interest, Gove:

  • said that the UK will present its own draft legal text of the treaty before the next round of talks. However, he said that the Government has yet to decide when the text will be made available.
  • confirmed that, contrary to the case of the FTA with the US, where the Government published 60 pages of economic assessment, the Government will not prepare an impact assessment of the new agreement with the EU.
  • confirmed that the UK is giving equal status to trade negotiations with the EU and US, and said “that there is no reason why they can’t both be completed by the end of the year”.
  • said that it might not be possible to conclude a security deal with the EU by the end of this year, confirming that negotiations will continue after the end of transition period.
  • refused to confirm whether there would be extra checks on goods going from Great Britain to Northern Ireland under Protocol agreed by the UK and the EU, saying that this “would be a matter for the Joint Committee”, the body tasked to oversee implementation of the Withdrawal Agreement.
  • suggested that there would not be an agreement on REACH, the European Regulation concerning chemicals and their use, saying that one of the problems with it “is that it involves ECJ jurisdiction”.

Meanwhile, earlier in the week, Transport Secretary Grant Shapps confirmed that the UK will leave the European Union Aviation Safety Agency (EASA). During Parliamentary Questions, he further explained that the UK’s decision to cease its participation in the agency was taken after “the EU said in their statement of negotiating parameters on 15 of January that the UK’s participation in EASA is not viable from their perspective”, adding “It would not be viable from a UK perspective either, because we would be subject to ECJ rulings, in one form or another, and certainly, without any doubt, we would have to accept the European Commission creating the laws under which we would exist…”

This week, it was also reported that the UK “is not seeking waiver in relation to the Safety and Security declarations as part of the FTA negotiation” and would be subjecting all goods to declaration “in line with the rest of the world”. The move caused consternation among trade groups – including hauliers, port operators and shipping companies – who were informed of the decision last week by the HMRC’s Border Delivery Group.

In the EU –

EU Chief Brexit negotiators Michel Barnier has sent a 441-page text of a ‘New Partnership with the UK’ with the European Parliament and the Council for discussion. The BBC’s Adam Fleming, who obtained a copy of the draft, said that “Much of this

will be rejected by the UK because they don’t want any reference to EU law or to the European Court of Justice, nor do they accept an over-arching governance arrangement”. The text will be published after the EU internal exchange.

Next steps –

The next round of negotiations will not take place in London next week, after the UK and the EU decided to cancel face-to-face talks due to the coronavirus. The two Parties are now exploring alternative ways to “partially continue” the negotiations, including through audio and video conferencing. Despite the challenge posed by the Coronavirus, Gove has insisted that the Brexit transition period, which is due to end in December this year, will not be extended.

OTHER KEY DEVELOPMENTS

  • The Office for Budget Responsibility (OBR), the UK’s official budget watchdog, revealed in its March report that the UK Real business investment has barely grown since the referendum, whereas its March 2016 forecast assumed it would have risen more than 20% by this point. It also reported that around one third of the long run hit to productivity from Brexit has already happened, that another third is likely to come over the forecast period and the rest comes through beyond its forecast horizon. The UK Treasury pointed out that the OBR had not modelled for the possible economic gains of the UK using its new-found regulatory autonomy to create a more dynamic economy.