John Bruton

John Bruton

Prime Minister, Ireland 1994 - 1997
EU Ambassador to the United States 2004 - 2009

What the Brexit Trade Deal Means

 

by JOHN BRUTON

Published:  John Bruton Opinions and Ideas, 29 December 2020

 

The Trade and Cooperation Agreement between the EU and the UK is an exercise in damage limitation. The UK will face numerous obstacles because of its decision to leave the EU, including leaving the Customs Union and Single Market.

But it was in nobody’s interest to add to these obstacles. That was the spirit in which the EU approached the negotiation.

The Agreement may run to 1256 pages, but it boils down to some fairly simple and sensible ideas.

While no longer a member of the EU, the UK still wants to do business with the EU, and the EU members want to do business with it. 

So, for the future, there needs to be a system for ensuring that there are no surprises, or unfair trading , that would disrupt mutually beneficial business. That is essentially what the Agreement is all about.

While the UK was a member of the EU, that goal was achieved by having a common set of business rules, made democratically and together, and interpreted in a consistent way by the European Court of Justice (ECJ). These rules could be enforced in national courts. In other words the goal of predictable and fair business conditions between the UK and its fellow EU members was achieved directly by common action. 

Under the new Agreement, the same goal will be pursued, but indirectly.

Common rules, made and interpreted in common, will be replaced, as far as trade between the EU and the UK is concerned, by understandings set out in the Agreement, which will be interpreted by arbitrators appointed under the Agreement.

These understandings will have legal force, but will generally only be enforceable under the procedures set out in the Agreement, rather than directly in national courts.

While the EU and the UK will each be free to determine their own policies on the environment, social and working conditions, and subsidy controls, Article 9.4 of the Agreement allows for “rebalancing” measures to be taken by the other side if it feels its own businesses are being put at a disadvantage. This is supposed to restore the level in the level playing field. 

The Agreement contains principles, now to be enshrined in international law through the Agreement, that are shared by the EU and the UK. These cover environmental, social and subsidy issues. Arbitration Tribunals to be set up under the Agreement will interpret these agreed principles in specific cases. They will have a legal, but also a political, task.

Most of the text of the Agreement is taken up with procedures for resolving disputes. 

Matters, currently resolved in national courts under EU law, will have to be resolved at inter state level between the UK and the EU, rather than in the national courts. This is inherently more cumbersome.

Sometimes the issue will be settled by political agreement in one of the myriad of committees set up under the Agreement. 

ARBITRATION…. THE CORE IDEA

If the issue cannot be settled in this way, it will go the arbitration. 

So, instead of the interpretation being done by Judges of the ECJ, they will be done by an Arbitration Tribunal set up under the Agreement.

An Arbitration Tribunal will consist of three people. There will be lists of qualified arbitrators from which the three may be chosen, one by the UK and one by the EU and the Chair of the Tribunal will be someone who is not from EU or the UK. 

I think this idea that the chair must come from outside either the EU or UK may prove difficult. It will not  always be easy  to find suitable chairs who are not either British or EU citizens, especially as the work will have to be done at short notice and under tight time limits.

To qualify for appointment, an arbitrator will have to have “demonstrated expertise in law and international trade” .  They will all have to be people “whose independence is beyond doubt”. They will serve in their individual capacities, and not take instructions from anyone. They will have to be people who would qualify to be judges in their home countries.

I suspect there will be a lot of intense haggling over the composition of particular Arbitration Tribunals.  The nationality of the arbitrators and their past records will be scrutinised by the governments most affected by the issues in dispute. 

There are detailed provisions in the Agreement to prevent stalling by either the EU, or the UK, in appointing Arbitrators. Once established, the Tribunals will have to deliver their ruling within 130 days . Within 30 days after that, the affected party will have to say how they will comply with the ruling.

This entire structure of dispute resolution will be presided over by a Partnership Council to be chaired jointly, by a UK Minister and an EU Commissioner. It will be assisted by over 20 specialised committees and a number of Working Groups, all of which are listed in Title III of the Agreement.

EVEN MORE MEETINGS THAN BEFORE!

I expect that there will, in the future, be even more EU related meetings for UK officials than in the past.  But the dynamic will be different.

Instead of being able to build alliances on particular topics with other EU member states, the UK will in future find itself alone in the room with the European Commission.

The Commission side will have instructions, negotiated in advance with the 27 member states, so there will be a high degree of rigidity in the process.

As the EU member state most affected by relations between the UK and the EU, this will be a particular challenge for Ireland. Irish officials in Brussels and will have to stay on top of all that is going on in the various EU/UK committees. Cultivating an understanding with the Commission officials serving on these committees will be a priority.

No longer in the EU, the UK will, notwithstanding the provisions of the Agreement, encounter significant extra bureaucracy and uncertainty in doing business with the EU. 

PARTING COMPANY GRADUALLY

This will lead to a gradual divergence between the UK and all its European neighbours, including Ireland. That, in turn, will have cultural and political effects. 

The UK, and the EU states including Ireland will, so to speak, be mixing in different company .They will increasingly be seeing the world from diverging angles of vision. Issues that were previously depoliticised will become more political.

Eventually, this may affect the way the UK sees its physical and military security. NATO is already under strain, and Brexit creates a new fault line within NATO.

While Ireland is not in NATO, we live in a part of the world which has sheltered under the NATO umbrella, and we are deeply interconnected with NATO’s biggest member, the US.  

Brexit may be over and done with, but the forces which led to it…identity politics and suspicion of foreigners….have not gone away.