EU’s ‘Assertive’ Trade Policy Is A Shot Across UK’s Brexit Bow

With the unveiling of the European Commission’s future trade strategy, lawyers at Irwin Mitchell say the plans are a shot across the UK’s Brexit bow, as both sides plot their next key objectives.

Announced this week, the Commission described its plans as “open” and “sustainable”, with World Trade Organisation (WTO) reform seen as a priority for the EU.

The UK is not referenced by name, but the adoption of a “tougher, more assertive” approach to the enforcement of trade agreements will impact the recently negotiated TCA.

The first signs of this new strategy can be seen in the botched triggering of an emergency provision in the TCA to block vaccine exports across the Irish border. The decision was reversed, but highlights the Commission’s resolve to see agreements “deliver the negotiated benefits”.

These moves come as the House of Commons library published its own briefing on new customs rules for EU trade and new guidance from the cabinet office for those trading over £250,000 worth of goods with the EU annually – detailing the range of support open to these businesses.

On the UK side, the recent appointment of Lord Frost as the Cabinet’s leader on UK/EU liaison was accompanied by a hardening of the UK approach and a unilateral decision by the UK to extend transition arrangements for UK to NI goods exports in breach of what had been agreed with the EU. This, in turn, resulted in threats from the EU Parliament not to ratify the TCA and also threats of legal action against the UK for its unilateral acts. 

Irwin Mitchell continues to see clients looking for the latest advice and projections on the likely next moves, as intertwined businesses in the UK and on the continent look to crystallise their own long term European and international trade plans.

Bruce Macmillan, an expert lawyer at Irwin Mitchell, said: “The Commission has clearly set its stall out in terms of its objectives for international trade and it will be interesting how its “open strategic autonomy” plays out, when the UK will also be very engaged in any proposed WTO reform.

“Despite the tension that is being caused by the realities of Brexit sinking in all around Great Britain, there is much that the two former partners still have in common and are factually aligned on, including the push for carbon neutral economies and the realities of delivering a viable post-covid recovery for all.

“It is to be hoped that this will lead to a collaborative approach will emerge over time. However, in the interim, the stage appears to be set for renewed debate and disagreement later down the line as some TCA deadlines have yet to take effect and the Irish vaccine controversy and the UK’s unilateral deal breaking on transitional arrangements show that having the tools on both sides to defend against unfair trade practices has the potential for unforeseen consequences.

“The Commission quickly reversed its decision, but this and the current comments about legal action and the Parliament’s concerns about ratifying the TCA do underline the EU’s resolve to protect its interests and this desire to toughen up on trade coming so soon after Brexit hardly feels like coincidence – especially in the light of intentional unilateral acts on the UK’s part.

“The EU talking tough on the one hand and the UK’s need to show a Brexit dividend on the other could risk businesses on both sides of the continent being caught in the crossfire.

“The reality of the need to achieve post-covid economic recovery will focus minds in London and Brussels and the likelihood is that these will be the first of many shots by the EU across the bows of the UK and it is a reminder that post Brexit Britain is unlikely to find its trading relationships to be plain sailing.

“The reality is that we are likely to see many disputes resolved when each will need the other if we are to see a successful pan global recovery from the terrible social and economic price of lockdown – however, given form to date, this is likely to be a fractious and uncertain process with decisions made at the last minute – and then not always stuck to. Business will need to be vigilant and agile to deal with this effectively”