Sun | Aug 20, 2017

Delroy Beckford | Brexit and Cariforum

Published:Saturday | July 2, 2016 | 7:00 AMDelroy Beckford

Now that Brexit is to be formally negotiated, its implications for the Cariforum Economic Partnership Agreement is seen to be of some importance if advantage is to be had of the United Kingdom market for Cariforum exports.

Much depends on the type of post-Brexit deal to be finalised between Britain and the European Union (EU) and the status of trade agreements already negotiated with the EU and other countries prior to Brexit.

Some possible scenarios for post-Brexit deals include:

Norwegian-style EEA agreement: In this scenario, the UK joins the European Economic Area and maintains full access to the single market but is expected to adopt EU standards and regulations, with little influence over these. The United Kingdom would also still make a substantial contribution to the EU budget and would be unable to impose immigration restrictions.

Turkish-style customs union: In this case, internal tariff barriers are avoided, with the UK adopting many EU product market regulations, albeit sector coverage of the customs union is incomplete. The UK would also be required to implement EU external tariffs without influence or guaranteed access to third markets.

FTA-based approach: In this case, the UK is free to agree to FTAs independently, and the UK's relationship with the EU would itself be governed by an FTA.

Swiss-style bilateral accords: On this view, the UK and the EU agree a set of bilateral accords that govern UK access to the single market in specific sectors but negotiates FTAs separately.

MFN-based approach: In this scenario, there is no need to agree common standards and regulations, but this would be at the expense of facing the EU's common external tariff, which would affect the UK's trade with the EU in goods as well as services.

 

EFFECTS ON TRADE

 

Whatever the position adopted, the UK's trade preferences for Cariforum negotiated under the Cariforum-EPA may be affected if there is a need to renegotiate UK trade preferences bilaterally with Cariforum as a bloc. This approach depends on whether the Cariforum-EPA continues with respect to the UK's rights and obligations despite a formalised Brexit.

Withdrawal from the EU does not mean the UK's automatic withdrawal from the prior trade agreements between third countries and the EU as is being

suggested. These agreements continue until terminated by the UK in accordance with the terms of those agreements or the terms of the withdrawal agreement with the EU. This point bears emphasis particularly in light of the fact that there is no absolute delegation of treaty-making authority to the EU as a supranational authority, whereby the EU ratifies treaties on behalf of its members with

an exclusive competence without the ratification of individual

EU member states in such

agreements.

We should recall that The Vienna Convention on the Law of Treaties (VCLT) specifies the circumstances for termination of a treaty as confined to the treaty itself or the VCLT. Importantly, there is no provision for automatic suspension, and no such provision exists in the Lisbon Treaty regarding treaties between the EU and third countries. In other words, some ground has to be advanced for terminating the treaty by the terms of the treaty or in accordance with the VCLT.

Article 50 (3) of the Treaty on European Union, as amended by the Treaty of Lisbon 2007, states that 'the treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement ...' or within two years of the notification of withdrawal to the European Council, unless the period is extended by the European Council.

Notably, the Lisbon Treaty amends the Treaty on European Union (TEU) and the Treaty establishing the European Community (TEC), which is now called Treaty on the Functioning of the European Union (TFEU).

Importantly, also, the reference to treaties in Article 50(3) of the Treaty of the European Union does not refer to treaties between the European Union and third states as the term is limited to the TEU and the TFEU as observed from Article 1 of the TEU as amended by the Treaty of Lisbon.

If, as is being suggested, prior trade agreements with third countries continue until terminated, the real issue would be the desire to renegotiate because of a possible conflict with other agreements such as the WTO agreement. On this view, the UK could not offer preferences without violating multilateral trade rules if it does not adopt a customs union approach post-Brexit or adopt a GATT-consistent FTA.

 

RENEGOTIATION

 

The UK may seek to renegotiate its commitments in Cariforum-EPA bilaterally by converting commitments to a Generalised System of Preferences (GSP) or some other trading arrangement so as not to be at a competitive disadvantage with the region regarding goods and services unless it continues to pursue its growth and development policy with the region with an agreement providing for special and differential treatment.

The latter policy can be pursued by a GSP, which gives the UK more flexibility in extending preferences but less certainty for the beneficiaries of those commitments as these are usually subject to graduation provisions and tariff escalation whereby preferences are withdrawn once a certain GNP threshold is met by the beneficiaries or reciprocal commitments are expected for goods within certain tariff lines.

The default position for trade agreements with Cariforum regarding the UK would likely be the WTO Agreement, whereby commitments negotiated would at least be consistent with that agreement. But here, there are some misgivings in some quarters as to whether WTO rules would apply without the UK also renegotiating the terms of its membership with the WTO. For example, WTO Director General Roberto Azevedo is reported in the Financial Times as intimating that the UK will have to negotiate the terms of its engagement with the WTO since that agreement was concluded with the EU and also that the UK has no specific commitments in the WTO. This position is also a victim of the 'automatic termination' premise that is questionable.

The better view is that Brexit is no more than a storm in a tea cup without the doom and gloom being advanced.

We can, therefore, expect Cariforum-EPA to continue until Brexit is finalised; and while it is not clear what post-Brexit agreement with third countries the UK is likely to conclude, the possible default positions should reduce much uncertainty.

• Dr Delroy S. Beckford is adjunct senior lecturer, international trade law, Faculty of Law, University of the West Indies, Mona; and chairman, International Trade Law Subcommittee of the Jamaican Bar Association.