Parliament receives Brexit briefings on: Migration; Environment; Financial Services; and future trading with Commonwealth countries

We have continually updated our briefings on the Technical Notices as they have been published.  In this article we summarise 4 Parliamentary briefings published in in the last 24 hours.

Whatever the rhetoric, whatever the political outcome, planning to make Brexit as smooth as possible is a complex task, now involving thousands of civil servants in identifying and quantifying the impacts on the operational, legal and regulatory framework and preparing the nation for the future.

Parliament has the dual tasks of: passing change requirements into law – although there is increasing concern that our established constitutional procedures will now have to be by-passed as time has run out [Brexit Partners Insight Oct 23, 2018]; and overseeing the operational readiness of the civil service to deal with a post-Brexit world – although there is increasing concern that time has run out to complete these preparations in an adequate manner.

 Environment

Environmental principles inform legal and political frameworks and aim to minimise the ill-effects of human activity on the environment.  The EU (Withdrawal Act) 2018 commits the UK to incorporating a set of environmental principles into UK legislation:

  • The precautionary principle: allows regulatory action to be taken even if a risk has not been established with full certainty.

  • The prevention principle: aims to prevent environmental damage - such as to protected species or to natural habitats, water and soil - rather than to react to it.

  • The rectification at source principle: seeks to prevent pollution at its source rather than remedy its effects.

  • The polluter pays principle: requires polluters to bear the financial cost of their actions.

These four core environmental principles apply to the UK under Article 191(2) of the Treaty on the Functioning of the European Union (TFEU).

These principles now need to be brought into UK Law and the Government is due to publish the draft Environmental Principles and Governance and set up a UK Watchdog to police the standards.

There are further concerns that the UK Government could make decisions that do not fit with principles set by the National Assembly of Wales and those in the Scottish Continuity Bill.  This could result in different emerging sets of standards running in parallel in Wales or Scotland and being applied to devolved matters whereas we are presently harmonised under the EU Treaty.

Financial Services

The House of Lords received a briefing prepared in advance of the second reading of the Financial Services (Implementation of Legislation) Bill on 4 December 2018.

Financial services industry is of particular importance to the UK economy - contributing 6.5 percent of its total economic output.  Currently, most financial services regulation is made at EU level and is either directly applicable or transposed into domestic law by secondary legislation.

 In preparation for leaving the EU, the European Union (Withdrawal) Act 2018 (EUWA) incorporates all EU law on the day of exit into UK law to provide continuity and so that existing regulation continues to have effect after Brexit.  If the UK ratifies the withdrawal agreement, it will enter an implementation period until December 2020, during which EU law will continue to apply.  During this period the UK will continue to implement financial services regulation through secondary legislation.  However, if the UK leaves the EU with no-deal, there will be no mechanism through which financial services regulation can be updated without the need for primary legislation.

EU financial services legislation continually evolves.  The Bill proposes to give the Treasury the power to align UK law for up to two years after exit day though ‘statutory instruments’.  The Treasury will be required to produce annual reports on the use of the power.

Impact of Brexit on EU migration since the referendum – published by House of Commons Library  

Net migration of EU nationals to the UK was at its lowest since 2012 - 74,000 in the year ending June 2018.

It is down by 60% - with 115,000 fewer people arriving- than year ending June 2016 at the time of the referendum and is mainly driven by a fall in the number coming to look for work.

The biggest fall is amongst ‘EU8’ nationals - the group of Central and Eastern European countries which joined the EU in 2004 and who recorded more citizens leaving the UK than arriving.

Since the end of June 2018, there have been at least 280,000 grants of permanent settlement to EU nationals – more than five times as many as in the ten years prior to that combined.

There has not been much change in the annual numbers - around 38,000 – of British nationals emigrating to the EU.

Full report is available here.

Post-Brexit trading with the Commonwealth

The International Trade Committee has called upon the Government to reconsider how it trades with developing countries after Brexit, using the opportunities afforded by the UK’s current status as Commonwealth Chair-in-Office holder to lead by example in areas such as supporting gender equality through trade policy.

As Brexit approaches, and in the wake of the Commonwealth Heads of Government Meeting (CHOGM) in London earlier this year, the question of how the UK will trade with developing countries after Brexit has taken on clear political and economic significance.

The Prime Minister’s visit to South Africa, Nigeria and Kenya endorsed this need, and the Committee’s report identifies key areas where action could be taken not only to improve trade links with developing countries, but also to help meet development goals.

Launching the report, Committee Chair Angus Brendan MacNeil MP said:  “The extent to which the future UK-EU relationship will leave the UK free to develop and implement its own independent trade policy remains unclear.  Assuming that the Government is in the position to exercise relevant trade competences, our inquiry makes a range of proposals regarding how the UK should approach its relationship with developing countries over the coming years.  In our report, we are clear that the Government should ensure continuity in the short-term, but then must review the current arrangements to see if there is more that can be done so that our terms of trade fully support development.”

Trade between the UK and Commonwealth countries

The report argues that whilst World Trade Organization rules prevent the granting of non-reciprocal preferences to Commonwealth countries as a group, the UK could strengthen the unilateral preferences it grants to developing countries to the mutual benefit of developing countries and the Commonwealth - given that the majority of Commonwealth members are developing countries.

Trade and gender

The report highlights an explicit connection between trade and gender.  Women are disproportionately affected by trade policy decisions, particularly in developing countries, and if the Government is serious about actively promoting gender equality, it should use its time as Commonwealth Chair-in-Office to set an example when it comes to developing and implementing a gender-responsive approach to trade policy that moves beyond the simple ‘do no harm’ maxim.

Increased cross-Government collaboration

Despite the success of initiatives such as Aid for Trade, considerable scope remains for greater alignment of trade and development policy.  The report warns that such an alignment will not come about without significant efforts from both the Department for International Trade and the Department for International Development, as well as other government departments.

Supporting investment and exports

In addition to cross-Government initiatives, the report emphasises that if increased trade with developing countries is to be achieved, tailored support for UK exporters will be required.

The Committee recommends that the Government should encourage investment into developing markets that supports sustainable development, particularly in the area of infrastructure.  Stronger relationships with investment promotion agencies should be also be established.

Current and future unilateral arrangements

The Committee welcomes the Government’s stated post-Brexit intention to maintain current levels of UK market access to developing countries – and will monitor how the Government’s intentions are translated into legislation.

Reviewing ‘rolled-over’ EU Economic Partnership Agreements

The Committee reiterates its previous recommendation from its report into the Continuing application of EU trade agreements that Economic Partnership Agreements should be rolled-over - at least in the short-term - to ensure continuity.

Given that March 2019 is fast approaching, the Committee requests monthly updates from the Government on progress relating to roll-over.  In the longer term, rolled-over EPAs should be subjected to review, covering issues such as Most Favoured Nation clauses, rules of origin, requirements for economic liberalisation, and sanitary and phytosanitary measures, with a view to potential future renegotiation.

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John ShuttleworthComment