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Brexit deal: Martin Howe QC responds to No. 10’s ‘rebuttal’

25 November 2018

3:31 PM

25 November 2018

3:31 PM

10 Downing Street has published a ‘rebuttal’ to my article in this week’s Spectator looking at the legal implications of the Withdrawal Agreement. Regrettably, its responses to my critique go beyond making a best case for the treaty. Instead, No. 10 seeks to take advantage of the legal complexities to misrepresent the legal effects of the agreement on the first critical point (whether there could be any effective recourse to arbitration) as well as others. Much is at stake, so I have replied to each of its ‘rebuttals’ in bold, below.

1. “Once the Protocol is in force, the UK cannot leave it except by ‘joint’ decision of the UK and the EU. This gives the EU a right of veto over the UK’s exit. In agreeing to this clause, the government has caved in over seeking a right to leave.”

Downing Street: The Protocol is explicit in the legal text that it is intended to be a temporary arrangement. The withdrawal agreement establishes a binding obligation on both the UK and the EU to use their best endeavours to agree a future relationship which would supersede the backstop by December 2020. Compliance with this obligation can be subject to independent arbitration.

There is also an explicit review clause built in to the agreement, enabling the backstop to be terminated where it is not necessary to meet its objectives. If the EU does not engage in that review in good faith, that too can be arbitrated.

And ultimately we want to ensure it never needs to be used; or is used only for a temporary period. A future agreement ‑ whether our future relationship or other “alternative arrangements” (as referenced in the legal text) would ensure that the backstop was never needed or was turned off.

My response: No 10’s claim that an obligation “to use best endeavours to agree” could be enforced by arbitration is not true. An obligation on two parties to agree with each other is not justiciable because it is not possible for a judge or arbitrator to pin the blame on one party or the other if they cannot reach an agreement. The EU could carry on proposing terms which are unacceptable to the UK and/or spin out these complicated negotiations for years without it being possible to demonstrate that the EU is in breach of any obligation of best endeavours.

Again No 10’s claim is not true that arbitration could provide a remedy for a refusal by the EU to agree to release the UK from the Protocol under the review procedure. The criteria for release are extremely broad and vague and are linked to the overall objectives of the Belfast (Good Friday) Agreement. They involve issues of both political and operational judgement that any replacement arrangements proposed by the UK are such that the Protocol is “no longer necessary to achieve the objectives”. It would be impossible to demonstrate in an arbitration that a refusal by the EU to agree to release the UK from the Protocol was in bad faith.

My analysis and reasoning on these points is set out more fully at the Lawyers for Britain website, 

I would invite interested readers to consider these points carefully, and reach the conclusion that No 10’s argument that arbitration could provide an alternative route out of the ‘backstop’ Protocol to that of having to reach agreement with the EU is not only wrong but entirely implausible to any competent lawyer. It is most regrettable that the government is not trying to sell the deal on its merits, but is seeking to take advantage of legal complexities to misrepresent the legal effects of the agreement on this critical point as well as others.

2. “Indeed, the Protocol — which has become known as the ‘backstop’ — locks the whole UK into a customs union with the EU with no decision‑making power.”

Downing Street: The UK will be able to negotiate, sign and ratify free trade agreements with rest of world partners and, following the Implementation Period, implement any elements that do not affect the functioning of the backstop – such as those aspects related to services, procurement and investment.

The single customs territory also ensures no tariffs, quotas or checks on rules of origin for UK goods trade with the EU – it is by its nature reciprocal. Goods sectors, including agrifood, account for £226 billion of UK GVA, employ 835,000 people and see 48% of exports go to the EU. This amounts to £146 billion of exports, more than three times the £47 billion that went to the US, the UK’s second largest trade partner.

My response: No 10’s response does not actually contradict, because they cannot contradict, what I said in the sentence they have quoted – which is that the Protocol “locks the whole UK into a customs union with the EU with no decision-making power”.

They have raised a separate point about the ability of the UK to do trade deals with non-EU countries. The theoretical right to do trade deals about non-goods matters is of little value since we need to be able to offer tariff-free access to our markets for other countries’ goods exports in order to persuade them to take the services exports we want to make. It would for example be impossible for the UK to join an existing multi-lateral free trade agreement such as the Trans-Pacific Partnership while bound into the Protocol’s customs union.

No 10’s statistics give the UK’s goods exports to the EU but do not mention our goods imports from the EU, which in 2017 were £259bn, giving a trade surplus in favour of the EU of £95bn. The customs union under the Protocol throws away the possibility of the UK importing more of those goods from markets where they are cheaper to the benefit of UK consumers, and of using the reduction of barriers on goods imports into the UK market in order to negotiate favourable terms for UK exporters of both goods and services into fast growing markets around the world.

As a by-product, the Protocol would require us to remove tariffs on goods imports from countries which the EU does a trade deal with, even if that deal were to offer no reciprocal benefit to the UK.

3. “The declaration states that there will be “customs arrangements that build on the single customs territory provided for in the withdrawal agreement”. This means that the EU will not even be under a moral, still less legal, obligation to agree a trade deal which allows the UK to conduct its own future independent trade policy.”

Downing Street: The political declaration is clear that whatever is agreed in the future partnership must recognise the development of an independent UK trade policy beyond this economic partnership. The political declaration in fact recognises that our customs arrangements will build and improve on the single customs territory. That means exactly what it says — that we can make use where appropriate of what we have included in the withdrawal agreement. For example, there is explicit agreement to use all available facilitations and technologies in developing this ambitious customs arrangement, including examples of tools that the UK and the EU may draw on, such as trusted trader schemes.

My response:  The article was written based on the outline version of the political declaration then available. Now that the fuller version of the declaration is available, the position is even worse. Paragraphs 26 and 27 merely say that the EU will “consider” trusted trader schemes and other facilitative arrangements, without placing any obligation (even a non-legally binding one) on the EU actually to accept their use.

More seriously, paragraph 23 on Tariffs is incompatible on its face with the UK and the EU agreeing and operating a Canada-style free trade agreement which permits each party to operate tariff policies with third countries independently of each other. This is because paragraph 23 rules out origin checks which are necessary in order for countries to operate Canada-style free trade agreements which allow their third country tariffs to diverge from each other, both for practical reasons and for legal compatibility with the definition of permissible free trade agreement under Article XXIV of the General Agreement on Tariffs and Trade.

4. The ‘transition’ period would see most EU laws continuing to apply in the UK, enforced as now by the Commission and adjudicated by the ECJ.

Downing Street: It takes on average two years for significant new rules to pass through the EU, and the UK would therefore have helped to shape these rules. It makes sense that common rules will continue to apply until the Implementation Period ends in 2020, to give UK citizens and businesses consistency and certainty. The implementation period is designed to ensure continuity and certainty for businesses and citizens during this limited period when EU law continues to apply.

Martin Howe’s response: No 10’s response does not contradict what I said in the sentence quoted from the article, which is manifestly correct. In addition to the undesirability of effectively postponing Brexit for an extended period in order to carry on negotiating rather than for actually implementing anything, there is a severe risk that the EU will adopt and shape regulatory measures which are damaging for UK industries during the transition period – when we will have no vote but still be required to implement them. This lays the City open to EU measures which are designed to encourage business to migrate from London to eurozone financial centres.

The EU is quite capable of pushing through measures in less than two years if it wants to, and if the transition is extended to 4 years (see below) then the danger of the UK being left wide open to damaging EU legislation gets even greater.

5. The likely extension of the transition coupled with the very thin political declaration means that it could run indefinitely, prolonging the turmoil of the past 18 months and uncertainty about the future.

Downing Street: This is untrue. There is a provision for further extension of the Implementation Period if strictly necessary, but it can be extended only once and only for a time limited period. It is simply not true to state the agreement provides for an indefinite Implementation Period.

My response: When the article was written, the draft withdrawal agreement (rather farcically) stated that the transition could be extended “up to 31 December 20XX”. It has since been amended to “31 December 2022″.

That would still be six and a half years after the referendum, longer than the Second World War, and after the last possible date for a general election at the end of the current Parliament. The turmoil and uncertainty of the last 18 months will undoubtedly continue during the transition period.

6. The ‘independent’ panel will simply act as a postbox for sending the dispute to the ECJ. And as a rubber stamp when the answer comes back.

Downing Street: An ability for the ECJ to provide an interpretation of EU law is not the same as it resolving disputes ‑ the UK has been clear that must fall to an independent arbitration panel. This respects the principle that the court of one party cannot resolve disputes between the two.

My response: These astonishing and humiliating procedures derived from the Association Agreements of the former Soviet republics of Moldova, Georgia and Ukraine plainly do not respect the principle that the court of one treaty party cannot resolve disputes between the two.

Where the treaty obliges the UK to apply EU law or rules based on it, this procedure will require the substance of the dispute to be decided by the ECJ and not by the panel. The arbitral panel will be in the same position as our Supreme Court now is regarding EU laws. The UK Supreme Court formally “resolves the dispute” by passing the formal judgment in the case, but is obliged (1) to refer any doubtful questions of EU law to the ECJ, and (2) is bound to follow and apply the answers given by the ECJ, whether it agrees with them or not.

Allowing our treaty obligations to be decided in this way by a court of  the other treaty party is totally contrary to international treaty practice under which sovereign states simply do not agree to this happening. It means that our treaty obligations can be effectively rewritten in the future – through the ECJ promulgating a “reinterpretation” of EU rules we have agreed to follow. Our treaty obligations will be changed by an organ of the EU, without the UK having any say.

Most disturbingly, paragraph 124 of the political declaration makes clear that the UK government has caved in to making these arrangements  in the withdrawal agreement a permanent feature of the UK-EU relationship, while paragraph 83 will give the ECJ a similar role in the field of extradition and other criminal law measures.

7. This draft agreement will not take us closer to an acceptable final deal with the EU. Instead, it locks us down by throwing away in advance our two strongest negotiation cards: EU budget payments of £39 billion and the future access to our market for EU goods.

Downing Street: This agreement confirms that as we leave the EU the days of sending vast payments to the EU are coming to an end. The financial settlement reflects a fair settlement of our rights and obligations as a departing member of the EU. It is estimated to be much lower than some of the estimates we heard – as high as £100bn and it is agreed in the spirit of our future relationship.

Under international law the UK owes at most a small fraction of the sums the withdrawal agreement would make us liable to pay. This was confirmed by Dominic Raab as the government’s internal legal advice on the Today programme on 22 November 2018, and accords with the conclusions which I have explained in a 30-page report available at the Lawyers for Britain website.

In fact £39bn is probably an under-estimate of what we will end up paying. The government in yet another foolish capitulation which is in breach of international treaty practice, have agreed in Art.160 to give the ECJ rather than an independent panel the right to rule on the size of the EU’s financial claims. If the transition period is extended, the UK’s financial obligations will automatically increase by tens of billions.

8. It would not let us forge our own trade policy with other parts of the world.

Downing Street: The political declaration is clear that whatever is agreed in the future partnership must recognise the development of an independent UK trade policy beyond this economic partnership. During the IP we will be able to negotiate, sign and ratify free trade agreements with rest of world partners, ready to bring them into force thereafter. Even in a backstop, we could implement any elements that do not affect its functioning — such as those aspects related to services and investment.

My response: As I have already said, the theoretical right to conclude trade agreements will be of no practical use if those trade agreements cannot extend to doing deals on tariffs with prospective trading partners. Further, no serious trading partner will think it worthwhile to conduct negotiations with us with a view to bringing a deal into force as soon as we escape from the transition period and the Protocol if we are unable to give any assurance as to when – or even whether at all – we will be able to escape from the Protocol.

9. It would not give us back control of our laws.

Downing Street: In leaving the EU, the jurisdiction of the CJEU in the UK will end, including the end of direct effect and supremacy of EU law. Going forwards, all laws in the UK will be passed by our elected representatives in Belfast, Cardiff, Edinburgh and London. UK courts will no longer be able to appeal to the CJEU, other than for a time‑limited period on the important matter of citizens rights and on very specific aspects of our exit from the EU budget. Disputes between the UK and the EU will not be resolved by the CJEU; its role will be strictly limited to the interpretation of EU law, consistent with the principle that the court of one party cannot determine disputes between the two.

My response: No 10’s response is just not true. Direct effect and supremacy would continue to apply across the board up to the end of the transition period. But Art.4 makes clear that direct effect and supremacy would continue to apply to all provisions of the withdrawal agreement and to all provisions of EU law which the agreement requires the UK to follow, including those which will continue after the end of the transition.

Those notably include the provisions on EU citizens’ rights, where the UK will be required to maintain direct effect and supremacy for as long as anyone is alive who benefits from these rights, which will include EU citizens living here by the end of the transition as well as their descendents.

It will also apply to the EU laws which apply in Northern Ireland under the Protocol for an indefinite period unless and until the Protocol is replaced. And direct references from UK courts in Northern Ireland (including from the UK Supreme Court when dealing with a Northern Ireland appeal) to the ECJ will also continue indefinitely, placing the citizens of Northern Ireland under a foreign court as well as under foreign laws.


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