Against the backdrop of the recent speech by Theresa May outlining the UK government’s aspirations for Brexit, and President Trump’s tweeted warnings of tariffs on steel and aluminium imports to the US, MMTA member, Holman Fenwick Willan held the latest in its series of Brexit panel discussions.
The first speaker was Dame Elizabeth Gloster, Lady Justice of Appeal, who considered what will not change on the judicial horizon. She expressed confidence that English common law and English jurisdiction will continue to be the best option post-Brexit. The special features of English law will continue to attract litigations and arbitrations to the UK – a strong and independent judiciary, offering confidence that disputes will be decided on their merits; its simplicity, and the fact that English is the international language of commerce. Brexit won’t change any of these factors, as they have never been affected by EU law or our membership of the Union.
The UK will also remain a global arbitration centre, party to the New York Convention, which is recognised by 157 states, including the EU states. Dame Gloster also strongly believes that mutual recognition of judgements will continue unchanged post-Brexit. And in her view, the City of London will remain a centre of excellence for both British and international law firms.
There are a range of treaties that the UK needs to sign up to, ensuring a smooth continuation of collaboration post-Brexit, and she believes that the intention is to maintain close and comprehensive cross border cooperation, at least for the foreseeable future.
Former UK Ambassador to the US, France and Turkey, Sir Peter Westmacott, described Brexit as a matter of existential importance for the UK, and could not stress enough the importance of managing the way in which the UK leaves. He expressed concern that when MPs vote in the Autumn, it will only be on a vague outline agreement, a statement of intent. Theresa May’s speech at the start of March was a detailed and realistic attempt to quash what has become known as ‘cakeism’ – the desire expressed by some in the UK to ‘have their cake and eat it’, in other words to benefit from the advantages of the EU without being held to the accompanying responsibilities.
Pointing to the recent Trump tweets, as well as his own experience, he stressed that agreeing to a trade deal with the US will be very difficult. This is not a new problem as, even during the Obama presidency, it would not have been easy to achieve a deal due to the importance of State trade laws. The attempt by the UK to make progress on the ‘Open Skies’ agreement ended with the delegation returning home prematurely. The UK should be concerned about this – without it, there will be no transatlantic flights for UK companies. Even the EU’s attempt to reach a trade deal with the US – the stalled TTIP agreement – was proving difficult, and the two blocks are of a similar size. When the UK (a market of 65 million) sits down with the US (a market of 380 million), it will not be easy to come out with a deal that does not give way on controversial agricultural issues, such as hormone fed beef and chlorine washed chicken, to name just two.
Another important consideration from Sir Peter’s point of view is that Britain’s voice in the world will be diminished. With Brexit, there is no time or space for anything else. The UK is distracted, and as a result is not seen to be ‘pulling its weight’ internationally, eg on the war in Yemen, a proxy war in a part of the world where the UK has a lot of experience and influence. The UK appears to have gone AWOL.
Most Americans, too, would rather the UK remain part of the EU. As members, the UK provided an Anglo-Saxon voice in Europe, a voice that will no longer be present.
For the UK to matter on its own, she will need to work much harder than previously.
The next speaker, Dr Peter Warburton, of Economic Perspectives Ltd, characterised the economic outlook post-Brexit as either a liberation or a mutilation, depending on one’s point of view. Assuming the horizon is the end of 2020, he attempted to put Brexit in a broader context of what else is happening.
Economic growth is exceeding expectations in the EU, US, and parts of Asia, including Japan. This is less so in the UK. These economies powered ahead in 2017, but may be showing signs of slowing. There has been increased business optimism. However, we are in a more inflationary world than we were until recently.
Looking at President Trump, Dr Warburton highlighted two quite extraordinary ‘deals’ the president has done; one on tax and the other on raising the debt ceiling, both of which are acts of stimulus which, he believes, are inappropriate in the current climate. US immigrants are receiving the message that they don’t have much of a future in the US and, he believes, are already voting with their feet and leaving.
On an international perspective, Central Banks will reach the point towards the end of 2018 when they will no longer be accumulating government bonds. They will begin quantitative tightening rather than quantitative easing.
Is Brexit the only thing happening in the EU? No, of course it isn’t! There is a shake-up of power – Mrs Merkel has less authority than she did, Macron poses a challenge, the Dutch Premier has intervened in the debate. Meanwhile, the EU Central Bank has done an excellent job of keeping the show on the road. With an imminent change of EU Central Bank Chief in 2019, it will be an unsettling time for Southern Europe, and into that mix, Italian populism could drive a wedge.
The financial crisis in Europe has not gone away; it has been managed. The UK is, indeed, not as strong as it appeared even one year ago. There is background inflation and more pressure on real incomes. One can pose the question, is this a self-inflicted wound or would it have happened anyway? Whatever the answer, there is no feel-good on the horizon. Where the rest of the global economy is buzzing, the UK is cooling and has been for a couple of years.
Dr Warburton’s estimate is that the UK will be between ¼ and ½ % worse off post Brexit (depending on the hardness of the Brexit). There are many other factors that can offset these sorts of figures.
Some concerns, he concludes, are less of a issue; tariffs for example. The UK collected £3.4 Billion last year (on behalf of the EU) – it’s not those kind of amounts that the country depends on for its future.
The Bank of England’s plan to allow international banks to maintain their free access, he feels is sensible. It signals a desire for openness and cooperation which will hopefully be reciprocated, and will pay dividends.
Ultimately, though, Dr Peter believes that the UK will end up with a modified Canada type deal, which would not be the end of the world. He believes there will be some pain on both sides, and that it is in everyone’s interest to restore the status quo as soon as possible.
The final speaker, Anthony Woolich of Holman Fenwick Willan, focussed his attention on the competition and data protection aspects of Brexit and stressed the importance of establishing a level playing field. In the area of anti-trust, he believes that the UK may agree to follow the EU. Where mergers are concerned, however, Woolich is certain that there will be change post-Brexit. The Competition and Markets Commission is anticipating a doubling of UK merger activity.
State aid is an area currently wholly governed at EU level, and during the referendum campaign, there were suggestions that Brexit might lead to greater government support for UK businesses. However, Theresa May hinted in her recent speech that the UK will stick to EU policy on this matter. There are questions around how the devolved nations will react to this, and unless there is specific regulation, Scotland, Wales and N Ireland may race to support their local businesses.
There are still big questions about the future role of the European Court of Justice, and it is a contentious area surrounded by many red lines.
The UK will need to repatriate powers to manage anti-dumping and trade remedies, but overall the regulatory regime on goods will remain high and will aspire to mutual recognition. The UK will not become a low standard, off shore competitor as was suggested some months ago. Wollich’s words align with those suggested by DEFRA at Metal Events’ recent REACH seminar.
Turning his attention to data protection, Woolich explained that the UK is very keen to ensure the transfer of data with the EU remains free, and anticipates that the future role of the UK’s Information Commissioner will be vital as the country looks to retain current arrangements.
GDPR will be implemented by the EU on 25th May, tightening data protection regulations across the block, and the UK will have implemented this along with the rest of the EU before Brexit.
Although many areas remain unclear, it seems that a desired direction of travel is beginning to be articulated on the UK side, accompanied by a greater clarity on the areas where continued alignment is sought. It will, however, be some time before the country learns what its place in the rapidly changing world will be.
Our thanks to Holman, Fenwick, Willan for this fascinating insight.