The Wider Implications of the UK’s Withdrawal Agreement for Competition and Trade

Abstract

This contribution covers some preliminary aspects of an orderly Withdrawal, including the doctrine of acquired rights and trade in goods; procedural aspects of the 599-page Withdrawal Agreement, including temporal application, jurisdictional, mutual recognition and cooperation matters; and the substantive aspects of the Withdrawal Agreement, including the Protocol on Northern Ireland, in particular its Annex 4 on state aid and competition, followed by final reflections on the state of play of the negotiations. It has been updated to include the changes brought about by the non-binding political declaration of 25 November 2018. It argues that the present Withdrawal Agreement represents a convoluted approach to free trade and competition through Northern Ireland’s backstop solution. It could have been made more ambitious by offering at least a preview of a more comprehensive trade package that included some common rules on competition, labour, taxation, and the environment in exchange for free trade in goods and services for the whole of the UK. Instead, an interpretation in the spirit of the Protocol on Northern Ireland is that the Withdrawal Agreement delivers for competition law a hard blown Brexit, as it severs the close ties between the Commission and the CMA for the remaining territories of the UK which are not part of Northern Ireland. Given that until the end of 2020, the UK will have neither the time nor the appetite for a radical overhaul of its competition regime with a view to securing an EU trade agreement, this may not be a major problem, at least for the time being. Given that the details of such a trade agreement would have taken more time to negotiate, the Withdrawal Agreement delivers on many of its promises. It offers an original solution, which, if it were properly implemented, would not change the existing status quo and would maintain certainty for businesses. In the event that an independent authority would be established for Northern Ireland only, it might be possible that businesses could operate on the same ‘level playing field’ from anywhere in Northern Ireland by re-locating from the South to the North. However, if, instead of an interpretation delivered in the spirit of the Protocol on Northern Ireland, the implementation were to adopt a literal interpretation of the wording of the competition provisions, then the regulatory and competition policy regime will continue to apply to the whole of the UK. On the whole, the Agreement usefully spells out the required parameters for the negotiation of a more comprehensive trade agreement that would, at least, include competition, state aid, labour, taxation, and the environment as key areas of close cooperation and coordination, if not more. In the end, there are not too many options left to play with in these negotiations: (a) accepting it subject to significant improvements to be made in the future economic partnership that will be concluded between the UK and the EU; or (b) rejecting it and maintaining the present status quo. Time will tell which of these will come to fruition. However, a daunting (d) prospect of reaching no agreement at all, which is widespread among ‘hard line Brexiteers’, is like divorcing without a court ruling on the actual divorce. Severing the UK’s ties to the EU cannot proceed in a disorderly manner, as that would trigger an abuse of fundamental human rights and an undermining of the rule of law and democracy and of peace and prosperity throughout the whole of the UK. The latter prospect is simply unacceptable and inhumane, and those advocating for it – after nearly half of a century of close ties to the EU – need to give serious consideration to the reality of their proposals.