The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Simplifying Brexit: Maintaining third-party trade deals after Brexit

Memorandums of Understanding, or exchange of notes/letters, can form a key part of the necessary transitional arrangements as the UK moves from being an EU member state to an independent nation.

15th March 2017
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In our report What it will look like: How leaving the EU and the Single Market can be made to work for Britain[1] we explained that it should be relatively easy for the UK to maintain interim tariff-free trade with the countries who have signed deals with the EU, after Brexit.

 

‘The very worst case scenario is that the parties, UK and the [third party country] just need to deposit notification with the UN, or just [formally] inform the other parties if it’s not deposited at UN, that the treaties will continue and apply to UK after our secession. In other words, all these trade treaties don’t need to be renegotiated by an independent UK. Trade with other nations around the globe will continue as before.’

 

Back in December 2016, we also wrote that legal ‘devices’ such as MoU’s and ‘exchanges of letters’ could be extremely useful to the UK, the EU and ‘third countries’ during the Brexit process:[2]

 

‘A Memorandum of understanding (MoU) is an established device in public international law; less official that a treaty but more than a gentleman’s agreement. MoU’s can take various forms and can serve wildly different purposes. They can be short and cover one specific issue or be lengthy, covering a range of topics.

 

‘While they lack the legal certainty of treaties, the semi-official nature of MoUs means that one (or several relating to different areas of co-operation) could likely be signed quickly, without extensive consultation, parliamentary chicanery or ratification delays – as opposed to a potentially lengthy Free Trade Agreement (FTA) ratification.

 

‘These interim documents could help avoid a potential ‘cliff edge’ scenario as the 2 year article 50 period draws to a close in 2019.’

 

A recent report by the House of Commons Foreign Affairs Committee confirms much of what we said.[3]

 

In the report, representatives for The Bar Council Brexit Working Group, Professor Derrick Wyatt QC and Hugo Leith stated that: “There are 30+ countries to which the UK exports tariff-free under agreements between the EU and non-EU countries.”

 

But the Bar Council evidence suggests how this trade could be maintained after Brexit:

 

“In the event of an unplanned Brexit, the EEA agreement will cease to provide a basis for tariff-free trade between the UK and those three (EFTA/EEA) countries. It is likely that in the longer term, the UK will conclude a free trade agreement with these three EFTA states, in similar terms to those which it agrees with the EU. In the immediate aftermath of an unplanned Brexit, however, the UK would wish to carry on trade with these countries as if the EEA agreement were still in force.

 

“The UK might achieve this by an exchange of notes, in the international law sense (That is to say, a binding international agreement in the simplified form of an exchange of correspondence containing or incorporating by reference the terms of agreement), with the countries concerned, agreeing to conduct their trade by reference as far as possible to the EEA agreement, as if it were still in force between the parties concerned. This would in effect amount to a transitional arrangement as regards the UK and the three countries concerned, to be superseded in due course by a free trade agreement between the UK and the EFTA countries.”

 

They also suggested that when it came to relations between the UK and third countries, the UK and the third countries might wish to “put the arrangement on a sounder legal footing. It might achieve this by agreeing in an exchange of notes (in the international law sense) with country C to continue trade after Brexit on the same terms as before, referring to the agreement in question, and to any clarifications or modifications necessary to ensure continuity of performance of the trade obligations under the treaty. By such means, the UK might avoid WTO trade on the one hand, and putting a wholly new trade agreement in place, on the other, which would take time, and would not be achievable before Brexit.”

 

In short then, there is no need to assume that the UK will lose access to the trade deals that we have taken part in during the period we have been members of the EEC/EC/EU.

 

As the UK Government website states:

 

‘Like a treaty, an MoU can have a variety of names and can also be either in the form of an exchange of notes or a single document. However, the formalities which surround treatymaking do not apply to it and it is not usually published. Confusingly some treaties are called memoranda of understanding.’[4]

 

MoUs, or exchange of notes/letters, can therefore form a key part of the necessary transitional

arrangements as the UK moves from being an EU member state to an independent nation.


[1] https://www.brugesgroup.com/component/content/article/8-papers/1243-what-it-will-look-like-how-leaving-the-eu-and-the-single-market-can-be-made-to-work-for-britain?Itemid=101

[2] https://www.brugesgroup.com/blog/mou-the-key-to-a-smooth-brexit

[3] https://www.publications.parliament.uk/pa/cm201617/cmselect/cmfaff/1077/1077.pdf

[4] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293976/Treaties_and_MoU_Guidance.pdf

 

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Wednesday, 24 May 2017