Category Archives: Britain

Britain, Economic, European Court, European Union, Government, Legal

Free-trade deal possible post-Brexit following landmark EU court ruling

FREE TRADE AGREEMENT

ECJ

The court ruled that Brussels has trade negotiating competence over all goods and services.

Britain’s ambition to sign a quick Free Trade Agreement with the European Union after Brexit has received a significant boost after a landmark ruling by the European Court of Justice handed expanded trade negotiation powers to Brussels.

The much-anticipated decision from the court in Luxembourg surprised experts by ruling that on key areas – including financial services and transport – the European Union does not need to seek ratification of a trade deal by the EU’s 38 national and local parliaments.

Trade experts said the ECJ ruling could substantially reduce the risk of any future EU-UK free trade agreement getting bogged down in the EU national parliaments, opening the way for an FTA to be agreed by a qualified majority vote of EU member states.

“The Court of justice says all services – even transport – can be ratified by a qualified majority vote, which is potentially quite a big opening for the UK,” said Steve Peers, professor of EU law at Essex University. “It could certainly make things easier.”

In the ruling, the ECJ was asked to decide whether the new-generation bilateral EU-Singapore trade deal should be treated as a so-called ‘mixed’ agreement – that requires ratification by national parliaments – or could be agreed by a qualified majority vote of member states.

The court ruled that the EU did not have exclusive competence to conclude the Singapore deal, but said that only in two narrow areas – namely non-direct foreign investment and the investor-state dispute resolution mechanisms – did it need to seek ratification by national parliaments.

By contrast, the court said the EU did have competence to conclude agreements without ratification across the great majority of the Singapore agreement – contradicting parts of a previous opinion by the court’s advocate-general.

The court ruled that Brussels has trade negotiating competence over all goods and services.

FTA2jpg

Definition, meaning and purpose of a Free Trade Agreement (FTA).

Areas covered by EU competence include all goods and services, “including all transport services”, as well as intellectual property rights, competition policy, labour and environmental standards and the rules relating to exchange of information.

Legal and trade experts said the ruling had potentially massive implication for Brexit if the UK formulated its own FTA to avoid investment provisions and investor-state dispute mechanisms, relying on alternative arrangements such as bilateral investment treaties and WTO panels.

“This is the most significant ECJ case on EU trade policy for twenty years and has huge ramifications for any UK-EU FTA,” said Nicole Kar, head of international trade at Linklaters, the law firm.

“In policy terms, now the UK government will want to consider whether it moderates its ambition for the UK-EU FTA to those matters where there is exclusive competence in order to secure agreement through EU Member State governments by qualified majority voting.”

If Britain took a more expansive approach, Ms Kar warned, it risked any FTA getting mired in member state politics as happened last year when the regional Walloonian parliament of Belgium held the EU-Canada trade deal to ransom.

This problem arises because some EU member states, like Belgium, have domestic law that requires local parliaments to sign off on trade deals before they can be ratified by at a national level.

Allie Renison, head of EU and trade policy at the Institute of Directors, said the court ruling was to be welcomed and would make it easier for the EU to conclude deals “without fear of as many hold-ups from national and sub-national legislatures”.

“How this affects Brexit negotiations will depend on whether the final trade agreement includes investment provisions or not, although neither the UK or EU has expressed much interest in this to date,” she added.

“It’s important to remember that any eventual UK-EU trade agreement would not be about opening up each other’s markets in controversial areas, but trying to limit the amount of disruption to trade, and so it is unlikely to encounter the same resistance from other EU countries once concluded by the Commission.”

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Britain, Consumer Affairs, Government, Politics, Society

Imposing a price cap will not improve the energy market

ENERGY MARKET

Energy costs

A series of remedies have been called for to encourage greater switching.

The energy market does not work well. Consumers who shop around by believing they have obtained cheaper tariffs soon find they will be paying higher prices not long afterwards when the special deals they signed-up to expire. Unless people are prepared to spend time looking out for better terms, or by getting another company to do it for them, they will likely end up with a bigger bill than they should. Energy consumers are being trapped into a false sense of security.

With energy costs increasing for a variety of reasons – not least because of onerous environmental requirements imposed by the state – the cost of energy has become a toxic political issue. The Labour Party recognised this prior to the last election when it pledged to cap prices.

Now, the Conservatives under Theresa May – who ridiculed this policy when it was proposed by Ed Miliband – plan to do the same if they win the general election on June 8. Mrs May has said the Big Six were ‘ripping off’ consumers and has stated that the Conservative manifesto would regulate the maximum costs of the standard variable tariffs on which most users are parked. The analysis offered suggests this will save the average customer around £200 a year. But, even if we accept that the market is flawed, price controls are not the best way of addressing this. It is not for a free-market Government to decide the right price for a commodity but rather to encourage competition by allowing people to make their own choices.

Big Six Cashing In

There are several price comparison websites that help consumers switch suppliers, as some two million have done over the past six months. But millions more stay with the same company; and it is this inertia on which the companies rely allowing them to freely hike up prices with impunity. One thing a cap will do is bring down prices for many users.

On the other hand, it will simply consolidate the lack of movement by entrenching consumers to stay with their present provider: if you know that the price is capped why look around for a better deal? What is more, if the cap is set too low it will force small suppliers out of the market; too high and prices will gravitate upwards.

Following a review last year, the Competitions and Markets Authority recommended against a variable tariff price cap and called for a series of remedies to encourage greater switching. The energy companies say the Conservative policy would destroy competition, jeopardise jobs and deter vital investment. Yet, if that is the case, rather than constantly complaining, they would be well advised to make sure that the market works for the benefit of all their customers.

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Britain, Government, Politics, Society

The UK Government needs a clearer policy on migration

IMMIGRATION

Theresa May follows her predecessor by setting a specifically vague target on net migration levels. But how will the targets on immigration be met?

As Theresa May seeks a mandate from the electorate on June 8 to proceed with Brexit negotiations under her own terms, there are certain and specific issues that should be central to her case. Immigration policy is clearly one of them.

But in keeping and in line with much of the Prime Minister’s campaigning so far, the political debate on such issues fall short on substance. Certainly, it’s apt to ask whether Conservatives can agree on what the detail of their immigration policy should be. Yet, when pressed on the matter, Home Secretary Amber Rudd, could only say that the party’s manifesto “will not be identical” to the last two election campaigns. Hardly enlightening given that one of the central tenets prior to the Brexit vote was people’s concerns over migration. Mrs May insists there will be no back-tracking, and the target will be to reduce net immigration to the “tens of thousands”, a policy enshrined previously by David Cameron. If that’s suitably vague to speak in such terms, we must question whether it is credible? In 2016, net migration stood at 273,000, and it is some 20 years since that figure was below 100,000. What interpretation are we to apply when the Prime Minister repeats the mantra of old by insisting that net migration be reduced to the “tens of thousands”? An issue of confidence might yet arise.

In all of this, however, we should be careful of assuming that the EU is to blame for the UK’s high net migration. That would be a mistake. Migration from the EU accounts for less than half of the total figure, at 44 per cent. The other 56 per cent, from the rest of the world, is already within the control of the British government.

A difficult dilemma arises. The suggestion being made is that immigrants who shore up our workforce will be permitted entry if they are important to the economy, such as filling the skills-gap in industries such as health and IT. But those who come here to work account for half of the annual influx. Reducing the immigration figure by enough to get anywhere near the target (whether notional or not) will be tough if an exception is to be made for the majority of migrants.

The government could halt the flow of students into the UK, but by doing so could harm our universities and cut off a supply of skilled workers who could help to drive economic growth if they stay on. Or, the number of asylum seekers and illegal immigrants could also be tackled. The most recent figures, however, show that just over 12,000 people were granted asylum over a 12-month period. Even if all of them were to be removed at a stroke that would make minimal difference to the headline figures.

When published, the Conservative manifesto could yet contain a coherent strategy on immigration. But, on the evidence of recent years, when net migration targets have been repeatedly missed, we are entitled to doubt whatever the document says will be done or if the targets will ever be achieved.

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