Seoul Trader

Faisal Islam, Political Editor at Sky News, today reported that the Trade Secretary Liam Fox is visiting Korea, a key trade partner of the UK.

I noticed that Islam tweeted what has long been suspected regarding the possible rollover of the EU-Korea FTA, namely that “the EU has not and will not write key letter to Seoul and the other dozens of trade partners asking them to treat UK as a continuing EU member in transition for purposes of trade until Withdrawal Deal done. Limbo.”

A little background: the EU has an FTA in force with Korea. As a matter of law, that will cease to apply to the UK when it leaves the EU on 29 March 2019. Earlier in the year the EU agreed to write a letter to Korea, and its other FTA partners, requesting that the UK is treated as a continuing member of the EU during the transition period into which the UK will move, assuming that a Withdrawal Agreement can be finalised before 29 March 2019 (which despite recent blips I think is still probable, if not certain). If they all say yes, this prevents the scenario under which the UK is effectively treated as a member of the EU by the EU and itself until 1 January 2021, but it falls out of the FTAs, third countries not being bound by the Withdrawal Agreement.

Faisal Islam

A Withdrawal Agreement is unlikely to be finalised until next month at the earliest. At that point, the EU will ask Korea whether the FTA can still apply to the UK. Korea may say yes, it may say no, or it may say yes subject to conditions/concessions. It may not assent, if it assents at all, before 29 March 2019.

Many UK businesses consider that if the UK enters into transition, nothing will change until 1 January 2021. That may largely be true, although no business should assume that the UK will enter into a transition period and avoid a cliff-edge Brexit next year, and businesses should have advanced “no deal” plans by now. But the EU-third country FTA issue could be a problem for some businesses even if the UK goes into transition.

Any UK business that trades with Korea, or any other country with which the EU has an FTA, needs to consider what might happen if that FTA ceases to apply in March 2019. So does any business in a country like Korea that has an FTA with the EU that trades with the UK.

Undoubtedly Dr Fox will have raised this point with his counterpart in Seoul. But Islam is correct that businesses are in limbo on this point as much as they are on whether the UK will get a “deal” with the EU. Businesses need to ensure it is on their Brexit checklists.

Brexit Clock

The clock is ticking! With only seven months left until the leaves the EU on 29 March 2019.  With the European Council Summit on 18 October 2018 eagerly anticipated by all parties there is some expectation, that until that date it will not be resolved whether the UK and EU are able to agree on a Withdrawal Agreement, which would form the basis of the Transition Period from 30 March 2019 to 31 December 2020.

An open issue remains on whether or not any agreed final draft Withdrawal Agreement, will be submitted to the European Court of Justice (ECJ) for the usual legal opinion the ECJ renders under Article 218 (11) Treaty of European Union (TEU) in respect of international agreements the EU enters into.

There is an overwhelming view between legal experts that such Article 218 (11) TEU does not only apply to “normal” international agreements, but will also apply to the draft Withdrawal Agreement under Article 50 TEU. A recent survey and Report by Naurus outlines legal expert opinion.

It is common practice that the relevant institutions of the EU obtain legal opinions from the ECJ in relation to important contemplated international agreements the EU is about to enter into.

The ECJ court practice shows that the time obtaining such opinions can range from 5 ½ months – in case of the fundamentally important ECJ Opinions 1/91 and 1/92 on the European Economic Area Agreement with Norway and others, which Agreement would be the basis of any “Norway Solution” if so agreed – to 22 months in case of the most recent ECJ Opinion 2/15 in respect of the sophisticated Free Trade Agreement with Singapore.

Given the length of time it takes to seek Opinions from the ECJ, time really is of the Essence for the draft Withdrawal Agreement.

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