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Negotiating International Trade Treaties Before Exit

Claims have been made by European Commission President Jean-Claude Juncker and others that the United Kingdom is legally prevented while it remains an EU member from formally negotiating and concluding post-exit trade agreements with non-member countries. Francis Hoar, Lawyers for Britain Committee Member and barrister, has looked into this issue in depth.  His conclusions are clear and are set out below, and his full article can be downloaded here: Francis Hoar: UK's Right to Negotatiate Free Trade Agreements before leaving the European Union (PDF).

Executive summary - conclusions

1    Since the United Kingdom’s referendum vote to leave the European Union, it has been suggested that the UK may not negotiate future free trade agreements (‘FTAs’) with countries outside the EU while it remains a member state.  This view has no support from the EU Treaties or the Court of Justice of the European Union (CJEU): the EU may not prevent the UK negotiating and entering into such treaties providing that they will not come into force until the UK withdraws from the EU.

2    The EU Treaties give the Union the exclusive competence (exclusive right) to enter into FTAs with non-EU countries (known as “third countries”).  Yet, although member states surrender their right to negotiate or execute such treaties, they do so on the basis that they will be members of the Union once they come into force.  That membership is not irrevocable; and, under the termination provisions of Article 50 of the Treaty of European Union (TEU), the Union and its member states can expect that any one of them may go through a process of departure likely to take some years.

3    Members of the EU have a duty of sincere co-operation with each other, a duty the CJEU has ruled prevents them from negotiating treaties within the EU’s competence without the consent of the European Commission.  This consent is required in order that member states may consider their common position before negotiating; and that they do not damage the interests of the EU where it must act with one voice.

4    What the CJEU has never suggested is that the co-operation duty gives it the jurisdiction to consider whether member states negotiating treaties outside the EU’s competence damage the wider interests of the Union.  Rather, the duty is imposed only to prevent member states presenting conflicting positions to third countries in areas (including FTAs) within its competence.

5    A treaty coming into force after the UK withdrew from the EU would not be in breach of the UK’s treaty obligations to the EU.  Thus, neither the EU nor any other member states could expect to influence the UK’s negotiations: such co-operation may only be required where treaties being negotiated would, once ratified, be within the competence of the EU.   By analogy, the UK would be acting no differently to a person negotiating a new employment contract before the end of his current employment.

6    While the EU was founded with the object of providing for the economic interests of its members, it also has the objective of creating an area of prosperity and good neighbourliness outside it.  In taking steps to enhance its economic prosperity once it left the Union, the UK would be acting in accordance with that object; and the EU, were it to seek to prevent such steps, would risk endangering the wider area of prosperity and its good relations with its future neighbour.

FRANCIS HOAR
Field Court Chambers, Gray’s Inn