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Martin Howe QC
This is the advice I would give the Cabinet about the Irish border “backstop” arrangement.
First, the existing confusing December 2017 text about the “backstop” is not legally binding. We still have a brief, golden opportunity to walk away from this mess. The UK is free under international law to walk away. By contrast, if we sign a treaty text embodying a backstop arrangement, it would become legally binding. It is not realistic to say (as some have) that it is just a treaty and we can either change it in future or just break or leave it. We cannot do this unless its terms allow us to.
Under the backstop relationship we would have to follow the EU’s rules on external tariffs and customs, and also on so-called “level playing field” measures covering wide policy areas – and follow these rules as they are altered by the EU in the future. Unlike now, we would have no vote or veto on changes to these rules. This exclusion of Parliament’s right to make laws for the UK could only be constitutionally acceptable if the UK had the effective ability to exit the arrangement without delay.
These backstop terms would keep up the barriers against competing goods from non-EU countries entering the UK market. The “level playing field” terms would suppress the competitiveness of UK industry. So the EU would have a huge incentive to keep the backstop in place for as long as possible rather than agree a replacement long-term trade agreement.
Trade treaties normally contain clauses which allow either party to withdraw on notice. I can’t think of a single existing trade treaty which does not contain such a notice clause. So what the EU is currently asking for – a clause which would allow the UK to terminate the backstop only if it is replaced by a subsequent agreement with the EU – is wholly exceptional in international treaty practice. This would lock the UK into a relationship with the EU which the UK could not escape except with the EU’s permission.
Instead of pressing for a simple clause which gives the UK the right to withdraw from the backstop on notice, the government is contemplating a clause under which the UK’s right to withdraw is dependent upon satisfying a ‘joint review mechanism’ or arbitral body.
It is virtually unheard of in international treaty relations for states to agree to be bound by decisions of tribunals which are not strictly neutral. Typically, an international arbitration panel will consist of an arbitrator appointed by each party and a neutral chairman. However, the Chequers White Paper has proposed an arbitration process modelled on Ukraine’s humiliating deal with the EU under which the arbitration panel is obliged to refer issues of EU law to the ECJ and is bound by its decision.
It would be contrary to all international practice if the ECJ were to be involved in this way in an arbitration which governed whether or not the UK was permitted to leave the backstop and regain control of our own laws and our external trade policy. It would also add to the delays of an arbitration.
International arbitrations can be inherently complex. World Trade Organisation arbitrations typically last 2 years or longer despite stricter theoretical time limits. So a big risk factor to be considered by the Cabinet is the prospect of the UK being locked into the backstop for a lengthy period while an arbitration drags on, even if the right result is achieved in the end.
The Facilitated Customs Arrangement (FCA) in the Chequers White Paper aims to ensure that all goods imported into the UK will be subject to the correct EU import tariff (to be levied by UK customs and paid over to the EU) if they are re-exported into the EU over an open UK/EU border. A dual-tariff scheme of this kind has not been tried before anywhere in the world.
The UK government has admitted that it cannot get this new and untried system working until the end of December 2021. Third party experts think that it would be much longer. The truth is that the government can have no confidence about when it would have the system ready and be able to initiate the procedure for exiting from the backstop, let alone how long an arbitration would take and whether it would ultimately succeed.
While the backstop is in operation, it would be impossible for the UK to implement free trade agreements with non EU countries because we would not be allowed to remove tariffs on their goods. In theory we would be free to negotiate such agreements, to come into force when the backstop ends. But if escaping the backstop depends on an arbitration procedure, we could not tell prospective free trade partners when we would be free to implement a deal — or indeed with any certainty whether we would be able to implement a deal at all. They would think it a waste of time to negotiate with us at all until we had actually succeeded in getting out of the backstop.
So my advice to the Cabinet is that agreeing to a backstop which the UK can only leave if we satisfy a review mechanism risks dropping the UK into a legal black hole for probably a number of years and quite possibly for longer .
While in that black hole, we would be subject to EU control of our tariffs and external trade policy and of wide areas of our internal laws, without having any vote on the rules which bind us, and we would be unable to negotiate trade agreements with non-EU countries.
We know have a clear legal right to terminate the application of EU laws to ourselves by giving two years notice under Article 50. We would have swapped that to a situation where our right to escape from EU laws would be not under our control, and in the worst case might lock the UK into the backstop permanently.
Now the Cabinet must decide. As a legal adviser I can only point out the legal disadvantages and risks.
But my own view is that signing up to this backstop with this review mechanism would be mad, simply mad.