EU Law : Implication of the Withdrawal Treaty Over Brexit

Running head: EU LAW
EU LAW
Name of the Student
Name of the University
Author Note

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Facts and Introduction:
The United Kingdom leaves the European Union on the 31st of January, 2020 at 11
PM GMT after signing a The Brexit withdrawal agreement on 24th of January, 2020 which
might impact trade practice of UK.
Issue:
The issue in this case what will be the implication of the Withdrawal Treaty over
Brexit between UK and EU and whether it will result into soft, hard or medium Brexit in
relation to trade and what will be the situation if it end up in a no deal Brexit. In such a
scenario, whether UK will adopt a soft Brexit like Norway (EEA) or Norway Plus
(Continental Partnership) relationship to ensure easy access to EU trade market. Further the
issue discussed is what will be the scenario if UK’s trade is based upon free trade agreement.
Rules:
Rules relating to Article 50 of the Brexit Withdrawal Agreement and Article 128 of
TEFU have been discussed in this case. Further regulations of WTO in international trade
have also been discussed.
Analysis:
It can be say that, an advantage of the UK not being under EU membership is that
there will not be any UK MEPs, commissioners or ministers in the European Parliament1.
The disadvantage is that, after the transition period which will be over in December 2020, the
EU will no longer have access to the benefits provided to them through the EU membership
in respect of trade2. However, the association between the UK and EU will be improved as
1 Tetlow, Gemma, and Alex Stojanovic. "Understanding the economic impact of Brexit." Institute for the
government (2018): 2-76.
2 Dhingra, Swati, et al. "The impact of Brexit on foreign investment in the UK." BREXIT 2016 24.2 (2016).

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defined in Article 50 of the Withdrawal Agreement and Article 218 of the TEFU. Article 50
gives the power to the member of the EU to leave the EU, just like the same way the UK did.
But, Article 218 offers a better trading relationship with the EU through international
agreements. However, there has a political significance of the Article 50 clause, which is its
two-year withdrawal agreement deadline is said to be made to benefit a departing country by
ensuring that it cannot be held hostage. The withdrawal agreement has also been impacted by
the Northern Ireland protocol which thrives to evade the introduction of a rigid border over
the island of Ireland presuming that there is a no-deal Brexit3.
The EU is comprised of 29 WTO members, that it 28member plus EU itself4.
However, after the Brexit, these combined rights and duties of these members will be divided
between EU-27 and UK. The WTO is indeed dominated by the EU and the USA. EU as one
of the dominant trade forces of the world referred to as a global standard setter5. After the
transition period with no FRT, UK has to be dependent on the UK regarding the trading rule
which can be termed as ‘hard brexit’ and not beneficial for UK’s trade future. Though after
having one of the finest trade deals with the USA, its America First rule, might act as a non-
preferential actor for the UK6.
UK will continue to enjoy the benefits of trade deals of EU with other countries such
as Norway, Switzerland, Turkey, Canada, Singapore, Japan during the transition period. with.
Therefore, it can be said that a deal with EU during the transition period will place the UK in
a better position, especially its clear position in the EU single market will lead the nation to a
preferable position in the UK market.
3 Lawless, Martina, and Edgar LW Morgenroth. "The product and sector level impact of a hard Brexit across the
EU." Contemporary social science 14.2 (2019): 189-207.
4 McGrattan, Ellen R., and Andrea Waddle. "The impact of Brexit on foreign investment and
production." American Economic Journal: Macroeconomics 12.1 (2020): 76-103.
5 Busch, Berthold, and Jürgen Matthes. Brexit-the economic impact: A meta-analysis. No. 10/2016. IW-Report,
2016
6 Wadsworth, Jonathan, et al. "Brexit and the Impact of Immigration on the UK." CEP Brexit Analysis 5 (2016):
34-53.

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If UK ends up on hard Brexit, it might not be able to do smooth trade the EU27. This
is because the UK while exporting to EU27 has to deal with fiscal barriers as the EU CET
will be charged over the goods entering the EU from the UK. Furthermore, the EU as a WTO
member and further under the WTO principle of a most favoured nation will be bound to
impose tariffs over imported goods from the UK. This is because, in the absence of FRT,
trade between UK and EU27 will be governed by the principles of MFN.
However, if UK will rely upon free trade agreement rules with EU27, then it will be
regarded as a ‘medium brexit’. WTO members doing business on preferential terms can be
considered as an exception to the most favoured nation rule which specifies that every WTO
member nation has to treat the other nation and their goods like they prefer to treat their most
favoured nation7. The service industry is going to face a mixed response regarding the Brexit
new deals because it will get more opportunity to grow with if soft or medium brexit comes
into existence, else it will suffer8.
It can be say that, if UK had to rely on WTO rules for trade, then it will be
challenging situation as the dispute settlement rule of WTO is not satisfactory9. However, the
advantage of Brexit for the UK regarding trade will be that it can construct new rules for its
new trade relationships and disadvantage will be it will no longer able to enjoy benefits it
used to derive as EU member in the world trade and might face loss at the initial stage.
To avoid border checks and to continue with smooth trade with the EU, UK needs to
make an EEA type way into the EU single market and further participate in the EU customs
union as well as EU Common Commercial Policy. This new structure of the relationship
7 Portes, Jonathan, and Giuseppe Forte. "The economic impact of Brexit-induced reductions in
migration." Oxford Review of Economic Policy 33.suppl_1 (2017): S31-S44.
8 Davies, Ronald B., and Zuzanna Studnicka. "The heterogeneous impact of Brexit: Early indications from the
FTSE." European Economic Review 110 (2018): 1-17.
9 Steinberg, Joseph B. "Brexit and the macroeconomic impact of trade policy uncertainty." Journal of
International Economics 117 (2019): 175-195.

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between EU and UK is termed and Continental Partnership Proposal or CPP. This can be
referred to as a ‘soft Brexit’ which can be assumed to go beyond the Norway / EEA option.
The first member of this partnership proposal in the UK, but the other EEA like Switzerland,
Turkey, and Ukraine may be a part of this proposal as a substitute for their present trading
relationship. In the case of a continental partnership, the member states are rule makers and
they get the chance to consult over the rule made by the EU10. The CPP will make a way of
easy trading for the UK with the EU. The Continental Partnership will further allow the
members of the partnership to elect for the EU Common Commercial Policy. If the UK
chooses to be a part of the CCP, it will not lose access to the non-EU markets. However, it
might be difficult for the UK to obey all the rules of EEA after transition as it will be mostly
inspired by the EU policy11. Therefore, the UK by entering into the treaty of EEA, secured for
its people, the citizenship of Norway and Vice-versa. However, it further put itself in a non-
advantageous position in respect of international trading as not being a part of the EU.
It can be say that, CU with Turkey is a good option for continental Europe, because
Turkey always followed a hard Brexit option. The advantage of a deal with Turkey is that it
has tariff-free access over goods in the EU single market, which can be beneficial for the UK.
The disadvantage is the UK cannot enter into trade terms with turkey as it has lost the
authority to do some independent business deals. However, Disadvantages will be that, in the
absence of any fixed rule, it has a deal with a dispute on its own during the post Brexit
period12.
While discussing about the relation with Canada, it has been seen that
the Comprehensive Economic and Trade Agreement (CETA) is a free-trade
10 McGrattan, Ellen R., and Andrea Waddle. "The impact of Brexit on foreign investment and
production." American Economic Journal: Macroeconomics 12.1 (2020): 76-103.
11 Livingston, Dorothy. "Failing Financial Institutions: How Will Brexit Impact Cross-border Cooperation in
Recovery, Reconstruction and Insolvency Processes?." (2018).
12 Hosoe, Nobuhiro. "Impact of border barriers, returning migrants, and trade diversion in Brexit: Firm exit and
loss of variety." Economic Modelling 69 (2018): 193-204.

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agreement entered among Canada and the European Union. It aims to remove 98% of the
before existing trade tariffs between the two party. The European Commission points out that
this treaty will show the way to the savings of an amount nearly to the half a billion Euros as
taxes for the exporters in the European Union each year. The European Commission further
elaborates that CETA will further create the environment of new inventions between Canada
and the EU concerning intellectual property rights. The followers of CETA emphasizes that
this agreement will enhance different trade among the EU and Canada and therefore will
generate the scope for new jobs, and further assist in business operations by eradicating the
duties on customs, goods checks, and other levies13. The opponents of the agreement state
that this Agreement is a blessing for big business and multinational corporations and a sin for
small business and states that it will further expand the net-losses for the businesses,
joblessness, and cause damage to the environment, which will impact the individual of the
countries14.
Therefore, UK should try to enter into a CETA type agreement with Canada based on its
advantages comparing to EU membership such as,
 It will lower down the prices and broaden the choice for the consumers of Canada and
UK.
 It will further reduce customs duties for both exporters and importers.
 It will make the way for Canadian firms to trade their products in UK.
The disadvantages of CETA are that it deals with both the Canada and the EU markets in
two-way trade. Therefore, the amount of competition for EU domestic market holders are
huge regarding their products which UK might have to face if they make a alike agreement
with Canada.
13 Khorana, Sangeeta, and Nicholas Perdikis. "Modelling the Economic Impact of Brexit on the Welsh
Economy." (2018).
14 Delimatsis, Panagiotis. "The evolution of the EU external trade policy in services–CETA, TTIP, and TiSA
after Brexit." Journal of International Economic Law 20.3 (2017): 583-625.

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Conclusion:
Therefore, it can be concluded that Brexit will bring a huge collision on the trade
market of both the UK and the EU. Therefore, the Government of UK should focus on
making soft or medium Brexit trade terms with EU and furthermore, should try to enter into a
trade agreement with Canada as this will help them in mitigating the initial loss in trade they
might face post Brexit period. This can be said especially after seeing the CETA terms
between EU and Canada which reduces the 98% trade tariffs between the two parties as well
as expanded other doors of trading.

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Bibliography:
Books and Journals:
Busch, Berthold, and Jürgen Matthes. Brexit-the economic impact: A meta-analysis. No.
10/2016. IW-Report, 2016.
Davies, Ronald B., and Zuzanna Studnicka. "The heterogeneous impact of Brexit: Early
indications from the FTSE." European Economic Review 110 (2018): 1-17.
Delimatsis, Panagiotis. "The evolution of the EU external trade policy in services–CETA,
TTIP, and TiSA after Brexit." Journal of International Economic Law 20.3 (2017): 583-625.
Dhingra, Swati, et al. "The impact of Brexit on foreign investment in the UK." BREXIT
2016 24.2 (2016).
Hosoe, Nobuhiro. "Impact of border barriers, returning migrants, and trade diversion in
Brexit: Firm exit and loss of variety." Economic Modelling 69 (2018): 193-204.
Khorana, Sangeeta, and Nicholas Perdikis. "Modelling the Economic Impact of Brexit on the
Welsh Economy." (2018).
Lawless, Martina, and Edgar LW Morgenroth. "The product and sector level impact of a hard
Brexit across the EU." Contemporary social science 14.2 (2019): 189-207.
Livingston, Dorothy. "Failing Financial Institutions: How Will Brexit Impact Cross-border
Cooperation in Recovery, Reconstruction and Insolvency Processes?." (2018).
McGrattan, Ellen R., and Andrea Waddle. "The impact of Brexit on foreign investment and
production." American Economic Journal: Macroeconomics 12.1 (2020): 76-103.
McGrattan, Ellen R., and Andrea Waddle. "The impact of Brexit on foreign investment and
production." American Economic Journal: Macroeconomics 12.1 (2020): 76-103.
Portes, Jonathan, and Giuseppe Forte. "The economic impact of Brexit-induced reductions in
migration." Oxford Review of Economic Policy 33.suppl_1 (2017): S31-S44.

8EU LAW
Steinberg, Joseph B. "Brexit and the macroeconomic impact of trade policy
uncertainty." Journal of International Economics 117 (2019): 175-195.
Tetlow, Gemma, and Alex Stojanovic. "Understanding the economic impact of
Brexit." Institute for the government (2018): 2-76.
Wadsworth, Jonathan, et al. "Brexit and the Impact of Immigration on the UK." CEP Brexit
Analysis 5 (2016): 34-53.