International trade treaties before Brexit

20 Sep 2016 | by Professor Panos Koutrakos

Since the June referendum, the question of the trade relations between the UK and third countries has been raised in different contexts. These have included the status of the existing trade agreements that bind the EU as a matter of EU law (see my analysis here) and the legal issues regarding the application of WTO rules post-Brexit (see my analysis here).

The question that has been raised recently is whether the UK would be free to negotiate trade agreements with third countries before Brexit. The International Trade Secretary, Liam Fox, has stated that ‘we want to have discussions and to scope out any possible deals that we might want to do’. How much freedom does the UK have pre-Brexit, as a matter of EU law, in the area of international trade negotiations?

Trade policy falls within the EU’s exclusive competence. This is an area where the Member States have given the EU the power to act and are prevented from adopting any measure unless specifically authorized to do so under EU law. Even in policy  areas where the EU has non-exclusive competence (and which it shares with the Member States), the latter are still bound by a duty of co-operation. This duty has been interpreted by the European Court of Justice in broad terms. For instance, a Member State may not depart from a position agreed by the EU in international negotiations.

The UK is, therefore, prevented under EU law from negotiating trade agreements with third countries whilst still a Member State. A violation of the UK’s obligations may lead to infringement proceedings before the European Court of Justice by the European Commission under Article 258 TFEU (or by another Member State under Article 259 TFEU – such actions are, however, rare).

There is also a practical consideration: the post-Brexit relationship between the UK and the EU would be directly relevant to the content of trade negotiations between the UK and third countries. As long as the former has not been settled, the latter are difficult to envisage.

The post-Brexit trade relations with third countries add yet another layer of complexity to the already complex process of the UK’s disengagement from the EU. In fact, they may even feature in the negotiations between the UK and the EU under Article 50 TEU. For instance, the position of the UK under existing agreements with third countries in which it participates along with the EU could be addressed. In this context, the spirit in which the Article 50 TEU negotiations will be carried out would be crucial.

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