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Post-Brexit trade policy will need new regulator and may not cover all existing sectors

Out-Law News | 11 Oct 2017 | 1:24 pm | 2 min. read

The UK government will set up an independent regulator to deal with trade disputes after Brexit, but might choose not to adopt all the existing trade protections currently enjoyed at EU level. 

This could mean that some companies will lose trade protection when Brexit happens, according to EU law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com.

The government has published its plans for the regulation and negotiation of international trade following Brexit. They indicate the government's priorities for negotiation of deals with EU countries to replace the single market, and new deals with non-EU countries to enable trade once the UK falls out of existing trade deals between the EU and those countries.

The paper said that the government wanted to make sure that it had plans in place in the event that no trade deal with the EU is secured before Brexit.

"In order to ensure continuity in relation to our trade around the world and avoid disruption for business and other stakeholders, the UK needs to prepare ahead of its exit from the EU for all possible outcomes of the negotiations, and ensure that we have the necessary legal powers and structures to enable us to operate a fully functioning trade policy and pursue new trade negotiations," the paper said.

The paper said that the UK will have to create a new regulator to deal with trade disputes, which could disappoint Brexit hardliners who had seen leaving the EU as a way to reduce regulations or administrative processes.

The paper said: "To operate an independent trade policy, we will need to put in place a trade remedies framework. As an important part of a rounded trade policy, a trade remedies framework is designed to protect domestic industry against unfair and injurious trade practices, or unexpected surges in imports by allowing for measures (usually a duty) to be placed on imports of specific products. Consistent with our WTO obligations, the UK’s framework will be implemented by a new mechanism to investigate cases and propose measures that offer proportionate protections for our producers."

Lougher said that the trade remedies framework could have an impact in industrial policy areas and regional policy.

"It will be interesting to see what leeway there will be for the new body to take account of general public interest issues and the protection of UK employment," he said. "The paper indicates that the trade remedies framework will be used in a way that is proportionate, taking account of the interests of domestic producers and regional impacts, raising the possibility of the need to protect regional employment being taken into account."

The framework will replace the existing EU trade remedies rules, but Lougher said that companies should find out if their area of business will still be covered, as the government does not plan to emulate all the EU rules.

"The paper envisages the possibility that certain of the currently existing trade measures may not be replicated in new UK trade measures if they don’t 'matter to UK business'," he said. "Consequently, if any UK businesses currently benefit from the protection of trade measures adopted by the European Commission they should consider engaging with government to try and ensure that they will be protected by UK trade measures immediately post-Brexit."

The paper said the government would ask parliament to pass legislation creating the new trade remedies framework; allows enforcement of international trade disputes, and enables trade deals supporting sustainable development in poor countries.