EU Referendum: those trade deals

05/03/2016

One of the more egregious lies perpetrated by the "remain" campaign, and repeated by Philip Hammond in his Chatham House speech, is the canard about having to renegotiate "EU trade deals with over 50 different countries".

Said Hammond last week, these deals have been based on the negotiating muscle of a bloc with 500 million consumers and a quarter of the world's GDP.

Renegotiating them as a single country, he claimed, would take many, many years. Years in which British businesses would be squeezed out of traditional markets and with no guarantee at the end of the process we could get terms as good as we have now.

If this was actually true, this would present a serious problem – and far bigger than the ill-briefed Hammond makes out – but then he relies on his Civil Service, so you can't expect too much.

Illustrating the scale of the problem, we see that the European Union lists 881 bilateral treaties on its treaty database, together with 259 multilateral agreements.

These treaties cover a vast range of subjects from the "Agreement between the European Union and the Republic of Moldova on the protection of geographical indications of agricultural products and foodstuffs" to the "Agreement on fishing between the European Community and the Kingdom of Norway". Norway, in fact, is party to 166 agreements, and 215 are listed to which the UK is also party.

There is a further distinction as between treaties made jointly between the European Union and its component Member States, and other parties (whether bilateral or multilateral) – the so-called "mixed" treaties, and those concluded only between the European Union and third parties, such as under the Lisbon Treaty Article 207 powers, known as "exclusive" treaties.

On the face of it, Britain is excluded from all treaties once it leaves the EU. Therefore, it would appear that each treaty will have to be examined and, where necessary, the agreements between Britain and the relevant third countries renewed.

That is the thrust of the "remain" lie. The administration and negotiations potentially required in such an event, together with the procedural requirements associated in maintaining treaty continuity, could on the face of it take longer than the Article 50 negotiations needed to exit the EU. They would prove resource intensive, and probably outstrip our current diplomatic capabilities.

However, Hammond and his remainers need to come clean. There is what is known as the "general presumption of continuity", which is cited by authorities on international law. This applied in the "velvet divorce" between the Czech Republic and Slovakia, when on 19 January 1993 the two republics were admitted to the UN as new and separate states. In respect of international treaties, they simply agreed to honour the treaty obligations of Czechoslovakia.

The Slovaks transmitted a letter to the Secretary General of the United Nations on 19 May 1993 expressing their intent to remain a party to all treaties signed and ratified by Czechoslovakia, and to ratify those treaties signed but not ratified before dissolution.

This letter acknowledged that under international law all treaties signed and ratified by Czechoslovakia would remain in force. For example, both countries are recognized as signatories of the Antarctic Treaty from the date Czechoslovakia signed the agreement back in 1962.

Exactly the same option would be available to the UK. It would, of course, need to prepare the ground before committing to an Article 50 notification – which is another reason why we would be unwise to go ahead immediately.

Once alternative arrangements are in place, an exit agreement with the EU would hold no terrors. As we dropped out of the EU treaties, we would simply invoke the procedures leading to treaty continuity.

Conveniently, there is also a template which the UK could use, in the Vienna Convention on Succession of States in respect of Treaties, even though it is not a party to it.

The Convention sets out the procedures for carrying over treaties, where all parties agree to their continuation. It allows for the newly independent State – in this case the UK – to establish its status as a party to an existing treaty by way of a formal notification of succession, lodged with the depository of each treaty.

Nevertheless, participation in the treaties will normally require the consent of all the parties, and the newly independent State may establish its status as a party to these treaties only with such consent. It does not seem likely, though, that many (if any) parties will want to withhold consent.

This procedure, however, might not apply to exclusive EU treaties, where the EU as the contracting party concluded the agreement on behalf of its members, without the individual members acting as contracting parties.

In this case, the UK has no direct locus and, on withdrawal from the EU might have no part in such treaties. But there again, the principles of the Vienna Convention could be deemed to apply, given the political will. In those cases, where the third country is the beneficiary – as in the Mutual Recognition Agreement on Conformity Assessment between the EU and Australia – it would be irrational for that country to withhold consent.

In any event, there are currently very few exclusive treaties, with the EU treaty database listing only 17 made under Article 207, of which only three relate to trade, of the 250 trade agreements listed in the database.

Nevertheless, there is an option which would avoid the possibility of being held to ransom by third countries which do not consent to an independent UK as a treaty partner.

This would involve an agreement with the EU of a treaty giving Britain notional membership status for the strict and exclusive purpose of taking advantage of the third country treaty provisions. Any such arrangement would most certainly be of limited duration, giving time for selective renegotiation and/or re-enactment with the original parties to the treaties.

Even if a few have to be renegotiated, that is not necessarily a significant problem. Talks may be relatively trouble-free and speedy to conclude. For instance, on third country trade deals with developing and less-developed countries, the UK may be willing to offer more generous terms than were available from the EU, in return for a speedy conclusion of deals.

Where for instance the EU is currently demanding that Kenya (and EAC partners) progressively reduce tariffs on imports, the UK may be more inclined to carry over ACP arrangements in the interests of promoting employment and development, all with a view to reducing migration pressure.

With the groundwork already done, draft treaties might be in place long before the Article 50 deadline supervenes.

The point that thus arises is that third country treaties are manageable. For the most part, ensuring continuance is a relatively minor administrative task that can be resolved relatively simply. There is no question of any need for major renegotiations.

For the rest, there is a premium on negotiation, which will form part of the Article 50 exit agreement, but there is nothing which cannot be resolved with goodwill on all sides.

And then there is the get-out-of-jail-free card. Should we take the option of joining EFTA, then we can rely on Article 56(3), which allows for state acceding to the Association to apply to become a party to EFTA free trade agreements.

This, potentially, is a huge short-cut. Parallel negotiations with EFTA, while Article 50 negotiations are in progress, could allow for an orderly transition. As we leave the EU, we could arrange it so that the EFTA agreements could kick in at the same time.

Needless to say, nothing of this will come from Mr Cameron, his sidekick Philip Hammond, or any of the "remains". But the facts are the facts. Third country deals are not a crisis. They are an opportunity.