bReg-xit? Will 'Brexit' Lead Us To The Promised Land And Cut Down On Competition And Regulatory Law Red Tape?

Author:Ms Bernardine Adkins
Profession:Gowling WLG
 
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Following Friday's 'Leave' vote on UK membership of the EU, we look at how an exit by the UK from the EU could affect the legal landscape around the application of competition and economic regulation.

Much of the attraction of leaving the EU appears to have stemmed from the widely held view that - as an economically fully independent entity - the UK will be free to reduce regulation and jettison Brussels-inspired red tape in a wide range of industries. How far is this argument justified?

In the first part of this newsletter, we will look at the likely legal changes which will now be needed following the 'out' vote in the referendum - and the range of possible constitutional outcomes which the vote implies. In the second part of the newsletter, we consider what impact those outcomes may have on the UK 'regulatory state'.

THE 'POST-NO' FRENZY?

The immediate legal action is for the UK to begin the process of withdrawing from the EU Treaties. Until 2009, the Treaties did not contain any express provisions setting out how a Member State could leave the EU - once joined, EU membership was assumed to be eternal. The amendments to the EU Treaties imported by the Treaty of Lisbon included (at the UK's insistence) express provision for Member States wishing to leave the Union.

Article 50 of the Treaty on European Union (TEU) allows a Member State to give notice to the EU Council that it wishes to withdraw from the EU. The notifying state (i.e. the UK) and the EU must then negotiate the terms of the withdrawal from the Union and also the terms of any ongoing relationship between the EU and the UK. Article 50 provides a period of up to two years for these negotiations: if on the second anniversary of giving notice, the EU and UK have not reached agreement (or agreed to extend the negotiations), the EU Treaties automatically cease to apply to the UK.

When the UK joined the EU (in January 1973) EU law, which had already been in existence for 15 years and was by that time already expanding quite significantly, was imported into the laws of England, Wales, Scotland and Northern Ireland by the European Communities Act 1972. The main thrust of the Act is in section 2. This required all existing 'directly effective' EU law to be implemented immediately in the UK, gives the government the power by secondary legislation to implement any future EU law which needs national implementation (e.g. Directives) and provides that EU law overrides later national laws (including Acts of Parliament) which conflict with EU rules.

Although the 'Leave' campaign took the position that the European Communities Act 1972 would need to be repealed entirely, this is not a necessary consequence of an 'out' vote in the referendum. The 1972 Act applies to implement the 'Treaties' (and EU legislation made under them). 'Treaties' are defined in the Act, so it would be quite possible for Parliament simply to amend the list of EU Treaties in the 1972 Act and to include any post-withdrawal convention reached between the UK and the EU as a result of the negotiations required by Article 50 TEU. This might also have the technical advantage of making it easier to legislate for any transitional provisions needed.

So in fact the 'frenzy', if there is one, will be played out in the negotiation rooms in the EU Council buildings in Brussels and not on the floor of the House of Commons.

WHAT ARE THE LIKELY OUTCOMES FOLLOWING THE 'LEAVE' VOTE?

The UK as Norway or Switzerland? Or 'Brexceptionalism'?

The 'baseline' outcome - that the EU and UK fail to agree on any post-Brexit co-operation in the two years provided -would leave the UK out in the cold. Realistically, since both the EU and the UK are members of the World Trade Organisation (WTO), the baseline is not isolation, but the UK would revert to being part of the WTO worldwide trade area. This covers almost all goods and some services, and has...

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