Brexit focus: Customs, trade and travel

Today, we focus on the UK-Crown Dependencies Customs Union, World Trade Organisation membership and the the Common Travel Area.

The UK-Crown Dependencies Customs Union

Considerable work was undertaken by the Islands to ensure their preparedness for the end of the Transition Period, with the principal objectives of protecting the interests of the Islands and their citizens, ensuring free movement of goods, maintaining relations with the UK and seeking to benefit from any trade agreement which the UK ultimately reached with the EU.

In 2019, in order to ensure the continuity of their long-standing trading relationship, the UK and the Crown Dependencies negotiated a customs union (the ‘UK-CD Customs Union’), which had the effect of creating a common external tariff area (the tariffs being set by the UK in accordance with international trade agreements into which the UK enters), prohibiting quotas within such customs union, an undertaking from the Crown Dependencies to comply with all relevant international obligations in relation to customs, and to adopt the UK’s practices and procedures on customs law.

At the end of the Transition Period, the UK became an independent trading country vis-à-vis the EU, and all previously existing international trade agreements and arrangements ceased to apply.

The UK Government has adopted a general policy of continuity of effect in relation to such agreements and arrangements (seeking to become a party to those international agreements in its own right, either bilaterally with partner countries or by acceding to various relevant international agreements in its own right rather than as part of the EU). This policy also applies to the territorial scope of agreements. As a result, if an EU agreement previously applied to a Crown Dependency or an Overseas Territory through ‘Protocol 3’, it is in general the UK Government’s policy, agreed by the Crown Dependencies and Overseas Territories, that the transitioned continuity agreement should apply to the same territories to the same extent. In short, this means that where an international agreement applied to the Islands whilst the UK was a Member State, the UK will in negotiating the continuity of such agreements as an independent state seek to ensure that they also apply to the Islands.

As of 19th December 2020, the UK secured 29 trade agreements with 58 countries, so that the same benefits will apply between the UK and those countries as before, and continues to seek further such agreements. The terms of the UK-CD Customs Union enable the Islands to elect to join any such free trade agreement into which the UK enters (although they are bound to apply any preferential tariffs to goods imported under all UK free trade agreements).

The UK-CD Customs Union came into effect at the end of the Transition Period.

World Trade Organisation membership

Following requests made by the Islands, the UK Secretary of State for International Trade confirmed that the UK’s membership of the World Trade Organisation (WTO) would be extended to the Islands (by extending the UK’s ratification of the agreement establishing the WTO) when the UK becomes an independently represented WTO member. These both took effect at the end of the Transition Period.

The extension of the UK’s WTO membership ensures that the Islands have access to the international rules of fair trade for goods and services, as well as the trade-related aspects of intellectual property.

Being part of the UK’s WTO membership will protect businesses in the Islands from unfairly applied high tariffs or other discriminatory measures imposed when trading goods or delivering services across borders. Any goods exported from the Islands will benefit from the WTO’s core principles of ‘national treatment’ and ‘most favoured nation’, which ensure that countries cannot impose discriminatory measures by implementing high tariffs or trade barriers which distort trade and cause trade injury.

Inclusion within the UK’s WTO membership therefore provides trading certainty for businesses in the Islands which trade in goods or services with the 164 WTO member countries.

The Common Travel Area

The CTA is a long-standing arrangement between the UK, the Crown Dependencies and the Republic of Ireland. Under the CTA, British and Irish citizens can move freely between, and reside in, the Islands (subject to population management controls).

The CTA pre-dates the UK’s membership of the EU and so is not directly affected by the UK’s departure from the EU, notwithstanding that Ireland remains an EU Member State (with commitments to EU Law regarding the free movement of EU citizens). The UK and Irish governments signed a memorandum of understanding in May 2019 reaffirming their commitment to maintain the CTA, and the associated rights and privileges of British and Irish citizens, in all circumstances.

The rights and privileges of the CTA therefore continue to exist following the end of the Transition Period.

Join us tomorrow for the next part in this Brexit series, focusing on the end of the ‘Protocol 3’ arrangement

Our thanks to the Carey Olsen teams in Guernsey and Jersey for sharing their expertise and advice.

• Guernsey: Christopher Anderson (Partner), Elaine Gray (Partner), Matthew Brehaut (Senior Associate), Julia Schaefer (Senior Associate)
• Jersey authors: Robert Milner (Partner), David Patterson (Senior Associate)