In advance of the Chequers summit of the Cabinet last week on Brexit, the Law Society joined forces with other professional and business services providers, to write to the prime minister and remind her of the importance of services in any future deal. The same group simultaneously issued an extremely useful infographic on the value of our sector to the UK economy.
Crucially, the professional and business services group highlighted that: ‘Together we are worth more than the manufacturing, mining and extractive industries combined, exporting £66.1bn annually.’
The letter also gave one of the reasons why goods have played such an important role in the negotiations so far: ‘The EU has the balance of trade in goods in its favour and it is understandable that they seek to prioritise it in the negotiations.’ But a more important reason for this, surely, is the part played by the Irish border in the question of customs and goods. The letter rightly continues, though: ‘However, the UK needs to get the right deal on professional and other services given our relative strengths and current competitive position.’
In advance of publication of the long-awaited Brexit White paper this week – assuming that it will be published, given the political turmoil which has arisen in the few days after the Chequers summit - and to assist in the interpretation of the promised White Paper, it is worth looking at the government’s statement after the summit, since this doubtless prefigures the White Paper’s main lines. What does the statement say of interest to our profession?
Much of it is about goods, which does not concern us directly at all.
As for services, the outlook is not reassuring for those hoping for a replication of the currently extremely liberal regime for lawyers’ services in the EU: ‘We would strike different arrangements for services, where it is in our interests to have regulatory flexibility, recognising the UK and the EU will not have current levels of access to each other’s markets.’
What this means is that EU lawyers will continue to have their current liberal level of access to our market, because we have a remarkably open attitude to practice by foreign lawyers, which we are assured will not change post-Brexit. On the other hand, many continental markets have only been opened up to us by the various EU directives, which will no longer apply, and so our access to those markets will become much more difficult.
Either the future free trade agreement (FTA) has to include details that copy much or all of the lawyers’ directives (which are particular to our profession, and not similar to those for any other profession), or we may find ourselves having to rely on World Trade Organisation (WTO) rules.
Regarding the negotiation of the future FTA, the progress of the withdrawal negotiations does not inspire confidence that, when it comes to address the FTA, attention will be paid to something as specialist and detailed as the requirements of the legal profession. A more broad brush approach covering wide service sectors is more probable. That will be disadvantageous to us because of our present arrangements.
Regarding the WTO, the government statement proudly predicts: ‘the UK would have its own seat at the WTO, be able to set tariffs for our trade with the rest of the world, and have the ability to secure trade deals with other countries’.
Good luck to any country giving up - at this particular point in history - an extremely liberal regional free trade agreement for reliance on WTO rules within that region. Doubtless the Cabinet has been reading the news of what is taking place in the world outside the Brexit negotiations. Principally, President Trump has been taking aim at the WTO.
Although the US remains a member, it has a veto over judges appointed to the WTO’s dispute resolution body, and has refused to appoint any. There are supposed to be seven judges. By September, four seats will be vacant, leaving three judges, the number required to hear each appeal. If just one judge needs to recuse him- or herself for any legal reason, the system will break down.
That is separate from, but connected to, the raising of tariff barriers by the USA against a variety of countries, including the UK, and the retaliations taking place in response.
In other words, the WTO system is under mortal threat, and is widely predicted to break down soon. We will be launching ourselves into this hostile environment, hoping to rely on WTO rules to secure market access for solicitors in other EU Member States - and, of course, in the wider world.
In summary, the long-term outlook in the EU for legal services post-Brexit is not good. I await the White Paper to see whether it confutes that prediction.