UK Government white paper: blueprint or just more red tape?

Katie Hay, our Head of International, examines if the recently published UK Government White Paper provides a blueprint for the next stage of Brexit negotiations.

Last week, the UK Government unveiled its much-anticipated White Paper on leaving the EU.  Whatever the political arguments, we now have almost 100 pages of real substance in terms of government policy.  While obvious questions remain on how acceptable the White Paper is to parliament, to the EU Commission and to the other 27 EU member states, there is first and foremost the question of whether the proposals meets the needs of the sectors on which the Scottish and UK economy depends.

The UK Government asked us if we could host a roundtable discussion with the Secretary of State for Scotland, David Mundell on the day of the White Paper’s launch.  To be asked to do this underlined the widely recognised role of the Law Society as a leading and non-partisan voice in the Brexit debate.  The event itself brought together industry leaders covering a broad range of areas including professional services (including some of our largest law firms), food and drink, energy and tourism.

Many at that roundtable welcomed the added clarity that came from the White Paper and recognised the effort by Ministers to address specific industry concerns.  Equally, it was recognised that many more challenges remain, not just of substance but of process with such little time remaining to agree a deal before exit day in March 2019.  You can read the Secretary of State’s summary of the meeting on the UK Government’s website.

What does the White Paper mean for the legal profession?

The White Paper is split into four chapters: economic partnership, security, cooperation and institutional arrangements. Most of the debate surrounds the first section, the future economic relationship, which includes the sections of most relevance to our continued professional recognition and ability to practice throughout the EU. (Provisions relevant to the interpretation, practice and enforcement of law are contained throughout the paper and will be considered fully by our policy team.)

Mutual recognition of professional qualifications

The White Paper covers mutual recognition of professional qualifications inasmuch as it confirms the agreed position set out in article 25 of the Withdrawal Agreement published on 19 March (covering those who are in the process of requalifying in another Member State when the UK formally leaves the EU).  However, this only extends to the end of the transition period on 31 December 2020 – assuming there will be one.  Beyond that, the UK Government proposes a system that would go further than any existing Free Trade Agreement (FTA) in relation to professional recognition, covering the same range of professions as the Mutual Recognition of Qualifications Directive; and including those operating either on a permanent or temporary basis across borders.

It references the EU-Canada Comprehensive Economic and Trade Agreement (CETA), which, it points out, includes some of the EU’s most ambitious third country arrangements to date but which, in practice, still places significant restrictions on cross-border market access for the legal profession.

The Law Society of England and Wales published a paper, Blind Spot: How CETA Overlooks Legal Services, in January of this year examining the limitations imposed by CETA and other FTAs on the legal services market, which concluded with a call to the UK Government “to pursue a unique and close ‘partnership’ or association with the EU after Brexit, which falls outside current FTA structures”.  The White Paper appears to support this conclusion however it remains to be seen whether the EU will make greater concessions in this area to the UK than it has with other trading partners to date.

The White Paper also points out that in the wider area of mutual recognition it is very much in the EU’s interests to maintain a framework for the recognition of professional qualifications, given that from 1997 to 2016, the UK has recognised over 142,000 EU qualifications, including for lawyers, social workers and engineers; whereas in the same period over 27,000 decisions to recognise UK qualifications have been undertaken in the EU.

We will continue to argue, alongside our UK colleagues, that it is in the best interests of both UK and EU citizens and businesses to permit and facilitate trans-European and transnational legal services and to maintain access for lawyers to practise and establish within the EU through the Lawyers’ Services Directive and Lawyers’ Establishment Directive, or equivalent mechanisms.

Mutual Recognition of Financial Services regulations

Of particular concern to the financial services industry is the change of government policy from mutual recognition of financial regulations, which had the full support of the sector, in favour of 'a new economic and regulatory arrangement', which still goes further than the equivalence regime that the EU has with most other third countries but which would no longer allow financial firms to take advantage of passporting, which currently gives them automatic access to other EU markets.

While this apparent climb-down has caused consternation among financial services representatives, (former City law firm partner Catherine McGuinness from the City of London Corporation called the White Paper a “real blow for the UK's financial and related professional services sector”), again it remains to be seen whether this concession will be enough for the EU, as they may still consider that the proposal amounts to cherry-picking from the four freedoms that underpin the single market – the reason mutual recognition was so roundly rejected.

We have been in contact with UK civil servants working on Brexit policy, who have confirmed that the White Paper’s proposals in respect of financial and professional services are a pragmatic response to the basic premise that as the UK will no longer be members of the Single Market, we will inevitably enjoy less market access than we do currently.  However, we have received an undertaking that in that context, they still wish to facilitate continued cross-border provision of legal services to the greatest extent possible between the UK and the EU. 

Nothing is agreed …

In keeping with both sides’ commitment to the principle that ‘nothing is agreed until everything is agreed’, the Withdrawal Agreement and the framework for the future relationship are inextricably linked and so must be concluded together.  

With the publication of the White Paper, we consider that there is a greater chance of this being possible in the limited time available and we believe that there is still an opportunity for us to influence the final outcome for the benefit of our members and the citizens and businesses that they serve.