Don’t let Brexit jeopardise UK’s valuable services sector

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Professional services accounted for approximately 7.8% of UK GDP in 2016 – the latest figures – yet the EU trade deal with Canada (The Comprehensive Economic and Trade Agreement (CETA)), widely touted as the model for the UK post Brexit, does not provide a comprehensive framework for them. CETA has been given increasing attention following Michel Barnier’s publication of CETA as the ‘one available option’ given the UK government’s red lines on policy going forward.

In its 30 chapters and several protocols, CETA covers, inter alia, such areas as goods, financial services, cross-border supply of services, e-commerce, competition policy, telecommunications, investment, customs and trade facilitation, technical barriers to trade, domestic regulation, regulatory cooperation, trade remedies, mutual recognition of qualifications, temporary entry and stay of natural persons for business purposes, bilateral dialogues and cooperation, administrative and institutional provisions, transparency and dispute settlement.

Unveiling a new paper: Blind spot – how CETA overlooks legal services, Law Society of England and Wales president Joe Egan said: “We know that leaving the EU will result in some barriers to trade and movement being re-imposed on Britain if we leave the single market. It is the opinion of the Law Society that decades spent building the UK’s unrivalled professional services sector must not be thrown away in an EU deal which ignores Britain’s valuable legal services. The full paper can be found here: https://www.lawsociety.org.uk/news/stories/blind-spot-how-ceta-overlooks-legal-services/).

Egan continued that “The law of England and Wales is flexible, straightforward and is the law of choice for a vast number of transactions. Barring solicitors and barristers qualified in this jurisdiction from advising clients in others would be bad for UK PLC – to which our sector contributes well over £26bn each year”, adding that “…a CETA-type FTA would be equivalent to a ‘no deal’ outcome for legal services on market access.”

It was noted that in all but one of its free trade agreements (FTA) with non-EU states, the EU27 have not opened up its legal services markets. Yet even this exception – the deal with South Korea – is much more restrictive than is desirable going forward, leaving it to EU states to decide whether to open their markets. Egan has urged the UK government to ensure that mutual market access is at the heart of any post-Brexit deal and whilst it is true that an FTA could include legal services, it would have to be much more far-reaching than the South Korea FTA as outlined below.

Practice rights in South Korea

Under the EU-South Korea FTA, EU lawyers are permitted to advise in South Korea, provided that they are registered with the Ministry of Justice of Korea as Foreign Legal Consultants, the requirements for which include having to have practised in their home jurisdiction for at least three years.

EU firms of lawyers may provide legal representation on international issues in South Korea, but this is limited to advising on public international law and treaties in which one of the State parties is the jurisdiction where a Foreign Legal Consultant is qualified (i.e. English lawyers can advise on UK treaties). EU law firms may offer domestic (and international) legal services in South Korea through joint ventures, but EU law firms’ share in the joint venture is limited to 49%.

Law Society Recommendations

It is the view of the Law Society that no existing FTA model provides the necessary market access for legal services. They thus call on the Government of the UK to pursue a unique and close ‘partnership’ or association with the EU after Brexit, which falls outside current FTA structures. The Government’s commitment in the Prime Minister’s Florence Speech to negotiating a new and ambitious economic partnership is welcomed, as are plans to negotiate a comprehensive framework for future security, law enforcement and criminal justice co-operation.

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