BREXIT CONSEQUENCES IN EUROPEAN SCENARIO

Brexit consequences are many for both UK and the rest of EU member states and in this article they will all be analysed. The UK’s exit from Europe was decided by the result of a referendum held on June 23rd, 2016. It was therefore a choice dictated by the will of British citizens. In Scotland and Northern Ireland, the majority of the population voted to stay, but the aggregate vote of all UK population supported the Brexit implementation. As provided by Article 50 of the Treaty on European Union, Great Britain notified its decision to the European Council on March 29th, 2017.

The process to reach an agreement was very long and the exit had to be effective from October 31st 2019. The consequences of the Brexit, and in particular of an exit without agreement, will have a negative impact in various sectors including that of Food & Beverage, in which the main protections are contained in community regulations.

Let’s see in detail what the withdrawal clause provides for and what is the procedure to be followed if this clause was exercised by a Member State.

WITHDRAWAL CLAUSE FROM EU

The withdrawal clause, provided in Article 50 of the Treaty on European Union, was introduced with the Lisbon Treaty, in force since December 1st 2009. The introduction of this clause is linked to the desire to create a more democratic, transparent and efficient European climate. In the past, the right of withdrawal of a Member State from the EU had its normative base in the Vienna Convention of 1969. According to the art. 54 of this Convention, the withdrawal of a party was provided for “at any time by consent of all the parties after consultation with the other contracting States.” Instead, the art. 62 allowed withdrawal if “A fundamental change of circumstances which has occurred with regard to those existing at the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be invoked as a ground for terminating or withdrawing from the treaty

THE WITHDRAWAL PROCEDURE FROM THE EUROPEAN UNION

Article 50 of the Treaty on European Union now provides for a voluntary and unilateral withdrawal mechanism of a Member State from the European Union. The first paragraph of the article states that:

“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.”

The withdrawal does not take place automatically. The Member State that decides to withdraw must notify the European Council of its intention to do so. Then, the European Council shall provide guidelines for the conclusion of an agreement on withdrawal procedures for that State. The exit from the EU is formalised through the signing of an agreement. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament. After the signing of the agreement, the Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification

This is a procedure in accordance with the principles of democracy and efficiency, but not so simple to implement. Before the Brexit, no State benefited from the right of withdrawal and this first experiment highlighted its negative aspects.

THE AGREEMENT

The agreement must be negotiated in accordance with art. 218 of the Treaty on the Functioning of the European Union (TFEU). The European Commission is responsible for conducting the negotiations, which will take the form of an international treaty. The Brexit experience has shown that the process to reach an agreement is very long and complex. This agreement should define the withdrawal procedures for the applicant State and its consequences, trying to cause as little damage as possible to all parties involved, i.e. the outgoing State and the rest of the European Member States.

YELLOWHAMMER: THE EXIT PLAN WITHOUT WITHDRAWAL AGREEMENT

Yellowhammer is the code name for the Brexit plan that the UK government has prepared in case of exit from the European Union without agreement. The name, chosen by the queen, is inspired by a small bird with yellow and brown feathers recently declared in the United Kingdom at risk of extinction.

This plan illustrates the worst scenario that could derive from the Brexit no deal.

In the transport sector, the English Channel crossings could be reduced by 40-60%. The scenario illustrated also involves other sectors: food and fuel price increases, problems in the supply of medicines and potential public disorders and tensions between citizens and authorities. Being part of the EU customs union guarantees the entry and exit of goods among member state without strict controls. Leaving without deal, the borders with European Union member States would be closed for the UK, with consequent strict controls on all goods in transit. British citizens will suffer the same problem, they will no longer enjoy the right to free movement and residence within European borders.

According to the Bank of England, UK will see its gross domestic product decrease by around 5.5%, unemployment double reaching 7% and inflation rise to 5.5%.

In this document it is possible to read: “Some cross-border financial services will be disrupted. Law enforcement data and information sharing between UK and EU will be disrupted. UK nationals will lose their EU citizenship and associated rights and access to services.”

CONSEQUENCES FOR SINGLE MARKET

The first thing to highlight is that the economies of the different Member States complement each other in the global value chains. As a result, Britain’s exit from the single market context will affect the economies of the rest of European member states. Belonging to a single market, characterized by the free monument of goods, people, goods and capital, represents a great opportunity and the Brexit has upset the internal balance.

Exiting from EU, United Kingdom will become a third country. In food sector it leads huge consequences. The labels of the products made in the UK will have to show, in addition to the English manufacturer, also the indication of the company’s name and address of the importer established within the EU. The same importer will then have to guarantee the correctness of the information reported on the label, as FBO (Food Business Operator) in charge. In terms of certifications, those issued by the UK authorities will no longer allow the inserting into the EU market with the organic certification.

Even the geographical indications would no longer be protected. “In the United Kingdom there are frequent cases of counterfeiting of Italian and European products, protected by the EU system of geographical indications, such as the fake Prosecco on tap or the DIY kits of fake Italian powdered wine. This tendency (…) could find the definitive green light, releasing itself from the limits imposed by the community legislation. (…) The British legislation does not provide specific guarantees for the 3,000 European PDO / PGI products, of which 800 are Made in Italy”.

In general, in Great Britain two currents of thought can be distinguished, both oriented only to the consequences concerning the UK. On the one hand, Brexit supporters believe that there will be no important consequences following the exit of the UK from the single market, as EU countries have commercial interests in maintaining good contractual relationships with the UK, major importer of goods and services. On the other hand, the Europeanists who fear that foreign companies will be less inclined to invest in the British economy.

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