Brexit and China (excluding Hong Kong)
On 9th September 2022, in an article captioned “Chinese firms shun the US for London and Zurich”, City AM reported that “Chinese firms are shunning the US and turning towards European markets this year, with share sales in markets like London and Zurich raising more than five times as much money as the US”.
For all the political tensions that currently exist between the UK and China, according to August 2022 UK Government figures China (excluding Hong Kong, which the UK treats separately for statistical purposes) remains the UK’s 3rd largest trading partner, accounting for 6.9% of total UK trade in the four quarters to the end of Quarter 1 (Q1) 2022.
On 19th August 2022, the UK Government’s Department for International Trade (DIT) published a trade and investment factsheet showing that total trade in goods and services (exports plus imports) between the UK and China was £93.4 billion in the four quarters to the end of Q1 2022, an increase of 5.5% or £4.9 billion from the four quarters to the end of Q1 2021. Of this £93.4 billion:
- Total UK exports to China amounted to £27.1 billion in the four quarters to the end of Q1 2022 (an increase of 7.0% or £1.8 billion compared to the four quarters to the end of Q1 2021); and
- Total UK imports from China amounted to £66.3 billion in the four quarters to the end of Q1 2022 (an increase of 5.0% or £3.1 billion compared to the four quarters to the end of Q1 2021).
The factsheet also shows that in 2020 the outward stock of foreign direct investment (FD) from the UK in China was £12.9 billion accounting for 0.8% of the total UK outward FDI stock and that, in the same year, the inward stock of FDI in the UK from China was £3.4 billion accounting for 0.2 % of the total UK inward FDI stock. Again these figures exclude Hong Kong.
China remains a very important trade and investment partner of UK post-Brexit, notwithstanding the different political perspectives of the two countries.
Brexit and a green dividend from supply chain resilience
On 14th September 2022, The Times published a “Raconteur” supplement on “Supply Chain Resilience”, which included an article by journalist, Georgia Lewis, entitled “Brexit pays out a green dividend”. The subheading is “Can the costs of leaving the EU be offset by green benefits? Some manufacturing companies are reporting positive outcomes from moving supply chains back to Britain.”
The theme of the article is that Brexit has led to some UK businesses sourcing their products from within the UK rather from the EU with a consequent reduction in the carbon footprint of the businesses concerned. The article cites as back-up for this UK domestication of supply chains a recent report on tackling carbon emissions and trade policies, co-produced by the UK Trade Policy Observatory (UKTPO) and the Centre for Inclusive Trade Policy of the University of Sussex Business School (CITP), which recommended a comprehensive approach to supporting decarbonisation on a global level. The article goes on to say that both the UKTPO and CITP support low-carbon supply chains and that, at the government level, the report recommends green investment, climate finance, technology transfer and cooperation in the development of international standards for reducing emissions on supply chains.
Costs benefits can vary in locating supply chains to the UK and there can be additional costs arising for UK businesses when they export goods from the UK to the EU because of tighter export/import regulations and other factors. It is interesting, however, that businesses and commentators are talking about a “green dividend” deriving from Brexit and we shall need to see what happens.
Brexit and the Retained EU Law (Revocation and Reform) Bill 2022
On 22nd September 2022, the UK Government introduced the Retained EU Law (Revocation and Reform) Bill 2022 (“the Bill”) into the UK Parliament. This represents another important step along the UK’s post-Brexit path.
The accompanying “News Story” published on the same date as the Bill by the UK’s Department for Business, Energy & Industrial Strategy (BEIS) summarises important provisions of the Bill partly as follows:-
- Sunsetting Retained EU Law – The Bill will sunset the majority of retained EU law (excluding financial services–related retained EU law which is to be dealt with separately by the UK’s Financial Services and Markets Bill 2022) so that it expires on 31st December 2023. All related retained EU law contained in domestic secondary legislation and retained direct EU legislation will expire on this date, unless otherwise preserved. In this context, the principle of the supremacy of EU law, general principles of EU law, and directly effective EU rights will also end on 31st December 2023. The Bill, however, includes an extension mechanism for deferral of the sunset of specified pieces of retained EU law until 2026;
- Assimilated Law – Following the removal of the special features of EU law from retained EU law on 31st December 2023, any retained EU law that is preserved will become “assimilated law” to reflect that EU interpretive features no longer apply;
- Facilitating Departures from Retained EU Case Law – The Bill provides UK domestic courts with greater discretion to depart from retained EU case law;
- Modification of Retained EU Legislation – The Bill enables retained direct EU legislation to be amended more easily, with an appropriate level of scrutiny;
- Powers relating to Retained EU Law – The Bill creates powers to make secondary legislation so that retained EU law can be amended, repealed and replaced more easily; and
- Business Impact Target (BIT) – The Bill repeals the BIT, which apparently is a legacy from the UK’s membership of the EU.
The News Story from BEIS states that measures relating to tax in the context of EU law will be enacted through an appropriate Finance Bill (or subordinate tax legislation).
The Bill does appear to draw a line in many ways under the UK’s former membership of the EU, at least from a juridical standpoint, but we await to see how it all turns out in practice.