A group representing the UK‟s financial and related professional services sector, the International Regulatory Strategy Group (IRSG), has published a Brexit blueprint for how the UK can continue trading with the EU after leaving the block.
"A New Basis for Access to EU/UK Financial Services Post Brexit" follows the announcement from the UK Government that Britain will not seek Single Market Membership when it leaves the EU.
The blueprint outlines a bold and ambitious Free Trade Agreement (FTA), introducing a joint dispute resolution body and mechanisms for mutual market access when financial services passporting rights, which allow UK firms to trade freely in the EU Single Market, are lost after Brexit.
The arrangement which has been drafted in collaboration with international law firm Hogan Lovells is based on regulatory alignment between the UK and EU with both parties working together to implement new global and international standards, replacing existing regulatory frameworks. This would allow UK financial and professional services firms to operate inside the EU, and EU financial and professional services firms to operate inside the UK, without restriction.
This would be a bespoke agreement that takes the best concepts rom existing FTAs but goes far beyond them in scope and ambition.
Chair of the IRSG, Mark Hoban, “Businesses and families across Europe benefit from deep and integrated financial markets: offering lower costs, higher returns and greater choice. If we want to see these benefits continue after a Brexit we need a bold and ambitious agreement on how we continue to access each other’s markets. Unlike any other country, the UK is looking to secure an agreement from the exact same starting point as the EU and so the UKs new trading relationship with the EU should reflect this unique situation. This should be the foundation of a historic trade deal. It is an ambitious plan, but it is one that will benefit the entire continent. If London were to lose its crown as the world’s leading financial hub, activity will move to centres such as New York or Singapore -not elsewhere in the EU, and businesses and families would lose the benefits of deep and integrated financial markets. We see this report as a viable option that will maintain regulatory coherence and encourage strong trade links that benefit both sides.”
Rachel Kent, Partner at Hogan Lovells, “The starting point for this report is that both the EU and the UK have, in their own ways, expressed the desire to secure future arrangements for free trade in financial services. An enhanced FTA as proposed by the report is technically and legally entirely feasible, and would properly form a financial services chapter of a wider EU/UK agreement. The cross border supply of financial services under the FTA envisaged by the report, using the parties uniquely aligned starting point as a means to develop a detailed and workable template, could be a catalyst for accelerating other discussions. The EU has the ability to form such an agreement under existing treaties, and it would, at the very least, constitute the basis for a transitional arrangement, or bridge towards a foreseeable future relationship with the UK.”
The report details several key elements that should be included in the Free Trade Agreement, including:
* Market access arrangements
* Mutual market access on the basis of regulatory alignment and supervisory co-operation
* Promoting on-going alignment
* A Forum for Regulatory Alignment, where the UK and the EU can work together to implement new global and international standards;
* A dispute resolution body, to determine whether material divergence has taken place, and if so the impact that should have on market access.