Skip to main content

Clifford Chance

Clifford Chance

Regulatory Investigations and Financial Crime Insights

European Commission hopes for post-Brexit harmony on sanctions – Good news for businesses

Last week, the European Commission's Task Force for Relations with the United Kingdom published its latest Brexit negotiation slides, relating to foreign policy, security and defence. These slides suggest a desire, that will be shared by businesses, that the EU and UK will remain aligned in their sanctions regimes post-Brexit.

The European Commission's Task Force for Relations with the United Kingdom (UKTF) has begun publishing its preparatory documents for the next stage of Brexit negotiations with the UK. These slides do not constitute the EU’s formal negotiating mandate, which will only be published after 31 January 2020 (and which would need to be adopted by all 27 Member States), but the slides indicate how the EU intends to approach various topics. One of the latest negotiation slides, dated 17 January 2020, relates to "Foreign policy, security and defence", and includes how the European Commission sees the separate EU and UK sanctions regimes working post-Brexit.

The UKTF makes the "Political Declaration" in its slides that the UK and EU will have autonomous sanction policies in future, but that there should be consultation and cooperation between the two sanctions regimes. Further, it notes that "[w]here foreign policy objectives of the EU and the UK are aligned, [there is the] possibility of adopting sanctions that are mutually reinforcing".

The UKTF slides also include, as an objective, the desire to reinforce the impact and coherence of EU sanction policy, which will be driven by the interests of the remaining 27 Member States. Again, it re-iterates that where and when the UK has shared interests with the EU, convergence with the EU's sanction regime should be enabled.

The extent to which the two regimes will remain aligned or not after the transition period remains to be seen. At a press conference with the Canadian Foreign Minister on 9 January 2020, UK Foreign Secretary Dominic Raab stated that "Once we leave the EU, the UK will establish our own human rights sanctions regime, inspired very much by the Canadian [Magnitsky-style] model. And we look forward to collaborating with Canada on human rights sanctions and ultimately above all, to defend the values that our two countries share."

This suggests there may be divergence in policy. But even where policy is aligned, the devil is, as always, in the detail.

UK and EU businesses will need to keep a keen eye on whether any seemingly minor discrepancies arise between the sanctions policies adopted by the EU and the UK after the transition period, as this could create compliance difficulties for entities subject to both regimes. This is something that can already be seen as a result of tensions between the EU and US sanctions regimes in relation to Iran.

For now, however, there will be no change. Once the UK formally withdraws from the EU on 31 January 2020, there will be an 11 month transition period (until 31 December 2020). During the transition period, existing EU sanctions will continue to apply in the UK whilst the two parties negotiate their relationship going forwards.