The UK Government has published its response (the Response) to the House of Lords EU External Affairs Sub-Committee report on the implications of Brexit on UK sanctions policy (the Report).
Dated 8 February 2018, the Response sets out the Government’s position in relation to the Report’s key conclusions and recommendations. The Report, published on 17 December 2017, notes the importance of the UK maintaining a close working relationship with the EU and other international partners on the formulation and enforcement of sanctions policy. It highlights the UK’s pre-eminent role in the design of EU sanctions regimes and seeks further clarity on the Government’s proposal for an ”unprecedented” UK-EU partnership on sanctions policy. The Report goes on to suggest the establishment of a “UK-EU political forum” to discuss and co-ordinate sanctions policy in the event that the UK cannot continue to participate in the EU’s Common Foreign and Security Policy.
As anticipated in our earlier post, the Response repeatedly asserts that international co-operation will remain fundamental to UK sanctions policy. Specifically, it confirms the UK Government’s intention to continue to co-ordinate with the EU and other international partners, including the United States, in designing and implementing sanctions regimes and protecting mutual interests.
UK role in EU sanctions policy design
The Response recognises the UK’s leading role in sanctions policy design, but stresses that the UK’s influence is only partly attributable to its EU membership. It seeks to emphasise the UK’s status as a permanent member of the UN Security Council (the UNSC), as well as its membership of the G7 and the Financial Action Task Force.
Specifically, the Response stresses the importance of UNSC sanctions; however, it does not address concerns regarding instances where agreement cannot be reached at the UN, or where UN sanctions are limited in scope. EU sanctions regimes have had a significant impact in such circumstances; for example, sanctions on Russia and Syria have not been possible given Russia’s opposition and its status as a permanent member of the UNSC.
Regarding EU sanctions policy design, the Response acknowledges that “[E]xiting the EU will require new ways of working” with the remaining EU Member states but re-iterates that the precise mechanisms for the discussion and coordination of sanctions policy remain subject to negotiation. It therefore remains to be seen what the UK Government proposes in relation to its “unprecedented” UK-EU partnership on sanctions policy.
The future UK sanctions regime
In line with our analysis of the Sanctions and Anti-Money Laundering Bill (the Bill), the Response suggests that the UK will not seek to diverge from EU policy. It notes that the Bill was drafted “with a view to enabling the UK to maintain the broad range of sanctions we currently implement through EU law”.
This desire to align with EU sanctions has led to concerns, voiced in the Report, that the UK will be required to implement EU decisions over which it had no influence or input. The Response sets out the UK Government’s vision of “a model of UK/EU sanctions co-operation based on two-way exchanges of analysis and information” designed to retain UK influence in EU decision making. Further details are not available due to ongoing negotiations.
To the extent that the UK does diverge from EU policy, the Response acknowledges the need to minimise administrative burdens for domestic businesses. The Government will issue guidance in due course with the aim of making such guidance as user-friendly as possible. Corporates and financial institutions should review and implement this guidance to best prepare for any potential divergences between UK and EU sanctions policy.
The Response confirms the UK Government’s desire to ensure that the UK retains a strong influence at the heart of global sanctions policy but does not set out specific approaches as to how this will be achieved. It is further evidence of the UK Government’s desire to focus on the UK’s broader involvement in global sanctions policy, whilst at the same time emphasising the importance of continued cooperation and collaboration with the EU.
EU regimes – independent or building on UN measures – account for around three-quarters of all the sanctions the UK currently implements. Balancing increased UK autonomy with the UK Government’s stated desire to maintain a broadly similar approach to EU sanctions policy after Brexit will be key to ensuring that the UK remains a leading global player on sanctions post-Brexit.