In the many months of negotiations since March 2017, when the UK submitted its formal notice of intent to withdraw from the EU, the EU has steadfastly refused to engage in talks about the post-Brexit period until the terms of the so-called “divorce” were agreed and ratified – a goalpost yet to be reached. The UK and EU did move forward, however, on a plan to divvy up existing preferential tariff rate quotas between the UK and the remaining bloc of 27 EU Member States. Under the proposal agreed in August 2017, the UK would take over a portion of the EU quota commensurate to its average consumption over the most recent three-year period, thereby leaving WTO trading partners “no worse off” than before Brexit. Argentina, Brazil, Canada, New Zealand, Thailand, Uruguay, and the United States (US) immediately complained that split quotas did not provide the same market opportunities as the current single EU market. The countries claimed that such changes constitute more than a technical rectification, thus requiring consultation and consent from trading partners.

At last week’s WTO Goods Council, the number of countries expressing concerns about the proposed reallocation of the EU quotas rose to fifteen. Australia, Canada, the US, and others claim that losses from Brexit uncertainty are already being felt. As recompense for current commercial loss as well as future losses resulting from trade disruption and smaller markets, they seek concessions from the UK and the EU to provide improved access to both post-Brexit markets. Calling the proposal “unjustifiable,” the US asserts that trading partners are at risk of being crowded out and would suffer market access losses in both markets. The worry is that the EU will claim a large portion of the UK quota and vice versa. The proposal could have particularly harsh results for US exports of pork and wine.

How the conflict is resolved in the near term may depend on whether an alternative dispute resolution system comes to fruition when the WTO’s Appellate Body ceases to function on December 10, 2019. On that day, the Appellate Body will no longer have the three members necessary to review a case on appeal. With the US holding fast to its position that blocking Appellate Body nominations is the only way to bring about WTO reform, something will have to give. One alternative under consideration by the EU and Canada is an interim arbitration arrangement based closely on existing WTO rules. Another possibility would entail Members agreeing to accept the Panel’s decision at the outset of a dispute. With uncertainty piled on top of uncertainty, traders’ worries are not likely be lessened this holiday season.

Election front-runners, the Conservatives and Labour Parties, which recent polls projected to have 41 and 29 percent of the votes respectively, both have been reticent to support the use of cannabis-based products. The Liberal Democrats, with less than 15 percent of the projected votes, and the Greens with even less, both support liberalization. As recently as this summer, however, a cross-party group of Members of the UK Parliament returned from a study visit in Canada prepared to vote against party lines. As the UK potentially moves toward under a revitalized Conservative government to seal a deal with the EU before 31 January 2020 predicate to embarking on a process of resetting its rules as an independent nation, there is plenty of opportunity for change. The UK re-branding undoubtedly will seek to build on its reputation for excellence in research and development in the life sciences sector, including its extensive expertise in clinical studies of potential new treatments. The future may well include a significant increase in clinical research on cannabis products.

On 11 November 2019, the UK’s National Institute for Health and Care Excellence (NICE) published guidance that clears the way for two cannabis-based medicines to be used within the UK’s National Health System (NHS). NICE reversed the position it took in draft guidance in August when it questioned the efficacy GW Pharma’s Epidiolex despite the European Medicines Agency approving it in September for the entire EU market. NICE also overcame its hesitancy concerning the pricing of Epidiolex as well as Sativex, another GW Pharma product, approved for medicinal use in the UK in 2010 but which NICE had rejected earlier this year as not cost-effective. Subsequent work between NICE and GW Pharma on economic modelling as well as public consultations paved the way for the change in position.

Medical cannabis was legalised in the UK in November 2018 under certain conditions. NICE’s guidance enables, for the first time, NHS specialists to prescribe cannabis-based products for patients across England. Epidiolex, a purified cannabidiol (CBD) solution, is used to treat seizures in children with Lennos Gastaut or Dravat syndromes while Sativex, which contains equal portions CBD and tetrahydocannabinol (THC), treats spasticity related to multiple sclerosis. Sativex will be available only when other treatments have failed and where local NHS authorities agree to cover costs for a four week period. Continuation of the treatment by prescription from a general practitioner is possible where symptoms improve by at least twenty percent during the trial period.

NICE’s recommendation on Sativex was welcomed by the MS (multiple sclerosis) Trust. Similarly, Epilepsy Action considers the recommendation on Epidiolex to be an important step forward but calls for more research on the use of medicines containing THC for epilepsy patients. The patient advocacy group End our Pain, which last spring brought families of patients with epilepsy to the offices of more than 80 Members of the UK Parliament, has criticized the NICE guidance for not also recommending medicines with THC for NHS use in treating symptoms of epilepsy.

Whomever ends up in office to guide the UK through the coming rocky steps can expect to hear plenty more from constituents about the potential benefits of cannabis-based products and the need for regulatory reform.

Following months of emphatic statements by the EU that the agreement negotiated by predecessor Prime Minister Theresa may could be “re-opened” for negotiation, the EU did just that. The UK reversed its earlier rejection of any customs border that could “carve up” the UK and the EU rescinded its long-standing insistence that the UK, as a non-Member State, could not conduct customs checks for the EU. These concessions laid the groundwork for a unique arrangement whereby Northern Ireland would be part of the UK’s customs territory but also would be required to follow EU customs rules. Checks on goods exported from England, Wales and Scotland that present a risk of entering the EU market, i.e., not remaining in Northern Ireland, would ensure payment of EU tariffs The arrangement does not require any change on the side of the EU.

Crucial to reaching agreement was a new “consent mechanism” that gives Northern Ireland power to decide whether to continue or terminate the arrangement after four years and every four years after. It was this consent mechanism that enabled the EU to abandon its previously untouchable “backstop” that would have kept the UK permanently in the EU’s customs union if the EU and the UK were unable to conclude a trade deal by the end of a transition period scheduled under the Withdrawal Agreement to end on 31 December 2020.

The big question is whether Johnson can summit the next challenge. With a minority government, Prime Minister Boris Johnson must keep the party faithful, but also convince others to cross party lines, to obtain the 320 votes in the UK Parliament to ratify the revised Agreement. The vote will take place in an extraordinary sitting on Saturday, 19 October. Further complicating matters, opposition parties intend to push for a second referendum but are yet to agree on the best way to achieve it. Should Johnson fail to achieve a majority, the Benn Act, passed by the Parliament in September to avoid a “hard” Brexit, requires the Prime Minister to write to the EU before midnight to seek an extension until 31 January 2020. The vigil outside the UK Parliament is in full swing but with much less hope of white smoke.

On the U.S. side, there is strong political support by the Trump Administration and some Members of Congress for a U.S.-UK trading alliance. Several steps already have been taken to strengthen the Anglo-American trading relationship and mitigate negative impacts of Brexit. In February this year, a U.S.-UK Mutual Recognition Agreement (MRA) was concluded, which rolls over relevant aspects of the existing U.S.-EU MRA, covering electromagnetic compatibility, telecommunication equipment and good manufacturing practice of pharmaceuticals. U.S.-UK agreements on derivatives and insurance also have been agreed. These would take effect immediately after the UK exits the EU in an EU-UK “no deal” Brexit scenario or at the end of a transition period in a “deal” scenario. UK-U.S. preliminary talks on a bilateral free trade agreement (FTA) spanning the last two years, however, have failed to show any meaningful progress and are considered to be deadlocked. Should the UK leave the EU without a deal at the end of October, World Trade Organization (WTO) terms would govern U.S.-UK trade until such time as a trade deal is agreed.

Much hinges on the UK’s post-Brexit trading relationship with the EU, which still remains a priority for the UK. As Boris Johnson pursues hardline rhetoric on Brexit, insisting both that the current EU-UK deal needs to be renegotiated - which EU leaders reject - and that the UK will leave the EU on the scheduled date of 31 October 2019, with or without a deal, it is difficult to predict how the UK-EU trading relationship will unfold in the coming months. As of now, however, the EU is the UK’s largest trading partner: total UK trade in goods and services with EU countries in 2017 was 788 billion dollars, whereas two-way trade between the UK and the U.S. in the same year totalled about one third this amount, at 236 billion dollars. Boris Johnson, who is previously reported to have said that the “massive opportunity” of a U.S. trade deal only is possible if the UK escapes the “lunar pull of Brussels,” would be most likely to seek a loose, Canada-style trade deal with the EU, which might be limited in some respects, e.g. as is the case for services in the EU-Canada trade deal, but would eliminate most tariffs and leave the UK substantial regulatory freedom. Given the protracted nature of trade talks (i.e. seven years for the EU-Canada deal), however, Johnson will be pressured to negotiate a transition period with the EU, during which the UK will be able to negotiate, but not enter into, its own trade agreements.

If Johnson secures a withdrawal deal with the EU and a transition period is in place following Brexit, the key question will be whether an alternative arrangement has been reached on the Irish border issue, which now provides for a “temporary,” yet indefinite, EU-UK customs union. If the UK were to participate in the customs union, U.S.-UK negotiating flexibility would be restricted and trade talks limited to areas outside of the scope of the customs union, for instance, regulatory cooperation, services, public procurement, intellectual property, and digital trade. If an alternative arrangement has been reached on the Irish border issue which takes the UK out of the EU customs union, the UK would be free to negotiate trade deals and would regain full independence over its trade policy at the end of any Brexit transition period. The UK also would take back control over its national trade policy at once in a no deal Brexit scenario, in which case it would be free to negotiate and enter into FTAs with the U.S. and other countries.

For Johnson, embarking on U.S.-UK trade negotiations from a position of strength will be key from a political standpoint, but raises the question of both sides’ negotiating flexibility. Faced with significant pressures at home not to concede to U.S. trade demands, as laid down this February in the U.S. Trade Representative’s U.S.-UK FTA negotiating objectives, Johnson may be persuaded to exempt certain areas from trade talks - prompting Washington to come back to the negotiating table with more limited trade concessions. A major sticking point for the UK is the U.S.’ bid to incorporate into any bilateral FTA market access for U.S. agricultural goods. Boris Johnson already has stated: “I don’t want us to do any deal with the U.S. which in any way jeopardizes our animal welfare standards or our food hygiene standards.” Conversely, it is in the U.S.’ interest for the UK to accept its food and farming standards, and to shift away from the EU’s interpretation of sanitary and phytosanitary standards and technical barriers to trade. With the EU system criticized strongly in the U.S. as being inconsistent with WTO rules and unfairly distorting agricultural markets to the detriment of U.S. farmers, UK regulatory harmonization with the EU in this area could substantially curtail prospects for an ambitious U.S.-UK FTA. At the same time, the opposite would risk frictionless UK-EU trade post-Brexit, including with respect to regulatory checks between the Northern Ireland and the Republic of Ireland. The question as to whether service contracts with the UK’s National Health Service should be included in U.S. trade talks further promises to be thorny. Johnson also supports the implementation of a new UK tax on digital services, which has sparked stiff opposition from U.S. authorities and might create some challenges.

A quick post-Brexit U.S.-UK trade deal moreover is complicated by the fact that the U.S. federal government shares competence to regulate over specific trade-related areas with state and local authorities, making certain sectors such as financial services and public procurement difficult to negotiate. As highlighted by UK Trade Secretary Liam Fox, Brexit also falls “very close to the American pre-election year, where it’s quite hard to get things through Congress.” On the UK side, the UK Department for International Trade will continue to have many overlapping priorities, including to negotiate its WTO schedule of commitments on goods, services and agriculture, and taking steps to pursue new trade deals and roll over existing EU trade deals with third countries. The UK trade department may also soon be facing U.S. retaliatory tariffs on up to 25 billion dollars of EU products over a long-running transatlantic subsidy dispute between airliners Boeing Co. and Airbus SE.

Political and other developments further could impact both sides’ plans for an ambitious trade deal. London may pursue trade talks with China as part of plans for a “Global Britain,” which could be a deal-breaker for the U.S. for several reasons. On other international foreign policy issues, such as climate change and sanctions on Iran, Johnson will need to make decisions early on regarding whether to maintain the UK’s current policy, which is closer to Brussels than to Washington, or deepen U.S.-UK political ties by edging closer to the U.S. On this point, Johnson’s choice for a new UK Ambassador to the U.S. will likely be a strong indicator of his political agenda, including on Brexit. In sum, a quick post-Brexit U.S.-UK trade deal is improbable; however, a Johnson premiership may yet inject new momentum into the process depending on how he will position himself on the above issues. Furthermore, if a single comprehensive U.S.-UK trade deal proves challenging, the UK’s new leader could opt for a less ambitious target of a series of sector-specific deals.

In an attempt to create a majority in the UK Parliament to ratify the withdrawal agreement she negotiated with the EU, Prime Minister May intended to made certain concessions. Among them was the idea of negotiating a new and separate customs union with the EU that would take effect when the UK is no longer part of the EU internal market. The Brexit Party rejects this proposal and it may not be tenable for the next Conservative Party leader. Nevertheless, pressure to avoid a hemorrhaging hard Brexit, may yet result in further consideration of a separate customs union with the EU. It is useful then to consider what a customs union without single market access and EU membership might look like and how it could affect business.

The main arguments for an EU-UK customs union are that it guarantees reciprocal tariff- and quota-free access for goods, as well as avoids customs and rules of origin checks and costs. This would significantly reduce red tape for companies and helps to keep supply chains intact. Whether this would be possible from a position outside the EU internal market is questionable. The EU would most likely require single market membership to ensure regulatory alignment to rule out border checks between the UK and the EU.

Even if possible to negotiate a separate EU-UK customs union as a third country outside the internal market, there are potential drawbacks. First, an EU-UK post-Brexit customs union is unlikely to be as far-reaching as the internal EU customs union, which covers all goods. The EU-Turkey customs union, for instance, covers trade in industrial goods but not most agricultural products, steel and coal products, public procurement, and services. Thus, depending on the nature of any future EU-UK customs union, some goods might not be covered and would be traded between the EU and the UK on WTO terms, which involve higher tariffs. The EU and UK could negotiate separate bilateral preferential agreements in those areas not covered by a customs union, e.g. services, but this could take several years of negotiation and businesses in the meantime would lack visibility on what might be agreed at the political level. Additionally, a customs union does not guarantee frictionless trade as it is the UK’s current membership of the single market which ensures harmonization of safety and quality standards and avoids delays due to border checks. Businesses should therefore be prepared for some trade disruption even in an EU-UK customs union scenario.

Second, as the UK leaves the EU, it will no longer be able to participate as a Member State in free trade agreements (FTAs) between the EU and third countries. This is significant as the EU has in place, or is negotiating, trade agreements with several global economic heavyweights, including Japan, Canada, Singapore, MERCOSUR, Mexico, and Australia. Benefits granted through EU-third country FTAs, including duty-free access to EU partner markets, will not automatically apply to the UK. The UK would need to negotiate its own trade agreements with third countries to gain preferential access to their respective markets post-Brexit. Depending on the terms of any EU-UK customs union, states may lack incentive to strike wide-ranging individual trade deals with the UK. Businesses may accordingly need to consider disruptions to their market access and supply chains even if a post-Brexit EU-UK customs union is agreed.

Third, under any EU-UK customs union, the UK would be required to apply the bloc’s external tariffs and, so, would not be able to formulate independent trade policy. This is significant because goods from EU trading partners would be able to flow freely into the UK via an EU-UK customs union after entering the EU at reduced or zero tariff rates under EU trade deals. Reciprocal rights would not automatically apply for UK exports to the same countries, however, putting UK businesses at a disadvantage in relation to EU and EU partner country companies. If the UK also has little to offer potential trade partners on the goods side in terms of trade concessions, bilateral UK-third country trade deals may be limited in scope and the UK likely would have reduced bargaining power in negotiations even if it is an attractive market, i.e. with a highly developed and regulated economy. Additionally, an EU-UK customs union for the UK likely would involve significant regulatory alignment with the EU without direct participation in its decision-making mechanisms on trade policy, which again could undermine the UK’s bargaining power in any future trade negotiations. It nevertheless could be argued that the UK remains a prized market and that it has sufficient economic clout to negotiate lucrative trade deals with third countries e.g. on services, regulatory barriers to trade in goods, public procurement, data, and intellectual property.

Should the UK decide that it is in its interest to have a separate custom union with the EU, this would be done as part of future negotiations with the EU. The EU has been crystal clear that the withdrawal agreement already negotiated with May’s Government is not open for re-consideration. Whether or not it wishes to pursue a UK-EU customs union in future, the UK will crash out of the EU on WTO terms on 31 October 2019 unless the UK Parliament ratifies the withdrawal agreement or the EU grants it more time to do so. At this stage, each of these contingencies could not be more uncertain.

Noise from the UK suggests a strong belief that the UK can leave the EU but maintain trading privileges, including tariff-free and frictionless trade. Not so, says EU Chief Brexit Negotiator Michel Barnier. Barnier has made clear that the UK cannot have its desired legal autonomy without the free movement of EU citizens and the jurisdiction of the European Court of Justice and at the same time continue to enjoy access to the EU market and customs union privileges. Without access to the market and customs union, the UK faces tariffs and customs formalities that mean time and money for UK businesses and exporters. With access to the market and customs privileges, the UK cannot negotiate trade deals with other countries.

Only so many options exist for the future relationship of the UK with the EU. The so-called “Norway” option would mean continuing access to the EU market but without any say by the UK in the applicable rules and would entail customs procedures. The alternative “Turkey” option would mean a customs agreement but with controls to ensure compliance of goods and services with EU rules. In both cases, the UK would get less than it enjoys today and would not achieve its desired regulatory autonomy; moreover, the UK would remain blocked from negotiating free trade arrangements with other countries.

If initial negotiations on the rights of EU citizens, the UK’s financial obligations, and the complex Irish border issue go well, the EU and UK could be discussing the terms of their future relationship as early as the fall of this year. That may be a big “if”.