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 NICE reversed the position it took in draft guidance in August when it questioned the efficacy GW Pharma’s Epidiolex despite the European Medicines Agency approving it in September for the entire EU market.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.

The existing gulf between the U.S. and EU on pesticides regulation underscores a widely disparate policy approach. While the EU espouses the so-called precautionary principle for approving pesticides and setting maximum residue levels (MRLs) - thus taking protective action where scientific evidence is inconclusive but there is a presumption of risk to human or animal health or the environment -, science-based proof of harm has to be demonstrated for regulatory action to be taken in the U.S. Whereas the EU further maintains it is necessary to apply the precautionary principle to protect consumer health and the environment, it has been the object of strong pushback from the U.S., among other countries, for being trade inhibiting.

Accordingly, in a submission to the World Trade Organization (WTO) Council for Trade in Goods on 4 July 2019, the U.S. and 14 other countries (Brazil, Australia, Canada, Malaysia, Costa Rica, Peru, Colombia, Paraguay, Ecuador, Guatemala, Honduras, Dominican Republic, Nicaragua, Panama, and Uruguay) called on the EU to re-evaluate its approach to product approvals which “unnecessarily and inappropriately” restrict trade and to “use internationally accepted methods” of setting pesticide residue tolerances. The precautionary principle also recently has come under fire by Brazil within the context of the EU-Mercosur trade deal, with President of Brazil Jair Bolsonaro threatening to challenge EU at the WTO if the principle is used for “protectionist” purposes. Brazil is the world's largest user of pesticides and Bolsonaro, within the first 100 days of becoming President, authorized the registration of 152 previously banned pesticides, many of which are banned in the EU. In the meantime, Brazil and the U.S. have strengthened trade ties, with a free trade agreement reportedly in the pipeline.

The executive arm of the EU currently is undertaking a fitness check of regulations relating to pesticides approval and maximum allowed levels for pesticide residues which could lead to new or updated legislation. It is expected that the fitness check will reaffirm the EU’s commitment to the precautionary principle, focusing efforts on how to improve implementation of the legislation and addressing any gaps and administrative burdens. The new EU Commissioners, i.e. heads of the EU’s executive arm, taking office before the end of the year also have suggested they will take measures to bolster health and environmental protection measures, including by stimulating the take-up of low-risk and non-chemical alternatives, in particular those of biological origin, and reducing bureaucracy for these to be brought to the market quicker. EU’s trade policy further will be focused on protecting the environment by spreading environmentally friendly goods and incentivizing trade partners to implement measures to protect the environment and combat climate change.

In light of these developments, the regulatory gap on pesticides is set to widen. As new measures on pesticides can have profound impacts on global agricultural production and trade in key products, companies will have their eyes peeled on the European and American policy spaces. Increased regulatory divergence on pesticides also likely will flare up existing transatlantic trade sensitivities, which have long been strained over dissimilar food standards, and could become a point of tension in any post-Brexit UK-U.S. trade talks.

The EU-Canada interim appeal arbitration arrangement is grounded in Article 25 of the WTO’s Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), which contains rules for resolving disputes arising under WTO agreements. Article 25 DSU provides for “expeditious arbitration within the WTO as an alternative means of dispute settlement […] of certain disputes that concern issues that are clearly defined by both parties.” Under Article 25 DSU, parties agree in advance the procedures to be followed. The EU-Canada interim appeal arbitration arrangement thus provides in disputes between Canada and the EU for either party to appeal WTO panel reports to three arbitrators, which are chosen by the WTO’s Director-General from a pool of available former Appellate Body judges. The arrangement further specifies that the arbitration be governed by the provisions of the DSU and other rules and procedures applicable to WTO Appellate Review, and that a single arbitration panel should be formed to hear appeals filed by other WTO members on the same matter. Finally, the EU-Canada appeal arbitration procedure applies only if, and so long as, the WTO Appellate Body is unable to hear appeals.

The EU and Canada’s preferred course would be to unblock the WTO Appellate Body selection process. Work on WTO reforms to this end is ongoing. Reform leading to the re-establishment of the dispute settlement system remains critical in light of the fact that the U.S. might boycott any Article 25 DSU arbitration procedure. Furthermore, buy-in to the EU-Canada approach by other WTO members is uncertain. By activating the provision in Article 25 DSU, the EU and Canada nevertheless offer a way for WTO members to work around the impasse over WTO Appellate Body nominations. The two countries’ interim appeal arbitration arrangement can serve as template for similar arrangements, including a plurilateral arbitration agreement, should the WTO’s Appellate Body’s seats become vacant later this year.

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.

Agricultural would almost certainly be included in a comprehensive trade deal, as increased access to UK markets will be among the top U.S. objectives. Key to the success of future negotiations will be agreement on food standards. The EU, and thus the UK (for the time being), has different – and sometimes stricter – rules on food production and consumption than the U.S. and bans imports that do not conform to EU rules. Reportedly, the U.S. wants to create a joint agricultural science committee to decide on standards for goods traded between the UK and the U.S. as part of an agreement.

At the same time confidence-building was taking place in Washington, however, a political row developed back in the UK over the safety of potential food imports from the U.S. under a new trade agreement. Civil society organizations are raising concerns about food safety for UK citizens and the increased difficulty of exporting UK products to the EU if lower standards were to be adopted by the UK. UK producers also are balking at the prospect of competing with products they claim are processed or developed using unsafe methods. Lower standards, they argue, will lead to lower prices and increased competition, both at the expense of UK consumer safety. While so-called “chlorinated chicken” and hormone-treated beef are the headline-grabbing issues, different U.S. and EU rules on a range of issues including animal transport, minimum space requirements for farm livestock, food labeling, genetically modified foods, and the use of pesticides are likely to challenge negotiators on both sides of the Atlantic. Others see an opportunity for the UK to align its standards with science-based – as opposed to precautionary – principles, in the hopes of avoiding the problems that were faced during negotiations on standards in the now sidelined U.S.-EU Transatlantic Trade and Investment Partnership talks.

Trade Secretary Fox dismissed the outcry on chicken and beef as an obsession of the media and a mere detail in what would be lengthy potential trade negotiations. On the other hand, UK Environment Secretary Michael Gove responded that the UK would not enter into a trade agreement with the U.S. if it means lowering the UK’s environmental standards. As with many Brexit-related issues, how far the UK can and will go in a prospective free trade deal with the U.S. and other potential trading partners could depend on the nature of the future UK-EU relationship. Despite clear EU resistance, the UK will attempt to force a discussion of components of that future relationship as early as the end of August when Brexit negotiations resume in Brussels.

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”.