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Parliamentary scrutiny highlights continuing Brexit uncertainty for business and citizens in Britain and Northern Ireland

Michael Gove, MP – in his role of the Government Minister with overall responsibility for delivering a smooth Brexit on 31 December 2020 – was the sole witness to be interviewed in a two-hour meeting of Parliament’s European Union Select Committee last week.

This scrutiny session addressed the outcomes of ongoing negotiations between the UK and EU on the relationship from 1 January 2021, together with outcomes of the first formal meeting between the UK and EU focussed on the unique position of Northern Ireland.

Throughout the meeting, Gove made it clear that he was ‘not in a position’ to give definitive answers to the questions posed – peppering his responses with phrases such as “it is to be hoped…”, and “we can expect…” – a point picked up and criticised, politely but firmly, by the Committee towards the end of the meeting.

His overall message was the UK would need to concede to the EU ‘red-lines’ on a number of issues in order to secure a Brexit ‘deal’, such as: “we seek zero tariffs and zero quotas – but if we pay small number of tariffs, ‘there you go’.”

He also – as we forecast in our recent insight posting – confirmed that the price of a Brexit deal will mean that Northern Ireland becomes a separate trading area from the remainder of the United Kingdom – with different rules and reporting, and restrictions to the free movement of goods between Northern Ireland and mainland Britain.

Gove on Northern Ireland under a Brexit ‘deal’

Under the Northern Ireland Protocol, the province will effectively operate travel and trade as if were to remain in EU membership – following all the EU rules, regulations and operating procedures laid down in Brussels.

Questioned on Boris Johnson’s often repeated promise that Northern Ireland remains an integral part of the UK – with “unfettered access for goods” travelling between Great Britain and the province – Gove anticipates that ‘unfettered’ will not mean ‘free’ movement of goods.

All businesses – British and Northern Irish – trading into or out of the province will need to register on order to continue to trade. There will be reporting and physical checks – especially on animals and animal products – so called SPS checks – before or during shipment, or on arrival. Tariffs will be payable on any and all tariff-rated goods landed in Britain or Northern Ireland that originate from, or the end-destination is – or could be – Ireland.

Gove “hopes” that there will be a “light touch” in these new protocols – but that the: “proof of the pudding, is in the talking”. He was unable to say when guidelines for any new arrangements – or the new infrastructure for reporting of goods movements – will be available in order to for businesses to prepare. He committed to: “close engagement” and a public information campaign for business and citizens in Northern Ireland.

Gove was “not able to say” how Government might deal with increases to the cost of living in Northern Ireland. The NI Protocol is subject to agreement – and so the UK now finds itself: “waiting for agreement with the EU”.

Gove on EU and UK relationship under a Brexit ‘deal’

A number of Committee members addressed concerns that had been raised by EU chief negotiator, Michel Barnier’s statement at the end of the second round of EU-UK Brexit negotiations between officials. The suspicion in Brussels appears to be that the UK is ‘selectively negotiating’ – dragging its heels and refusing to engage in areas where it doesn’t want to compromise – such as access to UK fishing grounds and maintaining a ‘level playing field’ in future regulations on competition.

Gove confirmed the EU perspective and agreed that: “fisheries, the level playing field, governance, and Northern Ireland remain areas of dispute”.

Gove was closely questioned on whether the UK would apply for an extension to the Brexit ‘transition period’ – as allowed for in Article 218 of the EU Treaty – given that political leaders across Europe are fully focussed on dealing with coronavirus at the moment, and likely to be so until the end of Brexit transition at midnight on 31 December 2020.

When asked: “what if EU asks for extension due to Covid”, Gove said he: “cannot imagine anything but us saying no.” He explained the difference between a “real-time pandemic that is developing every day, compared to choosing a scenario from those already in place, for example, between the EU and the rest-of-the-World”.

He referred to the clause included in the Withdrawal Act that sets “in law” the end date of transition as 31 December 2020. Gove commented that: “deadlines concentrate minds” and that to: “perpetuate negotiations and maintain transition, means we [continue to] pay into the EU.” Furthermore: “as Europe exits the Covid, we will want UK to go its own way.”

The Committee expressed its disappointment at the Government’s intention of sticking to the date come what may – especially as Parliament granted exceptional powers to deal with Covid-19 – and felt that the Government should not dismiss ways of mitigating a “second overlay shock” for businesses and citizens.

Should the negotiations fail to reach agreement on a Brexit ‘deal’, Gove remains: “confident that business will be prepared” – as they are: “already dealing with and adjusting supply chains” due to the Covid crisis. Further, there is a: “strong incentive for EU to maintain an open flow” of goods and services. He views ‘no-deal’ as “no jeopardy” with “no let or hinderance to, for example, pharmaceuticals and essentials – and we’re building capacity now”.

The UK Government is concerned that should the UK continues in transition – and, thus, under EU jurisdiction it would be subject to the next 6-year ‘Multi-annual Financial Framework’ – the next medium-term budget-round that comes into effect on 1 January. The UK would have “no voice” and, thus: “no idea of what the bill would be – and no say over it.”

Furthermore, the UK would have no say in how EU might change its laws in order to deal with outcomes of Covid-19 – but would “be bound to follow it” – cutting down the UK’s freedom to respond in any way we might need.

Although there had been some discussion about an ‘assembly’ to oversee future relationship, the UK Government would not accept this – preferring to have a number of ‘committees’ instead.

On the issue of safeguarding the rights of UK citizens living and working and across the EU, Gove anticipates that the European Commission will: “talk to member states” and it will be raised by the UK as an open issue at next joint committee.

Addressing concerns raised by a number of business sectors about the shape of a potential Brexit ‘deal’, Gove said that the UK was: “not looking for a bespoke arrangement – rather a series of off-the-shelf arrangements – for instance, Canada-EU for trade; Norway-EU for fisheries” and so forth.

Fisheries is where, said Gove, the: EU’s ask is most ambitious”. The EU cannot continue to access as they do under the common fisheries policy – which, in any event: “hasn’t been successful” in addressing either “economic or environment” issues. The UK will now be free to: “do something that addresses both issues – as an independent coastal state”.

With or without a ‘deal, the issue of ‘internal security’: “may not have fully concluded by 31 December – it now depends on EU.” It is, said Gove within the “EU’s gift on Schengen – but only if we bow to the European Court of Justice”. He hopes that we can conclude arrangements for mutual data exchange – but that this is a decision for the EU.

The Banking and Insurance financial sector – key to the UK economy – has been asked for open access to continue to work and trade with Europe. To do so UK regulation and standards for the industry must be equal to – or higher than – EU requirements. EU law allows countries to be granted ‘equivalence’. Asked whether the EU will grant ‘equivalence to the UK by 31 December” Gove thinks that: “It should do”. He sees it as “relatively straight-forward” given that the we are starting from the same position today. If not granted, he commented that the: “EU lose access to UK capital market and its interest rates” which he considers would be an ”own goal.” He acknowledged that it would be “sub-optimal” for the UK. However, he is confident that the UK can manage future divergence in the finance sector that is: “used to adapting”. For instance, the UK did not enter the euro – which was: “thought by some to be a mistake – but proved not to be so – due to the alchemy” of the City.

Gove feels the: “chances are small” that the UK will share a common set of rules with the EU on ‘state aid’ – rather that: “we will be WTO compliant. We will not accept EU supervision of our state aid. We retain right to intervene – witness what we did regarding Covid.”

Asked about why the UK had requested that the existing EU Office in Belfast be closed, he said that as an independent state, it now fell to the UK alone to govern.

As the UK becomes a ‘third country’ on 1 January, policing and justice will increasingly be “different to the EU” and it was inappropriate to continue using the EU ‘off-the-peg’ model. Gove accepted the challenge of the Committee and acknowledged that we are in a short time scale but assured them that “we are making provisions” to protect UK and its citizens.

Gove was challenged on his repeated use of: “I would hope so…” on so many areas. He was asked that mitigation was planned if there were no agreement – and reminded that safety of citizens is crucial. “We do not want a no-deal cliff edge…it is not good enough to ‘hope’ and ‘use best endeavours’. He noted that the border-force may need to be: “stepped up”.

Further, that had already been: “some exchanges outside EU structures”, for example, on Anti-Money-Laundering where the UK relies on both EU and wider international information exchange.

Asked about progress on ‘third country trade deals’, Gove said that: “given goodwill, there is no reason not to expect a good outcome – for example, the US ‘agri-food’ industry needs to export to UK.”

Drawing the meeting to a close, Gove was questioned on who the Government was accountable to – and specifically on how Parliament was going to be able to scrutinise them in the restricted timescale of the negotiations and decision making, Mr Gove committed to providing progress updates. He acknowledged that statements are not scrutiny, and said that the process was: “inevitably imperfect!”

Key Dates:

  • 11-15 May: Third round of UK/EU negotiations on the future relationship.
  • 1-4 June: Fourth – and final – round of UK/EU negotiations on the future relationship.
  • June: UK and EU high level conference to take stock of the progress of the future relationship negotiations.
  • 1 July: Deadline for the Joint Committee to decide if the transition period should be extended.
  • 31 December 2020: Date in law for the end of the transition period.

References:

https://parliamentlive.tv/event/index/8b6c23fb-0399-40ce-8378-c4a32b529375

https://lordslibrary.parliament.uk/research-briefings/lln-2020-0096/

Questionable whether British businesses will be ready for Brexit on 31 December – and situation even worse for Northern Ireland

Just 878 firms have received assistance with preparing for Brexit – out of the Government’s estimate of 250,000 businesses that need to make changes if they are to continue to trade with the EU – from 1 January 2021 to trade between Britain and Northern Ireland, and vice versa.

The British Chambers of Commerce says the government has “not invested enough” in training for companies faced with new customs requirements and paperwork to complete.

Companies presently trading outside the EU will have some experience of completing the regulatory checks, reporting requirements and, where necessary, the dealing with payment of trade tariffs. HMRC estimates, however, that between 150,000 and 250,000 companies who presently trade only within the EU will be filling in customs forms for the first time.

Planning for Brexit is “not possible” at the same time as navigating the coronavirus crisis according to Alex Veitch, head of international policy at the Freight Trade Association. Jobs which are crucial to preparing Brexit have been furloughed.

Liam Smyth, director of international trade at the British Chambers of Commerce: “Whilst traders are focussed on survival and working out how to deal with the impact of coronavirus, the problem of making millions more customs declarations at the end of the transition period has not gone away.” Traffic will grind to a halt if goods cannot clear by new customs requirements.

For a fee, businesses without in-house capacity to fill in customs paperwork may use an ‘intermediary’ to help them after the end of the transition period. 403 of the 878 companies to have received assistance to date are customs intermediaries. Brexit Minister, Michael Gove, endorsed a suggestion that the UK could well need a further 50,000 customs agents.

Meanwhile, with just 8 months to go until Brexit, the first meeting of the joint UK and EU committee on implementing a Brexit deal in Northern Ireland has been held. Northern Ireland will operate under different trade regulations to other parts of the UK. The UK has said that this approach “will be focused on protecting the Belfast/Good Friday Agreement and gains of the peace process” – while preserving Northern Ireland as an integral part of the United Kingdom.

At the end of the Brexit ‘transition period’ on 31 December, the England, Wales and Scotland will leave the EU’s customs union. Northern Ireland, on the other hand, will continue to follow EU rules on agricultural and manufactured goods – and will also continue to enforce the EU’s customs code at its ports. This effectively sets up a new customs frontier for all good moving between mainland Britain and Northern Ireland – and vice versa.

If there is ‘no-deal’ between the UK and EU, a ‘hard’ border for goods will need to be established between Ireland and Northern Ireland. People may still be able to travel across the border under the ‘Common Travel Area’ arrangements set up in 1922.

We reported in a previous article that the EU has expressed concerns that the UK is not moving quickly enough to prepare for new checks. Michel Barnier: “The exchanges in the specialised committee now urgently need to be followed up by tangible measures”.

The outcomes of the Joint EU-UK Committee meeting were subject to Parliamentary scrutiny on 30 April by the Northern Ireland Affairs Committee. MPs called on industry experts and HMRC to give evidence. The two-hour detailed session highlighted the fact that there are many key issues need to be resolved by Government if internal flow and trade between Northern Ireland and the rest of Britain is to continue anywhere near as freely as it does today.

This throws doubt on the Prime Minister’s and Michael Gove’s repeated assertions that there would be “unfettered access” inside the United Kingdom.

The committee looked at customs arrangements for goods moving in both directions between Northern Ireland and Great Britain under the revised Northern Ireland Protocol. This includes:

  • import-export requirements and customs checks, processes and declarations;
  • whether the revised Northern Ireland Protocol will allow goods produced in Northern Ireland unfettered access to the rest of the UK internal market;
  • what customs checks, processes, declarations and infrastructure improvements will need to be implemented under the revised Protocol by businesses and customs authorities in Northern Ireland mainland Britain in order to export goods between Northern Ireland to Britain and vice versa;
  • whether the UK has sufficient customs agents, customs officials, and veterinarians to facilitate the new customs arrangements;
  • what effect the new customs arrangements will have on the volume and profitability of trade between Northern Ireland and Great Britain and vice-versa;
  • what potential economic effects the revised Protocol will have on Northern Ireland; and
  • any other issues and challenges arising from the implementation of the Northern Ireland Protocol.

It was clear that witnesses agreed with EU’s chief Brexit negotiator, Michel Barnier, that with Northern Ireland being at he same time part of EU Customs Union while also part of UK customs area is “very complex” from Customs point of view.

It will have to operate two sets of standards in parallel – especially onerous for food, chemicals and animal related products under ‘Sanitary and phytosanitary’ (SPS) requirements. There is clear evidence that the additional costs of dealing with regulations will drive up costs – in a region where the general population has a lower disposable income compared to the remainder of the UK. Goods moving for retail sale accounts for 70% by value of goods entering Northern Ireland.

The impact was illustrated by taking a lorry heading to a supermarket at random – and looking at its manifest. There were 1392 products on board.

As far as declarations and paperwork are concerned, in extremis, each will need a separate ‘export declaration’ which presently costs between £15-£56 per item. Of the 1392 items, 500 were of animal origin, requiring an SPS based ‘export health certificate’ – presently each costing around £200.

As far as trade tariffs are concerned, items fell into many different WTO ‘tariff codes’ – payable by the importer at the point of entry – and not, as with some other taxes, paid at the point of sale – resulting in a significant cashflow issue.

In addition to certification costs, many more staff are needed to complete the paperwork. The additional new costs will mean goods becoming unprofitable.

The UK Government’s mixed messages are creating confusion – several references were made to the Prime Minister’s repeated assurances of “unfettered access”. The reality is different – no clear indication as to how the new regime will work, not how the additional costs might be met. There has been little engagement with the trade bodies in Northern Ireland – and none with UK businesses trading with the Province according the MPs on the scrutiny committee. Discussions have been kept within the civil service and what information has been forthcoming about how future arrangements might look was said to be “bureaucratic and civil service heavy”.

There was reference to responding to Covid-19, necessarily, taking up all available energy and focus, “an interrupt to preparations”.

HMRC reported that they were aiming for “minimum intervention”. The Protocol allows them to grant ‘unfettered’ movement of goods providing it is intra-UK and with an end destination of Northern Ireland. However, they conceded that there is no way to know this from looking at the outside of a wagon. They will need at least some ‘basic data’ in order to make a judgement. As the end destination is immaterial within EU at present, there is no recorded data to that might help assess the extent of future reporting requirements.

HMRC conceded that as present, there were no thoughts yet on how “Red” and “Green” lanes will operate in ports on either side of the Irish Sea – ‘procedurally, legally or practicality’.

There was speculation as to whether the ‘Trusted Trader’ scheme could be used – although it was pointed out that this a costly process and registration can take up to a year.

Good in transit between the UK and Ireland often use the shorter crossing between the mainland and Northern Ireland. Any additional burdens of costs and delays will drive transport towards direct crossings to Ireland and impact on the Northern Ireland ports and economies. Additionally as the UK begins to conclude trade deals beyond the EU, there will be a requirement for proof of origin in order to comply with WTO rules.

Chair of the Committee, Simon Hoare MP, noted the heartfelt “cri-de-coeur” for information from all sides.

There was no witness able to represent the Northern Ireland Fishing Industry which the Chairman noted as a gap to be addressed.

It was clear that the revised ‘Protocol’ of October 2019 – with its promise of ‘unfettered access’ – may have to begin operation ‘working by exception’ in January 2021 – allowing free movement of good unless HMRC have a specific reason to believe it is not an intra-UK movement – albeit that there is not yet a published list of what will comprise a reportable product.

There was an acceptance that the Protocol as part of an overall UK and EU Brexit ‘deal is better than a ‘no-deal’ scenario – but not much better.

‘No-deal’ means that the Protocol won’t apply. This will mean implementing a ‘hard border’. A number of observations on the UK stance – as viewed from outside the negotiating team – felt like the UK Government was “running down the clock” on reaching a deal with the EU. There were stark warnings that the socio-economic impact of a no-deal Brexit will “hit the people of Northern Ireland hardest”.

There was unanimity that Brexit must not carry a “penalty for being a citizen of Northern Ireland – effectively a ‘tax on citizenship’.

There was doubt expressed that there is time to recruit and enough vets and customs officers before the end of the year. And the inevitable conclusion drawn between more officers meaning more bureaucracy leading to more costs. In 8 months. Trade that is not ‘unfettered’ means the process has failed.

The impact of Covid-19 should not be ignored nor underestimated: it has demonstrated the ‘fragility of supply chains and consumed resources needed to prepare for Brexit. The impact will not be evident by December, nor yet will we know the ‘new normal’. The Northern Ireland economy is “about slots on boats, and a missed boat isn’t only cost – it’s about broken supply”.

References:

https://www.parliamentlive.tv/Event/Index/667f5b0e-2e89-463c-a9ce-e71737c9c572

Figures obtained by the BBC under freedom of information show 878 firms have received assistance with preparing for Brexit.

 

Odds increase for a ‘no-deal’ Brexit transition in December

Standing in for the Prime Minister at PMQ’s yesterday, 29 April, Foreign Secretary, Dominique Raab re-confirmed that the UK Government had no intention of delaying the final transition step in the Brexit process beyond the presently scheduled date of 31 December 2020. The Leader of the SNP, Ian Blackford, had asked was it not better to deploy the extension to the transition period in order to focus the nation’s efforts on dealing with the Coronavirus pandemic. The transition to complete independence from the EU will add yet more uncertainty to an already unique unstable and unpredictable economic and social environment.

His question comes as from all sides – the EU, the wider Parliamentary scrutiny committees, and industry bodies – concern is growing that the UK risks crashing out with a ‘deal’ and in a climate that means preparations in place for a smooth transition will not be in place.

Chair of the Committee on the Future Relationship with the European Union, Hilary Benn MP, set five questions to the Minister in charge of Brexit arrangements, Michael Gove, Chancellor of the Duchy of Lancaster, to report progress on:

  • the negotiations on the ‘Future Relationship’ between the EU and UK – along with his current assessment of the chances of agreement in all the areas that the UK wishes to have a relationship with the EU by the December deadline;
  • implementation of the ‘Withdrawal Agreement’ – and in particular the timetable for establishing the governance structures, including that for the Ireland/Northern Ireland Protocol – and the UK’s policy for reporting on those discussions;
  • the arrangements to identify goods moving from Great Britain to Northern Ireland that may be at risk of subsequently entering the EU;
  • Government and business preparedness to implement the Future Relationship – and the mechanisms that are in place to enable the public and private sector to consult and feedback as the negotiations progress;
  • the list of the EU agencies and programmes the UK currently participates in – and an indication of whether the Government is seeking to continue this participation after the transition period, and on what terms.

Gove’s response was non-specific, as illustrated with references such as: “The Government and Civil Service are working hard to deliver a complex and challenging portfolio of work to ensure the UK is well prepared for the end of the transition period. This Government has a track record of preparedness on these matters” – and – “We will discuss with the EU how best to manage our friendly relations, but any solution has to respect our red line of no commitments to follow EU law and no acceptance of the jurisdiction of the CJEU. There are limited options for third country membership of EU bodies, and we have been clear we shall be operating on the basis of existing precedents.”

The response was also at odds with official reports from the second round of negotiations between the EU and UK – which were held ‘virtually’ due to Coronavirus restrictions – with little progress reported by either side.

View from the European Commission

Michel Barnier, EU chief negotiator, in his post-discussions press release: “In recent days, the UK government has made clear that it would refuse any extension of the transition period. We take note of this choice. My recommendation is, therefore, that we work hard until June and think carefully about our joint response to this question of extension taking into account the economic situation and the consequences of our decisions.

“Right now though, the consequence of the United Kingdom’s decision is that the clock is ticking.

“We have just 8 months ahead of us to advance on three workstreams: Ensuring the proper implementation of the Withdrawal Agreement; preparing ourselves to the negative economic consequences that the end of the transition period will entail; and negotiating a future partnership between the European Union and the United Kingdom with a view to limiting those negative consequences…

“…But now – if we want to make tangible progress – we need to move beyond clarifications and put more political dynamism into proposals aimed at building compromises…

“…The UK cannot refuse to extend the transition and, at the same time, slow down discussions on important areas…

“…June will also be an occasion do take stock on what real progress the UK has made for the implementation of the Protocol on Ireland and Northern Ireland. We need clear evidence that the UK is advancing with the introduction of the agreed customs procedures for goods entering Northern Ireland from Great Britain. We need clear evidence that the UK will be able to carry out all necessary sanitary and phytosanitary controls, as well as other regulatory checks on goods entering Northern Ireland from outside the EU as of January 2021, in 8 months’ time.”

View from the UK

David Frost, UK chief negotiator for post-Brexit relations with the EU is quoted in a press release from Downing Street as saying that: “Limited progress was made in bridging the gaps between us and the EU.

“Our assessment is that there was some promising convergence in the core areas of a Free Trade Agreement, for example on goods and services trade, and related issues such as energy, transport, and civil nuclear cooperation.

“We regret, however, that the detail of the EU’s offer on goods trade falls well short of recent precedent in FTAs it has agreed with other sovereign countries. This considerably reduces the practical value of the zero tariff zero quota aspiration we both share.

“There are also significant differences of principle in other areas. For example we will not make progress on the so called “level playing field” and the governance provisions until the EU drops its insistence on imposing conditions on the UK which are not found in the EU’s other trade agreements and which do not take account of the fact that we have left the EU as an independent state.

“On fisheries, the EU’s mandate appears to require us to accept a continuance of the current quotas agreed under the Common Fisheries Policy. We will only be able to make progress here on the basis of the reality that the UK will have the right to control access to its waters at the end of this year.

“We now need to move forward in a constructive fashion. The UK remains committed to a deal with a Free Trade Agreement at its core. We look forward to negotiating constructively in the next Round beginning on 11 May and to finding a balanced overall solution which reflects the political realities on both sides.”

Taken all-in-all, the odds of a no-deal Brexit on 31 December 2020 have increased – whilst Government, business and citizen preparedness will be lower than it was a year ago when – before they were re-deployed to dealing with Covid-19 – there were 5,000 civil servants engaged in preparing for the changeover.

Our team has focused for four years on identifying changes, consequential risks to continuity of business, and mitigation strategies. This expert support will be critical in the coming months – and is additional to, not instead of, dealing with the Coronavirus crisis.

We have included references to Northern Ireland in this article – and its unique situation of having a shared and open land border with the EU.  This will be subject of a future insight article and report on any findings of a specialised committee on the Northern Irish Protocol – scheduled to meet for the first time on 30 April.

Parliamentary scrutiny, reporting and decision-making processes

Incredibly – with only 8 weeks to go to the deadline for a decision on to apply for an extension to the transition period beyond 31 December – and almost 4 years since the referendum – a new structure for Parliamentary scrutiny of the Brexit arrangements has just been announced.

There are to be 5 Sub-Committees established: EU Environment; EU Goods; EU Security and Justice; EU Services; and International Agreements.

At the time of writing, each of these is no more than title and broad description of the area under focus (details, below). There are no lines of inquiry listed, no meetings planned, no news to report, or any output on record. Put this is the context of a decision in June on extending the transition and the lack of meaningful progress towards concluding a detailed framework to come into play on 1 January 2021.

EU Environment Sub-Committee: examines EU policy on agriculture, energy, climate change, the environment, food, fisheries, biosecurity and public health. It also considers the environmental aspects of the UK-EU level playing field.

EU Goods Sub-Committee: scrutinises the UK-EU negotiations on future trade in goods, including customs, the ‘level playing field’, consumer protections, public procurement and transport. It also considers EU policy and legislative proposals in these areas.

EU Security and Justice Sub-Committee: examines the Government’s approach the UK’s future relationship with the EU in respect of internal and external security matters, including criminal justice, policing, data-sharing and defence.

EU Services Sub-Committee: considers matters relating to the UK’s relationship with the EU in the services sector. This includes trade in financial and non-financial services, as well as UK-EU cooperation in the areas of science, education and culture. The Sub-Committee conducts inquiries in these areas and scrutinises relevant EU documents, asking questions and raising concerns through correspondence with UK Ministers.

EU International Agreements Sub-Committee: scrutinises all treaties that are laid before Parliament under the terms of the Constitutional Reform and Governance Act 2010 and considers the Government’s conduct of negotiations with states and other international partners.

Contact for further insight and support: john.shuttleworth@europartnership.com

References:

Head of EU negotiations, Michel Barnier: European Commission Press Release.

https://ec.europa.eu/commission/presscorner/detail/en/statement_20_739?utm_source=UK%20Parliament&utm_campaign=54d5efdcf9-EMAIL_CAMPAIGN_2019_02_15_02_16_COPY_38&utm_medium=email&utm_term=0_77d770157b-54d5efdcf9-102411877&mc_cid=54d5efdcf9&mc_eid=1037596b66

Head of UK negotiations, David Frost: Prime Minister’s Office Press Release.

https://no10media.blog.gov.uk/2020/04/24/statement-on-round-two-of-uk-eu-negotiations/?utm_source=UK+Parliament&utm_campaign=54d5efdcf9-EMAIL_CAMPAIGN_2019_02_15_02_16_COPY_38&utm_medium=email&utm_term=0_77d770157b-54d5efdcf9-102411877&mc_cid=54d5efdcf9&mc_eid=1037596b66

Coronavirus adds further uncertainty in the event of a no-deal Brexit on 31 December 2020

The UK ended its membership of the EU on 31 January 2020 – after 40 years of increasing integration. It has been recognised by all sides since the result of the ‘leave’ referendum was announced in June 2016, that a ‘no-deal’ Brexit was anything but a ‘clean’ break. Thousands of processes, laws, regulations, shared projects and freedoms would each have to be carefully examined by each side – and the future arrangements negotiated, legislated and practicalities put in place.

Experts had suggested that the negotiations would need several years – a figure of three was mooted – to complete Brexit planning in an orderly fashion. Meanwhile, the UK and EU agreed that things would continue pretty well as they were on 31 January to allow for an orderly severance – known as the ‘transition’ period.

One key difference of opinion is that, despite being offered an extension to the transition period to 31 December 2022 should it prove necessary, the UK Conservative Government legislated for a latest end date to transition of 31 December 2020 – in line with their winning election manifesto.

The scene was set – and talks between UK and EU opened in Brussels on 3 March…but came to an abrupt halt just a few days later due to the coronavirus outbreak. The previously agreed – and already tight – timetable for the talks cannot now be met.

In the light of the pandemic, external observers, including the International Monetary Fund, have suggested the UK and the EU should not “add to uncertainty” from coronavirus by refusing to extend the period to negotiate a post-Brexit trade deal.

IMF Managing director, Kristalina Georgieva, was asked in a BBC interview what she thought about the prospect of a ‘no-trade’ Brexit in 8 months time. She felt that because of the “unprecedented uncertainty” arising from the pandemic, it would be “wise not to add more on top of it…I really hope that all policymakers everywhere would be thinking about reducing uncertainty. It is tough as it is, let’s not make it any tougher,” she said.

The IMF chief had previously already backed the parties reaching a deal – warning that a no-deal Brexit would hit the UK economy by up to 5%.

Without a deal, the UK and EU will move overnight to trading on ‘World Trade Organisation’ terms from 1 January 2021 – including significant new taxes and checks on trade.

Background Detail

A UK-EU Withdrawal Agreement (WA) was concluded in October 2019, accompanied by a non-binding Political Declaration (PD).

The PD set out a framework for the future relationship. Together the WA and PD provide an outline scope and timetable for the future relationship negotiations.

The WA provides for the ‘transition’ period. During the transition, EU law (with a few exceptions) continues to apply to the UK. The transition period ends on 31 December 2020 – but could be extended “for up to one or two years” if both the UK and EU agree to do so by 1 July 2020.

The PD sets out the shared intent of the UK and EU to get future relationship agreements in place by 31 December 2020. The PD includes provision for a high level UK-EU meeting to take place in June 2020 to ‘assess progress’. It commits the UK and EU to using ‘best endeavours’ by 1 July 2020 to have: concluded and ratified a fisheries agreement; and conducted equivalence assessments. Decisions on reciprocal data exchange and adequacy of security are to be complete by the end of 2020.

Before the coronavirus hiatus, the proposed timeline envisaged negotiations being concluded before the 15-16 October 2020 summit of 27 EU leaders European Council meeting.

At the time that negotiations were suspended the joint UK and EU statement described the talks as “constructive”. They said that there was agreement in some areas – but there were differences in areas including: governance, “level playing field”, fisheries, and judicial and police co-operation in criminal matters.

Despite the suspension of talks, the UK Government has repeatedly stated that it will not ask for or agree to an extension of the transition period – referring to the Conservative manifesto commitment. Indeed, the Government went so far as to legislate to prohibit itself from agreeing an extension with the EU.

Labour Party leader, Keir Starmer, has said keeping to the deadline of ending the transition on 31 December seems “unlikely”. In addition to the IMF comment, above, there have been calls by many trade and commercial organisations along with other opposition parties and MEPs to extend the deadline.

On 18 March the Prime Minister said that he had no intention of changing the legislation that prevents the Government from agreeing an extension.

In Brussels the EU trade commissioner, Phil Hogan, has said that in every EU member state, civil servants were busy dealing with the Covid-19 situation. He explained there were not enough people “who are able to apply themselves to these intensive [Brexit] negotiations that are required to be concluded in such a short space of time”. He believes that a comprehensive trade deal could not be concluded in time for a 31 December deadline.

There is already one very significant impact of the UK no longer being an EU member state. It is no longer part in the EU’s decision-making and legislative processes. Nevertheless, under the terms of the Withdrawal Agreement, all new EU laws that come into force during the transition period will apply to the UK.

Prior to Brexit, the Government said most EU law due to come into force during the transition period would have been agreed while the UK was still an EU member state, with full representation and voting rights. However, the coronavirus pandemic means the EU is having to make certain policy decisions at speed and bring new rules into force more quickly than is often the case.

The Government was also planning to use the transition period to begin negotiating new trade deals with countries outside the EU to come into force after the transition period ends. The priority was to launch negotiations with the US, Australia, New Zealand and Japan. On 24 March, however, the Government said that whilst both sides remained fully committed to negotiating a free trade deal, the ‘unprecedented coronavirus situation’ means all sides are “looking at options to conduct the negotiations in a way that reflects the current situation and respects public health”. More pressure and uncertainty for business, trade and finance in a no-deal scenario on 31 December 2020.

Our team has modelled the requirements for managing a no-deal scenario – and businesses across the EU and UK now risk adding these onerous additional impediments to free trade to a global economy that has been undermined and weakened by the impacts of Covid-19.

References:

https://commonslibrary.parliament.uk/brexit/the-eu/what-is-happening-in-the-uk-eu-future-relationship-negotiations/?utm_source=Brexit+research+alerts&utm_campaign=d4a2554033-EMAIL_CAMPAIGN_2020_04_15_10_31&utm_medium=email&utm_term=0_a38e6fcad0-d4a2554033-103705509&mc_cid=d4a2554033&mc_eid=1037596b66

https://lordslibrary.parliament.uk/infocus/coronavirus-what-does-it-mean-for-the-brexit-transition-period-part-1-of-2/?utm_source=Brexit+research+alerts&utm_campaign=d4a2554033-EMAIL_CAMPAIGN_2020_04_15_10_31&utm_medium=email&utm_term=0_a38e6fcad0-d4a2554033-103705509&mc_cid=d4a2554033&mc_eid=1037596b66

 

 

 

European Parliament toughens goals for UK to reach a trade agreement

Following the UK’s departure from the EU with effect from 1 February 2020, the European Parliament has now set out a tough position for the negotiations on the future relationship between the UK and EU.

MEPs have put the price of Prime Minister Johnson’s ‘ambitious free-trade deal’ such that the UK must follow EU policies in a host of areas. These range from chemicals regulation to climate change, food labelling and subsidies for companies. Further, there will need to be ‘dynamic alignment’ – with the UK adopting European rules as they are introduced.

The wide-ranging resolution also called for measures to ensure that Brexit does not cause gender discrimination, for a crackdown on all British overseas territories that may act as ‘tax havens’, and for a joint UK-EU position at the upcoming UN climate conference in Glasgow in November.

The European Parliament is establishing the mandate for the EU’s chief negotiator, Michel Barnier. They go further than Barnier’s own draft, published in early February, where there was no mention of alignment – and definitely not the automatic kind.

A first revision came from EU from national governments. It added a reference to the need for a ‘level playing field’ – commitments by the UK to fair economic competition to prevent European businesses being undercut by their British rivals. The goal of ‘building on’ existing access to British waters for European fishing boats was upgraded to ‘upholding’ it; and the UK’s participation in the Galileo satellite positioning system was downgraded from ‘should’ to ‘could.’

MEPs have now gone a step further. The European Parliament can be ‘bad cop’ – allowing Barnier to say he can’t agree certain things ‘because the Parliament won’t accept them.’

Whilst MEPs were not willing to oppose the divorce deal, they will be tougher on any trade agreement that touches on Europe’s values and social model.

European integration started in the 1950s as a way for Germany to atone for its own nationalist and belligerent past. Its citizens were eager to subsume part of their identity in a ‘post-nationalist, rules-based, non-militarist and largely mercantile entity’ – in return for being accepted again by their neighbours. Occupied at the time by three of the Allied Powers, they had surrendered national sovereignty – so did not worry about ceding more of it to Brussels.

Meanwhile, post-Brexit, the agreed ‘financial settlement’ – often labelled the ‘exit bill’ or ‘divorce bill’ – is has come into operation.  The settlement is part of the Withdrawal Agreement, which is the legally binding treaty setting out the negotiated terms of the UK’s departure from the EU.

It sets out how the UK and EU are settling their outstanding financial commitments to each other – which financial commitments will be covered, the methodology for calculating the UK’s share and the payment schedule.

There is no definitive cost to the settlement. The final cost to the UK will depend on future events such as future exchange rates and EU budgets. Present estimates suggest a net cost to the UK of around €33 billion (£30 billion).

Much of this cost will come in the early years of the settlement, but the Office for Budget Responsibility – the UK’s public finances watchdog – has forecast that relatively small payments will continue until the mid-2060s.

The UK and EU have formally agreed some principles for the settlement:

  • no EU Member State should pay more or receive less because of the UK’s withdrawal from the EU;
  • the UK should pay its share of the commitments taken during its membership; and
  • the UK should neither pay more nor earlier than if it had remained a Member State. This means that the UK will make payments based on the outturns of EU budget.

The settlement can be split broadly into three components:

  1. During the transition period, until the end of 2020, the UK will pay into the EU budget almost as if it were a Member State. The UK will also receive funding from EU programmes– such as structural funding – as if it were a Member State.
  2. EU annual budgets commit to some future spending without making payments to recipients at the time. The commitments will become payments in the future. The UK will contribute towards the EU’s outstanding commitments as at 31 December 2020. Recipients in the UK will also receive funding for outstanding commitments made to them.
  3. The UK will share the financing of some EU liabilities as at the end of 2020, and any materialising contingent liabilities, and will receive back a share of some assets. The pensions of EU staff are likely to be the most significant liabilities for the UK, while the most significant item being returned to the UK is the capital it paid into the European Investment Bank (EIB).

Beyond these three components the UK has, for instance, agreed to continue to contribute to the EU’s main overseas aid programme – the European Development Fund – until the current programme ends. This programme is funded directly by Member States, rather than through the EU budget. Any UK contribution made via the EU will count towards its commitment to spend 0.7% of national income on overseas aid.

The UK net payments to the EU are estimated by the OBR as totalling £30 billion between 2020 and 2064:

  • 2020: £8 billion
  • Between 2021 and 2028: a total of £20 billion
  • Between 2029 and 2064: a total of £2 billion

Sources include: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8822?utm_source=R%26I+%28business+communications%29&utm_campaign=be6cf81b59-EMAIL_CAMPAIGN_2020_02_17_10_07&utm_medium=email&utm_term=0_4957411bec-be6cf81b59-102508873&mc_cid=be6cf81b59&mc_eid=1037596b66

Government announces new restrictions in UK-EU trading rules to come into effect on 1 January 2021

The UK government has, this week, published formal notice that it plans to introduce import controls on EU goods at the border from 23:00 GMT on 31 December 2020 – the end of the ‘Brexit transition period’ set in the Withdrawal Act passed by Parliament in January.

The decision was confirmed in a speech given by Michael Gove, Chancellor of the Duchy of Lancaster, at a Border Delivery Group stakeholder event. In a significant chance to the Government’s previous stance – all UK exports AND imports will be treated equally. This means that everyone that trades between the EU and GB – and vice versa – will have to submit customs declarations and will be liable to goods’ checks.

Gove believes that there is sufficient time between now and the end of the year for businesses to prepare – and announced that the policy of ‘easements’ put in place as a contingency for a potential ‘no-deal’ exit will not be reintroduced.

“We are leaving the EU’s customs union and single market, taking back control of our borders, and beginning to strike trade deals around the world.”

The Government notice sets out a number of reasons for implementing import controls:

  • to keep UK borders safe and secure so that it knows who’s coming in and how often, what they are bringing in, and why
  • to ensure that the UK treats all partners equally as it begins to negotiate our own trading arrangements with countries around the world
  • to ensure collection of the correct sums of customs, VAT and excise duties
  • The UK will reciprocate and enforce its own rules for goods entering the UK since the EU has said that it will enforce checks on UK goods entering the Eurozone. Business must prepare for border controls by making sure they have an Economic Operator Registration and Identification (EORI) number. They should look into how they will be making declarations – and consider, for example, using a customs agent.

The Government will ensure that ‘facilitations currently available to rest of the world traders’ will also be open to those trading between GB and EU.

Gove said: “The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.

“As a result of that we will be in a stronger position, not just to make sure that our economy succeeds outside the European Union but that we are in a position to take advantage of new trading relationships with the rest of the world.”

https://www.gov.uk/government/news/government-confirms-plans-to-introduce-import-controls

Gove was speaking to representatives of lobby groups, including the Freight Transport Association and British International Freight Association, in London on Monday 10 February.

He warned the logistics industry to prepare for ‘strict border controls between Britain and the European Union’ after Brexit.

There was an immediate response from trade and professional associations raising a wide range of concerns that trade will be disrupted. This included doubts about the Government’s ability to have electronic customs declarations systems in place, physical infrastructure to undertake checks on goods without disruption to traffic flows; sufficient experienced and trained personnel in place – including customs officers, vets and officials able to scrutinise for regulatory compliance.

Elsewhere, the tough stance is now almost certain to mean extra costs and delays for companies importing goods into the U.K. from Europe. In the Midlands, car-makers and aerospace companies, which rely on just-in-time delivery of parts, have been preparing plans to address vulnerabilities including hold-ups to just-in-time components and assemblies.

Bloomberg reports Shane Brennan, chief executive of the Cold Chain Federation – which represents businesses operating frozen and chilled storage distribution vehicles – as saying that: “It is now becoming clear that the very real threat of disruption to food trade is present. A dawning realization has to spread quickly through industry and government agencies about how much has to be done to be ready.”

Gove also told the meeting there would be “light-touch administration” of trade between Great Britain and Northern Ireland in both directions, according to three people present at the meeting, who asked not to be identified.

We note that Prime Minister, Boris Johnson, had previously maintained that there will be no checks on such trade. We also note that this chance in the UK stance that has profound implications for trade was not announced to Parliament – but via a presentation by a Minister and sketchy press release from the Cabinet Office.

The EU publishes its ‘red-lines’ for future Brexit negotiations

The UK is no longer a member of the European Union.

From the outset of discussions in 2017, both sides agreed that it was wise to allow a ‘status quo’ period of time after the UK left to settle the future long-term relationship. Three years was offered by the EU – but the UK Government has since legislated to limit this ‘transition’ period to 11 months, ending at 23:00 GMT on 31 December 2020 – whether or not an agreement is reached.

From that moment, the UK will no longer be treated as an EU member with free movement of people, goods, capital and finance.

As soon as Brexit was enacted, the European Commission – the body responsible from the EU side of the negotiations – has issued a recommendation to the European Council (comprising the 27 Heads of EU States) that sets out the terms of reference allowing them to open negotiations with the UK.

The principles are governed by Article 218 of the Consolidated Treaty on the Functioning of the European Union. Contact us if you want full details on the scope and terms of reference for negotiating with a ‘third country’ – and the UK became a ‘third country’ on 1 February 2020.

The next step is for the European Council to formally adopt the draft negotiating directives. This will formally authorise the Commission to open the negotiations as Union negotiator. Watch out for the EU ‘red lines’ – already in conflict with the UK’s own ‘red lines’.

The Commission’s recommendation is based on the existing European Council guidelines and conclusions – but takes into account the ‘Political Declaration’ that was negotiated and agreed between the EU and the UK in October 2019.

It includes a comprehensive proposal for negotiating directives, defining the scope and terms of the future partnership that the European Union envisages with the United Kingdom. These directives cover all areas of interest for the negotiations, including trade and economic cooperation, law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence, participation in Union programmes and other thematic areas of cooperation. A dedicated chapter on governance provides an outline for an overall governance framework covering all areas of economic and security cooperation.

Michel Barnier, the European Commission’s Chief Negotiator, said: “We will negotiate in good faith. The Commission will continue working very closely with the European Parliament and the Council. Our task will be to defend and advance the interests of our citizens and of our Union, while trying to find solutions that respect the UK’s choices.”

As the body delegated to be the EU negotiator, the European Commission intends to continue work in close coordination with the European Council and the European Parliament – as was the case during the negotiations for the Withdrawal Agreement.

President of the European Commission Ursula von der Leyen said: “It’s now time to get down to work. Time is short. We will negotiate in a fair and transparent manner, but we will defend EU interests, and the interests of our citizens, right until the end.”

This came as the European Commission on Monday, 3 February 2020 published a set of ‘Questions & Answers’ regarding the draft negotiating directives for a new partnership with the United Kingdom. For the avoidance of doubt, we publish them in full, below.

For insight and interpretation of these Q & As – and what it means for business, commerce and finance – please contact us for the implications on your sector and organisation.

POLITICAL ASPECTS

What has the Commission adopted today?

The European Commission has today adopted a recommendation to the Council to authorise it to open negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland, in accordance with Articles 218(3) and (4) TFEU and Article 101 EAEC.

This recommendation is based on existing European Council guidelines and conclusions, as well as the Political Declaration agreed between the EU and the United Kingdom in October 2019. It includes a comprehensive proposal for negotiating directives, defining the scope and terms of the future partnership that the European Union envisages with the United Kingdom.

What is the scope of these draft negotiating directives?

In line with the European Council guidelines of 23 March 2018 and the European Council conclusions of 13 December 2019, the directives cover all areas of interest for the negotiations, including trade and economic cooperation, law enforcement and judicial cooperation in criminal matters, foreign policy, security and defence, participation in Union programmes and other thematic areas of cooperation. A dedicated chapter on governance provides an outline for an overall governance framework covering all areas of economic and security cooperation.

Have you agreed with the United Kingdom yet about practical arrangements for the negotiations, such as language regime?

Practical issues, such as language regime and negotiation structure, will be agreed jointly between the EU and UK negotiators.

What are the next steps?

The recommendations are now with the Council for adoption. The General Affairs Council is scheduled to adopt the Decision authorising the opening of negotiationsand providing negotiating directives to the Commission on 25 February. Once this decision is adopted by the Council, the European Union will be ready to begin formal negotiations with the United Kingdom.

When will negotiations start?

The Commission is ready to begin negotiating once the Council authorises the opening of the negotiations. The first formal meeting between the EU and the UK negotiators is likely to take place at the beginning of March.

GENERAL QUESTIONS

Can you really negotiate everything by the end of the year?

The Commission intends to achieve as much as possible during the transition period. We are ready to work 24/7 to make the best out of the negotiations. It is possible to extend the transition period by 1 to 2 years. This decision must be taken jointly by the EU and the UK before 1 July.

Extending the transition period: if no decision is taken by July 2020, surely there is an alternative mechanism, if needs be?

If no decision has been taken by the Joint Committee before July 2020, there is no other legal basis for extending the transition beyond 2020.

Is there still a risk of a “no-deal” scenario at the end of the year?

As in every negotiation, the risk of not reaching an agreement is there. Regardless of whether a future partnership will be in place, all businesses need to prepare now for the end of the transition period, as the UK will no longer be in the Single Market or the Customs Union.

Will all issues in the negotiating directives be negotiated in parallel?

We will work on all topics in parallel. We will be particularly vigilant to progress in areas where the risk of disruption at the end of the transition period is particularly high, in case no agreement has been reached.

Why was this legal basis chosen for the negotiations? Does that mean that the agreement does not need to be approved by national parliaments?

Given the scope of the envisaged partnership, at this stage, the choice of Article 217 of TFEU as a legal basis is the most natural since it is the widest legal basis possible. It is also suitable in order to provide for an overarching governance framework, which is one of the EU’s objectives. Obviously, the legal basis can only be final once we know the content of the final agreement. What is important is to ensure that the future agreement can enter into force on 1 January 2021.

Will there be one agreement or several agreements?

The aim is to negotiate an ambitious and comprehensive partnership with the United Kingdom that can enter into force by the end of the transition period. The Commission’s intention is to negotiate that partnership as a package that comprises three main components:

  • general arrangements (including provisions on basic values, essential principles and on governance);
  • economic arrangements (including provisions on trade, level playing field guarantees and fisheries); and
  • security arrangements (including provisions on law enforcement and judicial cooperation in criminal matters, as well as on foreign policy, security and defence).

Will the new partnership be an ‘association agreement’ and how will such an agreement be ratified?

‘Association agreement’ is the term used in Article 217 of the Treaty on the Functioning of the European Union for an agreement ‘establishing an association involving reciprocal rights and obligations, common action and special procedure’. Article 217 TFEU allows for the closest possible partnership with a country that is not an EU member. There are many different types of association agreement, but what they all have in common is their comprehensive nature and the fact that they establish a long-term institutional framework. An association agreement must be approved by unanimity in the Council and requires the consent of the European Parliament before it can enter into force. Whether the future partnership must be ratified by national parliaments depends on its final content and can only be determined at the end of the negotiations.

How will you ensure unity during these negotiations?

Just as with the Article 50 negotiations on the UK’s withdrawal from the EU, the Commission will conduct these negotiations in continuous coordination with the Council and its preparatory bodies. It will consult and report to the preparatory bodies of the Council in a timely manner, and will provide all the necessary information and documents relating to the negotiations. The Commission will also keep the European Parliament fully informed of the negotiations. For Common Foreign and Security Policy matters, the Commission will furthermore conduct negotiations in agreement with the High Representative of the Union for Foreign Affairs and Security Policy.

Will EU negotiating positions be made public?

Yes, the Commission’s aim will be to ensure full transparency. This is also why the Commission has made today’s recommendation public.

What is the purpose of the High-Level Conference between the EU and the UK in June 2020?

The High-Level Conference in June, as foreseen by the Withdrawal Agreement, aims to take stock of the progress in negotiations. The Commission will also use the Conference to take stock of the state of implementation of the Withdrawal Agreement, in particular when it comes to citizens’ rights and the Protocol on Ireland and Northern Ireland.

Will the future agreement supersede the Protocol on Ireland and Northern Ireland?

Unlike earlier versions, the Protocol on Ireland and Northern Ireland agreed in October 2019 and which is a part of the Withdrawal Agreement is not a “backstop”. It was conceived as a stable and lasting solution. The Protocol will apply alongside any agreement on the future relationship. Nevertheless, it is clear that the terms of the future trading relationship between the EU and the United Kingdom – in terms of the shared ambition to have zero customs duties and quotas between the EU and the United Kingdom – will have some bearing on the practical application of the Protocol.

GOVERNANCE

How to ensure effective implementation of any future agreement?

For the agreement to be correctly implemented and applied, there must be effective governance arrangements with credible enforcement and compliance mechanisms, as of 1 January 2021. Where the future partnership relies on EU law, there must be a role for the European Court of Justice. Only the European Court of Justice can interpret EU law.

What would happen if the United Kingdom were to breach the future agreement?

Many international treaties have rules on how disputes between the parties must be resolved. The future agreement should also have such rules. The typical process is that the parties must first attempt to resolve their differences amicably through a process of ‘consultations’. If those attempts are unsuccessful, the dispute may be brought before an arbitration panel for a binding ruling. If a party continues to infringe the agreement, the other party can take action to safeguard its interests and to urge compliance. In certain situations, there should be a possibility for a party to act quickly to avoid irreparable harm. An important part of the negotiations with the United Kingdom will be about making sure that the rules governing disputes between the parties are clear and effective and that breaches can be remedied quickly.

What will be the role of the European Court of Justice?

The European Court of Justice is the final arbiter when it comes to the interpretation and application of rules of Union law. The future agreement must respect this by making sure that no other court, tribunal or arbitration panel set up by the parties may encroach upon the role of the Court of Justice. The precise role of the European Court of Justice under the future agreement will depend on the content of the future relationship with the United Kingdom.

Will there be sanctions if the UK does not play by the rules?

We are looking at the best possible safeguards to allow for a quick reaction and protection of the EU’s interests. The precise details and scope of the overall governance framework will depend on the content of the future relationship.

ECONOMIC PARTNERSHIP

How does the European Commission envisage the future economic partnership?

The envisaged partnership should contain comprehensive arrangements including a free trade area, with customs and regulatory cooperation, underpinned by robust commitments ensuring a level playing field for open and fair competition, as well as by effective management and supervision, dispute settlement and enforcement arrangements, including appropriate remedies.

What kind of customs cooperation do you foresee?

Within the framework of the EU’s Customs Code, including customs checks and controls and all other controls such as systematic sanitary and phytosanitary controls at the border, the envisaged partnership should aim at facilitating legitimate trade by making use of available facilitative arrangements and technologies and, while ensuring proper implementation of the Union Customs Code, where justified.

Customs authorities must be able to take effective measures at the border to enforce legitimate public policies (protection of health and safety of consumers, protecting businesses, for example regarding enforcement of intellectual property rights) and protect financial interests. Therefore, the customs cooperation that we envisage is, as is the case with our existing free trade agreements, limited and in any event cannot be described as going in the direction of frictionless trade. Only membership of the Single Market and the Customs Union can ensure such frictionless trade.

Will a free trade agreement (FTA) allow goods to be exchanged between the UK and the EU as they are today?

Trading under FTA terms, even a so-called “best in class” FTA, will be of a very different nature compared to the frictionless trade enabled by the EU’s Customs Union and Single Market. In an FTA context, rules of origin and customs formalities will apply; all imports will need to comply with the rules of the importing party and will be subject to regulatory checks and controls for safety, health and other public policy purposes.

That being said, the proposal we are ready to table, as the Political Declaration already announced, will be of an unprecedented nature for an FTA: no tariffs and no quotas across all goods, including agricultural and fisheries products.

Because these conditions are exceptional, this is conditioned on the existence of robust provisions ensuring a level-playing field, guaranteeing competition between economic operators from both sides. In addition, these exceptional conditions of no tariffs and no quotas across all sectors can only be tabled if a fisheries agreement that includes provisions on access to waters is concluded.

Without an FTA in place by the end of transition, tariffs and quotas will apply to all trade in goods between the EU and the UK. In this scenario, we must apply what is known as “MFN tariffs” to the UK. Indeed, under the WTO Most Favoured Nation (MFN) principle, benefits given to one trading partner need to be extended also to others and only a trade agreement or Customs Union can be an exception to that rule. Therefore, without an FTA in place as of 1 January 2021, economic operators and consumers should not expect privileged treatment when dealing with the UK.

What does “level playing-field” mean?

The EU is ready to offer a high-ambition trade deal, with zero tariffs and zero quotas on all goods entering our single market of 450 million people. However, because of our high levels of economic inter-connectedness, the value of trade and geographical proximity, the draft negotiating directives also make clear that this exceptional offer is conditional on robust level playing field safeguards to avoid unfair competitive advantages the UK could derive from regulatory divergence (lowering of standards) or subsidisation of UK operators. In the Political Declaration, the EU and the UK already agreed that they would avoid unfair competitive advantages. We must now agree on effective assurances to guarantee high standards on social, environmental, tax and state aid matters.

What if the UK will not commit to any level playing field guarantees?

We agreed in the Political Declaration that the scope and depth of the future relationship will depend on the level playing field commitments that the UK is willing to undertake. The EU will not agree on an FTA without solid level playing field guarantees and an agreement on fisheries. Our geographic proximity and economic interconnectedness are such that it is in our mutual interest to agree on fair competition standards between us, as well as on their effective enforcement. Given the current very close integration of British companies with the Single Market and the UK’s desire for zero tariffs and zero quotas for goods, it is only fair that the EU requires commensurately strong level playing field guarantees. This will also be in the interest of British consumers and businesses. The EU is by far the greatest export market for UK businesses and most UK imports are from the EU.

Will sanitary and phytosanitary requirements (SPS) change?

There will be no changes to the Union’s food safety standards. Union law, including systematic controls, will fully apply to imported food, animals and plants without exceptions or equivalency. High-level SPS standards will be safeguarded. As in existing FTAs, relations will be built on and will go beyond existing multilateral instruments [World Trade Organization (WTO), Codex Alimentarius, International Plant Protection Convention (IPPO) and World Organisation for Animal Health (OIE)] recommendation and requirements. Co-operation should be ensured in combating antimicrobial resistance as well as protecting animal welfare and ensuring sustainable food systems.

Will the EU allow for mutual recognition of rules and standards?

By choosing to leave the Single Market, the UK has opted to have the status of a third country regarding EU law. The EU and UK will therefore form separate markets and distinct legal orders, after the end of the transition period. The future relationship will therefore result in a lower level of integration than is the case today. The future economic partnership on goods will seek to facilitate trade as far as possible but this cannot be expected to replicate the same frictionless conditions of trade that exist between EU Member States. Such conditions are based on adherence, by Member States, to a full ‘ecosystem’ of rules, including the Treaties, and their supervision and enforcement, including the jurisdictional system under the Court of Justice of the EU. Mutual recognition can only be granted between participants to that ecosystem.

What can be achieved on services in the context of an FTA?

We can aim at a level of liberalisation of trade in services beyond the baseline provided by our existing WTO GATS commitments, similarly to the approach in our most recent FTAs. As requested under GATS rules, the FTA would need to cover most services sectors, such as telecommunication services or business services to name a few. But, as in any FTA negotiated by the EU, there will be exceptions: for instance, the EU normally excludes audiovisual services from the provisions on liberalisation. Under its FTAs, the EU maintains its right to regulate its own markets and its full regulatory autonomy. We will be particularly attentive to include provisions that preserve the EU’s public services. This preservation of our right to regulate will be paramount in all sectors, and a good illustration is financial services. Indeed, in that area, the key instruments the EU and the UK will use in this area are their respective unilateral equivalence frameworks, as laid down in their legislation. The FTA will cover financial services, but it will not go beyond what the EU offers in its FTAs with other third countries. It will also contain the prudential carve-out.

Finally, it should be recalled that while free trade agreements’ provisions are important in the area of services, a number of other rules impact trade in services. Some of them imply unilateral decisions such as EU regimes on data protection and financial services regulation and supervision. The EU intends to assess the UK for adequacy on data protection and equivalence on financial services. That is what we have agreed in the Political Declaration. Decisions should be reciprocal. Services are also closely linked to the free movement of people (professionals such as lawyers, consultants, accountants etc.), which the UK explicitly intends to stop post-Brexit. Those elements should be taken into account too when assessing priorities for the coming negotiations.

Will audiovisual services and public services be covered?

The EU always excludes certain sectors (e.g. audiovisual, public services) from its FTAs and considers carefully any commitments made in the other sectors. The EU also needs to consider the Most Favoured Nation commitment it has taken that would extend the benefits of the agreement with the UK to other FTA partners such as Canada, Japan and Korea.

What about roaming?

The provisions on roaming-like-at-home will stop applying in respect of the UK. When traveling to the UK, the situation will be similar to that of travelling to Switzerland: roaming changes may apply. Telecoms operators have obligations to be transparent as to the tariffs they charge.

What do you foresee on digital trade?

The objective is to facilitate digital trade, such as e-commerce, while respecting consumer rights and personal data protection rights. This is something that the EU has been doing in its FTAs for long time.

Will financial services be covered by the FTA?

Yes, we usually cover financial services in EU FTAs. The standard approach is to have limited market access commitments, notably on cross-border supply of financial services. In addition, even where there is market access the EU will continue to apply its host state-rules to incoming providers. Finally, like in all FTAs we will have a prudential carve-out that allows to Union to adopt any measure for prudential reasons.

The EU’s equivalence regimes are the instruments that the EU will use to regulate interactions with the UK in the financial services area. The EU’s equivalence frameworks only provide for the possibility to give market access in a few cases (investment firms, trading venues, central clearing parties). They do not cover all financial services. The granting (or not granting) of equivalence is a unilateral measure by the EU. Equivalence can be withdrawn at any time. Decisions should be reciprocal.

What are you proposing on geographical indications, and how does that differ from the Withdrawal Agreement?

All EU geographical indications registered on 31.12.2020 (the “stock”) will be protected in the United Kingdom as a result of the Withdrawal Agreement. However, beyond this, the future FTA should provide a framework to ensure the protection of newly registered geographical indications at the same level as that guaranteed by the Withdrawal Agreement.

What are you proposing on public procurement?

We aim at securing procurement opportunities on top of those guaranteed by the UK’s accession to the WTO Government Procurement Agreement (the UK is in the process of acceding to that agreement).

Mobility: will EU and UK citizens still be able to move freely?

The UK has decided to end the free movement of persons and has limited ambition for specific arrangements with the EU on the mobility of persons.

This does not mean that mobility will stop. Today, citizens move from one country to another to live, work, study and carry out research. However, after the end of the transition period, mobility to and from the UK will be different and will happen under different rules than before when free movement rules applied. What exactly those rules will be depends on the outcome of the negotiations but our objective is to ensure reciprocity and no discrimination between EU nationals.

How about short-term trips by EU citizens to the UK and by UK nationals to the EU?

After the end of the transition period, the EU will not require visas for short stays (less than 90 days in 180 days) for UK nationals independently of the purpose of the trip (except in case of paid work), so short-term tourists, students, journalists, trainees, etc. from the UK will be able to come visa free.

This arrangement is dependent on the UK also granting full visa reciprocity to the nationals of all EU Member States travelling to the UK.

Will there be different entry checks on UK nationals when entering the EU?

Yes, UK nationals will be treated as third-country nationals as of the end of the transition period. There is no legal alternative under the Schengen acquis. This means that the entry conditions for third-country nationals and the procedures applicable to the crossing of the EU external borders will also apply to UK nationals.

Concretely, this means that: UK nationals will no longer be able to use the designated lanes at Border Crossing Points (EU, EEA, CH); their passports will be subject to stamping upon entry and exit from the Schengen Area; they will be subject to checks including checks against databases upon entry and exit; they will be subject to the EU’s Entry/Exit-System (EES) and the European Travel Information and Authorisation System (ETIAS) when these systems will be deployed in the future.

The entry checks on UK nationals will include verification of the possession of a valid travel document for crossing the border; the duration of the stay; the purpose (e.g. tourism or work) and the conditions of the intended stay (e.g. accommodation, internal travels); the existence of sufficient means of subsistence (i.e. having sufficient means to pay for the intended stay and return travel).

How about the possibility of EU citizens to move to the UK and UK nationals to the EU for longer terms (longer than 90 days)?

After the end of the transition period, mobility to and from the UK will be different and will happen under different rules than before when EU free movement rules applied. What exactly those rules will be depends on the outcome of the negotiations.

Nevertheless, even in the absence of specific provisions, the default rules of the EU and the UK would cover the entry and stay for different purposes. On the EU side, national rules and the EU’s legal migration acquis for long stays sets out the conditions of entry and stay in the EU for categories such as students, researchers, some types of workers, family members, long-term residents, au pairs, volunteers etc. These rules apply in the same way to citizens of all third countries, including the UK when it becomes a third country. For stays of less than 90 days in a 180-day period, the Schengen acquis applies. On the UK side, its national migration regime would apply.

What do you foresee on mobility of citizens within the FTA?

As regards mobility, FTAs only deal with the entry and temporary stay of natural persons for business purposes in defined areas. However, host State rules continue to apply as regards conditions for entry and stay, access to labour market and working conditions.

What do you foresee on social security coordination?

In order to facilitate the future mobility of persons, appropriate social security coordination will also need to be agreed. The scope of social security coordination rules in the future relations with the UK should take into account the extent of the specific mobility arrangements that will be agreed with the UK. These social security coordination arrangements should be based on non-discrimination between EU Member States and full reciprocity.

It is noted that one of the stated objectives of Brexit was to stop the free movement of citizens. This means that in any event, the situation on citizens’ mobility after 1 January 2021 will be very different compared to today.

Will smooth transport links still be ensured?

In the future relationship, the EU will aim to ensure a continued flow of goods and persons between the UK and the EU, but the UK, as a third country, does not have the same rights as a Member State.

The situation is very different depending on the mode of transport: Ensuring connectivity for air traffic and road haulage will require an agreement, e.g. on market access. Without an agreement, there is no fall-back to allow traffic to continue.

What kind of an air transport agreement do you foresee?

In terms of air transport, UK operators currently benefit from full market access in the EU: a UK airline can offer air services within the EU without restrictions. Without an EU-UK partnership in aviation, and in absence of unilateral contingency measures, no flight would take place between the UK and the EU as the WTO does not offer any fall-back for air services.

We are aiming for an aviation relationship that allows for continued connectivity and ensures a high level of aviation safety and security standards, air traffic management, and sector specific level playing field provisions to allow for open and fair competition, including appropriate and relevant consumer protection requirements and social standards.

What do you foresee on road transport?

In the area of road transport, we are aiming for a system of open market access allowing journeys between the UK and the EU, while preserving the integrity of the internal market for road haulage services. We also need to ensure sector specific level playing field provisions, in particular as regards the rules that affect our operators, our drivers and our vehicles.

Will you need an agreement on energy?

The negotiating directives foresee cooperation in the area of energy. An important pre-condition for cooperation in this area is to ensure we have robust level playing field requirements. In particular carbon pricing (Emission Trading System – ETS) and provisions on State aid are both a pre-condition for future cooperation on energy.

In the area of electricity and gas, there is no precedent for this type of arrangement.

As regards Euratom issues, the EU has experience regarding Nuclear Cooperation Agreements with other third countries.

What about climate change?

In the introductory paragraphs of the negotiating directives, five binding political clauses underpinning the all-encompassing relationships between the EU and third countries are highlighted, namely: the respect for and safeguarding of human rights, democracy and the rule of law; support for non-proliferation of weapons of mass destruction; the fight against terrorism; prosecution of those accused of the most serious crimes of concern to the international community; small arms and light weapons. The fight against climate change has been added as an essential element of the envisaged partnership.

Will the UK continue to participate in the ETS system?

In line with the Political Declaration, the negotiating directives foresee the possibility of a so-called linking agreement by which the EU and the UK could link their respective emission trading systems.

Will EU fishermen continue to have access to UK waters?

Access to each other’s waters will be negotiated as part of the provisions on fisheries, which should provide for continued reciprocal access, in line with the objectives set out in the March 2018 European Council Guidelines.

Will the EU impose tariffs on UK fisheries products?

The envisaged partnership should include, in its economic part, provisions on fisheries setting out a framework for the management of shared fish stocks, as well as the conditions on access to waters and resources. The intention is to have fully liberalised market access across all goods, which will be guided by the agreement on fisheries.

What happens if there is no agreement on fisheries by July 2020?

The Political Declaration includes a joint commitment on best endeavours to reach an agreement on fisheries by 1 July 2020. The time to negotiate such an agreement will be very short (four months), but it is in our mutual interest to conclude the fisheries agreement in due time, so it can be implemented as of 1 January 2021 in view of ensuring sustainable fisheries management.

Union programmes: will the UK still get grants and subsidies from the EU? Will they contribute to the EU budget?

As set out in the Withdrawal Agreement, UK beneficiaries will continue to benefit from programmes under the Multi-annual framework for 2014-2020, even where this continues after the end of the transition period.

The UK will be treated as a third country for the purposes of the next Multiannual Financial Framework (MFF) 2021-2027. If the UK requests participation in some areas, the EU could consider participation in accordance with the MFF rules for third country participation.

What about Erasmus?

Activities under the current Erasmus+ (2014-2020) programme are covered by the Withdrawal Agreement, and will continue without interruption until their closure. For the future Erasmus programme, under the next Multiannual Financial Framework (2021-2027) it will depend on the possible participation of the UK in Union programmes.

Will the United Kingdom be able to continue to participate in EU regulatory agencies as a third country?

No. These agencies have been set up to support the EU and its Member States to develop and implement EU rules. A third country leaving these rules, and their supervision, can no longer participate in these agencies..

Will our data still be safe if transferred to the UK and processed there?

In view of the importance of data flows, the envisaged partnership should be underpinned by a high level of personal data protection. The adoption by the Union of adequacy decisions, if the applicable conditions are met, should be an enabling factor for cooperation and personal data flow, in particular in the area of law enforcement and judicial cooperation in criminal matters. The Commission endeavours to adopt such decisions by the end of 2020, if applicable conditions are met.

Would the UK still be able to use the European Arrest Warrant? How would criminals be extradited between the EU and the UK?

The European Arrest Warrant is an internal EU instrument, used exclusively among Member States. Therefore, it will no longer be used with the UK.

The draft negotiating directives propose new and effective arrangements between the United Kingdom and EU Member States to render criminals swiftly to justice. This would be an ambitious scheme, based on streamlined procedures and strict deadlines, subject to judicial control. It would be conditional upon robust safeguards on fundamental rights and the role of Court of Justice.

At the same time, it will offer flexibility to each Member State and to the United Kingdom to decide how far they wish to go in common relations. It will help, for example, to address constitutional constraints related to extradition of own nationals in some Member States.

Why do you have reference to “UK continuous commitment” to the European Convention on Human Rights? Why would cooperation cease if the UK leaves the Convention?

The draft negotiating directives propose close relations with the UK on law enforcement and judicial cooperation in criminal matters. It would cover, amongst other things, ambitious extradition or exchange of sensitive information that may impact human lives or rights (e.g. deprivation of liberty). Such relations require a high degree of confidence that the human rights concerned will be upheld. We need a common understanding on how we protect those rights. Within the Union we have the Charter of Fundamental Rights. This is a part of our Treaties. With regard to the UK, the negotiating directives propose a strong commitment to respect the European Convention on Human Rights (ECHR), a common pan-European instrument applied for over 70 years by the United Kingdom and other countries across Europe. Commitment to ECHR is also set out in the Good Friday (Belfast) Agreement.

Will Passenger Name Records (PNR) continue to be exchanged to prevent, detect and investigate terrorism and other forms of serious crime?

The negotiating directives foresee that arrangements should be established for timely, effective, efficient and reciprocal exchanges of Passenger Name Records (PNR). This means that arrangements need to be made for two situations: first, for exchanges between EU27 Member States’ and UK Passenger Information Units and, second, for transfers of PNR data by air carriers to the UK authorities for flights between the United Kingdom and EU27 Member States. There are examples of cooperation with third countries on PNR transfers: the EU has PNR agreements with the USA and Australia; there is a draft negotiated text with Canada and a mandate for negotiations with Japan. An essential precondition for any such arrangements is that the UK applies data protection standards essentially equivalent to those set out in the EU’s standards, i.e. the GDPR and Law Enforcement Directives, and complies with specific additional data protection standards stemming from the CJEU opinion on EU-Canada PNR agreement (opinion 1/15).

Will DNA, fingerprints and vehicle registration data be exchanged between the UK and EU for law enforcement purposes? (Prüm)

The negotiating directives provide that arrangements should be established for timely, effective, efficient and reciprocal exchanges of data on DNA, fingerprints and vehicle registration (so- called ‘Prüm data’). However, there will be no direct access to such sensitive personal data but only through a decentralised system based on a “hit/no hit” model. After a “hit”, i.e. a confirmation that something is available, this needs to be followed up by a request to receive this data from the Member State concerned.

The EU currently has concluded Prüm-agreements with Schengen Associated Countries (Iceland, Norway, Switzerland and Liechtenstein), but the model is open to third countries outside Schengen.

Essential preconditions for any such arrangements are that the UK applies data protection standards essentially equivalent to those set out in the EU’s Law Enforcement Directive standards, and provides reciprocal access to EU Member States of data available at UK national level in the same way as EU27 Member States do.

Will the UK keep access to the Schengen Information System (SIS)?

Non-Schengen third countries do not have access to SIS. SIS is a measure that contributes to security within the EU, in which there are no internal borders. It is intrinsically linked to the free movement of persons. The Court of Justice has consistently defended the coherence of the Schengen acquis.

We need to set up new effective ways of data sharing on wanted and missing persons and objects, while taking into account the UK’s future status. This would be achieved via different complementary tools. These are: making full use of Interpol, the Europol access to SIS to verify links between data provided to Europol with SIS data. Finally, streamlined bilateral exchanges of information between law enforcement authorities, based on specific standard forms, strict deadlines and secure communication channels to facilitate and speed up cooperation.

What would the UK role in Europol be?

The negotiating directives provide for cooperation between Europol and the United Kingdom law enforcement authorities. This will be done in line with the rules for third countries established in EU legislation.

In practice, this means that the UK would be able to:

  • share any relevant data, initiate new cases, use common secure communication channel – as it is the case now;
  • participate in all Europol analysis projects where Europol, Member States and other partners cooperate on ongoing live-investigations, if Member States participating in such analysis projects agree; and
  • take part in common operations, get analytical support from Europol, keep its Liaison Officers at Europol and be informed about relevant data concerning the UK. However, it would not get access to the Europol Information System or have any role in governance of the EU agency.

The negotiating directives propose an ambitious law enforcement and judicial cooperation in criminal matters, guaranteeing at the same time security and fundamental rights of our citizens. Cooperation will, however, be different from what we have today. This is a logical consequence of the UK’s decision to withdraw from the EU. The UK will leave the common rules-based system underpinned by shared principles, common obligations and enforcement.

Will the EU and the UK continue to cooperate on sanctions?

EU sanctions will continue to be driven solely by EU interests. However, cooperation is important to maximise the impact of our sanctions. We should cooperate with the UK the same way we cooperate with other like-minded third countries.

Will UK participation in EU missions and operations have to stop?

The UK will be invited to participate by the Union in its missions and operations on a case-by-case basis (no standing invitation), following the existing rules and preserving the independence of the Union’s decision-making process.

Will you continue to cooperate in third countries on development cooperation?

The EU will maintain its autonomy and strategic programming of development priorities. The EU and the UK will continue to cooperate on the ground to maximise the impact of development cooperation. The UK will be able to make use of existing mechanisms for third countries’ participation, including with regard to any proposals for development cooperation instruments.

Brexit Phase 2 – the ‘transition’ begins

Following the Brexit referendum in June 2016, there was a nine-month pause for thought and a change of Prime Minister before, in March 2017, UK triggered the 2-year notice period for leaving the EU that is set out in Article 50 of the Treaty on European Union.

At 23:00 GMT on Friday 31 January, the Article 50 process was completed and the UK is no longer a member state of the EU – and the withdrawal process moved to a new constitutional phase – meaning that the new legal basis for our negotiations with the EU is “Article 218” of the EU treaties.  Expect to hear a lot more about Article 218 as it sets out the EU’s rules for conducting negotiations, in the coming months.

For the avoidance of doubt, Article 50 process is complete and final. It cannot be further extended, nor can it be reversed.

This brief insight on the transition period explains which elements of the UK’s membership of the EU remain the same during the transition period – which ends at 23:00 GMT on 31 December 2020.

A ‘transition’ – or ‘implementation’ – period was conceived to allow the UK and the EU negotiate a new relationship. It will last until the end of December 2020. Theresa May had originally agreed with the EU for the transition period to be extended for one or two years – but the Johnson Government has said it will not seek any such extension – and, in January 2020, legislated to prohibit itself from doing so.

From 1 February, the legal basis for negotiations between the UK and EU on the future relationship will be based on Article 218 of the Treaty on the Functioning of the EU – exactly the same procedures that apply to negotiations with other states that are ‘third countries’ to the EU.

During the transition period nearly all EU rules will continue to apply to the UK:

  • The UK will still be part of the EU single market and customs union;
  • Existing trade arrangements and rules for travelling within the EU will continue to apply;
  • The jurisdiction of the Court of Justice of the EU in relation to the application of EU law in the UK will continue as before until the end of the transition period;
  • The UK will continue to pay into the EU budget as part of the financial settlement that was set out in the in the Withdrawal Agreement.

The UK can no longer take part in EU decision-making:

  • The UK will no longer be represented in the EU institutions from 1 February – and will not participate in EU decision-making.
  • UK MEPs leave the European Parliament, and the UK loses its voting rights in the Council of the EU. It will be possible for UK representatives to participate in meetings of EU bodies where discussions are relevant to the UK. But the UK will not have voting rights in these meetings. The Withdrawal Agreement, for instance, identifies fisheries as a policy area where the UK will continue to be consulted.

Arrangements that have already ceased to apply include the following:

  • Citizens – whist some of the rights relating to EU citizenship will continue for UK citizens during the transition period – including the right to freedom of movement across the EU – other rights will end at the beginning of the transition period. For example, UK citizens resident in EU Member States will lose the right to vote and stand in local and European elections.
  • Justice – the UK will no longer have the right to opt into new justice and home affairs (JHA) co-operation measures. EU Member States may give notice that they will no longer surrender their citizens to the UK under the European Arrest Warrant (EAW). Thus far Germany, Austria and Slovenia have notified that they will not transfer their citizens to the UK under the EAW. They will still transfer other countries’ citizens. It is up to the UK to decide whether to reciprocate and say it will not transfer its citizens under the EAW to these countries.
  • Security – the EU can exclude the UK from EU activities where participation would grant the UK access to certain ‘security-related sensitive information’.
  • Foreign and Security Policy – the UK will not be considered as an EU Member State in relation to permanent structured co-operation – but may be invited to take part in EU initiatives. The UK will not be allowed to take various command roles within an EU governed force.
  • Common Agricultural Policy – the UK left the CAP on Brexit day. The WA means some CAP payment regulations do not apply for 2020. The Government has legislated to allow direct payments to UK farmers to be made this year and is introducing a new UK farm support policy through the Agriculture Bill.
  • The EU’s international agreements (including trade agreements) with 70 non-EU countries – apply to the UK until the end of the transition period. However, whilst the UK is bound by obligations stemming from the EU’s international agreements to observe the agreements until the end of the transition period – none of the 70 countries are themselves obliged to comply. The EU has notified these countries that the UK should be treated as an EU Member State for the purposes of these agreements – and the UK Government has published a list of countries that have ‘indicated’ they were looking to continue to treat the UK as an EU Member States for trade agreements during the transition period.  The UK is now permitted and free to negotiate and ratify new international agreements with non-EU countries – but these can only come into force at the end of the transition period. The UK has already opened negotiations with a number of non-EU countries on ‘continuity’ agreements that will replace the EU’s agreements on 1 January 2021.

We will report on the wider UK-EU negotiations and continue to focus on the significantly greater changes that are likely to come on 1 January 2021.

The nature of arrangements for other aspects of UK-EU relationship such as trade, travel, security collaboration and co-operation in other policy areas will depend on what is agreed during the transition period. Early indications in the opening positions of the parties gives little optimism for a comprehensive and binding agreement in time for ratification and implementation on 1 January 2021. In the next article, we will look at the legal frameworks under which the negotiations have to take place – and the constraints that these place on both the EU and the UK negotiating teams.

2-Minute Brexit Brief: UK Supreme Court’s findings on prorogation of Parliament

On 24 September 2019, the UK Supreme Court ruled on two questions regarding an Order to prorogue the UK Parliament.

  1. was it ‘justiciable’: in other words, could the decision to prorogue be subjected to scrutiny by the courts?
  2. was it legal?

The court found:

  1. that it did have the power to rule on this question, and subsequently;
  2. went on to find that the Government’s decision to prorogue Parliament for five weeks was ‘unlawful’ – and that Parliament has not in fact been prorogued.

This Insight will look at the remedies granted in terms of next steps for Parliament – and detail some the rationale behind the findings of the Court.

What followed was both Houses of Parliament sitting on the following day, Wednesday 25 September – although there was no ‘Prime Minister’s Questions’ as Standing Order No. 22(5) requires that at least two days’ notice be given of questions for oral answer.

As the prorogation was declared ‘null and void’, the 2017-19 parliamentary session continues. All of the Bills that fell because they had not concluded their passage through Parliament at the time of the unlawful prorogation remain live.

Parliamentary business – including: scrutiny of the entire Government programme; passing of secondary legislation; and the holding of Parliamentary Committees – continues as though the prorogation had never taken place.

As this is a historic constitutional event, we have set out some of the background detail for the record.

Background

28 August: The prorogation came about when – at a meeting of the Privy Council – Her Majesty, by Order in Council, ordered that Parliament be prorogued. The prorogation was to take effect on a day between 9 and 12 September. Parliament was to be summoned again on 14 October for a new session. Parliament was then prorogued on 9 September by Her Majesty acting on the advice of her Prime Minister.

The prorogation was controversial. When ‘Black Rod’ came to summon the Commons to hear the Royal Commission for proroguing Parliament the Speaker, John Bercow, stated in the House: “This is not, however, a normal Prorogation. It is not typical. It is not standard. It is one of the longest for decades, and it represents, not just in the minds of many colleagues but for huge numbers of people outside an act of Executive fiat.”

Separate legal proceedings to challenge the legality of the prorogation began in the courts of England and Wales, Northern Ireland and Scotland.

The first question before the courts concerned the justiciability of the prerogative power to prorogue Parliament. That is, could the decision to prorogue be subjected to judicial scrutiny? If found to be justiciable, the second question concerned the legality of the prorogation. Finally, if the advice upon which the decision was based was deemed to be unlawful, what would that mean for the order to prorogue itself, and for the execution of that order?

There were opposing rulings from High Court of England and Wales and the Court of Session in Scotland.

11 September, the High Court of England and Wales held that the legality of the prorogation was not justiciable in a court of law. That meant that the High Court had determined the question to be beyond the scope of judicial review.

On the same day, the Court of Session in Scotland reached the opposite conclusion. It determined that the issue was justiciable. It then concluded that the decision to prorogue Parliament was motivated by an improper purpose. The Court of Session concluded that the prorogation was “unlawful and thus null and of no effect”.

The matter was referred to the UK Supreme Court which considered both High Court and Court of Session findings.

On 24 September, 11 justices the UK Supreme Court headed by its president, Baroness Hale, handed down a unanimous judgment.

  1. The Court held that the power to prorogue Parliament is a prerogative power: “a power recognised by the common law and exercised by the Crown… on advice” of the Prime Minister. The Court did not express a view on whether Her Majesty is obliged to act on that advice; and subsequently that…
  2. …‘It is impossible for us to conclude, on the evidence which has been put before us, that there was any reason – let alone a good reason – to advise Her Majesty to prorogue Parliament for five weeks, from 9th or 12th September until 14th October. We cannot speculate, in the absence of further evidence, upon what such reasons might have been. It follows that the decision was unlawful.’ [para. 61]

Detail from the Supreme Court findings. On the question of whether prorogation is ‘justiciable’:

  • The Court asserted a right to exercise supervisory jurisdiction over decisions of the executive, which was said to have ample judicial precedent. They cited the Case of Proclamations (1611) and Entick v Carrington (1765). Based on these and other precedents, the Court concluded that it is possible to determine the lawful limits of the exercise of a prerogative power to prorogue Parliament.
  • ‘Parliamentary sovereignty from threats posed to it by the use of the prerogative powers and in doing so have demonstrated that prerogative powers are limited by the principle of Parliamentary sovereignty.’
  • ‘The sovereignty of Parliament would, however, be undermined as the foundational principle of our constitution if the executive could, through the use of the prerogative, prevent Parliament from exercising its legislative authority for as long as it pleased.’

As a result, the Court determined that the power to prorogue cannot be unlimited and must, therefore be subject to judicial review.

Having determined that the prorogation was unlawful the Court then set out remedies. The question became: is Parliament prorogued or not?

  • The Government had argued that prorogation was a “proceeding in Parliament”. Based on the Bill of Rights 1688 proceedings in Parliament cannot be questioned in any court: this is a key element of Parliamentary privilege. The Court rejected that argument: ‘The prorogation itself takes place in the House of Lords and in the presence of Members of both Houses. But it cannot sensibly be described as a “proceeding in Parliament”. It is not a decision of either House of Parliament. Quite the contrary: it is something which is imposed upon them from outside’.

The Court concluded that Parliament has not been prorogued. However, the Court did not set out the implications of the Order. Rather the Court stated: ‘as Parliament is not prorogued, it is for Parliament to decide what to do next.’

And Parliament ‘resumed’ its session, sitting the following day at 11:30 am.

Countdown to a no-deal Brexit: 150 calendar days – but insufficient priority or progress on Government preparations

The Prime Minister announced that she will resign as leader of the Conservative and Unionist Party on Friday 7 June.  The Conservative Party has begun choosing a new leader for the party – and the UK Prime Minister – a process will take several weeks.

Meanwhile, Europe is focused on dealing with the fallout from the results of the recent European Parliament elections – and in selecting three new Presidents to serve for the coming 5 years.

What does this mean for Brexit legislation?  Bluntly, it is not entirely clear.  The Government had said that it would provide an update on publication of the ‘Withdrawal Agreement Bill’ (WAB) as MPs return to Westminster from a week’s recess.

Meanwhile enabling Brexit related legislation – such as the Fisheries Bill, Trade Bill and Agriculture Bill – has been put on hold. During the Conservative leadership contest Theresa May continues in the post of Prime Minister – with all the powers this role entails. However, she has said that “it will be for my successor, and for Parliament, to find a way forward and get a consensus” on Brexit. The latest Parliamentary committee report into Brexit preparations paints a dismal picture on just how unprepared the UK is for Brexit – whatever form it takes.

Four key dates

20 – 21 June: European Council summit at which the 28 EU leaders will review progress of the UK’s exit from the EU

2 July: First sitting of the new European Parliament

17-18 October: European Council summit

23:00 GMT on 31 October 2019: The ‘exit date’ now set in law for the UK to leave the EU. The EU leaders have made it clear that it’s the deal agreed in November 2018 – and rejected 3 times by UK Parliament – or ‘no-deal’.

Future UK-EU transport connectivity

One Parliamentary committee has just published its findings. The EU Internal Market Sub-Committee raises deep concerns on the amount of work that is still needed between now and Brexit in order to deal with the ‘implications of Brexit for road, rail and maritime transport’.

Transport links are a fundamental component of the trading relationship between the UK and the EU – and have an important social function by enabling the mobility of citizens. The implications of Brexit for different transport modes vary depending on the degree of integration of UK networks with the EU.  Their report examines what will be needed to maintain connectivity in the road, rail and maritime sectors under a new UK-EU relationship – whatever form this may take. Key findings are summarised, below.

Chairman of the EU Internal Market Sub-Committee, Lord Whitty, emphasised that maintaining surface transport links will be vital. “The UK’s interests and priorities vary between transport modes.  Road transport, for example, is heavily regulated at the EU level whereas the maritime sector is largely underpinned by international law.  On the rail side, the UK has limited physical network links with the EU but a strong interest in the EU’s rail manufacturing market.  This leaves many questions still to be answered.”

Road haulage

UK hauliers currently rely on the EU’s Community Licence system to carry goods between the UK and the EU. The published positions of the UK Government and the EU suggest that the continuation of this system is an unlikely outcome.

Bus and coach transport

Bus and coach transport provides consumers with a low-cost option for international travel, and an agreement to maintain UK-EU services is needed and should set out clear reciprocal benefits for both markets.

Private motoring

The inconvenience and additional costs of International Driving Permits and Green Cards should not be underestimated. The committee finds the present requirement for UK drivers to visit a Post Office to obtain an International Driving Permit unsatisfactory. The Government should improve accessibility, including the addition of an online option.

Vehicle standards

If the EU retains its influence on international vehicle standards, the UK will have a continuing interest in its position, which will be more difficult to influence after Brexit. There may however be opportunities, for example, in areas relating to newer technologies, for the UK to take a leading role in international standard-setting.

Rail transport

The Government intends to conclude bilateral agreements with some EU countries to maintain rail services through the Channel Tunnel and the Dublin-Belfast Enterprise. While this is the most urgent priority, a more far-reaching set of bilateral agreements would provide greater certainty for long-distance freight services and support the future expansion of UK international freight and passenger services.

Maritime transport

Maritime transport is generally liberalised and underpinned by international law. Post-Brexit, UK and EU ship operators will in most respects be able to access each other’s ports as at present.

The Government should seek wide-ranging, deep co-operation arrangements with the European Maritime Safety Authority (EMSA), including in the area of response to sea pollution.

Northern Ireland – Ireland road and rail transport

The island of Ireland’s distinct social and economic ties place unique demands on its future transport arrangements. These conditions may not be best-served by broader negotiations on UK-EU transport arrangements. A solution may be found in an integrated bilateral approach to arrangements for passenger transport by rail and road.

Reference

https://publications.parliament.uk/pa/ld201719/ldselect/ldeucom/355/35502.htm