The progress of the UK’s negotiations on EU withdrawal - The Withdrawal Agreement and Political Declaration Contents

3The Political Declaration on the Framework for the Future Relationship

Political Declaration

61.Throughout our scrutiny of the Article 50 negotiations, we were assured by the two previous Secretaries of State for Exiting the European Union that the Political Declaration on the framework for the future relationship would be “detailed” and “substantive”.80 On 25 April 2018, the Rt Hon. David Davis MP81 told us:

It has to be substantive from the British Parliament’s point of view. The British Parliament, when voting for the withdrawal agreement, will be voting for a bill of £35 billion to £39 billion. It will want to know, on the other side, what we are getting in exchange.82

On 24 July 2018, the Rt Hon. Dominic Raab MP also told us that he expected that “the Political Declaration would be a substantive document”.83

62.In our April 2018 Report on the future EU-UK relationship, we set out a series of tests by which we would judge the Political Declaration. They covered the future EU-UK relationships on the economy and security and foreign policy relationships, as well as participation in EU programmes and agencies. In this chapter we examine whether these tests have been met.84

Future EU-UK economic relationship

Trade in goods

63.We set the following tests for trade with the EU:

64.The Political Declaration states that the future relationship should be based on a free trade area, which “should ensure no tariffs, fees, charges or quantitative restrictions across all sectors”.85 It also states that there is an objective to agree customs arrangements that “build and improve on the single customs territory provided for in the Withdrawal Agreement”, which would remove the need for rules of origin checks.86

65.We noted in our September 2018 Report that regulatory checks are more onerous than customs checks. The Political Declaration includes an ambition to avoid “unnecessary” barriers to EU-UK trade, along with Technical Barriers to Trade, which encompass product regulations and SPS measures.87 The Political Declaration states that the UK “will consider aligning with Union rules in relevant areas”.88 However, the level of this alignment is not set out and there is another specified ambition for both sides “to preserve regulatory autonomy”.

66.There are references to the Government’s intention to establish an independent trade policy. The level of independence that is envisaged is left unspecified. If the Government seeks the freedom to strike ambitious free trade agreements with other countries that include goods, more checks would be required on goods that move between the UK and the EU.

67.There is no detail on what fishing arrangements will exist between the UK and EU Member States after the transition/implementation period. Both sides have agreed to use their best endeavours to reach an agreement before 1 July 2020.89

68.In short, many of the details of the UK’s future trading arrangements for goods are left open, to be decided during the next phase of negotiations. This is illustrated by a paragraph under the heading “Implications for checks and controls”, which states:

The Parties envisage that the extent of the United Kingdom’s commitments on customs and regulatory cooperation, including with regard to alignment of rules, would be taken into account in the application of related checks and controls, considering this as a factor in reducing risk. This, combined with the use of all available facilitative arrangements as described above, can lead to a spectrum of different outcomes for administrative processes as well as checks and controls, and note in this context their wish to be as ambitious as possible, while respecting the integrity of their respective markets and legal orders.90

69.If the future EU-UK economic relationship results in more checks and controls on goods, which based on the terms of the Political Declaration is possible, this will increase costs and bureaucracy for many UK businesses and would impact cross-border supply chains and the delivery of just-in-time and perishable goods.

Trade in services

70.In respect of trade in services, we set the following tests:

71.The Financial Services Part of the Political Declaration sets out a relationship that would be based on equivalence agreements, to be agreed by June 2020. The EU’s equivalency regime does not cover all financial services and access to the Single Market can be withdrawn with as little as 30 days’ notice. However, there is a commitment to keep equivalency frameworks under review, and to be transparent and consult on decisions to adopt, suspend or withdrawal equivalency decisions.91 The Secretary of State told us that this language set “quite a high aspiration, which has been agreed, as to what our relationship should be on financial services. That speaks to that 30-day concern.”92 There is no explicit reference to broadcasting.

72.The Declaration talks about enabling service providers to operate in a range of sectors across the EU and the UK, including “market access and national treatment under host state rules for the Parties’ service providers and investors… treated in a non-discriminatory manner, including with regard to establishment.”93 The principle of national treatment implies that imported services and national services are treated equally. Nevertheless, UK services will have less freedom to trade across the EU than membership of the Single Market, where there is more freedom to operate across borders in many sectors.

73.On data, the Political Declaration states that the European Commission will start an assessment of data adequacy as soon as the UK leaves the EU, “endeavouring” to adopt a decision by end of 2020. Oliver Robbins told us that this commitment was “very unusual for the EU to have made, to make an assessment of us before we leave the transition period… certainty in this area is extremely important for a modern economy, and the political declaration moved us a lot further forward in that respect, because we are not subject to the vagaries of the adequacy process after we leave …”94 The Political Declaration also states that there should be appropriate cooperation between regulators.95 As a Member State, the UK’s Information Commissioner sits on the European Data Protection Board (EDPB). Oliver Robbins confirmed to us that the Information Commissioner would not be on the EDPB after 29 March 2019, but that the UK wished to continue negotiating for the Information Commissioner to have an ongoing role with the EDPB in the future negotiations.

74.The extent to which the two sides will seek to recognise professional qualifications is unclear. The Political Declaration states only that “The Parties should also develop appropriate arrangements on those professional qualifications which are necessary to the pursuit of regulated professions, where in the Parties’ mutual interest.”96 It does not state which professions will be included.

UK participation in EU agencies and programmes

75.We set the following tests on continued participation in EU programmes and agencies:

76.The Political Declaration states that the UK aims to continue to participate in a range of EU programmes, including those that relate to “science and innovation, youth, culture and education, overseas development and external action, defence capabilities, civil protection and space.” However, any future participation in EU agencies and programmes would be subject to “terms and conditions” to be established and the “conditions set out in the corresponding EU legal instruments”.97 The UK would also be required to make financial contributions.98

77.The Political Declaration also includes the “possibility of cooperation” between UK authorities and EU agencies, including the European Medicines Agency (EMA), the European Chemicals Agency (ECHA), and the European Aviation Safety Agency (EASA). The ambition to examine the “possibility of cooperation” appears to rule out continued participation in these agencies. These proposed arrangements will, in sector after sector, leave the UK with less influence and control over rules which govern key aspects of our economy than we enjoy today. The two sides also have an ambition to ensure passenger and cargo air connectivity through a Comprehensive Air Transport Agreement.

Government view

78.We asked the Secretary of State for Exiting the EU and Oliver Robbins about several aspects of the Political Declaration, including trade in goods and services. Asked whether frictionless trade would be possible under the Political Declaration, Mr Robbins said that “ the declaration makes clear that it is the ambition of both sides to achieve as frictionless a relationship as possible and that, at the extreme, frictionlessness is not ruled out by the spectrum of outcomes that is described in that declaration.”99 He also said that the provisions setting up discussions on trade in services were more ambitious than in comparable free trade agreements.100 He was confident that the Political Declaration would allow the UK to continue arguing for the positions set out in the July 2018 White Paper,101 and emphasised that the document had rolled back some of the more “extravagant” demands expressed by the European Council in its March 2017 negotiating mandate.102

79.We were told throughout our scrutiny of the negotiations by successive Secretaries of State for Exiting the European Union, and by Michel Barnier and other interlocutors from the European Union, that the Political Declaration would be detailed and substantive. We deeply regret that it is neither. The document only sets out a series of options for the UK’s trade with the European Union, its closest and largest trading partner, and establishes a framework for ongoing conversations across a range of areas. We note that the Political Declaration expresses a high level of ambition about the nature and scope of the future relationship, but ambition is no guarantee of success, nor is it clear how it would deliver at least the same outcomes as we have under our current relationship with the EU. People, businesses and institutions will therefore continue to face significant uncertainty about the future terms of EU-UK trade, which will affect future investment in the UK economy.

80.There is insufficient detail in the Political Declaration for us to judge whether our tests have been met, with the exception of the one relating to tariffs. What is clear from the Political Declaration is that our degree of market access to the European Union will be related to the degree to which we adhere to its rules. We welcome the fact that both sides have said there should be no tariffs or quotas. There is also an indication that burdensome rules of origin checks might be unnecessary, and there are measures which, if agreed, would facilitate trade in services and allow for the free exchange of data. However, outside the Single Market and Customs Union there cannot be frictionless trade. This will mean additional costs and bureaucracy for many UK businesses, however ambitious any future arrangement outside the Single Market and Customs Union may be. The Government needs to be frank and open about how far it is willing to align with EU rules, at the expense of UK regulatory autonomy, if its main priority is to secure EU-UK trade that is as frictionless as possible. This is not a choice the Government has so far been willing to make. The Political Declaration makes clear, that because of the number of issues crucial to the future of the EU-UK relationship which are still to be decided, the Brexit process will not be concluded by March 2019. Indeed, negotiations on the future relationship are likely to go on for a number of years.

Options for the future relationship

81.On 4 April 2018, we published a report that examined the different types of EU-UK relationships that are possible.103 It assessed the strengths and weaknesses of a range of existing models of EU relationships with third countries, including those with Canada, Norway, Switzerland, Ukraine and Turkey, along with a relationship based on trading with the EU on WTO terms. We said then “that there are trade-offs between the rights and obligations that comprise those relationships.”104

82.The Secretary of State told us that the Political Declaration keeps options for the future relationship open.105 There are therefore a range of possible options that will need to be considered as the basis of the future negotiations if Parliament decides to approve the deal. These include options for a looser relationship with the European Union based on a Canada-style free trade agreement, a closer relationship which could be based on Norway’s relationship with the EU with a close customs arrangement (‘Norway plus’) or a more bespoke arrangement that is closer to the Government’s Chequers proposals, although we note that the EU has indicated that these would not be acceptable in their current form.106 If Parliament does not approve the Withdrawal Agreement, there is also the possibility that has been referred to by the Prime Minister, which is that there might be another referendum to decide what should happen if Parliament is unable to agree a way forward.107 This would require legislation and would inevitably involve asking the EU for an extension to Article 50. There is also the possibility of there being no deal.

83.On 28 November 2018, the Government published its economic analysis of EU exit. Four potential scenarios are compared against today’s arrangements, holding all other factors constant. These were a no deal scenario, an EEA-type scenario, an EU-UK FTA scenario and the Government’s Chequers proposals.108 On 3 December 2018, Oliver Robbins told us that the Chequers proposals could still be the basis of the future economic relationship.109 The Government’s analysis found that under all scenarios, the resulting “higher barriers to UK-EU trade would be expected to result in greater economic costs.”110 The table below sets out the impacts of GDP over a 15-year period, compared to what it would have been under current arrangements with the UK as an EU Member State.

Source: EU Exit: Long-term economic analysis November 2018

84.On 28 November 2018, the Bank of England also published an analysis of EU withdrawal scenarios.111 The Bank found that in a disorderly, no deal EU exit, GDP would fall by 8% against its current forecast. The Bank also examined the impact on GDP from a future relationship that is either ‘close’ or ‘less close’ to the EU. If a close trading relationship is agreed, the economy could still be 1.25% smaller than if the UK had remained in the EU by 2023. If it is less close, the economy’s growth could be 3.75% less than if the UK had remained in the EU by 2023.

85.We note that the Government’s analysis of EU exit indicates that, over a 15-year period, the UK will be economically poorer under all possible scenarios than it would have been under current arrangements. The Government has also said that the Political Declaration allows for a “spectrum” of options. However, we note that the Government is seeking an economic relationship that would enable frictionless trade to continue. The Government must be honest that this will entail trade-offs, specifically, adhering to rules over which we no longer have a say, and will limit the number of options it has to choose from in the future relationship negotiations.

Security and foreign policy

86.On future EU-UK security and foreign policy relationships, we set the following tests:

87.The Political Declaration states that continued police and security cooperation will reflect the shared threats that the EU and the UK continue to face, while recognising “that the UK will be a third country outside of Schengen, to which the principle of free movement of people will not apply.”112 This status will inevitably limit the extent of cooperation between the UK and the EU. It states that “the two sides will “work together to identify the terms for the United Kingdom’s cooperation via Europol and Eurojust.” Membership of Europol is limited to EU Member States,113 although it cooperates with non-EU countries, either through ‘strategic agreements’, which provide for the exchange of general intelligence and strategic and technical information, or through ‘operational agreements’, which provide access to many Europol services and the ability to station liaison officers at the Europol headquarters.114

88.The Political Declaration appears to rule out continued UK participation in the European Arrest Warrant, which has speeded up and simplified the return of suspected offenders to the UK to face justice. The Warrant is linked to EU membership, including free movement of people, the Charter of Fundamental Rights and EU citizenship.115 The Political Declaration states that the two sides will seek replacement extradition arrangements instead.116

89.There are references to continued access to EU information sharing systems, including reciprocal arrangements for exchanges of Passenger Name Record (PNR) data, and DNA, fingerprint and vehicle registration data, as contained in the Prüm Convention.117 SIS II is not mentioned explicitly, although the desire to exchange information on “missing persons and objects” is, which is the purpose of SIS II.118 The prospect of UK participation in legal sharing instruments is qualified with the statement that this would be delivered “so far as is technically and legally possible, and considered necessary and in both Parties’ interests, approximate to those enabled by relevant Union mechanisms.”119

90.The Declaration calls for continued close cooperation on foreign policy. The two sides aim to work together closely and in international organisations, in a way that is “flexible and scalable” and can be combined to the “greatest effect”, for example in times of crisis or in the event of “serious incidents”.120 The UK can be invited to informal Ministerial meetings of the Member States of the Union “where appropriate” and at the discretion of the EU’s High Representative.121 The two sides will also seek a high level of information exchange on sanctions and listings.122

91.The Political Declaration includes objectives for the future EU-UK internal and external security relationships. These include the UK’s participation in cross-border data sharing agreements, continued cooperation with the EU’s law enforcement and criminal justice agencies and securing the UK’s place in Europe’s foreign policy and defence structures, as we judged would be essential in our key tests on future security and foreign policy cooperation. As the dispute over UK participation in Galileo has demonstrated, however, the depth of cooperation will, in many cases, depend on what the EU decides it wishes to allow under EU rules. It is imperative that negotiations on these issues are settled as early as possible. The overall level of EU-UK cooperation will be less than it is now, as will be the UK’s influence on the strategic direction of EU foreign and security policy.

Oversight of negotiations on the future relationship

The role of the House

92.The Political Declaration on the framework for the future relationship therefore leaves open a range of options for the future relationship between the UK and the EU to discuss. If the House approves the Withdrawal Agreement, the Government will then introduce the European Union (Withdrawal Agreement) Bill to give the Agreement effect in UK law and complete the parliamentary conditions for ratification required by section 13 of the EU (Withdrawal) Act 2018. Consideration of the EU (Withdrawal Agreement) Bill will provide an opportunity for Parliament to consider its role during the negotiations which will turn the Framework on the Future Relationship into a treaty or treaties.

93.Dr Jack Simson Caird, Senior Research Fellow at the Bingham Centre for the Rule of Law, asked:

what does Parliament want its role to be in the negotiations on the future relationship?… Does it want to replicate for the future relationship the conditions in section 13 for the withdrawal agreement? Does it want to guarantee itself a veto at a particular moment in time, perhaps, before the European Parliament gets a chance to give its consent to the future relationship?

… This is the moment of maximum leverage for the House of Commons to say, “When we have left, we want to make sure we have at least a similar level of responsibility as the European Parliament has”.123

94.If section 13 of the EU (Withdrawal) Act set the parameters for Parliament’s role in approval of the Withdrawal Agreement, consideration of the EU (Withdrawal Agreement) Bill provides the opportunity to establish the framework for Parliament’s role in concluding the agreement on the future relationship.

95.If the Withdrawal Agreement is approved, it is essential that Parliament has a central role in the scrutiny of the negotiations on the future relationship that take place after the UK has left the EU. Consideration of the legislation implementing the Withdrawal Agreement will provide an opportunity to set out the role that the House should have in agreeing a mandate for the Government for the future relationship negotiations; maintaining oversight of the progress and conduct of the negotiations; and ensuring that the House is given a meaningful and timely role in approving any agreements reached, including the circumstances in which the UK will opt to extend the implementation/transition period. This is a matter to which we will return in more detail.

The role of the devolved administrations

96.The role of the devolved administrations in informing both the proceedings of the Joint Committee charged with overseeing the implementation and application of the Withdrawal Agreement and the Government’s approach to negotiations on the future relationship is important. We have previously raised questions about the process for feeding in the views of the devolved administrations and parliaments into negotiations on the future relationship.124 In response, the Government informed us that it had built on the work of the Joint Ministerial Council as the high level political forum for discussing the negotiations with the devolved administrations (and officials from the Northern Ireland Civil Service in the absence of a Northern Ireland Executive) and established a Ministerial Forum on EU Negotiations to enable the devolved administrations to “contribute to the development of the UK negotiating position on the future relationship in greater breadth and depth”.125

97.In our very first report of this Parliament, on the EU (Withdrawal) Bill, we noted that our predecessor Committee in the last Parliament had received evidence that the Joint Ministerial Council (EU Negotiations) had not been effective from the point of view of the devolved administrations. We concluded that “The future [intergovernmental] arrangements for the UK after leaving the EU will only be successful if they work for the whole of the UK”.126

98.Oliver Robbins noted that the Joint Committee envisaged by the Withdrawal Agreement will be a body representing both the EU and the UK Governments, adding that the structures of the Joint Ministerial Committee would be in place to ensure that the views of the devolved administrations were fed into the process.127 The Secretary of State acknowledged the importance of the perspective of the devolved administrations on certain matters, citing in particular the involvement of the Welsh Government in relation to trade between the Republic of Ireland and Holyhead.128 He told us that he was “keen to build on the areas that have gone well in terms of cooperation with the devolved administrations”.129

99.If the Withdrawal Agreement is approved by the House, negotiations on the future relationship between the UK and the EU will profoundly affect the devolved administrations. For the sake of the future of the United Kingdom, it is essential that the voices of the devolved administrations are heard. We have previously noted that intergovernmental arrangements will only work if they work for all the nations of the UK and have previously expressed concern at perceived shortcomings. We will continue to engage with our counterparts in the devolved assemblies to assess whether the arrangements made to ensure that the devolved administrations are able to inform the UK’s negotiating position during negotiations on the future relationship between the EU and the UK are effective.

Select Committee scrutiny

100.The UK’s exit from the EU on 29 March 2019 will not bring to an end Parliament’s role in close oversight of negotiations and of EU affairs. The European Scrutiny Committee has previously noted that “if the Withdrawal Agreement is implemented as described [in the draft published in March] it would require continued intensive scrutiny of EU Affairs by Parliament”.130

101.We have also previously noted that negotiations on the future relationship would be a “monumental task” and that it was not yet clear whether changes would be made to the machinery of Government to accomplish it.131 We concluded that it was essential that a dedicated Select Committee was maintained to follow the progress of negotiations regardless of any changes in the machinery of Government.

were the Department for Exiting the European Union to be abolished and this Committee to lose its role, adding the scrutiny of these negotiations to the workload of another existing committee would not be adequate. To ensure the right level of scrutiny of these historic negotiations and an effective role for Parliament in seeking the best outcome for the UK, there must continue to be a dedicated select committee on EU exit during the transition / implementation period to scrutinise and hold the Government to account in negotiating the UK’s future relationship with the EU.132

102.In evidence to us on 3 December, the Secretary of State confirmed that he would retain ministerial responsibility for ongoing negotiations on the future relationship after the UK’s exit from the EU on 29 March 2019. However, he noted that

The structure of Whitehall is an issue that I am discussing with the Prime Minister and with colleagues across Whitehall because, as I am sure you will appreciate, as we move into phase 2, the governance structure will undoubtedly need to reflect a different approach. There will be a lot of different work streams and there is the mere fact that we will be outside the EU institutions, so the Prime Minister’s own interaction outside of those institutions will change.133

103.We reiterate our previous recommendation that in order to ensure appropriate scrutiny of the negotiations on the future relationship there must be a select committee dedicated to this task, regardless of any future changes in the machinery of Government.


80 Our first test was: “The border between the Republic of Ireland and Northern Ireland must remain open, with no physical infrastructure or any related checks and controls, as agreed in the Phase 1 Withdrawal Agreement”. We considered the Withdrawal Agreement’s backstop Protocol in the previous chapter

81 The Rt Hon. David Davis MP was Secretary of State for Exiting the European Union between 13 July 2016 and 8 July 2018. Upon his resignation, he was replaced by the Rt Hon. Dominic Raab MP. Mr Raab resigned on 15 November 2018 and was replaced by Rt Hon. Stephen Barclay MP

84 Exiting the European Union Committee, The future UK-EU relationship, Fourth Report of Session 2017–19, HC 935, 4 April 2018, para 181

87 SPS measures relate to food safety and animal and plant health

103 Exiting the European Union Committee, The future UK-EU relationship, Fourth Report of Session 2017–19, HC 935, 4 April 2018

104 Exiting the European Union Committee, The future UK-EU relationship, Fourth Report of Session 2017–19, HC 935, 4 April 2018, para 177

107 Liaison Committee, Oral evidence from the Prime Minister: Brexit, HC 1765, 29 November 2018, Q4

108 The Government’s Chequers proposals were comprised of two main parts, a ‘Facilitated Customs Arrangement’ (FCA) and a Common Rulebook for goods and agri-food. These proposals, according to the White Paper, would remove the need for customs processes between the UK and the EU and, taken with a proposed wider free trade area, it would preserve frictionless trade for the majority of UK goods trade. See, HM Government, The Future Relationship between the United Kingdom and the European Union, 12 July 2018, para 15

110 HM Government, EU Exit Long-term economic analysis, 28 November 2018, page 5

113 Excluding Denmark, which has a special relationship with the agency as a result of its JHA opt-out

124 Exiting the European Union Committee, Parliamentary scrutiny and approval of the Withdrawal Agreement and negotiations on a future relationship, Sixth Report of Session 2017–19 Report, HC 1240, 28 June 2018, para. 107

125 Exiting the European Union Committee, Parliamentary scrutiny and approval of the Withdrawal Agreement and negotiations on a future relationship: Government Response to the Committee’s Sixth Report, Seventh Special Report of Session 2017–19, page 10; the Joint Ministerial Committee (EU Negotiations) is currently chaired by Rt Hon David Lidington MP, Chancellor of the Duchy of Lancaster; the Ministerial Forum on EU Negotiations is currently chaired by the Minister for the Constitution, Chloe Smith MP.

126 First Report, Session 2017–19, European Union (Withdrawal) Bill, HC 373, para. 78

130 European Scrutiny Committee, EU withdrawal: transitional provisions and dispute resolution, Nineteenth Report of Session 2017–19, HC 763, 20 March 2018, para 46

131 Exiting the European Union Committee, Parliamentary scrutiny and approval of the Withdrawal Agreement and negotiations on a future relationship, Sixth Report of Session 2017–19 Report, HC 1240, 28 June 2018, para. 108.

132 Exiting the European Union Committee, Parliamentary scrutiny and approval of the Withdrawal Agreement and negotiations on a future relationship, Sixth Report of Session 2017–19 Report, HC 1240, 28 June 2018, para. 108.




Published: 9 December 2018