75.Negotiations on the transition/implementation period have started and it is expected that its terms will be agreed at the next European Council on 22–23 March. It is vitally important that this deadline is achieved. On 29 January, the European Council published Supplementary Directives for the negotiations on the transition/implementation period and on 7 February the Commission published a more detailed position paper that outlined in “legal terms” how such arrangements should be given effect in the Withdrawal Agreement. This position paper has been incorporated (with some amendments) into its draft Withdrawal Agreement that was published on 28 February 2018. Since the Prime Minister’s Florence Speech in September 2017, which was the first time that the Government formally requested a transition/implementation period, the Government has published a ‘Technical Note on International Agreements’, ‘Draft Text for Discussion: Implementation Period’, and a paper on ‘EU citizens arriving in the UK during the implementation period’.
76.The Secretary of State set out the Government’s view of the purpose of a transition/implementation period in a speech in Teesport in January. He said:
77.On 29 January, the European Council said that the transition/implementation period will start on the day that the Withdrawal Agreement comes into force and “should not last beyond 31 December 2020.” This suggests a period of 21 months. The Commission’s position paper said the same. The EU selected this date because it coincides with the end of the current Multiannual Financial Framework (MFF—the European Union’s seven-year budgetary cycle); the last one to which the UK has agreed to contribute. However, the Government’s ‘Draft Text for Discussion: Implementation Period’ does not commit to this timeframe. It said:
The UK believes the period’s duration should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the Future Partnership. The UK agrees this points to a period of around two years, but wishes to discuss with the EU the assessment that supports its proposed end date.
78.As the Government has set out in the Teesport Speech and the Draft Text for Discussion, the transition/implementation period will need to allow time for the ratification of the treaties/agreements that will establish the Future EU-UK Partnership and to implement new processes and systems.
79.The Commission intends to set out the details of the Future Partnership in a Political Declaration that will accompany the Withdrawal Agreement. We heard in Brussels that the Commission and the European Parliament would like the Political Declaration to be detailed. Negotiators plan to reach this point in October 2018. Once the Political Declaration has been agreed, negotiations will begin on the treaties and agreements that will establish the Future Partnership. Michel Barnier said that the Future Partnership would be established by several agreements, some of which will be treaties. The following graphic shows the Commission’s schedule for UK withdrawal:
80.The Government is confident that a substantial amount of the Future Partnership will have been agreed before the start of the transition/implementation period. In evidence to us, the Secretary of State said that the “substance” of an EU-UK trade agreement will have been agreed before UK withdrawal. He also said that it was important that material aspects of the Future Partnership are not negotiated during the transition/implementation period. He said:
It would be unwise, in my view, apart from that it practically does not meet the requirements of a transition period, to get sucked into doing a negotiation that is substantive or major during the transition period itself. Why? The balance of power in the negotiation alters and the aim then, on the part of the Commission, will be to spin out the negotiation.
In her Munich Speech, the Prime Minister said that “key aspects of our Future Partnership in [foreign affairs and defence] would already be effective from 2019.” However, Michel Barnier suggested that it was possible that not all aspects of the Future EU-UK Partnership will have been agreed before UK withdrawal. He said:
I can say that within a short period of time we cannot do absolutely everything. We do have to set priorities, but we will be in a position to conclude at least the Free Trade Agreement, if not more. I will work with that in mind, because we want to ensure good trade co-operation. That is a very important condition in the interests of your country as well as the European Union.
81.As well as time for ratification, the Government will also need time to implement new administrative processes and systems. For example, new customs arrangements, new trade agreements and new immigration policies will all need to be devised.
82.If more time were needed to negotiate the Future EU-UK Partnership, the Government could seek an extension to the Article 50 period. This would require unanimous agreement amongst the EU27. It would allow more time to negotiate a detailed Political Declaration and potentially more time to negotiate the treaties/agreements that will establish the Future Partnership before the start of the transition/implementation period, depending on the length of the extension. However, extending Article 50 would break the Government’s commitment to leave the EU and its institutions by the end of March 2019.
83.If a longer transition/implementation period were needed for ratification and the implementation of new administrative processes and systems, an extension is possible. However, the Secretary of State said that a transition/implementation period that lasted much longer than two years might not be possible. In Brussels, we heard that a three-year transition/implementation period was probably the legal limit of what Article 50 could support.
84.The Government believes it can agree the “substance” of its Future Partnership with the EU before October 2018. In the short time that remains, it is difficult to see how it will be possible to negotiate a full, bespoke trade and market access agreement, along with a range of other agreements, including on foreign affairs and defence cooperation. The UK Parliament will need absolute clarity on the Future EU-UK Partnership, including the arrangements for the Northern Ireland/Republic of Ireland border. We look forward to monitoring progress over the coming months.
85.The Secretary of State has said that the “substance” of an EU-UK trade agreement will have been agreed before UK withdrawal in March 2019. The Prime Minister has said that key aspects of our Future Partnership in foreign affairs and defence will be effective by the same date. Yet, the Government has also given October 2018 as the date by which it expects to have agreed the “substance” of its Future Partnership with the EU. The Government should give regular updates to Parliament on progress.
86.If substantial aspects of the Future Partnership remain to be agreed in October, the Government should seek a limited extension to the Article 50 time to ensure that a Political Declaration on the Future Partnership that is sufficiently detailed and comprehensive can be concluded. It would meet the Government’s objective that negotiations on substantive aspects of the Future Partnership should not take place in the transition/implementation period. That time should be used to finalise details and implement administrative measures and infrastructure that is necessary for the Future Partnership.
87.If a 21-month transition/implementation period is insufficient time to conclude and ratify the treaties/agreements that will establish the Future Partnership or to implement the necessary technical and administrative measures along with any necessary infrastructure at the UK border, the only prudent action would be for the Government to seek a limited prolongation to avoid unnecessary disruption. It would, for example, be unacceptable for business to have to adapt their import and export processes twice. We therefore recommend that the Withdrawal Agreement include a provision to allow for the extension of the transition/implementation period, if necessary, and with the approval of Parliament. However, we note that there is a risk that a transition/implementation period that lasts much more than two years might exceed the vires of Article 50 and be subject to a legal challenge in the CJEU.
88.During a prolonged transition/implementation period, the UK would be bound by the full acquis, with no say in the Union’s decision-making bodies. It would also be bound by the CJEU without a UK Judge on the Court. Furthermore, it would have to make financial contributions to the EU’s new seven-year budget, with no say on how it is to be spent. The UK would also be subject to new EU laws over which it had not had voting rights.
89.It is the Government’s view that the Specified Date, or ‘cut-off’ point, for when the citizens’ rights provisions in the Withdrawal Agreement come into force should be the 29 March 2019. However, the Commission’s view, as set out in the draft Withdrawal Agreement, is that the Specified Date should be the end of the transition/implementation period. The timing of the Specified Date has consequences for several aspects of the citizens’ rights part of the Withdrawal Agreement. For example, the Joint Report stated that concepts of EU law in the citizens’ rights chapter of the Withdrawal Agreement are to be interpreted in line with the case law of the CJEU by the Specified date. In addition, UK courts will be able to make referrals to the CJEU for “litigation brought within 8 years from the date of application of the citizens’ rights Part”. It will only be possible to know when this period will start once the Specified Date has been agreed.
90.In a recent policy paper on EU citizens arriving during the transition/implementation period, the Government said:
The expectations of EU citizens arriving in the UK after our exit will not be the same as those who moved here before our withdrawal, and the same will be true of UK nationals moving to an EU Member State. It should therefore be for the UK and for Member States to determine the rights and pathways to settlement that new arrivals will have if they wish to remain beyond the implementation period.
However, the Government also said that during the transition/implementation period EU citizens will be offered “eligibility after the accumulation of five years’ continuous and lawful residence to apply for indefinite leave to remain”; “a temporary status in UK law that will enable them to stay after the implementation period has concluded—this means that they will be able to remain lawfully in the UK working, studying or being self-sufficient for the five years needed to obtain settlement”; and “an opportunity to secure this temporary status during the implementation period, with an additional three month window for applications after the period, ensuring that there is no cliff-edge.” The Government’s offer to permit applications for indefinite leave to remain will be based on existing UK immigration law, not on the Withdrawal Agreement, which means that EU citizens who arrive during the transition/implementation period would not have the same rights as those that arrive before the start of the transition/implementation period; for example, the right to seek rulings from the CJEU for an eight-year period. Furthermore, the Government has offered the ability for EU citizens to be joined by family members after the transition/implementation period. However, this right will be “on a par with British citizens” which is more restrictive than what those EU citizens will have who will be covered by the Withdrawal Agreement,
91.In Brussels, we heard that the European Parliament would not accept a situation whereby EU citizens who arrive during the transition/implementation period are treated differently to those that are already living in the UK. On 31 January, Guy Verhofstadt MEP, the EP’s Chief Brexit Coordinator said, “The maintenance of EU Citizens’ rights during the transition is not negotiable. We will not accept that there are two sets of rights for EU citizens. For the transition to work, it must mean a continuation of the existing acquis, with no exceptions.”
92.We note the Government’s view that the Specified Date for the citizens’ rights chapter of the Withdrawal Agreement should be the 29 March 2019 but that it has also made a unilateral offer to provide EU citizens arriving during the transition/implementation period with the opportunity to apply for indefinite leave to remain in the UK. However, under this proposal EU citizens that arrive in the UK will have different rights to those that are living in the UK before the transition/implementation period. We believe that this is not consistent with full acceptance of the acquis which is fundamental to the transition/implementation period.
93.In the Florence Speech, the Prime Minister said that during the transition/implementation period, the UK will be subject to “the existing structure of EU rules and regulations” but that it would not be participating in the EU’s main decision-making bodies. She said:
The United Kingdom will cease to be a member of the European Union on 29th March 2019. We will no longer sit at the European Council table or in the Council of Ministers, and we will no longer have Members of the European Parliament.
94.The EU’s Supplementary Directives suggest that the UK will have limited opportunities to influence decisions during the transition/implementation period. They said that while the UK will be subject to the “full competences of the Union institutions”, the UK will “no longer participate in or nominate or elect members of the Union institutions, nor participate in the decision-making or the governance of the Union bodies, offices and agencies.” Furthermore, the Supplementary Directives state that as a general rule, the UK will not attend “Commission expert groups and other similar entities or of the agencies, offices or bodies where Member States are represented.”
95.Where the Supplementary Directives do allow for consultation with the UK, the terms are ambiguous. They state that the UK should be consulted on the “fixing of fishing opportunities (total allowable catches) during the transition period.” The Supplementary Directives also give two scenarios in which the UK could be invited to attend meetings in which Member States are represented but only on a case-by-case basis and without voting rights:
These exceptions are drafted broadly and therefore the exact scope of potential UK participation in meetings is not clear. The Supplementary Directives state that the “Withdrawal Agreement should define the precise conditions and the clear framework under which such exceptional attendance should be allowed.”
96.The Commission said that during any transition/implementation period, the UK will be required to adopt new EU laws. Michel Barnier said, “It is a question of maintaining the status quo, as Theresa May has said, and this will only be possible if the dynamic nature of this acquis can be accepted.” The European Council’s Supplementary Directives stated, “Any changes to the Union acquis should automatically apply to and in the United Kingdom during the transition period.” The Government has said that most new EU rules and regulations that will come into force during the transition/implementation period will have been formulated while the UK was a Member of the EU’s institutions. When asked whether the UK would accept new EU rules during the transition/implementation period, the Secretary of State said:
The average time to put a regulation into effect in the European Union is 22 months. The proposal we have with the European Union at the moment is that we leave over 21 months. In other words, there will be nothing that we did not have a say in. As to what happens where that is not exactly right and it does not work out quite that way, we will see when we come to it, but at the moment no.
97.The Government has said that there could be exceptions where the UK could be subjected to new rules without a say over how they were devised. In evidence to the European Scrutiny Committee, Sir Tim Barrow, Permanent Representative of the United Kingdom to the European Union, provided the example of EU tertiary legislation. He said:
there is tertiary legislation as well and that primarily comes through agencies and bodies, and that is why, as the Minister has said, we need to have a Joint Committee: so that we can resolve concerns, if we have concerns, about actions in [the transition/implementation period].”
It is also possible that the UK could be bound by changes to EU sanctions policy, which could be devised and implemented rapidly, during the transition/implementation period.
98.On 26 January, the Secretary of State said that the Government will seek a mechanism that will enable it to influence new EU rules and regulations that are formulated after the UK has left EU institutions but that are scheduled to come into force during the transition/implementation period. He said, “we will have to agree a way of resolving concerns if laws are deemed to run contrary to our interests and we have not had our say and we will agree an appropriate process for this temporary period” and “It’s very, very important. If there are new laws that affect us, we have the means to resolve any issues during that period.” The Government’s Draft Text for Discussion for the Implementation Period proposed a Joint Committee for this purpose. The Joint Committee would have:
specific functions in relation to the implementation period, including resolving any issues which might arise concerning the proper functioning of the Agreement, having regard to the duty of mutual good faith which should apply between the UK and the EU, for example, in relation to acts of Union law adopted during the implementation period. Arrangements will need to protect the rights and interests of both parties.
99.The UK will be a ‘rule-taker’ with few formal rights to consultation under the current proposals for the transition/implementation period. We agree that the Withdrawal Agreement should establish a mechanism under which the UK can have a say on new EU laws that will apply to the UK during the period but which are devised after it has left the European Union’s institutions and call on the Government to come forward with proposals for such a mechanism as soon as possible.
100.The European Union has a large number of international agreements with non-EU third countries to which the UK wishes to remain a party during the transition/implementation period. The EU has bilateral relationships with over 100 third countries that cover a wide range of policy areas including trade, nuclear cooperation and aviation.
101.The Supplementary Directives state:
During the transition period … the United Kingdom should remain bound by the obligations stemming from the agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly, while the United Kingdom should however no longer participate in any bodies set up by those agreements.
102.In our last report, we called upon the Government to “set out its plans for the UK’s continuing participation in these agreements, its approach to how it is prioritising agreements, and what can be achieved during the Article 50 timeframe.” On 8 February 2018, the Government published a ‘Technical Note on International Agreements’. The Note set out that the UK will seek to obtain the agreement of the EU and the third countries concerned to interpret the existing agreements as still applicable to the UK. The Government appears to envisage some system of collective informal agreement to continuing the international agreements during the transition/implementation period. It said:
It would not be necessary … to deal individually with each EU Treaty. The key requirement would be the clear agreement of the parties that the underlying treaty continued to apply to the UK during the implementation period.
103.The Note said that this approach is underpinned by international law and practice, including Article 31 of the Vienna Convention on the Law of Treaties.
104.The International Trade Committee has concluded that the Government should “produce a ‘risk register’, identifying clearly the agreements to be rolled over, with an assessment of how important each agreement is to UK trade. If resources allow within the time given, this should be compiled in consultation with Parliament, businesses and civil society. If resources do not allow for this, the Government should reassure us that this register exists internally.”
105.The EU has a number of bilateral international agreements with non-EU third countries to which the UK wishes to remain party during the transition/implementation period. The UK has asked the EU to seek agreement with those third countries to continue with these agreements during that time. These third countries and the UK may have a mutual interest in continuing these agreements on current terms. However, the Government’s approach to reaching agreement on the continuation of these agreements after the transition period is over is not clear and the progress that the Government have made to date is unknown.
106.Failure to reach a timely deal on continuing these agreements during the transition/implementation phase could lead to UK exporters no longer being able to take advantage of the EU’s existing free trade agreements, while exporters located in countries with EU FTAs would continue to benefit from preferential access to the UK market on the same terms as now. This would be unacceptable.
107.The UK intends to negotiate—and, where possible, sign—new trade agreements during the transition/implementation period, although they would not enter into force until after the period had ended.
108.The Secretary of State said, “we will not be subject to the duty of sincere co-operation, which is what stops us from arriving at trade deals, negotiating and signing trade deals now. That freedom will exist.” The Secretary of State said that the freedom to negotiate new trade agreements was a key reason for leaving the EU’s institutions in March 2019 and not extending Article 50 to allow for more time to negotiate the Future EU-UK Partnership. He said:
[New trade deals] matter enormously. If we do it this way, the way we are doing it, they will come into effect very soon after conclusion in 2020–21. If we extend our membership, we will not be in a position to do that. Those two years are going to be extremely important for inward investment, for establishing trade arrangements and for bolstering the economy.
However, the potential for new trade deals will almost certainly be contingent on the progress of the negotiations on the Future UK-EU Partnership which will have implications for the terms of any other trade agreement that the UK may wish to enter.
109.The Commission’s draft Withdrawal Agreement said that the UK will still be the subject of a duty of sincere cooperation towards the EU. It said, “during the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the areas of exclusive competence of the Union, unless authorised to do so by the Union.” This is less extensive than the Supplementary Directives as the word “exclusive” has been added. However, it still leaves uncertainty whether the UK can negotiate or sign an agreement with a third country even if it does not come into binding effect until after the transition/implementation period. We heard in Brussels that the Commission recognises that the UK should be able to negotiate agreements with third countries during the transition/implementation period.
110.The EU has proposed that the transition/implementation period should end by 31 December 2020 but the Government’s paper on the transition/implementation period does not commit to that end date. If the period continues into 2021, there could be significant consequences for the UK taxpayer as the UK would likely be committed to making contributions to the EU’s new seven-year budget.
111.In our last report, we called on the Government to publish a White Paper on the implementation period as soon as possible after the European Council had met in December 2017. On 24 January 2018, the Secretary of State for Exiting the European Union said that he did not believe that a White Paper was required. However, he did not rule out the prospect that one would be published at some point:
… [the implementation period] will not of itself require a White Paper, unless it is a White Paper preceding the withdrawal and implementation Bill … It is possible there, but it depends on whether it justifies it. It may well be that this is a relatively straightforward negotiation.
112.While the Government has not decided on whether it is necessary to publish a White Paper, the Secretary of State said that the Government would “almost certainly” publish “some papers on elements of [the transition/implementation period].” In January and February 2018, the Government published three short papers on aspects of the transition/implementation period, including papers on international agreements and citizens’ rights. The EU has published negotiation papers on its objectives for a transition/implementation period. Most recently, the European Council published specific Supplementary Directives for the negotiations on the transition/implementation period and the Commission published a more detailed position paper that outlined in “legal terms” how such arrangements should be given effect. This was then included in the Commission’s draft Withdrawal Agreement.
113.In January 2018, the Commission published two documents on the governance of the Withdrawal Agreement. These documents referred to a requirement for “Special governance in case of a transition period” comprising the existing jurisdiction of the Court of Justice. More generally it envisaged a Joint Political Committee to oversee the ongoing management and supervision of the Agreement. The document also envisaged a combination of political and judicial mechanisms for dispute settlement after transition and “enforcement after dispute resolution”. These ideas were translated into the Commission’s legal text of 28 February. We look forward to the Government’s response to these proposals.
114.In our last report, we recommended that the Government publish a detailed White Paper on the transitional/implementation period setting out the Government’s objectives in detail. This would provide much needed clarity for citizens, business, institutions and our partners in the EU27, as well as providing Parliament with an opportunity to scrutinise and potentially improve the Government’s plans. However, just days before the transition/implementation deal is expected to be agreed, the Government has still not published a substantial policy paper that sets out what it wants in precise terms. This is regrettable. By contrast, the EU has set out its objectives for the transition/implementation period in clear terms.
115 European Council, , 29 January 2018, and Commission, , 7 February 2018
116 Department for Exiting the European Union, ; , 21 February 2018; , 28 February 2018
117 Department for Exiting the European Union, , 26 January 2018
118 European Council, , 29 January 2018, para 22
119 Commission, , 7 February 2018
120 Politico, , 20 December 2017
121 Department for Exiting the European Union, , 21 February 2018
122 Northern Ireland Affairs Committee, Oral evidence: Brexit and Northern Ireland, HC 329, Oral evidence: Brexit and Northern Ireland, HC 329,
125 Prime Minister,
126 Northern Ireland Affairs Committee, Oral evidence: Brexit and Northern Ireland, HC 329, Oral evidence: Brexit and Northern Ireland, HC 329,
127 Department for Exiting the European Union, , 28 February 2018
128 Department for Exiting the European Union, , 28 February 2018.
129 European Parliament, Brexit: EP to keep fighting to fully protect rights of EU-UK citizens, 31 January 2018
130 Prime Minister, , 22 September 2017
131 Commission, , 7 February 2018
132 European Council, , 29 January 2018
133 European Council, , 29 January 2018
134 Northern Ireland Affairs Committee, Oral evidence: Brexit and Northern Ireland, HC 329, Oral evidence: Brexit and Northern Ireland, HC 329,
135 European Council, , 29 January 2018
136 Department for Exiting the European Union, , 26 January 2018
137 European Scrutiny Committee, Oral evidence: EU Withdrawal, HC 763, Thursday 22 February 2018,
138 Department for Exiting the European Union, , 26 January 2018
139 Department for Exiting the European Union, , 7 February 2018, para 4
140 European Council, , 29 January 2018
141 Exiting the European Union Committee, , Second Report of Session 2017–19, HC 372, 1 December 2017, para 105
142 Department for Exiting the European Union, , 8 February 2018. The Technical note only applies to ‘bilateral agreements’ and not ‘multilateral agreements’ which it states, “raise different considerations.”
143 Department for Exiting the European Union, 8 February 2018
144 International Trade Committee, , First Report of Session 2017–19, HC 520, para 35
145 Department for Exiting the European Union, , 26 January 2018
148 Commission, , 28 February 2018, Article 124(4)
149 Exiting the European Union Committee, , HC 372, 1 December 2017, para 106
152 European Council, , 29 January 2018, and Commission, , 7 February 2018
153 Commission, , 19 January 2018
Published: 18 March 2018