Chapter 5: The length of the negotiations
41.Article 50(3) TEU provides for a two-year time limit for the withdrawal agreement to enter into force, after which the “Treaties will cease to apply” to the withdrawing Member State. The two-year period can be extended by the European Council, acting unanimously. There is no limit to the length of the extension, nor to the number of times an extension can be agreed.
The likelihood of the two-year time limit being extended
42.We asked our witnesses how likely it was that the two-year time limit would be extended. Professor Wyatt thought that an extension would probably happen.51 The incentive was “£8 billion a year in net contributions, and access to the UK market for workers and for motor cars. All the Member States in the EU believe they benefit from the internal market.”52
43.Professor Wyatt warned, however, that “there will be huge national self-interest in moving forward in a very considered way without jumping the gun in directions that could torpedo the negotiations before they start”. He saw “huge risks” to this not being achieved: “If, for example, the UK were to … insist on imposing unilateral restrictions on immigration while negotiations were going on, the climate would disintegrate.”53 His written evidence elaborated on these concerns: “in the event of a Brexit vote, there will be expectations on the part of some politicians and members of the public of immediate action to restrict EU migrants coming to the UK to work. I do not think these expectations could be accommodated.” The priority throughout the negotiations should be “damage limitation”.54
44.Sir David counselled against relying on the two-year time limit being extended:
“Remember that other Member States have much higher priorities, such as refugees and so on. Their willingness to sit down, make concessions and go on and on beyond two years is not necessarily guaranteed. They may say, ‘Right, you want to go, so please go and let us get on’ … All I am saying is that each one of them has to consent to a continuation, and you cannot guarantee it. It might just be pure spite, but you cannot guarantee that that would not motivate them.”55
The consequence of the two-year time limit not being extended
45.Article 50(3) makes clear that, if the European Council does not agree an extension before the two years has expired or a withdrawal agreement is concluded, the withdrawing State will no longer be a Member State of the EU: “we are out. We cease to be a Member State”.56
46.Sir David confirmed that, should the UK be forced to withdraw unilaterally in this way, it would have no option but to fall back on the trading terms derived from its membership of the World Trade Organization (WTO).57 Professor Wyatt told us the following consequences would be likely to ensue:
“We would impose tariffs on goods almost certainly at the same level as the common external tariff. That is the tariff we impose to the outside world currently. We leave the EU; we impose those tariffs on goods coming to us. The EU would be a third country; the EU would be imposing those tariffs on us. Of course, that would cost customers; it would cost people in the shops. We cannot disarm in tariff terms, because that is our ammunition in negotiating trade in goods. We also want to negotiate trade in services, where the WTO is not very good for us … There would be tariffs between the UK and the EU, many of them not very high but some of them—as the Government pointed out—would be 10% on cars and 35% on dairy products.”58
47.If the UK were to withdraw unilaterally, the question of recognition of acquired rights, and transitional arrangements for those without acquired rights would, initially, be handled unilaterally on each side. There would be a pressing need to take decisions on the rights of EU citizens resident in the UK and the rights of UK citizens resident in EU Member States.59 The UK could introduce unilateral immigration controls on EU citizens, but it would be likely to liaise closely with the Commission, particularly with regard to the consequences for UK citizens in the EU. Professor Wyatt thought that “a reasonable and fair approach to acquired rights and transitional arrangements would be the likely instinct of Government and Parliament, and that would be conducive to receiving reciprocal fair treatment from the EU side, and to the prospects of negotiating a free trade agreement for the future with minimum possible rancour.”60
48.On the EU side, individual Member States could introduce immigration controls on resident UK citizens, though the EU would have competence to legislate in due course for the movement and residence of UK citizens in the EU.61
49.Sir David gave the following illustrations of the complexity of the negotiations on acquired rights in the event of a unilateral withdrawal:
“A university has an EU research funding package with provision for cross-frontier movement of research scientists, and that has a life beyond two years. What happens to that? What happens to Erasmus students? When does participation in Erasmus end? A divorced couple live in the UK and another member state with special arrangements for access to children, and particularly cross-border payment of family maintenance. What happens to that? There are cross-border investments and tax treatment of capital and revenue. There are agricultural support payments and fishing quotas. Those are just examples.”62
50.This led Sir David to conclude that: “The long-term ghastliness of the legal complications is almost unimaginable.”63
Length of the negotiations, if extended
51.We asked the witnesses whether the negotiations on Greenland’s withdrawal from the EU offered a guide to how long the UK’s withdrawal and future relationship might take to negotiate. Professor Wyatt thought that Greenland’s negotiations offered “support for the proposition that even mildly complicated negotiations can take some time to sort out—in the case of Greenland the negotiations took about two years, and the final decision came into force after three years.”64 The population of Greenland was about 55,000, and most of the negotiations were about fishing, though provision was made for transitional arrangements to cover acquired rights of residents: “On any view the UK negotiations would surely take much longer than the negotiations with Denmark over Greenland.”65
52.Professor Wyatt drew our attention to historical data on the time taken by States to complete various trade deals.66 The length of negotiations for agreements between the EU and non-EU countries ran from four to nine years. The length of agreements between two non-EU countries ran from just under four years to just under 10.
53.That said, he concluded that it was impossible to extrapolate with any certainty from the data available how long the negotiations would take: “These are uncharted waters, both in legal terms and political terms, and no ‘weather forecast’ is available.” He did think it likely, however, that if the UK were to vote to withdraw:
“it would remain a member of the EU for at least the duration of the present Parliament, while the withdrawal agreement and the future relationship agreement were being negotiated in tandem. This would be the right process, in terms of legal options, and in terms of aiming for a smooth transition between EU membership and whatever relationship lay beyond. But it would inevitably involve a period of prolonged uncertainty, without any guarantee of a trading agreement at the end of the process which would meet UK needs.”67
Conclusions
54.No firm prediction can be made as to how long the negotiations on withdrawal and a new relationship would take if the UK were to vote to leave the EU. It is clear, though, that they would take several years—trade deals between the EU and non-EU States have taken between four and nine years on average.
55.It would be in the interests of the UK and its citizens, and in the interests of the remaining Member States and their citizens, to achieve a negotiated settlement. This would almost certainly necessitate extending the negotiating period beyond the two years provided for in Article 50.
56.While it is possible that the European Council would agree to an extension, the requirement for unanimity means that such agreement cannot be guaranteed.
57.Were no extension to be agreed, the UK would be likely to trade on World Trade Organization terms, placing tariffs on imports from the EU; the EU would place tariffs on imports from the UK; and the acquired rights of millions of individuals and companies would remain unresolved.
66 Open Europe, ‘Would Brexit lead to “up to a decade or more of uncertainty”?’: http://openeurope.org.uk/today/blog/would-brexit-lead-to-decade-or-more-of-uncertainty/ [accessed 17 April 2016]