37.The formal negotiations under Article 50 will address two key areas: the terms of withdrawal, and the framework for the future relationship between the UK and the EU.
38.The formal negotiations on withdrawal will be akin to negotiations on the terms of a divorce. Lord Kerr, who as Secretary General of the Convention on the Future of Europe from 2001 to 2003 is credited with drafting Article 50, told us:
“The discussion about the divorce will be nasty and brutish—all money negotiations are—but short. Two years is ample time for a discussion about the budget, acquired rights, pensions, properties and institutions—where the European Medicines Agency, the European Banking Authority and the other institutions that are based in this country will go.”
Thus the withdrawal negotiations may turn out to be limited in scope, focusing on the key practical issues—division of assets and ongoing liabilities—that arise in any divorce. There is no inherent reason why this component of the wider UK-EU negotiation should not be completed within two years.
39.It can also be assumed, as Lord Kerr stated, that the withdrawal negotiations will cover certain issues that are intrinsically connected to the process of divorce. In particular, they will cover the ‘acquired rights’ of those nationals of the UK and the other 27 Member States who live in each other’s countries: it is inconceivable that withdrawal should be completed without providing legal certainty to between three and four million UK and EU citizens. The options for addressing these ‘acquired rights’ are currently the subject of an inquiry by our Justice Sub-Committee.
40.The second limb of the negotiations under Article 50 will relate to the framework for the future relationship between the UK and the EU. The scope of this negotiation, as Lord Kerr told us, is far less well defined:
“The framework negotiation is a much more interesting and complex negotiation. They are legally obliged to have the framework in front of them as they conclude the divorce. Nobody knows what that means. Do not ask me what it means. Presumably, the framework is, as a minimum, principles that will define how close the relationship is between the UK that has left and the EU. Will it be, sector by sector, a commitment to consult, a commitment to inform, a commitment to co-ordinate or no commitment at all—a complete divorce?”
41.Lord Kerr then suggested a number of areas in which the parties to the negotiation, within the scope of Article 50 negotiations, might wish to conclude detailed and binding agreements, to take effect immediately upon withdrawal. The most obvious was “the area of security—internal security, counterterrorism, anti-drugs, Prüm, the European arrest warrant and intelligence”. Other areas mentioned by Lord Kerr included foreign policy, research funding, environmental policy, climate change and energy policy.
42.In practice, negotiation on such a wide range of issues would probably be divided into ‘chapters’, or ‘baskets’, with officials from across Whitehall, supported by the UK Permanent Representation to the EU, participating—as Mr Davis noted, DExEU had “decided not to replicate in my department the immigration policy department from the Home Office or the CAP department from Defra”. At the same time, the nature of the negotiation will mean that nothing is agreed until everything is agreed: at some point trade-offs will have to be made, on all sides, between different objectives. The more wide-ranging and complex the negotiations on the framework agreement, the more difficult will be the trade-offs.
43.In each area of the negotiations on the framework agreement the parties—not just the UK, but the EU institutions and the 27 remaining Member States—will wish to avoid damaging interruptions to existing cooperation and coordination, while also minimising the uncertainty, and distraction from other pressing priorities, that would result from a prolonged and excessively detailed negotiation. Squaring this circle will become increasingly difficult as time passes, particularly as the two-year deadline, likely to fall in March 2019, approaches.
44.At some point, therefore, a transitional agreement may be proposed, to bridge the gap between withdrawal and completion of detailed negotiations. Such an agreement, were the time to be running out, could address some or all of the areas that have already been touched on in the context of the framework agreement. It could also extend more widely, possibly even to the future trading relationship between the EU and the UK, negotiations on which, as Lord Kerr told us, “certainly cannot” be concluded within two years. In this area above all, as Professor Wyatt told us, a choice will have to be made between extending the two-year deadline (a decision requiring unanimity), to allow time to conclude a full agreement, reaching an interim agreement, or accepting the shock that would result from UK withdrawal without agreement:
“It will not suit us suddenly to have to bounce into WTO terms. Will it suit Germany? Will it really suit France? The dislocation to trade would be considerable, in motor cars, in agricultural products and in services, which would particularly hurt the UK. In addition, there will be the attraction of the UK continuing to pay its £8 billion net contribution to the EU … For all those reasons, I still incline to say that an extension is likely. I am aware that some commentators have argued that we might have an interim trading regime. I cannot rule that out or say that it is a bad thing. My only doubt about it is whether one would end up taking as long to negotiate the interim trade regime as one would take continuing with the main exercise.”
45.As we noted in Chapter 2, the Secretary of State envisaged the Government providing information after key decisions had been taken, rather than ahead of time; he embraced the principle of “accountability after the event”, but resisted what he described as micromanagement. We have also given our reasons for concluding that the Government and Parliament should seek a middle ground, which would enable Parliament to monitor and comment on the negotiations in timely fashion, without micromanaging them.
46.Despite his reluctance to grant Parliament an active role in scrutinising the negotiations, Mr Davis assured us that the flow of information from the Government to Parliament would improve once formal negotiations had begun: “I expect it to be a more open process.” He also made it clear that the negotiations would not be “a black box out of which a treaty drops at the end.” He envisaged Select Committees in both Houses contributing their views to the development of the Government’s negotiating position by conventional means, using publicly available information:
“If I were on those Committees … I would be looking to make my own contributions. It is the point we started with: whether a Committee has a view on immigration policy, justice and home affairs or whatever.”
47.We then asked the Secretary of State whether parliamentarians in Westminster would enjoy the same level of access to information as their counterparts in the European Parliament. His response was clear: “we would not want either House of Parliament to be disadvantaged with respect to the European Parliament”. He admitted that the Government was not sure what this commitment would mean in practice (“We have not grounded it all yet”), but he emphatically repeated the point of principle:
“We will certainly match and, hopefully, improve on what the European Parliament sees.”
48.The Secretary of State’s undertaking is significant. The European Parliament is responsible for conducting parliamentary scrutiny of the EU’s international agreements, including trade agreements. Such scrutiny provides the ‘baseline’—the level of oversight that MEPs, including UK MEPs, currently possess in respect of negotiations affecting the UK’s international trade. The Secretary of State was acknowledging, in effect, that no diminution of this baseline level of parliamentary scrutiny would be acceptable.
49.We will seek in due course to explore in detail how European Parliament scrutiny of trade negotiations is conducted, including by visiting Brussels and to talk to colleagues in the European Parliament. Ahead of that visit, we are very grateful to our expert witnesses, in particular Professor Wyatt, for shedding light on certain key points. The following paragraphs draw heavily on Professor Wyatt’s written evidence in particular.
50.While the procedure for EU withdrawal is set out in Article 50 TEU, the negotiations themselves will be conducted in accordance with the provisions of Article 218 of the Treaty on the Functioning of the European Union (TFEU). Article 218, which was adopted as part of the Treaty of Lisbon in 2007, sets out the procedure for reaching international agreements, such as trade deals. Under Article 218 the EU entrusts the conduct of trade negotiations to the European Commission, represented by its EU Trade Commissioner. The Commission must follow guidelines adopted, in the case of withdrawal negotiations, by the European Council; under Article 218 the Council also adopts negotiating directives, and may “address directives to the negotiator and designate a special committee in consultation with which the negotiations must be conducted”.
51.Article 218(10) TFEU provides that “The European Parliament shall be immediately and fully informed at all stages of the procedure”, and since this provision was agreed in 2007 the European Parliament has played an increasingly influential and active part in monitoring trade negotiations. The detailed arrangements are set out in a binding 2010 Framework Agreement on relations between the European Parliament and the European Commission. Paragraph 23 of the Framework Agreement states, with reference to Article 218(10) TFEU, that “Parliament shall be immediately and fully informed at all stages of the negotiation and conclusion of international agreements, including the definition of negotiating directives”. Paragraph 24 requires that this information “shall be provided to Parliament in sufficient time for it to be able to express its point of view if appropriate, and for the Commission to be able to take Parliament’s views as far as possible into account”. These provisions are developed in Annex III to the Framework Agreement, an extract from which is given in Box 1.
“2. In line with the provisions of point 24 of the Framework Agreement, when the Commission proposes draft negotiating directives with a view to their adoption by the Council, it shall at the same time present them to Parliament.
“3. The Commission shall take due account of Parliament’s comments throughout the negotiations.
“4. In line with the provisions of point 23 of the Framework Agreement, the Commission shall keep Parliament regularly and promptly informed about the conduct of negotiations until the agreement is initialled, and explain whether and how Parliament’s comments were incorporated in the texts under negotiation and if not why.
“5. In the case of international agreements the conclusion of which requires Parliament’s consent, the Commission shall provide to Parliament during the negotiation process all relevant information that it also provides to the Council (or to the special committee appointed by the Council). This shall include draft amendments to adopted negotiating directives, draft negotiating texts, agreed articles, the agreed date for initialling the agreement and the text of the agreement to be initialled. The Commission shall also transmit to Parliament, as it does to the Council (or to the special committee appointed by the Council), any relevant documents received from third parties, subject to the originator’s consent. The Commission shall keep the responsible parliamentary committee informed about developments in the negotiations and, in particular, explain how Parliament’s views have been taken into account.”
52.Finally, in order to facilitate the transfer of what are clearly large volumes of sensitive material, Article 24 of the Framework Agreement states that: “Parliament and the Commission undertake to establish appropriate procedures and safeguards for the forwarding of confidential information from the Commission to Parliament”. These procedures are developed in more detail in Annex II to the Framework Agreement.
53.The European Parliament has duly put in place arrangements to make full use of the rights conferred under Article 218 TFEU, and the procedures described in the Framework Agreement. The Committee on International Trade takes the lead on behalf of the Parliament in trade negotiations, and, as Professor Wyatt noted, the President of the European Parliament, Martin Schulz MEP, commented in a speech in April 2015 that it was now “standard practice” for the Commission to share information with that Committee “on a regular basis”. Professor Wyatt also highlighted the Committee’s recommendations regarding the negotiations on the Transatlantic Trade and Investment Partnership (TTIP), and cited a recent example, a Resolution adopted by the Plenary in July 2015, which contained recommendations running to a dozen pages of text.
54.This, then, is the baseline level of European parliamentary scrutiny, against which any scrutiny arrangements adopted in Westminster in coming months will be measured. What is striking is not only that the European Parliament, as Lord Kerr put it, “will have access to all the negotiating documents”, but that it will have such access “at every stage”. In Professor Wyatt’s words, the Commission will “let the European Parliament know what it is proposing and … give that information to the European Parliament in good time for the Parliament to come back to the Commission and for the Commission to act upon that comeback, should the Commission decide that it is appropriate.” This, he argued, embodied “a kind of scrutiny reserve”, but one adopted in a spirit of cooperation and dialogue, not confrontation—he drew attention in his written evidence to the “recommendatory and non-combative” tone of the European Parliament Resolution of July 2015.
55.Professor Wyatt’s mention of a ‘scrutiny reserve’ prompted us to consider further the observation in our July 2016 report that committee scrutiny of the forthcoming negotiations might be “underpinned by a new scrutiny reserve resolution”. Such a resolution would define the terms of engagement between Government and Parliament. It would be analogous to the existing Scrutiny Reserve Resolution, last updated by the House of Lords on 30 March 2010, under which Ministers undertake not to agree to any EU proposal in the Council of Ministers while that proposal is subject to scrutiny by the European Union Committee. A similar resolution, albeit yet to be updated in light of the Lisbon Treaty, applies in the House of Commons. Although both resolutions allow Ministers discretion to over-ride the scrutiny reserve in important or urgent cases, they give scrutiny committees a clear right to be consulted and informed before decisions are taken.
56.As to whether an explicit scrutiny reserve was needed to cover the Brexit negotiations, Ms Barrett saw a clear need for “the terms of reference or the scrutiny reserve resolution to be more explicit about what this Committee requires from the Government”. Professor Wyatt, notwithstanding his analysis of the European Parliament’s detailed scrutiny, was cautious, noting that parliamentary scrutiny of negotiations would be a “new departure”, and that a formal code of practice would be “probably premature”. He continued:
“A code of practice is something that is more likely profitably to evolve from the practice than to be dreamed up now, with the practice evolving from it. A few key principles might be recorded—principles that acknowledge the balance between scrutiny and the Executive’s needs.”
Professor Wyatt also observed that, even though the Commission would formally lead negotiations under Article 50 from the EU side, “government to government talks are likely to continue, even if not officially part of the negotiations”. It would be difficult to draft a scrutiny reserve in terms broad enough to capture such a wide-ranging negotiation.
57.The Secretary of State was not persuaded that a scrutiny reserve would be “applicable in this circumstance”. His primary concern was that a formal reserve would fail to reflect the dynamic and fast-moving character of the negotiations:“ the simple truth is that we will have to be nimble, fast and responsive. I worry about anything that ties our shoelaces together in those terms”. At the same time, it appeared that his thinking was still developing, and he undertook to consider the issue further: “If the Committee writes to us, we will have a look at it, but my instinct at the moment is that it is not really appropriate.”
58.The current level of scrutiny of trade and other international negotiations by the European Parliament, as set out in the 2010 Framework Agreement between the European Parliament and the European Commission, provides a baseline against which any arrangements agreed in the United Kingdom Parliament must be measured: it would be unacceptable for the European Parliament to have greater rights of scrutiny over the negotiations on Brexit than Westminster. We are therefore grateful for the Secretary of State’s assurance that the level of scrutiny in Westminster will at least match that in Brussels.
60.The same general principles should be applied to scrutiny by the Westminster Parliament of the forthcoming negotiations on Brexit. Too much is at stake for scrutiny to be limited to establishing accountability after the event. While it is not for Parliament to manage the negotiations themselves, Parliament must be able to monitor them actively, and to make its views known in timely fashion, potentially against the backdrop of fast-moving negotiations, so that the Government can consider these views and decide whether not to act on them.
61.We have considered whether these principles should be embodied in a formal scrutiny reserve resolution. On balance, however, we are persuaded that a formal and prescriptive scrutiny reserve could restrict the Government’s room for manoeuvre, thereby acting against the national interest. We are also conscious that scrutiny of treaty negotiations will be a new departure for the UK Parliament: it will take time for mutual trust to develop and for optimum working practices to be identified. We therefore do not recommend the adoption of a formal scrutiny reserve at this stage.
62.Instead, we invite the Government to undertake that the principles outlined in paragraph 59 should be applied to its relations with Parliament during the forthcoming negotiations. It is essential that the Government should work with the two Houses to give effect to these principles, if there is to be parity between the Parliaments in Westminster and Brussels in scrutinising Brexit.
31 . The Secretary of State repeated this undertaking in oral evidence taken before the House of Commons Foreign Affairs Committee, 13 September 2016 (Session 2016–17) (David Davis MP), and in his statement to the House of Commons on 10 October 2016: see HC Deb, 10 October 2016, .
32 Subject also to Article 207,
33 Article 218(4),
34 Framework Agreement on relations between the European Parliament and European Commission,
35 See European Parliament resolution of 8 July 2015 containing the European Parliament’s recommendations to the European Commission on the negotiations for the Transatlantic Trade and Investment Partnership (TTIP) (2014/2228(INI))
38 European Union Committee, (1st Report of Session 2016–17, HL Paper 33)
41 Written evidence from Professor Derrick Wyatt ()