Brexit: the Withdrawal Agreement and Political Declaration Contents

Chapter 3: The transition period

The general principles of transition

113.Arrangements for the transition period are dealt with in Articles 126–132 of the Agreement.108 The transition period will run from when the Agreement comes into force until 31 December 2020.109 Article 132 of the Agreement provides for a single decision by the Joint Committee to extend the length of the transition period “for up to one or two years” (see paragraph 130).110

114.During the transition period, as a general principle, all EU law will apply to the UK111 and produce “the same legal effects as those which it produces within the Union and its Member States”.112 The EU’s institutions and agencies, including the Court of Justice of the European Union (CJEU), will continue to enjoy all their current powers to enforce, police, and review the application of EU law within the UK, including the application of the Withdrawal Agreement.113

115.While EU law will continue to apply, several provisions deprive the UK Government, and its citizens, of the institutional and constitutional privileges of membership. For UK citizens, this includes the rights to vote and stand in European and/or municipal elections and to engage in European Citizens’ Initiatives.114 UK citizens will also cease to be eligible for recruitment as officials and/or servants of the EU’s institutions, offices or agencies.115

116.Article 128, which deals with “Institutional Arrangements”, works in conjunction with Article 7 to remove the UK’s right as an EU Member State to participate in the EU’s institutions and agencies during the transition period. The UK will also lose its limited right to initiate EU legislation;116 will no longer be able to participate in new legislation pursued via enhanced cooperation;117 and will lose its current right to opt into new Justice and Home Affairs (JHA) measures, but will be able to opt into measures that “amend, build upon or replace existing [JHA] measures”.118

117.The Agreement also states that during transition the UK Parliament will “not be considered a national Parliament of a Member State”, and will lose its privileges, for example to issue subsidiarity Reasoned Opinions.119 The UK Parliament will continue, however, to receive consultation documents (Green and White Papers and Communications) directly from the Commission,120 along with draft legislative acts placed in the public domain.121

Exceptions to the general principles

118.There are few exceptions to the general principle that the UK should be excluded from the EU’s institutions and agencies during transition. This is despite the fact that in many of the agencies provision is made for third country cooperation. The Agreement says that “upon invitation” the UK will be able to send national experts to “meetings or parts of meetings” of “Commission expert groups” and/or EU “bodies, offices or agencies”.122 But this will only happen in exceptional circumstances and when the discussion involves legislation “to be addressed to the United Kingdom,123 or where the presence of a UK expert “is necessary and in the interest of the Union”. UK experts will not be allowed to vote in these meetings.124

119.With regard to fisheries and the negotiation and agreement of Total Allowable Catches (TACs) under the Common Fisheries Policy, the UK will be “consulted in respect of the fishing opportunities related to the United Kingdom”,125 and will be allowed to “provide comments” to the Commission ahead of the preparation of its annual Communication on fishing opportunities.126

120.In our report Brexit: deal or no deal we identified two secure means, consistent with the terms of Article 50 TEU, whereby a ‘standstill period’ could be established after exit day, in order to provide reassurance to citizens and businesses and buy time to finalise an agreement on future relations. Either the European Council could, by unanimous agreement, agree to a request to extend the negotiating period, or the Article 50 Agreement could set a date later than 29 March 2019 for the UK’s withdrawal to take effect. At the same time, we recognised the political sensitivities over both these approaches.

121.Under this Agreement, save for a few minor exceptions, transition means that the UK will carry all the responsibilities of EU membership without the institutional rights and privileges enjoyed by EU Member States. Throughout the transition period, the UK will remain subject to EU law and the EU institutions and agencies that oversee its application and operation, without any institutional say over its development, application and content. This falls short of a genuine ‘standstill’ period.

122.Despite the possibility of invitations being extended to UK officials to attend relevant meetings in exceptional circumstances, we are concerned about the sudden removal of the UK’s institutional privileges, particularly those relating to the EU’s many executive agencies.

Free trade agreements

123.Specific provisions address the ramifications of the UK’s withdrawal from the EU for the suite of international agreements to which the EU is party and in which the UK currently participates by virtue of its EU membership.

124.The Agreement confirms that the UK “shall be bound”127 by all such agreements and must refrain, in this context, from any action “which is likely to be prejudicial to the Union’s interests”.128 During transition, UK representatives will not be permitted to participate in the “work of any bodies set up by international agreements concluded by the Union”, unless the UK participates in its own right or is invited to do so by the EU.129

125.A footnote130 confirms that the EU “will notify” all the other parties to these agreements (that is, third countries) “that during the transition period [the UK] is to be treated as a Member State for the purposes of these agreements”.131

126.The UK will be free to “negotiate, sign and ratify” its own international agreements in areas falling within the “exclusive competence of the Union” (such as free trade agreements) during the transition period. But such agreements cannot enter into force or apply to the UK during transition without prior authorisation from the EU.132

127.We broadly welcome Article 129, which leaves the UK free to pursue its own free trade agreements during the transition period, provided they do not enter into force before it expires.

128.However, beyond the limitations to this freedom implied by the Protocol on Ireland/Northern Ireland (the so-called backstop), questions remain about the detailed operation of this provision. For example, it is silent about the extent of the UK’s freedom to renegotiate during transition the myriad EU agreements dealing with matters where responsibilities are shared between the EU and the individual Member States.

129.Furthermore, Article 129, which attempts to carry over the application to the UK of the suite of existing EU international agreements, is one-sided and unclear. While it expressly binds the UK to its obligations under these international agreements, and calls on the Government to refrain from any action in this context deemed “prejudicial” to the Union’s interests, the UK’s status as a party to these agreements after 29 March 2019 is dealt with by a footnote. We are concerned that the solution to such a significant question is subject to a footnote of questionable legal status. The attitude of third countries to continuing UK participation in agreements with the EU remains unclear.

Extending the transition period

130.Article 132 of the Withdrawal Agreement may prove one of the most significant elements of the text. It was amended on 22 November 2018, to make clear that the Joint Committee (for which see paragraphs 24–38) would be entitled, before 1 July 2020, to adopt a single decision extending the transition period for “up to one or two years”.133

131.As we note in Chapter 5, the breadth and complexity of negotiations on the future UK-EU relationship are such that it will be difficult to complete them by the end of June 2020. In circumstances where these negotiations are still continuing (or the two sides have been unable to resolve the question of the Irish border) an extension of the transition period would be the only way to avoid activating the backstop on 1 January 2021. The Prime Minister, in a debate on 15 November 2018, described the provision as an “insurance policy”:

“As I have said many times, I do not want to extend the implementation period and I do not believe we will need to do so … but if it happens that at the end of 2020 our future relationship is not quite ready, the UK will be able to make a choice between the UK-wide temporary customs arrangement or a short extension of the implementation period.”134

132.The key benefit of extending the transition period, if negotiations on the future relationship are incomplete, would be to maintain continuity and stability: the UK could remain part of the EU Single Market, subject to the continuing application of EU rules, until such time as the new relationship is ready to be implemented. The downside is that the UK would remain subject to all the obligations described above (including those under new Regulations and Directives) and subject to the jurisdiction of the CJEU beyond 2020.

133.Moreover, under Article 132(2)(d), if the UK wished to extend the transition period, it would be required to make an additional contribution to the EU budget. This would not occur if the UK simply fell into the backstop.135 The Prime Minister has acknowledged that this is one of the criteria which would be relevant in deciding which of the two options was preferable.136

134.Article 132(2) sets out a number of derogations from Article 127 (which defines the scope of the transition). It indicates that the UK would be considered a third country for the purposes of implementation of EU programmes and activities committed to under the Multiannual Financial Framework applying from 2021; and that the applicable EU law concerning the EU’s own resources would not apply after 31 December 2020. The UK would also not be a party to the Common Agricultural Policy during any extension to the transition period, and could devise its own system of agricultural subsidies as long it did not exceed the UK’s CAP expenditure in 2019.137

135.The mechanism for calculating the actual payment for the extension is set out at Article 132(3). However, the amount that would be payable is far from clear. The “status of the United Kingdom during that period” would be taken into account, as well as the “modalities of payment of the amount”.

136.The decision on extending transition would be made by the Joint Committee. This means that it would not be subject to veto by individual Member States in Council, but it would still need agreement with the EU and would be subject to “negotiation”.138 As we have noted above (paragraph 37), there is also the question of transparency in the Joint Committee. It is far from clear what information would be provided to the UK Parliament (and the negotiation of the Withdrawal Agreement has not provided a good precedent). It is also far from clear what role Parliament would have in approving any such extension (and the relevant payment which would fall due). Members may wish to raise these matters when any Bill implementing the Withdrawal Agreement is brought before Parliament.

137.Finally, it is possible that even if the transition period is extended for a period of up to two years, at considerable cost, the negotiations with the EU may still not reach a satisfactory conclusion. In such circumstances, while the UK would have avoided a ‘cliff edge’ in December 2020, it would still ultimately fall into the backstop.

138.The Government has described the option to extend the transition period as an “insurance policy” in case the negotiations on the future relationship are not completed. However, this insurance policy gives rise to a number of significant issues. It would have to be triggered several months before the end of the transition period. It would then have to be negotiated by the UK and the EU. The cost of extension is unclear. And should the parties be unable to conclude their negotiations on the future relationship at the end of the extended transition, it would not stop the UK falling into the proposed backstop.

139.An extension of the transition period would also mean that the UK would remain subject to EU law (including new Regulations and Directives and the jurisdiction of the CJEU) for an extended period, without any representation in the European Parliament, the Council, or the CJEU. The risk that is inherent in the UK becoming a ‘rule taker’ (subject to new EU laws, without having had any say in their preparation or adoption) will become more acute, the longer the transition period lasts.

140.Given that any decision on extending the transition period would have to be taken by the Joint Committee, Members may wish to seek clarification from the Government on the role that Parliament will play in authorising any extension.

108 The Government has consistently described the period immediately following the UK’s exit from the EU on 29 March 2019 as an ‘implementation period’. Successive drafts of the Withdrawal Agreement, on the other hand, have referred to a ‘transition period’, and although Article 126 of the current text refers to “a transition or implementation period”, the term ‘transition’ is still used throughout the text. We therefore use the term ‘transition period’ in this report. See also para 129 of European Union Committee, Brexit: deal or no deal (7th Report, Session 2017–19, HL Paper 46).

110 The original text said that the single extension could be until “31 December 20XX”.

118 Withdrawal Agreement (25 November 2018), Article 127(5). The UK can also be compelled to participate by the Council in such measures where the UK’s non-participation “in the amended version of an existing measure makes the application of that measure inoperable” for the other EU Member States (Article 4a of Protocol (No 21) of the Treaty on the Functioning of the European Union).

119 Under Protocol (No 2) to the Treaty on the Functioning of the European Union on the Application of the Principles of Subsidiarity and Proportionality.

120 Article 1 of Protocol (No 1) to the Treaty on the Functioning of the European Union on the Role of National Parliaments in the European Union

131 A footnote to Withdrawal Agreement (25 November 2018), Article 132 providing for the extension of the Transition Period states: “In case of extension, the Union will notify other parties to international agreements thereof.”

133 The original text said that the single extension could be until “31 December 20XX”.

134 HC Deb, 15 November 2018, col 432

135 See Chapter 4 for further analysis of the Protocol on Ireland/Northern Ireland.

136 HC Deb, 15 November 2018, col 464

137 Withdrawal Agreement (25 November 2018), Article 127(1)(c) sets out a detailed derogation from Articles 107, 108 and 109 of the Treaty on the Functioning of the EU, which would “not apply to measures of the UK authorities, including on rural development, supporting the production of and trade in agricultural products in the United Kingdom up to the annual level of support which shall not be more than the total amount of expenditure incurred in the United Kingdom under the Common Agricultural Policy in 2019, and provided that a minimum percentage of that exempted support complies with the provisions of Annex 2 to the WTO Agreement on Agriculture.” This does not apply to the Common Fisheries Policy. However, there may be a separate agreement on fisheries and aquaculture (see para 153).

138 HC Deb, 15 November 2018, col 456

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