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Beyond Brexit: the institutional framework Contents

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Chapter 1: The story so far

The Trade and Cooperation Agreement

1.On 24 December 2020, four and a half years after the people of the United Kingdom voted to leave the European Union, negotiators representing the two sides finally agreed the terms of the future UK-EU relationship and published the EU-UK Trade and Cooperation Agreement (TCA).1

2.The process that led to the publication of the TCA was long-drawn-out. On 29 March 2017 the then Prime Minister, Rt Hon Theresa May MP, formally notified the EU of the United Kingdom’s intention to withdraw from the EU in accordance with Article 50 of the Treaty on European Union. This triggered a two-year period within which, according to Article 50, the two sides were to “negotiate and conclude an agreement … setting out the arrangements for [UK’s] withdrawal, taking account of the framework for its future relationship with the Union”.2 Article 50 also established a procedure whereby the two-year period might be extended, and in the face of the rejection by the House of Commons of the Withdrawal Agreement negotiated by Theresa May’s Government, this procedure was repeatedly invoked. Only after the new Prime Minister, Rt Hon Boris Johnson MP, secured a general election victory in December 2019 was a revised Withdrawal Agreement approved and ratified, allowing the United Kingdom to leave the EU on 31 January 2020.

3.Upon ceasing to be an EU Member State the United Kingdom entered into a transition period, during which EU law continued to apply. The transition period was intended to give stability, providing reassurance to citizens and businesses while the terms of the new UK-EU relationship were negotiated and agreed. The original proposed Withdrawal Agreement, in November 2018, had envisaged a transition period of almost two years, beginning on 29 March 2019 and ending on 31 December 2020. This reflected the view of the former Prime Minister, that it would take “around two years” to “prepare and implement the new processes and new systems that will underpin that future partnership”.3 But the end date remained unchanged in successive iterations of the Withdrawal Agreement, so that following the UK’s eventual withdrawal in early 2020 just 11 months remained within which to negotiate the terms of a complex, broad and enduring UK-EU relationship.4

4.As a result, the more than 1,200 pages of the TCA were negotiated and agreed at extraordinary pace. Time pressure was compounded by intense political interest, as well as the challenges of the ongoing COVID-19 pandemic. It is therefore no surprise that the text of the TCA published on 24 December was provisional, containing some errors, and requiring further legal checking (or ‘scrubbing’) prior to ratification.5 It was accompanied by two much shorter agreements, on Nuclear Cooperation and on Security Procedures for Exchanging and Protecting Classified Information, as well as 15 Declarations agreed by the Parties, setting out their intention to address various still-unresolved questions on matters as diverse as road haulage and data adequacy. Then on 31 December it emerged that the UK, Gibraltar and Spain had agreed in principle on the framework for a separate UK-EU legal instrument setting out Gibraltar’s future relationship with the EU.

5.Not only was the TCA published in unfinished form, alongside a range of documents looking forward to further agreements, but it appeared too late for the EU to be able to ratify it before the end of the transition period on 31 December 2020. It therefore had to be provisionally applied by both Parties, initially until 28 February 2021, a period subsequently extended to 30 April 2021.6 This has allowed time for detailed scrutiny by the European Parliament, leading up to a vote on the TCA. In contrast, the UK Government, in bringing forward the implementing legislation required to give effect to the TCA before the end of the year, chose to disapply the requirement for parliamentary scrutiny that would otherwise have existed under the terms of Part 2 of the Constitutional Reform and Governance Act 20107—even though there has been ample time for such scrutiny to be completed prior to ratification. The result is that neither House of Parliament has had the opportunity for a formal debate or vote on the TCA itself, as opposed to the implementing legislation.

6.But despite its unfinished quality, and the limited scope for parliamentary scrutiny, the TCA marks a critical shift in UK-EU relations. From the moment Theresa May triggered the Article 50 process on 29 March 2017 there was the risk of a chaotic Brexit, without agreement on a host of issues of vital mutual interest. That is why, as long ago as December 2017, this Committee warned:

“‘No deal’ would mean the abrupt cessation of over 40 years of economic, political and legal partnership. It is difficult, if not impossible, to envisage a worse outcome for the United Kingdom.”

As we launched this inquiry it appeared that the publication of the TCA, along with the Withdrawal Agreement, had averted the risk of ‘no deal’. Then the Government’s announcement that it would unilaterally extend certain ‘grace periods’ in relation to the Protocol on Ireland/Northern Ireland first led the European Parliament to suspend plans to vote on the agreement (a necessary pre-condition for EU ratification) and then prompted the Commission to announce that it would take action against the UK.8 Although issues relating to the Protocol are beyond the scope of this report,9 these latest tensions reflect and compound a broader breakdown of trust between the UK Government and the EU. As a result, while the existence of the TCA has certainly lessened the risk of ‘no deal’, it has not wholly removed it.

7.We welcome the achievement of the United Kingdom and European Union lead negotiators, Lord Frost and Michel Barnier, along with their teams, in delivering the Trade and Cooperation Agreement under extraordinarily difficult circumstances, thereby averting the threat of a chaotic and damaging conclusion to the post-Brexit transition period.

8.We note that the final text of the TCA has yet to be published, and that it has been provisionally applied on the EU side. We regret that the UK Government, in bringing forward section 36 of the European Union (Trade and Cooperation Agreement) Act 2020, chose to disapply the procedure for parliamentary scrutiny of the TCA that would otherwise have applied under Part 2 of the Constitutional Reform and Governance Act 2010. An agreement of such complexity and importance surely merited formal debates in both Houses prior to ratification.

9.We also note that, at the time of writing, and in response to the UK Government’s decision unilaterally to extend certain ‘grace periods’ under the Protocol on Ireland/Northern Ireland, the European Parliament has declined to set a date for its vote on the TCA—a vote that is a precondition for EU ratification. The threat of ‘no deal’ thus remains, and a ‘no deal’ that took effect on 1 May 2021 would carry just as much risk as one taking effect four months earlier.

10.The current state of UK-EU relations underlines the importance of completing the process of ratifying the TCA. Whatever the imperfections of the TCA and the challenges presented by the text, and whatever the deficiencies of the process whereby it was implemented in domestic law, the TCA will provide a structure within which the UK-EU relationship can be managed and can develop. That structure is needed now more than ever.

The work of the European Union Committee

The European Union Committee, 1974–2021

11.The European Union Committee was first established, as the European Communities Committee, in 1974. The core task of the Committee and its sub-committees was to scrutinise EU (EEC, as it then was) legislation, bringing accountability and transparency to the work of UK Ministers in negotiating and adopting new laws that would bind the UK. The Committee has also published detailed, evidence-based inquiries on almost every aspect of EU policy, drawing on formidable experience and expertise at both Member and staff level, and setting a benchmark for engaged scrutiny by committees across the Member States.

12.The structure adopted in 1974 served Parliament and the public well, but the 2016 referendum was a turning-point. Since 2016 the European Union Committees have published 48 reports addressing the policy implications of Brexit, or various aspects of the Brexit process, but only six addressing the wider areas of EU policy or activity that before 2016 were their bread-and-butter. This refocusing of committee activity was justified because Brexit was an unprecedented and hugely complex task, involving not just the disentangling of almost half a century of legal, economic and political integration, but also the birth of a new relationship between the United Kingdom and its largest trading partner, closest neighbour and key strategic ally.

13.We have also been aware throughout that our Brexit-focused work would be finite: there would come a time when Brexit would be achieved, and Parliament and the country would move on. So we have repeatedly updated our working practices and structures in response to new challenges:

• In early 2019 we took over responsibility for scrutinising Brexit-related international agreements with third countries, on which we have published a further 30 reports;
• In early 2020 we presented proposals to the Liaison Committee to update our terms of reference, and to reorganise the European Union Committees for the duration of the transition period;
• In spring 2020, following the Liaison Committee’s report, we implemented a slimmed-down sub-committee structure, with a reduction to four EU-facing sub-committees, and a new sub-committee dedicated to scrutiny of international agreements.
• At the same time, we agreed with the Cabinet Office a streamlined process for scrutiny of EU laws, one that was proportionate to the UK’s status as a former Member State still subject to EU law.

14.Most recently, in late 2020, we contributed to the final phase of the Liaison Committee’s comprehensive review of the House’s committee structure, which began in January 2018 in the wake of the referendum. In January 2021 the House agreed the report of the Liaison Committee,10 and as a result the European Union Select Committee and its sub-committees will cease their work on 31 March 2021. In their place there will be a European Affairs Committee, with one sub-committee focusing on the Protocol on Ireland/Northern Ireland. A free-standing International Agreements Committee has already been appointed, replacing the previous EU sub-committee, and from April there will be four new committees with cross-cutting policy remits, on the Built Environment, Environment and Climate Change, Industry and Regulators, and Justice and Home Affairs.

This report and its four companion reports

15.This report, and the four companion reports from sub-committees that will be published in the same week, are the European Union Committee’s final contributions to almost 50 years of debate on the UK’s relationship with the European Union. In this report the Select Committee comments on those parts of the TCA that establish institutional structures to oversee its implementation, and to manage the developing UK-EU relationship. We also review the processes for resolving disputes between the Parties. Our sub-committees will report separately on the substantive provisions of the TCA, on trade in goods and services, on the environment, energy, and on law enforcement and criminal cooperation. The constraints of time, given the breadth and inherent complexity of the issues, have meant that our analysis cannot be exhaustive, but we have sought to identify and explore the most important elements.

16.These are still early days: the institutional arrangements envisaged by the TCA have in most cases not yet been implemented, and businesses are still adapting to the new terms of trade. So it would be premature to provide a full assessment of the agreement’s impact. Nonetheless, our aim in analysing the TCA and its associated documents is to look forward, not back. We have published many reports over the last four years on the Government’s conduct of the Brexit negotiations, its objectives and its red lines. Our priority now is to look beyond Brexit itself, and explore how the structures established under the Withdrawal Agreement and the TCA can be used most effectively to support good UK-EU relations in the years ahead.

17.In preparing this short report, we have drawn on evidence provided by a panel of experts, who gave evidence on 2 February. The following week, on 9 February, we heard from the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, and the UK’s chief negotiator (and now Minister of State in the Cabinet Office), Lord Frost, along with officials. We heard separately from the Chief Minister of Gibraltar, Hon Fabian Picardo QC MP, on 19 January. We are grateful to our witnesses for their input.

18.We make this report for debate.

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