Beyond Brexit: the institutional framework Contents

Chapter 2: Purpose, scope and underlying principles

Purpose, essential elements and termination

19.The Preamble to the Trade and Cooperation Agreement (TCA) begins with a commitment, on behalf of both the United Kingdom and the European Union, to their core shared values, to “democratic principles, to the rule of law, to human rights, to countering proliferation of weapons of mass destruction and to the fight against climate change”. These are described as “essential elements of this and supplementing agreements”.

20.Article COMPROV.1, the first substantive Article of the TCA, then sets out its formal purpose:

“This Agreement establishes the basis for a broad relationship between the Parties, within an area of prosperity and good neighbourliness characterised by close and peaceful relations based on cooperation, respectful of the Parties’ autonomy and sovereignty.”

21.The juxtaposition of these two passages, the first Recital of the Preamble and the first Article of the TCA, demonstrates that the mutual respect of the Parties for each other’s “autonomy and sovereignty” sits against a backdrop of shared commitment to certain “essential elements” that bind them in common cause. We particularly welcome the inclusion of the fight against climate change as an “essential element”: this is, to the best of our knowledge, the first time it has been placed front and centre in an agreement of this kind.

22.The two Parties’ commitment to these “essential elements” is developed and reinforced by Title II of Part Six of the Agreement, ‘Basis for Cooperation’. Although the relevant provisions (Articles COMPROV.4 to COMPROV.11 and INST.35) are buried deep in a Part of the TCA that ostensibly addresses Dispute Settlement and Horizontal Provisions,11 in reality they are less about dispute settlement than over-arching principles. Article COMPROV.4 develops the two Parties’ commitment to democracy, human rights and the rule of law, Article COMPROV.5 their commitment to fight climate change, described as an “existential threat to humanity”, and Article COMPROV.6 addresses the proliferation of weapons of mass destruction. The following Articles outline other areas of common interest: crimes of concern to the international community; counter-terrorism; personal data protection and other areas of cooperation.

23.Article INST.35 then outlines the measures that either Party may take if they consider there has been “a serious and substantial failure by the other Party to fulfil any of the obligations that are described as essential elements”. To constitute a “serious and substantial failure”, an act would have to “[threaten] peace and security” or have “international repercussions”. Any act or omission that “materially defeats” the purpose of the Paris Agreement would be considered as falling within this definition. If no “mutually agreeable solution” can be found within 30 days, the concerned Party may “decide to terminate or suspend the operation of this Agreement or any supplementing Agreement in whole or in part”.

24.Article INST.35 describes a self-contained procedure, and even though it sits (at least in the current, provisional text of the TCA) in Part Six, Dispute Settlement and Horizontal Provisions, there is nothing in the Article itself to suggest that it is subject to the general dispute settlement or arbitration procedures. It may also be compared with Article FINPROV.8, which sits in Part Seven of the Agreement, Final Provisions. This confers a more general and similarly self-contained power upon either Party, to terminate the TCA in its entirety with just 12 months’ notice:

“Either Party may terminate this Agreement by written notification through diplomatic channels. This Agreement and any supplementing agreement shall cease to be in force on the first day of the twelfth month following the date of notification.”

Unfinished business

25.As noted above, the TCA, while establishing “the basis for a broad relationship”, was accompanied by a range of other documents, outlining further work to which the Parties are committed. The 15 Declarations accompanying the TCA set out the following items of unfinished business:

26.Taken alongside the proposed UK-EU agreement in respect of Gibraltar, this is a formidable list of ‘unfinished business’. It sits alongside a range of tasks, including decisions linked to the termination of ‘grace periods’, or review provisions, that are provided for in the body of the TCA itself or in the Withdrawal Agreement. Figure 1, based on a graphic produced by Professor Simon Usherwood and reproduced with his permission, shows some of the outstanding work that will have to be undertaken over the next decade.

Figure 1: Forthcoming UK-EU timetables and deadlines

Image of a timeline of upcoming UK-EU deadlines

Source: Professor Simon Usherwood, ‘The next Brexit timetables and deadlines’ (3 January 2021)

Territorial scope

The Crown Dependencies

27.The Committee has regularly scrutinised the impact of Brexit on the Crown Dependencies since 2016, including in a March 2017 report on Brexit: the Crown Dependencies,13 and through engagement with the Chief Ministers and other representatives of the Governments of the Crown Dependencies.

28.Article FINPROV.1 of the TCA states that the Agreement applies to the territories to which the EU treaties apply, and to the territory of the United Kingdom. The provisions on fisheries and trade in goods, however, also apply to the Crown Dependencies (the Bailiwick of Guernsey, the Bailiwick of Jersey and the Isle of Man), while a separate Declaration (as noted above) confirms the willingness of all sides to promote future cooperation between Guernsey, Jersey and the EU in respect of the recovery of claims related to VAT, customs or excise duties.

The Overseas Territories

Gibraltar

29.Article FINPROV.1(3) states that the Agreement “shall neither apply to Gibraltar nor have any effects in that territory”.

30.Since 2016 the European Union Committee has regularly taken stock of the impact of Brexit upon Gibraltar, including through the publication of a report on Brexit: Gibraltar in March 2017,14 a follow-up visit to Gibraltar in March 2018,15 and regular engagement with the Chief Minister of Gibraltar, Hon Fabian Picardo QC MP. In its work, the Committee noted three overriding priorities:

31.Most recently, on 19 January 2021, we took evidence from the Chief Minister on the proposed framework for a UK-EU legal instrument setting out Gibraltar’s future relationship with the EU, which was agreed in principle by Gibraltar, the UK and Spain on 31 December 2020.16 This proposes provisions to permit the application of elements of the Schengen acquis to Gibraltar, and a possible bespoke customs union arrangement between Gibraltar and the EU.17

32.Although formal negotiations with the EU on converting the in-principle agreement into a treaty have yet to start, we wrote to the Foreign Secretary on 10 February to welcome the progress already made.18 It will be for the new European Affairs Committee to scrutinise any UK-EU treaty on Gibraltar as and when it is agreed.

The other Overseas Territories

33.Article FINPROV.1(4) states that the TCA does not apply to the other Overseas Territories “having special relations with the United Kingdom”, which it then lists.19

34.We explored the issues facing the Overseas Territories as a result of Brexit in an evidence session in July 2017 with the Premiers, Chief Minister and other representatives of a number of Overseas Territories. More recently, we wrote to Lord Ahmad of Wimbledon, Minister of State, FCDO on 27 January 2021, expressing regret that the Overseas Territories had not been given the opportunity to be included in the TCA, and noting the particularly serious economic implications for the Falkland Islands of the imposition of tariffs and quotas upon its trade in fisheries (including Loligo squid) with the EU.20 Other Overseas Territories will also now be disadvantaged compared to neighbours enjoying free access to EU markets as developing countries.

Domestic and international law

35.Article COMPROV.13 confirms that the provisions of the TCA shall be interpreted “in good faith” and in accordance with the “customary rules of interpretation of public international law, including those codified in the Vienna Convention on the Law of Treaties”. It then states in terms that, as an Agreement in international law, it imposes no obligation to interpret its provisions in accordance with the domestic law of either Party; nor shall an interpretation of the Agreement by the courts of either Party be binding on the other.21 From the UK perspective, this explicitly precludes the possibility that any interpretation of the Treaty by the CJEU could bind the UK.

36.Article COMPROV.13 thus establishes the TCA as an Agreement operating purely on the international plane. One consequence of this is spelled out in Article COMPROV.16, namely that nothing in the TCA is to be construed as conferring rights on individuals, including the right to invoke the Agreement in domestic courts. Neither Party is to “provide for a right of action under its law against the other Party” on the grounds of a breach of the Agreement. This significant limitation on the rights of individuals and businesses is discussed further in Chapter 4 (see paragraph 128).

37.As Marie Demetriou QC pointed out, Article COMPROV.13 imposes a duty of good faith in “the interpretation of the agreement”. This is reinforced by Article COMPROV.3, which, in terms echoing Article 26 of the Vienna Convention,22 imposes the same duty “in the performance of the agreement”:

“The Parties shall, in full mutual respect and good faith, assist each other in carrying out tasks that flow from this Agreement and any supplementing agreement.”23

The second paragraph of Article COMPROV.13 makes the point even clearer: the Parties shall “take all appropriate measures … to ensure the fulfilment of obligations arising from this Agreement”, and they shall “refrain from any measures which could jeopardise the attainment” of those objectives.

38.As Marie Demetriou noted, Article COMPROV.3 is unusual: “You do not see expressly the duty of the good-faith obligation in the Canadian-EU agreement, for example.” She speculated that it might have been introduced into the TCA at the request of the EU, “following the United Kingdom Internal Market Bill and the threat of the UK to breach”. But even if this is not the case, the repeated references to good faith underline the importance to both Parties, in Ms Demetriou’s words, “that they stick to the spirit as well as the letter of the agreement and that they operate in an honest way”.24

Safeguard measures

39.Article INST.36 provides for “safeguard measures”. If either Party experiences “serious economic, societal or environmental difficulties of a sectorial [sic] or regional nature, including in relation to fishing activities and their dependent communities, that are liable to persist”, it may unilaterally take appropriate safeguard measures. These must be “restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation”, and should, as far as possible not disturb the functioning of the Agreement. There are requirements for immediate consultation, and for the other Party to take “proportionate rebalancing measures”.

40.Article INST.36 is not in itself unusual: comparable emergency or safeguard provisions are found in other agreements.25 What is striking, given the difficulty the UK and EU negotiators had in reaching agreement on fisheries, is the reference to “fishing activities and their dependent communities”. Nor is Article INST.36 time-limited, so it will remain in force even after the initial five-year adjustment period on fish quotas has come to an end in 2026—for instance, if the UK were then to take unilateral action that caused serious difficulties for EU fishing communities.

Conclusions

41.The first Recital of the Preamble sets the tone for the entire Trade and Cooperation Agreement. The United Kingdom and the European Union hold to the same fundamental values of democracy and the rule of law, and face the same global challenges of the proliferation of weapons of mass destruction and climate change: these are rightly the “essential elements” of their relationship. As liberal democracies more unites them than divides them, and while the UK’s EU membership has now ended, the two Parties’ mutual interest in close and peaceful relations is as strong as ever.

42.The process described in Article INST.35, in the event of a failure by one or other Party to respect the “essential elements” of the TCA, is a nuclear option: it is unlikely that either Party would seek to suspend the TCA in its entirety except in unprecedented and dire circumstances, even though, under Article FINPROV.8, they may do so without any explanation, and with just 12 months’ notice. A better reading of Article INST.35 is that it demonstrates to both Parties that the high-flown declaration in the first Recital of the Preamble has teeth, embodying as it does a shared and lasting commitment to the values that unite liberal democracies and their citizens.

43.We welcome the application of the TCA to the Crown Dependencies in relation to trade in goods and fisheries, guaranteeing as it does the continuation of tariff-free trade in goods, and serving as a sound basis for the Crown Dependencies’ future relationship with the EU. By contrast, the exclusion of Gibraltar and the United Kingdom’s other Overseas Territories from the scope of the TCA is striking.

44.We welcome the proposed framework for a UK-EU legal instrument setting out Gibraltar’s future relationship with the EU, which was agreed by Gibraltar, the UK and Spain on 31 December 2020. We hope that this can be swiftly converted into a separate UK-EU treaty concerning Gibraltar.

45.We invite the Government to confirm whether a UK-EU treaty on Gibraltar will be a stand-alone agreement (as appears to be envisaged by Article FINPROV.1(3) of the TCA), or whether it will be a supplementing agreement, and therefore subject to the same over-arching governance structure as the TCA itself.

46.The outlook for the other Overseas Territories, following their exclusion from the TCA, is more worrying. We note for instance the serious economic implications for the Falkland Islands of the imposition of tariffs and quotas upon its trade in fisheries (including Loligo squid) with the EU. We call on the Government to continue to defend the interests of the Falkland Islands and the other Overseas Territories.

47.It is notable that the TCA not only states, in terms, that its provisions shall be interpreted in good faith, but that the Parties shall take all appropriate measures in good faith to fulfil their obligations under the Agreement, and refrain from any measures that might undermine their fulfilment of those obligations. Given recent events, which have undermined trust on both sides, it will all the more important for the UK Government and the European Commission to reflect on this explicit commitment.


11 All references, and all Article numbers, refer to the draft text of the TCA published on 24 December 2020. The logic behind the ordering of Articles (which frequently contradicts their numbering) is impenetrable.

12 The TCA does not cover judicial cooperation in civil matters or family law, either in the substantive text or the accompanying declarations. This omission is considered in the report of the EU Security and Justice Sub-Committee. Beyond Brexit: policing, law enforcement and security (25th Report, HL Paper 250)

13 European Union Committee, Brexit: the Crown Dependencies (19th Report, Session 2016–17, HL Paper 136)

14 European Union Committee, Brexit: Gibraltar (13th Report, Session 2016–17, HL Paper 116)

15 European Union Committee, ‘EU Committee visits Gibraltar to examine impact of Brexit’ (13 March 2018): https://committees.parliament.uk/committee/176/european-union-committee/news/92985/eu-committee-visits-gibraltar-to-examine-impact-of-brexit/

16 Oral evidence taken on 19 January 2021 (Session 2019–21), QQ 1–14 (Hon Fabian Picardo QC MP)

17 ‘Deal between Spain and UK plans to eliminate Gibraltar border checkpoint’, El País, (11 January 2021): https://english.elpais.com/brexit/2021–01-11/deal-between-spain-and-uk-plans-to-eliminate-gibraltar-border-checkpoint.html [accessed 4 March 2021)

18 Letter from Lord Kinnoull, Chair of the European Union Committee, to Rt Hon Dominic Raab MP, Secretary of State for Foreign, Commonwealth and Development Affairs, dated 10 February 2021: https://committees.parliament.uk/publications/4638/documents/46899/default/

19 The listed Overseas Territories are: Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; Saint Helena, Ascension and Tristan da Cunha; South Georgia and the South Sandwich Islands; and Turks and Caicos Islands.

20 Letter from Lord Kinnoull, Chair of the European Union Committee, to Lord Ahmad of Wimbledon, Minister of State, Foreign, Commonwealth and Development Office, dated 27 January 2021: https://committees.parliament.uk/publications/4487/documents/45133/default/

22 This provides that every treaty in force “is binding upon the parties to it and must be performed by them in good faith”. See Vienna Convention on the Law of Treaties (1969), Article 26: https://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf [accessed 20 February 2021]

25 See for instance Article 92 of the Agreement establishing an association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part: https://eur-lex.europa.eu/resource.html?uri=cellar:f83a503c-fa20-4b3a-9535-f1074175eaf0.0004.02/DOC_2&format=PDF [accessed 20 February 2021]




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