Beyond Brexit: the institutional framework Contents

Summary of conclusions and recommendations

The story so far

1.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. (Paragraph 7)

2.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. (Paragraph 8)

3.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. (Paragraph 9)

4.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. (Paragraph 10)

Purpose, scope and underlying principles

5.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. (Paragraph 41)

6.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. (Paragraph 42)

7.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. (Paragraph 43)

8.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. (Paragraph 44)

9.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. (Paragraph 45)

10.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. (Paragraph 46)

11.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. (Paragraph 47)

The institutional framework

12.The EU-UK Trade and Cooperation Agreement establishes a complex but flat governance structure, which will sit alongside the structure already put in place by the Withdrawal Agreement. Such breadth and complexity are, in our view, likely to prove challenging. We also note the possibility that further agreements could in due course be brought under the same governance umbrella, adding still more breadth to governance. While initially we expect both sides will respect and adhere to the newly established structures, we recommend that the Government keep them under review—there may well be a case for simplifying and rationalising them in due course. (Paragraph 67)

13.One area of difference between the two structures is in the use of written procedure, which is prohibited in respect of the Joint Committee, by virtue of section 35 of the European Union (Withdrawal Agreement) Act 2020, but is permitted in respect of the Partnership Council. We call on the Government to explain the reasoning behind this difference of approach. (Paragraph 68)

14.The Government will need to commit significant resource to support the governance structure. This resource should primarily be focused in Brussels and in Whitehall: the extent of EU competence is such that Brussels will remain the key forum for developing UK relations with the EU-27. We therefore urge the Government to ensure not only that dedicated resource is available across Departments, but, as we recommended in our 2019 report Beyond Brexit, that the UK Mission to the EU in Brussels is able to drawn on additional resource to support it in monitoring and influencing developments in Brussels. (Paragraph 69)

15.Although the Member States are excluded from the governance structure established under the TCA, they will have a major say on the policy positions adopted by the EU. It will therefore be important also to provide the resource needed to develop the UK’s bilateral relationships with the Member States. (Paragraph 70)

16.There will also be a critical need to coordinate the Government’s contribution to the governance structures of both the TCA and the Withdrawal Agreement. The close symmetry between these structures, and the overlap of personnel, is helpful, given the synergies between the two Agreements, particularly in respect of Northern Ireland: it should assist in coordination and may ultimately pave the way for a formal rationalisation of the current two-headed structure. We welcome the fact that, at a time when the crucial UK-EU relationship is developing rapidly, there will be a designated Cabinet-level Minister charged with coordinating the Government’s engagement with the EU and leading the UK’s input into the governance of both Agreements. (Paragraph 71)

17.But this new ministerial role will bring with it increased accountability to Parliament. We welcome the recent decision that Lord Frost should answer questions in the House of Lords on a regular basis, and we underline the urgent need for effective mechanisms to allow the House of Commons to hold him to account. We also invite the Government to agree that any holder of the role to which Lord Frost has been appointed should appear at regular and predictable intervals before designated Select Committees of the two Houses. (Paragraph 72)

18.We note the absence of any provision in the TCA for regular summit-level meetings between the Parties. We note Lord Frost’s confidence that such meetings will occur naturally and organically, but given the number of bilateral relationships that are subsumed within the UK-EU relationship, we regret this omission, and believe there would be huge benefit to the UK in adopting a more structured approach. We invite the Government therefore to set out its plans for ensuring regular ministerial and Head of Government-level dialogue with the EU-27 and the Commission. (Paragraph 73)

19.The complexity of the governance structure underlines the need for both sides to commit to transparency. Although the TCA appears to establish a presumption in favour of transparency, its substantive provisions are weak, and unless further commitments to transparency are made it may be impossible for Parliament, the devolved legislatures, or wider civil society, to contribute effectively to the developing UK-EU relationship. Formal ministerial statements after meetings are not enough: we call on the Government to draw up a comprehensive mechanism to support document-based scrutiny by designated select committees, and more generally to promote the transparent operation of the governance bodies established by the TCA. (Paragraph 74)

20.Finally, we note with concern the Government’s decision not to allow the governance structure established under the TCA to meet. We acknowledge that the agreement has yet to be ratified, and is currently only provisionally applied. But it is fully operational, and it is now, when the new arrangements are still unfamiliar, that problems are most likely to be encountered. We see no justification, particularly given the agreed extension of provisional application, for allowing such a complex and important relationship, affecting the security and livelihoods of over 500 million citizens in the UK and in the EU, to drift without the formal governance arrangements having been activated. (Paragraph 75)

21.We welcome the TCA’s provision for a Parliamentary Partnership Assembly, bringing together Members of the Westminster and European Parliaments—there should be a presumption that any modern, multi-faceted international agreement of this kind includes an integral parliamentary dimension. In our view, the initial goal of the Assembly should be to help rebuild relationships between the UK and the EU and strengthen channels of communication between the two Parliaments. (Paragraph 87)

22.We note that the PPA will be particularly important, given that the European Parliament remains co-legislator in respect of all legislation affecting the EU Single Market in goods that applies in Northern Ireland under the Protocol on Ireland/Northern Ireland. MEPs will shape the laws that apply to the people of Northern Ireland: it is therefore vital that there should be a structure to enable parliamentarians in Westminster and Stormont to engage with MEPs throughout the EU’s legislative processes. (Paragraph 88)

23.We note that the TCA does not mandate the Parliamentary Partnership Assembly, placing the onus for establishing it upon the two Parliaments. A similar provision in the UK-Chile Agreement has yet to be implemented, and we note with concern the Chancellor of the Duchy of Lancaster’s view that this would be a matter purely for the two Houses, not the Government. The Government has extensive power of initiative in both Houses, and also has the power to frustrate committee-driven initiatives if it so chooses, simply through inaction. The Government should give impetus to the Assembly, by supporting Members and committees in bringing forward proposals, and by committing to table the relevant motions in both Houses. (Paragraph 89)

24.We note with regret that the wording of the relevant Article appears to preclude Members of the devolved legislatures from membership of the PPA. If this is indeed the case, it will be all the more important not only for other forms of direct engagement between the devolved legislatures and the European Parliament to be found, but for the legislatures of the United Kingdom to work together to support coordinated scrutiny of both intra-UK and UK-EU relations, in all their dimensions. (Paragraph 90)

25.The provisions of the TCA on civil society engagement are relatively weak. In particular, we regret that the Civil Society Forum will essentially meet at the pleasure of the Partnership Council, and we therefore call on the Government to explain how it plans to give effect to this provision in facilitating the work of this new body. (Paragraph 91)

Dispute settlement

26.Within the dispute resolution provisions of the TCA, the Government has broadly achieved its aim of bringing the direct jurisdiction of the Court of Justice of the European Union to an end. However, there are some caveats to this conclusion. The first is that some remaining obligations under the Withdrawal Agreement will continue to be subject to the CJEU (most notably those under the Protocol on Ireland-Northern Ireland). The second is that cooperation with the EU agencies will still be subject to the oversight of the CJEU. Finally, the indirect effect of CJEU judgments should not be underestimated, particularly in the fields of law enforcement, judicial cooperation and data exchange. (Paragraph 129)

27.The ending of the direct jurisdiction of the CJEU, and the inherent breadth and complexity of the TCA, means that, as we envisaged in our 2018 report, Dispute resolution and enforcement after Brexit, it has been necessary to create a varied series of dispute resolution mechanisms to deal with the many areas of potential disagreement that could arise between the two Parties. (Paragraph 130)

28.This complex architecture is necessary to deal with the unique nature of the TCA—a ‘one size fits all’ method of dispute resolution was never likely to be sufficient. Many of the mechanisms, such as arbitration, are familiar from other free trade agreements. But other mechanisms, such as the proposed ‘rebalancing’ measures, are novel, untested, and without clear precedents. (Paragraph 131)

29.Only time will tell if these novel approaches are workable in practice, or if they will have a destabilising effect. There is a risk that, if the Parties do not behave pragmatically and reasonably, some of the dispute resolution mechanisms could be used to trigger a broader renegotiation of the TCA—or even, in an extreme case, to justify termination of all or part of the agreement. (Paragraph 132)

30.We regret that it was not possible to find a means to protect the interests of individuals and small businesses under the TCA. The fact that the bulk of the arrangements are necessarily State-to-State means that access to justice will be restricted, and the interests of those who are unable to lobby effectively may be overlooked. (Paragraph 133)

31.We therefore call on the Government, in reflecting on the domestic consultation that will be needed to support the implementation and operation of the TCA, including the establishment of the domestic advisory groups provided for in Article INST.7, to prioritise measures to mitigate this loss of access to justice. Mechanisms are needed whereby individuals and businesses (particularly SMEs) adversely affected by the operation of the Agreement can swiftly escalate issues to Government, so that the Government can then pursue them. Even in the weeks since 1 January 2021, it has been clear that quick and effective resolution of issues experienced by individuals or businesses is essential if the wider Agreement is not to be brought into disrepute.(Paragraph 134)

32.More specifically, we call on the Government to set out the safeguards and procedural rights available to those citizens in the UK who may be subject to extradition requests from EU Member States under the terms of the TCA, and in particular to explain how those rights have changed from those that were available before 1 January 2021, under the terms of the European Arrest Warrant. (Paragraph 135)

The future of UK-EU relations

33.The governance structure established by the Trade and Cooperation Agreement has been designed to support cooperation between the UK and the EU, as autonomous entities, across many areas of mutual interest. But the TCA is a starting point, not a final destination, for UK-EU relations. Cooperation may expand and deepen over time, or it may narrow in scope as the two Parties diverge. From the UK perspective, this Government—and future Governments, with their own democratic mandate—will have to make difficult choices. It is already clear that these choices will demand trade-offs, between economic, political and constitutional considerations. As we concluded in 2018, there is no ‘free lunch’ in UK-EU relations.(Paragraph 145)

34.What is vital, though, is that both sides approach the new relationship constructively, in good faith, with the aim of rebuilding the trust that has been so undermined in recent times. Liberal democracies are precious, and they should work together, not pull apart. The TCA provides a structure within which the UK and the EU can do just that: the opportunity must not be wasted. (Paragraph 146)





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