Background Briefing: The EU27's Transition Negotiating Directives

Introduction

Today, the EU27 published their negotiating directives for the transition phase of the Brexit talks. These documents can be found here and here. As a next step, the aim is for the EU 27 Member States and the UK Government to reach agreement on this text, where the European Council summit of 22/23 March is being touted as the possible date to achieve such an agreement.   

Today’s directives, almost unchanged from the original proposal by the European Commission from December 2017 (see Open Britain briefing on this here), crucially spell out the following:

  • A transition period should not last beyond 31 December 2020 – this is less than the 2 years which the Government have been calling for and less and which Theresa May had envisaged in her Florence speech.
  • During transition all existing as well as new EU rules proposed during this period will apply to the UK, including all Single Market (as well as the four freedoms) and Customs Union rules, where the UK will have to apply existing EU customs’ policies.
  • The transition period will see the UK continue to have abide by rulings of the European Court of Justice and also accept the jurisdiction of the ECJ as a final arbiter.
  • Just like the European Commission’s December 2017 draft proposal, these negotiating directives recall that negotiations on the second phase can only begin when what has been agreed in the first phase are translated into legal terms.
  • The EU27’s negotiating directives act as a reminder that the talks on the future relationship cannot be negotiated under Article 50 but will be negotiated under Article 218 of the Treaty of the Functioning of the European Union and according to today’s document, these talks are not expected to be started until after the 22/23 March 2018 European Council. This provides a period of 6 months only to discuss the future relationship, prior to the start of the ratification process.
  • Already from the date of the withdrawal, the UK will no longer benefit, automatically, from the EU’s trade and other international agreements, throwing into serious question the UK’s ability to roll over existing trade agreements which it benefits from as an EU member state.

The thrust of these negotiating directives, if agreed to by the Government, would turn the UK from a rule maker to a rule taker, effectively taking the country into a worse situation than it currently enjoys today. Last week, the Brexit secretary, David Davis, spoke about the transition phase being a “bridge” to the future UK-EU relationship. However, as things currently stand, the Government have failed to ever spell out in concrete detail precisely what they want from the future relationship, rendering the transition phase a bridge to nowhere. 

If the Government need more time to negotiate Brexit then they should request an extension of the Article 50 negotiations as opposed to putting the UK in the position of being a “rule-taker”.      

Today’s text underscores yet again the difficult nature of the Brexit negotiations and poses serious questions for British businesses about the length of the transition period, with 31st December 2020 being 2 years 11 months’ away from today. The clock is very much ticking and the Government’s Brexit rhetoric is already crashing head-first into reality, serving, once again, as a reminder that everybody has the right to change their mind on Brexit, if they so choose. 

The following pages provide further examples from today’s recommendations, nixing the Government’s rhetoric so far on the Brexit negotiations.

 

The length of the transition period

Theresa May had alleged that a transition period would be around 2 years in length but today’s document shows that it will only be for 21 months, further putting business concerns at the fore-front of these negotiations. To counter these concerns, the Government should look to keep the UK in the single market and the customs union for the long-term.    

What Ministers said then: “As of today, these considerations point to an implementation period of around two years.”[1] (Theresa May, Florence speech, 22 September 2017)

EU27 transition negotiating directives: “The transition period should apply as from the date of entry into force of the Withdrawal Agreement and should not last beyond 31 December 2020.”

 

On the European Court of Justice/Taking back control

Throughout the 2016 referendum one of the key arguments to leave the EU by leading Brexiteers was about “taking back control.” The Government have also stated in the past that the UK would no longer need to abide by the jurisdiction of the ECJ, including during a transition period. However, today’s document makes a complete mockery of this and – if the Government agree to them – turns the UK from a rule maker with a seat around the table to a rule taker for 21 months. 

What Ministers said then: “So we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain. Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast. And those laws will be interpreted by judges not in Luxembourg but in courts across this country.”[2] (Theresa May Lancaster House speech, 17 January 2017)

“The UK must refuse to accept new EU or ECJ rulings during transition…UK must not agree to shadow EU rules to gain access to market.”[3] (Boris Johnson, 29 September 2017)

EU27 transition negotiating directives: “In line with the European Council guidelines of 29 April 2017 and the first set of negotiating directives of 22 May 2017, any time-limited prolongation of the Union acquis requires existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply, including the competence of the Court of Justice of the European Union.

“In relation to the application of the Union acquis to the United Kingdom, the Withdrawal Agreement should therefore, during the transition period, preserve the full competences of the Union institutions (in particular the full jurisdiction of the Court of Justice of the European Union), bodies, offices and agencies in relation to the United Kingdom and to United Kingdom natural or legal persons.”

“In line with the European Council guidelines of 15 December 2017, the United Kingdom will however no longer participate in or nominate or elect members of the Union institutions, nor participate in the decision-making or the governance of the Union bodies, offices and agencies.”

 

On the Single Market 

Only in December, the Prime Minister stated that the UK would be outside of the Single Market during a transition period. Today’s document clearly underlines that this will not be the case.  

What Ministers said then: “As I proposed in Florence, during this strictly time-limited implementation period which we will now begin to negotiate, we would not be in the Single Market or the Customs Union, as we will have left the European Union. But we would propose that our access to one another’s markets would continue as now, while we prepare and implement the new processes and new systems that will underpin our future partnership.”[4] (Theresa May statement to the House of Commons, 19 December 2017) 

EU27 transition negotiating directives: “In line with the European Council guidelines of 15 December 2017, any transitional arrangements require the United Kingdom's continued participation in the Customs Union and the Single Market (with all four freedoms) during the transition.”

 

On the Customs Union 

Prior to Christmas, Theresa May reiterated the Government’s red line of leaving the Customs Union in order to try to strike new free trade deals with other countries outside the EU. Today’s language by the EU27 clearly spells out that the UK will be abiding by EU trade policy until 31st December 2020 and will be very much in the Customs Union in this period.   

What Ministers said then: “As I proposed in Florence, during this strictly time-limited implementation period which we will now begin to negotiate, we would not be in the Single Market or the Customs Union, as we will have left the European Union. But we would propose that our access to one another’s markets would continue as now, while we prepare and implement the new processes and new systems that will underpin our future partnership.”[5] (Theresa May statement to the House of Commons, 19 December 2017)

“We respect the will of the British people – in March 2019 the United Kingdom will leave the European Union. We will leave the Customs Union and be free to negotiate the best trade deals around the world as an independent, open, trading nation...When we’ve left the Customs Union, we will build up on [relationships with other countries] by negotiating as an independent nation with the freedom to sign bilateral free trade agreements.”[6] (Liam Fox and Philip Hammond, 13 August 2017)

EU27 transition negotiating directives: “The United Kingdom should take all necessary measures to preserve the integrity of the Single Market and of the Customs Union. The United Kingdom should continue to comply with the Union trade policy. It should also in particular ensure that its customs authorities continue to act in accordance with the mission of EU customs authorities including by collecting Common Customs Tariff duties and by performing all checks required under Union law at the border vis-à-vis other third countries. During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.”

 

On the legally binding nature of the agreement

Following the agreement on 8 December between the EU and the UK on the terms of the UK’s withdrawal, comments by David Davis on the Andrew Marr Show on 10 December led both the European Parliament (here) as well as the European Council (here) in late December to spell out the importance of the agreement reached on the first phase of the negotiations. This was further underlined by today’s language by the EU27.

What Ministers said then: “It [the terms of ‘sufficient progress’] was much more a statement of intent than it was a legally enforceable thing.”[7] (David Davis, Andrew Marr Show, 10 December 2017) 

EU27 transition negotiating directives: “Negotiations in the second phase should furthermore translate into clear and unambiguous legal terms the results of the negotiations, including those obtained during the first phase, which should, where appropriate, be adapted in the light of the existence of the transitional arrangements referred to below.”

 

On regulatory alignment

The Government has previously spoken about the desire to see regulatory divergence between the UK and the EU, including during the transition period. Today’s document fully spells out that the UK will have to be in full regulatory alignment with the EU during a transition period. 

What Ministers said then: “That is why we believe a time-limited interim period will be important to further our national interest and give business greater certainty - but it cannot be indefinite; it cannot be a back door to staying in the EU. We are both clear that during this period the UK will be outside the single market and outside the customs union and will be a 'third-country' not party to EU treaties.”[8] (Philip Hammond and Liam Fox, 13 August 2017)

“We start at the same position, but we will manage the divergence…of course we will diverge, we will do things our own way.”[9] (David Davis, 24 September 2017)

EU27 transition negotiating directives: “In line with the European Council guidelines of 29 April 2017 and the first set of negotiating directives of 22 May 2017, any time-limited prolongation of the Union acquis requires existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply, including the competence of the Court of Justice of the European Union.”

 

On timings for the negotiations on the future relationship

The Government used to argue that the negotiations on the future relationship could be concluded prior to the UK leaving the EU. This has run into the reality that the UK will not be able to conclude any agreement until after it has left the EU and will not be able to start negotiating the future relationship until after March 2018, when the European Council adopts guidelines on the future relationship. Todays’ text only talks about an “overall understanding on the framework for the future relationship” and does not go into further detail about this.

What Ministers said then: "What we are intending to do is to get the form of the implementation period agreed quickly -- December or thereafter -- but we want to conclude the overall negotiation by the end of March 2019."[10] (David Davis, 25 October 2017 

European Commission recommendations: “During the second phase of the negotiations, an overall understanding on the framework for the future relationship of the Union with the United Kingdom should also be reached. For that purpose, the European Council decided that it would adopt additional guidelines on this framework in March 2018 and called for further clarity on the United Kingdom’s position on the framework for the future relationship.”

 

Rolling over international agreements

In the past the Government have claimed that the UK will be able to roll-over the existing trade agreements which we enjoy through our membership of the EU. Today’s negotiating directives by make clear that this will not be the case, and that unless renegotiated, the UK will lose access to the deals with more than 65 countries around the world.

What ministers said then: “The EU currently has 36 free trade agreements covering more than 50 countries. It is entirely possible for us to be able to transition those into UK agreements."[11] (Liam Fox 3 November 2017)

“There are a number of countries who said they would like to move directly to a new free-trade agreement but we have said we are simply unable to do that at the moment…It requires the willingness of the country involved to want to move the process further on and it’s dependent on our own capacity in our own department.”[12] (Liam Fox, 4 September 2017) 

EU27 transition directives: “During the transition period, and in line with the European Council guidelines of 29 April 2017, the United Kingdom should remain bound by the obligations stemming from the agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly, while the United Kingdom should however no longer participate in any bodies set up by those agreements.

“During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.”

 

[1] https://www.gov.uk/government/speeches/pms-florence-speech-a-new-era-of-cooperation-and-partnership-between-the-uk-and-the-eu

[2] https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech

[3] https://www.thesun.co.uk/news/4580334/boris-johnson-pm-brexit-red-lines/

[4] https://www.gov.uk/government/speeches/pm-commons-statement-on-european-council-18-december-2017

[5] https://www.gov.uk/government/speeches/pm-commons-statement-on-european-council-18-december-2017

[6] https://www.theguardian.com/politics/2017/aug/13/hammond-and-fox-brexit-transition-would-not-be-way-to-remain

[7] http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/10121703.pdf

[8] https://news.sky.com/story/brexit-hammond-and-fox-pledge-fixed-transition-to-avoid-cliff-edge-10986546

[9] https://www.politico.eu/article/david-davis-uk-will-diverge-from-eu-regulations/  

[10] https://www.irishtimes.com/news/world/uk/brexit-parliament-may-vote-on-deal-after-britain-leaves-1.3268289

[11] http://parliamentlive.tv/event/index/916c39e8-6824-4066-9b10-6a09d18d45a5?in=10:19:00 (10:19:05 – 10:19:20)

[12] https://www.politico.eu/article/brexit-trade-negotiations-liam-fox-britain-does-not-have-capacity-to-strike-deals-now/