It is widely accepted that a transition period (or in the UK Government’s parlance: implementation period) will be necessary to ensure an orderly Brexit. The rationale behind transition is twofold: nobody expects an agreement on the future relationship between the UK and the EU to be negotiated and ratified by 29 March 2019; and even if it were, there would not be enough time for government, traders and individuals to prepare for its entry into force.
Given there is no political appetite for an extension of the period for negotiating the withdrawal agreement, a transition based on the status quo of the UK’s EU membership is the only way to avoid the EU-UK relationship finding itself in a disruptive limbo with trade on the basis WTO rules and other forms of cooperation either not happening or based on largely outdated international treaties.
A status quo transition sounds simple, but putting it in place will be legally challenging. This article takes into account the European Commission’s draft withdrawal treaty published on 28 February and the UK Government’s response to an earlier (nearly identical) Commission draft of 21 February. It distinguishes four dimensions of the transition: the UK-EU, EU-internal, UK-internal, and external dimensions. Each area raises a number of tricky legal questions which cannot be easily answered.
The UK-EU Dimension
It is evident from its inclusion in the withdrawal agreement that the Commission intends the transitional arrangement to be agreed on the basis of Article 50 TEU. It is, however, by no means certain whether Article 50 TEU is the appropriate legal basis for this. It is certainly preferred by the Commission, as in procedural terms it is relatively light-touch: it only requires a qualified majority in the Council (and not unanimity, let alone all the EU27 as parties to the agreement) and the consent of the European Parliament. The correct legal basis matters, as the EU only has limited powers to conclude international agreements on its own. Moreover, different legal bases may require different procedures to be followed.
The key test is whether the ‘essential object’ of the agreement envisaged is covered by the chosen legal basis. Article 50 TEU does not mention transition, but only allows the EU to ‘conclude an agreement with [the UK] setting out the arrangements for its withdrawal.’ Can one consider a transition to be covered by the arrangements for the UK’s withdrawal? The argument in favour is that the essential object of the transition is to facilitate the UK’s withdrawal. Counterarguments might point to the more specific EU competences on trade, and indeed the express possibility to extend the transition period foreseen in Article 50 TEU, which would avoid all the problems discussed here.
Assuming then that transition can be achieved on the basis of Article 50 TEU, does the transition have to be time-limited? It would seem clear from the wording of Article 50 that it is confined to agreeing the terms of withdrawal and cannot serve as a basis for a (permanent) future relationship. This would suggest that a time limit must be included and indeed, the Commission’s draft provides that the transition period ends on 31 December 2020.
This results in the practical problem that the EU and the UK would again end up negotiating against the clock. Could therefore the transitional arrangement feature an option of an extension? The Commission draft does not provide for one. At the same time, the UK is clearly not happy with the end date suggested and instead suggests that the duration of the transition period should be determined ‘simply by how long it will take to prepare and implement new processes and systems.’ It is unlikely that such a formulation would be (1) practically feasible; (2) politically acceptable; or (3) legally possible under the constraints of Article 50.
The express possibility of a time-limited extension is therefore preferable. It is unclear whether this can be agreed on the basis of Article 50 TEU in advance as, for example, an unlimited number of extensions might be considered too ‘permanent’. What seems clear, however, is that the extension cannot be agreed on the basis of Article 50 TEU after the withdrawal agreement has entered into force, for the simple fact that the UK will no longer be a Member State at that point. It would have to be done on a different basis and probably as a mixed agreement.
In terms of content, the European Commission’s draft adopts a catch-all approach by stipulating that ‘unless otherwise provided Union law shall be applicable to and in the [UK] during the transition period.’ Politically sensitive questions concern the enforcement of the agreement and in particular the question whether the UK must adopt EU legislation entering into force during transition. The UK’s proposal in this regard envisages a Joint Committee which would decide ‘whether new acts are within the scope of [the transitional arrangement]’.
Joint committees are a common feature of EU trade deals. They are composed of the parties to the agreement – here, the UK and the EU – and operate by way of unanimity. The UK proposal would be difficult for the EU to accept: it would in essence give the UK a veto on whether it had to introduce new legislation. This runs counter to the Commission’s concept of transition, which is based on the premise that the UK would have no say in the adoption of new rules during that period as it would no longer be a Member State.
The EU-Internal Dimension
From an EU-internal perspective, three key questions arise: the status of the withdrawal agreement under EU law; whether its provisions will have direct effect in the EU; and how it will be interpreted.
Like every other international agreement concluded by the EU, the withdrawal agreement, and thereby the transition provisions, will occupy a status between EU primary and secondary law. This means that the agreement must comply with substantive EU law (including the EU Charter of Fundamental Rights), but also with key constitutional principles, particularly those concerning the integrity of the EU’s constitutional framework. Compliance is reviewable by the ECJ and any deviation from the status quo risks being found incompatible with the overall treaty framework.
It will in practice be important for individuals in the EU27 to be able to rely directly on the transitional arrangements. There is a long line of ECJ case law confirming that agreements concluded by the EU are capable of having direct effect (1) if the nature and broad logic of the agreement do not preclude it; and (2) if the concrete provision is sufficiently clear, precise and unconditional. Some EU agreements expressly exclude such effect, for instance Article 30(6) CETA.
The Commission’s draft provisions on the transitional period are somewhat unclear in that regard. They require that applicable Union law shall ‘produce in respect of and in the UK the same legal effects as those which it produces within the Union and its Member States’, but they are silent on the effects of the agreement in EU law. Applying the above test set out by the ECJ, there should be little doubt that EU law – whether applied as such or through the prism of the withdrawal agreement – is capable of having such effects. Nonetheless, an express clarification in the withdrawal agreement would be helpful.
Finally, it is unclear how crosscutting principles of EU law, such as ‘mutual trust’, ‘duty of loyalty’ or ‘effet utile’ will apply under the transitional arrangement. On the one hand, the Commission is trying to ensure a continuation of the status quo. On the other, these principles stem from the supranational nature of EU law, which the UK has decided to abandon. What effet utile would one invoke when interpreting EU law as it applies during the transition period? Surely, the purpose of the transition period is to facilitate the end of UK membership and is therefore not the same as that of the EU treaties, which aim for closer integration.
The UK-Internal Dimension
The withdrawal agreement will require the UK to achieve the following in regard of transition: continued direct effect and primacy; a legal basis for the transposition of Directives; and continued jurisdiction of the ECJ.
As the UK is a dualist state, this means that it will need to enact legislation to achieve this. At present, this job is done by the European Communities Act 1972. That act, however, will be repealed by the European Union (Withdrawal) Act that is currently making its way through the UK Parliament. One option would be to delay the repeal of the 1972 Act and amend it so that it captures the transitional rules as well. But this overlooks the totemic nature of the act for those in favour of Brexit, so it will probably have to go. Bizarrely, the UK Parliament will then have to re-enact almost identical provisions for transition.
In addition, the relationship between the new Transition Act and the European Union (Withdrawal) Act will need to be clarified. The latter cannot simply be delayed, as it will repeal the European Communities Act and therefore the category of ‘retained EU law’ that it introduces will still be needed to ensure that there are no gaps in the legal system. Nonetheless, ministers will not be able to use their powers of amendment, as they will have to ensure that during transition the UK remains aligned with EU law as if it were a Member State.
The External Dimension
The final set of hurdles in the way of an effective transition relate to its external dimension. One question – a certain battleground for the negotiations – is whether the UK will be allowed to negotiate or even conclude free trade agreements with non-EU countries during that time. On the UK side, there is certainly a lot of political interest in this being possible. The Commission draft states that the UK must ‘not become bound in areas of exclusive EU competence’. This relates specifically to the EU’s Common Commercial Policy – in other words, the competence to conclude trade agreements.
The term ‘becoming bound’ is not entirely clear in this regard. It does not seem to exclude negotiations, but then there is a reference to the duty of sincere cooperation in the Commission draft as well, which is the reason why the UK is currently barred from engaging in such negotiations. Would that also apply during transition? It is clear that the UK could not ratify an agreement and put it into operation during transition. But could the UK sign an agreement and delay its entry into force until after transition? This might be compatible with the ‘not becoming bound’, but strictly speaking the UK would be bound as soon as it made an internationally binding commitment – usually the signing of an agreement. Clarification is therefore needed.
The bigger question in practice, however, is whether the UK will still be able to benefit from current EU free trade agreements after Brexit. The Commission draft expressly stipulates that the UK ‘shall be bound’ by them; whereas the UK’s response to the Commission draft seems to want to water this down and stipulate that they ‘continue to apply’. Both solutions are not good news for the UK, it would seem. A unilateral commitment to be bound would certainly be welcomed by third countries such as Canada or South Korea, but there would be no incentive for them to reciprocate this without anything in return. A ‘continue to apply’ clause would not change anything, however: after all, the EU and the UK cannot legally agree that a third country should be bound something agreed between the two. This is the rule of pacta tertiis nec nocent nec prosunt which is a general principle of international law that can also be found in the Vienna Convention on the Law of Treaties.
There are some rays of hope, however, at least as far as the transition period is concerned. Article 15(15) of the EU-South Korea FTA for instance states that it ‘shall apply, on the one hand, to the territories in which the Treaty on European Union and the Treaty on the Functioning of the European Union are applied and under the conditions laid down in those Treaties, and, on the other hand, to the territory of Korea’. And: ‘As regards those provisions concerning the tariff treatment of goods, this Agreement shall also apply to those areas of the EU customs territory not covered by [the previous paragraph]’.
One could argue that, during the transition, the EU treaties will continue to be applied in UK, and the UK will also remain in EU customs territory during that time. But then there is no guarantee that this interpretation will be shared by the third country concerned.
Agreeing and implementing a workable arrangement allowing for a relatively smooth transition from EU membership to life outside the EU as a third country is anything but easy. This article has had to restrict itself to highlighting some of the most politically controversial examples and had to ignore others, such as dispute settlement or the Common Foreign and Security Policy. Nonetheless, it has hopefully demonstrated that it is all too easy to get lost in transition.
University of Edinburgh
Dr Tobias Lock is Senior Lecturer in European Union Law and Co-Director of the Edinburgh Europa Institute at the University of Edinburgh. His research focuses on the EU’s multilevel relations with other legal orders, including the European Convention on Human Rights.
Shortlink: edin.ac/2CRkrXy | Republication guidance
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