On Monday, Britain and the EU announced a lot of progress on the terms of the British exit from the European Union, specifically when it comes to the so-called “transition stage” which will last until January 1st 2021, and during which Britain will take over EU rules in order to keep access to the EU single market.
Here’s an overview of some “wins” and “defeats” for the UK government.
Some UK “wins”
More control over trade policy during the transition
Britain will be able to negotiate and sign trade deals with third countries during those 21 months, although deals cannot enter into force until after the transition, unless approved by the EU.
EU negotiator Michel Barnier has however made clear that the UK Trade Secretary Liam Fox will probably need to focus more on keeping the trade access Britain enjoys to third countries thanks to trade deals negotiated by the EU, as he said: “They are leaving 750 international agreements. 750! The UK has work to do to reestablish relations with all those partners.”
Also, here, however, the British have obtained a concession. The EU has been convinced to adopt the British strategy of telling non-EU countries to treat the UK as a Member State during the transition period. Whether Mexico and South Korea will be happy to do so is another question, but one would suspect they won’t create a big fuss. They’ll probably save that for later, at the point when Britain would no longer enjoy full access to the EU’s single market.
Out of EU foreign policy, right to opt in to new justice and security measures
According to UK officials, the EU has listened to its concerns by fulfilling its desire to be opted out from EU foreign policy decisions during the transition phase while giving it during that time the right to opt in to new justice and security measures. In times of terrorism, and with a UK Prime Minister who has always been very keen on EU security cooperation during her time as Home Secretary, this is no surprise.
A pledge from both sides to act in “good faith” with a joint committee to oversee the agreement
The main concern for the UK government obviously is for Britain not to be called a “vassal state” during this time when it won’t be able to vote on the EU regulations it will be bound to apply. To make this bitter pill more acceptable, the EU has conceded to insert a promise that both sides will act “in full mutual respect and good faith” and “assist each other in carrying out tasks which flow from this Agreement”. Given that the transition period isn’t all that long and because both sides will be negotiating a new trade relationship at the same time, one shouldn’t expect anything less, but it’s a good idea to remind everyone of the obvious by including it in the withdrawal agreement.
This is no “right to delay rules”, as enjoyed by Norway, that other non-EU country that is in a “rule-taker” status in order to keep full access to the EU’s single market. In a previous comment one month ago, I’ve made clear how Britain is missing out on some of the perks enjoyed by Norway. Some of that has been mended. New is that the EU has also included a provision – in article 123(7) – for Britain to be consulted on newly proposed EU laws during the transition period, while a joint committee will oversee application of the arrangement. These are elements reminiscent of Norway’s deal. For the Norwegians, it is very important to be able to “shape” decisions, short of having the right to vote.
Fundamentally, the question will be how long the transition stage will turn out to be. There are no provisions to extend it, but apparently, many European governments think the duration can be reviewed. Legally it’s possible to extend it simply by having EU leaders and the UK government sign a Treaty to extend it, while enabling the trade aspects to enter into force provisionally, similar to the procedure of the EU’s agreement with Ukraine and Canada. Parliamentary ratification can then follow later. Without any doubt, one can and should raise some legal questions if this method were to be applied, but the urgency and importance of it all may well make this happen. If the “transition” is extended, the UK will likely ask for more sovereignty, as this would be decided right before the 2022 general election. Then, on the other hand, it should be possible to agree a lot. The UK’s pragmatic vision for its future relationship with the EU should stand a good chance of being accepted, as I’ve written.
Some UK “defeats”
The UK government wanted to restrict freedom of movement from the point it will have legally left the EU, but it has backed down on this one. Therefore, freedom of movement will more or less continue to apply during the transition, meaning that any EU citizen who wants to move to Britain in order to reside there for the rest of his or her life has time to make such a decision until the end of 2020.
The question is whether we’ll see a last-minute “rush” into Britain. Perhaps it will depend on what the UK’s future immigration laws look like. Given the fact that the UK public isn’t very keen on excessive migration restrictions after Brexit, we shouldn’t expect major restrictions. According to Open Europe polling, 56 per cent of British agreed with the idea of “controlled migration” while only 36 per cent supported simply “reducing the numbers of people coming into the UK”. Those British economic sectors dependent on EU workers will be happy to hear it. The fact that the UK government hasn’t played it hard here with the EU should also be an indication that when the UK has regained control over immigration policy towards EU citizens, it will remain a welcoming destination.
When it comes to the annual fishing negotiations on how much EU countries’ fishermen can catch in each other’s waters, the UK has accepted that its share of the total allowable catches will remain the same during the transition period.
David Davis said that: “Through 2020 we will be negotiating fishing opportunities as an independent coastal state, deciding who can access our waters and on what terms.” That doesn’t satisfy Scottish politicians or the Scottish Fishermen’s Federation, which stated that “we will leave the EU and leave the Common Fisheries Policy, but hand back sovereignty over our seas a few seconds later” as “our fishing communities’ fortunes will still be subject to the whim and largesse of the EU for another two years.”
Under the transition arrangement, Britain will only have the right to be consulted, not to vote during the annual haggling on fishing quotas. France has been pushing for the EU to increase its share relative to Britain, so the UK government has negotiated that the British share of “total catch” will remain unchanged during two years after EU exit.
The idea is now to link any changes in fishing quotas to the future EU-UK trade arrangement. Here, Britain has a strong hand, as European fishermen would catch four times the value of the catch allowed for the British fleet in British waters, but then UK fishermen catch a lot more fish than British consumers are able to consume, so the UK will want to keep the ability to sell British fish in Europe. That is why environment secretary Michael Gove had already pledged last summer to continue to grant European fishermen access to British waters.
What’s not agreed yet
On the issue of the Irish border, both sides have agreed that there should be a “backstop” option in the withdrawal agreement, which would enter into force if no other solutions are agreed. It doesn’t really go much beyond that, as the legal text is currently “unacceptable” for Britain, so expect quite a bit more drama on this issue, which is ultimately linked with the future relationship between Britain and the EU. Britain has suggested it’s keen to follow the “Swiss model” for selected sectors, by voluntarily cut and pasting EU rules that apply where there’s a lot of trade, to avoid disruption – with the caveat that the UK may still ultimately refuse to apply EU rules, accepting that it would then risk losing market access. A solution may be to apply this to the Irish border issue, with Britain taking over EU rules in those sectors that are relevant for Northern Ireland and the all-island economy. For now, the EU has branded this “pick and choose” – but on the other hand it had agreed in December that Britain should selectively “align” its rules only with the “rules of the Internal Market and the Customs Union which, now or in the future, should support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.“ Supposedly, all other rules shouldn’t be aligned. Isn’t that picking and choosing as well? Never mind that there wasn’t, of course, agreement on the content of the word “align”.
Maybe the EU was a bit frustrated when it suggested that Britain should erect a customs border within its own territory, but let’s hope that following the British outcry, the EU has realised it’s not exactly making a great contribution to solve the Northern Irish puzzle, also given that it was agreed in December that the whole UK – not parts of it – would leave the Customs Union. Also Labour has stressed that the EU’s backstop option for the Irish border as currently drafted could never be acceptable to any British Prime Minister. On March 26, talks will begin between the EU, Britain and Ireland, so let’s hope cooler heads prevail.
Despite stressing it is acting as a single bloc, the EU has provided a de facto veto to Ireland regarding the border question and to Spain regarding Gibraltar. Barnier has stated that no deal can apply to Gibraltar without a bilateral agreement.
Tensions over Gibraltar and Spanish border checks have been nothing new, but whereas the UK could in the past count on the EU to safeguard a smooth border over there, the European Union suddenly seems much less interested in preserving smooth cross-border movements during the transition – at least as compared with the passion it (rightly) shows for EU citizens in Britain. Are the 10,000 people – including many EU citizens – who cross from Spain to Gibraltar to work every day not worth the attention?
Of course, Spanish politicians are aware they aren’t going to manage to use Brexit to negotiate Gibraltar out of British hands and overturn the 1713 Treaty of Utrecht. Actually, Spain is one of the EU member states most friendly to Britain, given the importance of the UK for its tourism sector. Then, haggling over Gibraltar during Brexit talks constitutes a political posturing opportunity that may be hard to resist for any local politician. Possible Spanish demands may include joint control of the airport and ending what Madrid sees as Gibraltar’s status as a tax haven.
Although Britain has agreed to selected supervision by the EU’s top court, the European Court of Justice (ECJ), over aspects of the transition, for example EU budget law rules, it is still refusing to agree to letting the ECJ be the ultimate arbiter over disputes relating to the withdrawal and transition arrangement, especially as the EU is proposing that the ECJ can impose penalty payments as a remedy.
Is the prospect of a transition period working to avoid disruption for businesses?
According to the Chartered Institute of Procurement and Supply, one in seven European companies with UK suppliers has moved part or all of their business out of the UK. Of course we don’t know to what extent this is due to Brexit – it may well be have to do with the Bank of England’s devaluation. Also, we don’t know for sure if certain economic developments would have been much different in the absence of a transition deal. In any case, business federations are loudly proclaiming their desire to have a transition deal agreed as quickly as possible, so their concerns should be listened to. At a time when the US is experimenting with dangerous protectionist policies and the European Commission is clumsily responding with tit-for-tat threats, businesses shouldn’t have to worry about the EU’s obsession with imposing its own arbiter on a deal or inflexible politics in Northern Ireland and Gibraltar.