Extra Time – But for What?

The point of writing Brexit Time and this blog has been to show how time shapes Brexit. From the timing of the referendum and the triggering of Article 50 to the two-year window for negotiating an orderly withdrawal, time has been a factor at key moments in the Brexit process.

As we approach 29 March 2019 – the UK’s scheduled date of departure from the EU – the European Council has offered the UK extra time to facilitate an orderly exit from the EU.

If MPs approve the deal negotiated between the EU and the UK before 29 March, the EU27 have offered to extend the Article 50 negotiation period to 22 May to allow legislation to be passed in the UK to give legal effect to the Agreement in domestic law.

Even if MPs fail to approve a deal – either because an approval motion is proposed and defeated or because the UK Government delays a vote till after 29 March – European leaders have also offered the UK an extension till 12 April.

The choice of these dates is clearly to avoid getting the UK mixed up in elections to the European Parliament which neither sides wants. The extension till 22 May is less extra time that Theresa May requested in her letter to European Council President Donald Tusk. Despite knowing that the EU27 did not want an extension into the election period, Theresa May had requested a 30 June deadline. The offer from the European Council underlines the European Commission’s position that a longer extension would pose legal risks in the formation of the new Parliament. So although the EU27 have shown some flexibility it’s not at any price.

What is significant about the extension offer is that the original idea of a single deadline of 22 May conditional on MPs approving a deal has been significantly modified by the unconditional offer to extend to 12 April. This is intended to prevent a cliff-edge “No Deal” exit on 29 March. But this offer is also problematic.

Firstly, Parliament is scheduled to be in recess from 4-23 April. In Parliamentary terms this only gives one additional week for a “meaningful vote” to be presented to MPs.

Secondly, as things now stand “exit day” is defined in UK law as 29 March. An extension beyond that date in terms of Article 50 TEU would keep the UK in the EU as a matter of EU law but without domestic law giving continuing legal effect to membership. The European Union (Withdrawal) Act 2018 allows a Minister to change the exit date by regulation and this would need to be approved by Parliament before the 29 March deadline. If MPs have not approved a deal the exit date would be changed to the 12 April default. If by that extended date the Brexit deal has been approved a further regulation would need to change the exit date to the later 22 May deadline on the assumption that the EU27 would agreed to this extended deadline notwithstanding that the vote had not taken place “next week” (as stipulated in the Conclusions to the European Council meeting).

How things play out depends on a couple of key events next week.

On Monday the Commons is set to debate a motion triggered under the EU (Withdrawal) Act as a consequence of the Commons’ second rejection of the EU-UK Brexit deal. Although this is a technical motion on how the Government intends to proceed it is also an important moment for MPs to signal how they want the Brexit process to develop.

A cross-party Amendment has been proposed that changes the normal rule giving precedence to Government business so that on Wednesday 27 March MPs can move and debate motions other than a Government motion to approve a Brexit deal. The idea behind this is to give MPs control over Parliamentary business with a view to taking control over the process.

The second key event would be the Government again asking the Commons to approve the Brexit deal. The offer of an extended Brexit deadline assumes that vote will take place the week beginning 25 March although in theory it could be delayed to the week beginning 1 April.

Despite the Commons Speaker’s statement that the Government cannot put substantially the same proposition to the House as the motions previously rejected, the European Council’s formal approval and endorsement of the Brexit deal together with a proposal to lay a draft regulation extending Brexit deadline would likely pass the Bercow test and so allow yet another “meaningful vote” to progress. However following the Prime Minister’s ill-judged berating of the very MPs whose backing she needs it is far from obvious that the deal will be approved.

The EU has made clear it is open to making changes to the Political Declaration if there is a majority in the Commons for an alternative Brexit. There are cross-party moves to articulate what that might look like and if the amendment to Monday’s motion is passed m, the Commons could have the opportunity to come to a view.

But the issue of free movement of people could make consensus on a Common Market 2.0 vision of the future relationship hard to sell to MPs in Leave-voting constituencies.

In the absence of an alternative consensus and in the face of a No Deal Brexit the only option may be to admit failure and requests an Article 50 extension of much longer duration. An extension of a much longer length would suggest a fundamental change in domestic politics is needed to chart a way forward. That could be an early general election or a further referendum.

Politics takes place in time but it is also structured by time. Brexit Time is unrelenting. It is also unforgiving.

The Legal Clarifications to the Withdrawal Agreement – White Smoke or Smoke and Mirrors?

On 11 March, the European Union and the United Kingdom announced that agreement had been reached on the legal clarifications sought by the United Kingdom with the hope that these might be enough to ensure backing by MPs. These clarifications are found in two joint texts – an “Instrument” relating to the application of the Withdrawal Agreement and a “joint statement” supplementing the Political Declaration – and a unilateral declarationmade by the UK Government. It is on the basis of these clarifications that the UK Government has indicated to Parliament that political agreement has been reached and MPs are due to vote on 12 March on a motion to approve the texts of the Withdrawal Agreement and Political Declaration as is required under section 13 of the European Union (Withdrawal) Act 2018.

The Legal Status of the Clarifications

The main text simply describes itself as an “instrument”. We tend to think of instruments as a generic description rather than identifying a specific type of instrument e.g. a treaty, a protocol, a decision. The instrument itself states that it is an instrument for the purposes of Article 31 of the Vienna Convention on the Law of Treatiesmeaning that it is an instrument “which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty”. The legal value of this is that when it comes to interpreting the objects and purposes of any treaty or agreement –  the central legal interpretative exercise – such an instrument is to be used to identify and define the purpose of the agreement. In other words, the joint instrument agreed between the Union and the UK is a legal instrument that reflects a common understanding of the purposes of provisions of the Withdrawal Agreement including the Protocol on Ireland/Northern Ireland.

The joint statement on the Political Declaration similarly attempts to clarify how aspects of the Political Declaration will be taken forward and underscores the relationship between the Withdrawal Agreement and the Political Declaration. Nonetheless, its legal status is no higher than that of the Political Declaration itself. The Declaration and the supplementary text identify political commitments and political intentions in instruments which are not of themselves binding legal texts.

The declaration by the UK Government sets out its understanding of the objective of the backstop. It is unilateral in nature and in consequence it cannot create obligations for the EU unless the Union acts in a manner which indicates that it considers itself bound by the declaration. Rather, it is a text that defines the legal position of the UK in respect of how it would act were it to consider that the backstop had become permanent contrary to its objective.

The Legal Effects Created

Far more important than the legal status of the texts is the legal effects that they are intended to create. In respect of the backstop, the key issues relate to how to avoid the backstop being triggered in the first place and how to exit the backstop were it to come into effect if no agreement could be reached to replace it.

Article 2(1) of the Protocol on Ireland/Northern Ireland states:

The Union and the United Kingdom shall use their best endeavours to conclude, by 31 December 2020, an agreement which supersedes this Protocol in whole or in part.

In other words, by the end of the transition period – during which time the whole of the UK will remain bound by EU law obligations – it is the aim of the Union and the UK to have in place an agreement that will prevent the backstop being triggered. In view of this – together with the general “good faith” obligation contained in Article 5 of the Withdrawal Agreement – the joint instrument sets out the commitments the parties are making with regard to the negotiations on subsequent agreements that will supersede the backstop. These steps include:

  • Preparatory work on the future negotiations as soon as the Withdrawal Agreement is signed (para 6)
  • A distinct negotiating track to replace the customs and regulatory alignment aspects of the Protocol through “alternative arrangements” including existing and future “facilitative arrangements and technology” (para 7, and para 6 of the supplementary joint statement)
  • A capacity for the distinct negotiating track to give rise to either a separate agreement or to form part of the overall future relationship. A separate agreement could become applicable and replace the relevant parts of the backstop even if the future relationship had not been agreed, and could be given provisional application pending ratification (paras 10 and 11)
  • Regular monitoring of the progress of the negotiations with high level conferences convened every six months (para 8) or at the request of the parties to address substantive obstacles that might risk or delay progress (para 9).

These are the sorts of steps I identified as being essential to the implementation of the commitments made in the Withdrawal Agreement and the Political Declaration in my proposal for an “Implementation Protocol”. They are intended to ensure that negotiations are on track to deliver outcomes before the end of the transition period.

The more contentious aspects relate to what happens if the backstop is deployed and there are problems with agreeing texts to replace the backstop. In his original legal advice, the Attorney General Geoffrey Cox highlighted that the backstop would endure unless and until replaced by a subsequent agreement. Although the parties did not intend the backstop to be permanent, if there was no way out of it, then it would endure. He highlighted that if a dispute about the backstop went to the Arbitration Panel established under the Withdrawal Agreement, the remedies available before the Panel did not include termination of the backstop. Instead the remedy that might be available would be to suspend the operation of part of the Agreement with a view to bringing the other side back to the negotiating table (para 28 of the AG’s advice).

The joint instrument aims to clarify that if either the UK or the Union act “with the objective of applying the [backstop] Protocol indefinitely” contrary to the good faith obligation contained in Article 5 of the Withdrawal Agreement and the best endeavours obligation in Article 2(1) of the Protocol, then the Joint Committee established under the Withdrawal Agreement is to be immediately brought into action with a view to resolving the dispute. If the dispute is escalated to an Arbitration Panel established under the Agreement, it can determine if one side is acting with the objective of applying the Protocol indefinitely. The joint instrument notes that a “persistent failure” to comply with its obligations could give rise to “temporary remedies” against the offending party. However, the key message it contains is that ultimately the aggrieved party could unilaterally enacts of proportionate suspension of its obligations under the Withdrawal Agreement – apart from the citizens’ rights provisions – “unless and until” compliance with the ruling of the Arbitration Panel is ensured (para 14).

In this way – and without termination of the agreement – the UK could unilaterally suspend its obligatons under the Withdrawal Agreement, but only once an Arbitration Panel had concluded that the Union was breaching its good faith and best endeavours obligations as regards the negotiation of an agreement to supersede the backstop, and only if there was a “persistent failure” to comply.

This presents a two-fold difficulty.

The first point is that the effect of this instrument is limited to only one type of breach – acting with the objective of making the backstop indefinite contrary to the obligations of good faith and best endeavours in the conduct fo negotiations – rather than any other disagreement between the two sides. Yet, it is perfectly possible that both sides and in good faith have very different understandings of a problem that is preventing them from reaching an agreement. Indeed, the difficulties with the negotiations thus far may point to that very fact. In legal terms, neither side has complained that the other is acting in bad faith even when they have clashed over what might be needed to avoid a hard border on the island of Ireland. This may mean that an Arbitration Panel could conclude that a dispute between the parties simply did not give rise to a breach of the good faith or best endeavours  obligations.

Of course, this would not prevent other types of dispute coming before the Arbitration Panel. Indeed a dispute could arise as to the operation of the review mechanism in Article 20 of the Protocol on Ireland/Northern Ireland which aims to determine when the backstop should cease to apply. But in placing all the emphasis on an exceptional breach of the good faith and best endeavours obligations, an opportunity has been missed to clarify how the Article 20 review mechanism might ordinarily be applied. In my proposal for an “Implementation Protocol” I suggested that the Joint Committee establish an “assessment framework” to help with the review mechanism, with oversight from the Arbitration Panel.

The second difficulty is the very open nature of the good faith and best endeavours obligations. As normative standards they are open to different interpretations and an Arbitration Panel might demand a high standard of proof to show that they had been breached.

The UK’s unilateral declaration is intended to shed some further light on this. It sets out the UK’s understanding that a breach of the good faith requirement preventing the conclusion of an agreement to supersede the Protocol would entitle it to consider that the Protocol was no longer temporary, and that nothing in the Agreement would “prevent it from instigating measures that could ultimately lead to disapplication of obligations under the Protocol”. This would seem to repeat para 14 of the Joint Instrument rather than adding anything to it. Indeed, it is clear that the outcome of the disapplication of obligations would have to follow the process to which the UK is legally bound under the Withdrawal Agreement, namely seeking a political resolution within the Joint Committee and a referral to an Arbitration Panel if there is no resolution. All of which takes us back to the difficulty in determining a breach of the good faith and best endeavours obligation in the first place.

In conclusion, the clarifications that have been produced are contained in documents with a legal status intended to produce legal effects. Insofar as those effects are aimed at de-risking failures in the political negotiations on the future relationship they are a step in the right direction, although my proposal for an “Implementation Protocol”goes further, not least by giving parliaments a greater oversight over future negotiations. In respect of remedies in the event that there are problems in the negotiations, the Union and the UK have put all their eggs in one basket – a breach of the good faith and best endeavours obligations. This may confine disputes and remedies to a narrow corridor of problems that may beset negotiations with the added problem that an Arbitration Panel may demand a great deal before finding a breach of those obligations.

MPs looking for a reason to vote in favour of the Government’s deal may well find enough in this to grasp with both hands. However, those looking for a reason to reject the deal will also find limitations in what has been produced.

100 Days to Brexit -From ‘Branching Histories’ to Binary Choices

Forget the 12 Days of Christmas, there are now just 100 days remaining of the United Kingdom’s forty-six-year membership of the European Union. In the upcoming weeks, days and hours, critical choices will be made that will shape not just Brexit but every aspect of UK political, economic and social life in the years ahead.

Eighteen months ago I posted the following on this blog:

In the introduction to Brexit Time: Leaving the EU – Why, How and When? I quote from a blog post written by Dominic Cummings, the campaign director for Vote Leave. In that post, he describes a world in which events happen that change the future, but where those events happen in a ‘non-linear’ way. These are the ‘branching histories’ that take us down one road rather than another.

This was brought back to mind when listening to my Cambridge colleagues David Runciman and Helen Thompson discussing Brexit on their weekly Talking Politics podcast. In particular, David spoke of the narrowing of choices down to a moment when a binary choice will be apparent and a decision will be made that will define Brexit. Whereas the Cummings thesis is that moments of destabilisation and disruption produce an expanding set of political choices and options, the Runciman perspective is one of a gradual narrowing of those choices into a new moment of decision.

What is perplexing about our current times is that both dynamics – expanding and contracting choices –  appear to be possible at the same time.

With the production of a Withdrawal Agreement and a Political Declaration on the future UK-EU relationship in November, the range of options available to politicians seemed to narrow decisively. Indeed, the consensus from both the UK and the EU sides of the negotiations is that this is thedeal and it is the only deal on the table. And with anxieties about the Irish backstop continuing to put at risk the conclusion of the deal, the response from the EU has been to reiterate that the text of the agreement is not to be re-opened for further negotiations.The binary choice seems to be Deal or No Deal.

It is precisely because the Prime Minister’s Brexit deal looks unlikely to get the consent of MPs at Westminster – a realisation that led the PM to delay a vote on the deal until mid-January – that every potential alternative outcome – from a ‘No Deal’ Brexit to a ‘Norway Plus’ future relationship – now seems to be in play. The ability of the UK to revoke its Article 50 withdrawal notification is also now an option following the recent ruling of the Court of Justice of the EU. We seem to be generating more possibilities rather than narrowing the choices down.

But choices will need to be made and the sequencing of those choices will determine the outcome.

The first choice is for MPs to make: to approve or not to approve the PM’s Brexit deal.

This is a decision MPs gave to themselves when Parliament enacted the EU Withdrawal Act 2018. The Government cannot proceed to ratification of the Withdrawal Agreement without parliamentary approval of the legally-binding Agreement and the accompanying non-binding Political Declaration (setting out the direction that UK and EU negotiators intend to take to talks on the future relationship).

If MPs do not approve the Brexit deal, Parliament has no capacity to substitute its own preferred version of Brexit. It cannot enter into negotiations with the EU. It could try directing Government as to the deal it might want – something it perhaps ought to have done when empowering the Prime Minister to trigger the Article 50 withdrawal process – but it is hard to conceive how this could be done without Government backing for the legislation that would then bind the Government in its EU negotiations, nor is it obvious that the EU would consider going back to the drawing board. if MPs reject the deal table then – absent anything else – a No Deal Brexit cannot be avoided. So why might the deal be rejected?

For those who dislike the backstop provisions of the Withdrawal Agreement, a No Deal Brexit may seem preferable despite its implications for the Irish border and for the reciprocal protection of the rights of EU citizens in the UK and UK citizens in the EU. This is the view of those for whom any deal betrays the mantra of taking back control. If the objection is instead to the future UK-EU relationship contained in the Political Declaration, there is nothing to prevent a different type of relationship being negotiated once the UK leaves the EU. The Political Declaration does not bind either side to only one vision of the future. Choices can still be made including the option of Norway-style access to the Single Market whether or not combined with a Customs Union. Provided the Withdrawal Agreement is otherwise acceptable, it is less obvious why MPs would vote down this deal simply because they think a better future UK-EU relationship is possible. Like it or not, the smoothest path towards the UK’s departure from the EU is to accept this deal.

If the deal is rejected by MPs, the Government faces further choices.

There is a political choice about whether a new government is needed to take charge of Brexit. This could happen in one of two ways without a general election. Having survived a vote of no confidence in her leadership within her own party, the Cabinet could, nonetheless, force the PM to resign under threat of Cabinet resignations. After all this was how Margaret Thatcher was evicted from No. 10. The problem the Conservatives face is the absence of an alternative position or rallying figure around which Tory MPs could coalesce. Given that the Conservatives are running a minority Government, unless a new Conservative administration could be formed that could command the confidence of the Commons, the initiative could pass to the Opposition parties to form a minority government. Because of the riskiness of the political arithmetic entailed in running minority administrations, the better option might be to precipitate an early election under the Fixed-term Parliaments Act. Nonetheless, for the Conservatives the risk would be that Labour would capitalise on the Conservative’s mishandling of Brexit, while for Labour the risk would be that it inherits the Brexit problem weeks before the UK’s intended departure. Changing government at this time seems politically dangerous.

It is against this background that the option of a further referendum begins to make more sense. Mrs May could end up backing a referendum as a Hail Mary option to give voters the option of backing her deal, thereby forcing MPs to get in line with the electorate. For those who believe a No Deal Brexit – or ‘managed’ No Deal – is preferable to the Brexit deal, allowing voters that option also has some leverage. It may seem more acceptable to fall off the cliff-edge if the people give politicians the final push. However, it is impossible to conceive of the necessary referendum legislation getting through Parliament if all that is offered is a choice between Mrs May’s Deal or a No Deal Brexit. So perhaps contrary to David Runciman’s assumption that decisions inevitably move towards a binary choice, a third option of remaining in the EU could well be an option.

With three potential choices on a referendum ballot paper – and the risk that a split ‘Leave’ vote could allow a ‘Remain’ vote to win even if the combined Leave vote was greater than 50% – voters would have to be asked to rank their preferences. A referendum in these terms would have the advantage of allowing voters to express multiple preferences at least as regards where things stand now. It would not give voters an alternative deal to vote on but as explained above, accepting the current deal does not rule out alternative scenarios in the future.

In a previous blog post I came to the conclusion that a referendum on the options was preferable to an attempt by Parliament to manufacture a ‘least worst Brexit’. That was when we were 340 days from exiting the EU and before the UK Government and the EU agreed withdrawal terms. The political climate has deteriorated significantly to the point we are now at and we need to be honest that a referendum that selects any one of the available Brexit options also has destabilising consequences.

If the electorate backs the PM’s Brexit deal as delivering on the 2016 referendum, it will highlight the chasm between politicians and the people on Brexit. Voters will have done the dirty work that MPs appeared incapable of doing on their own. The erosion of faith in parliamentary democracy will accelerate.

Backing a No Deal Brexit would double down on a loss of faith in politicians to negotiate an orderly exit from the EU by engendering a significant shock to the UK, Irish and EU economies. The babble about a Brexit on WTO terms or a managed No Deal Brexit veers between the wholly inaccurate and the triumph of hope over reality. Crashing out of the EU will produce a political and economic crisis.

If Remainers content themselves with the belief that staying in the EU is a comfortable reversion to the status quo, they ignore that the status quo changed with the 2016 referendum. The genie will not be put back in the bottle. The political right – and its representation in the tabloid press – stands ready to claim that ‘our’ Brexit has been stolen from ‘us’. Don’t be surprised if the Yellow Vest movement makes an appearance on UK streets, filling the gap created by the UKIP implosion.

The Prime Minister has suggested that another referendum will damage democracy. The problem is more that democracy is capable of damaging itself, the political and economic institutions and the social order it sustains, and from which it is itself sustained. That process began with the 2016 referendum and could accelerate with another referendum. The flip-side is that the system of representative democracy does not seem to be working either.

Perhaps David Runciman is right after all. There are binary choices to be made that are about the choice of democratic process – parliamentary democracy or direct democracy – as well as about what form Brexit will take.

If Parliament takes the initiative and approves the Withdrawal Agreement and Political Declaration, it will have taken the options of No Deal and No Brexit off the table. If Parliament rejects the deal and leaves it to the electorate to decide, it seems highly unlikely a ‘People’s Vote’ would really be on the deal if it is the deal that MPs have rejected. In practice, even if there are three options on the ballot paper, the first preference selection would likely become a binary choice between a No Deal Brexit and No Brexit. A referendum would put back on the table what parliament could have taken off the table. That is the choice MPs must make when they return to the Commons in January.

Is the ‘Backstop’ a Trampoline to the Future UK-EU Trade Relationship

Following the publication of the text of the Withdrawal Agreement on 14 November, the full text of the Political Declaration on the future UK-EU relationship is now keenly awaited (the outline was published on the same day as the text of the Withdrawal Agreement). It will set out the aspirations for an ambitious economic relationship between the UK and the EU to be negotiated once the UK has left the EU on 29 March 2019. EU leaders will consider these documents at a special summit to be held on 25 November.

The Withdrawal Agreement itself is not just the ‘divorce’ agreement but also sets out two routes to a new UK-EU relationship.

The apparently obvious route is to be found in the part of the Agreement establishing a ‘transition period’. In essence, the transition period is a legal ‘stand-still’ during which time the UK will remain bound by EU law obligations but without being a Member State and without any of the representation in the EU’s institutions that flows from EU membership. The transition period is intended to give the UK and EU time to negotiate agreements governing their future relationship. The transition period lasts until 31 December 2020 unless – before the end of July 2020 – the UK and EU agree to exercise an option to extend the transition period. Although the Withdrawal Agreement does not determine how long this extension might last, the use of the formulation ‘up to [31 December 21XX]’ suggests at least a year up until the end of 2021, although Michel Barnier has indicateda willingness to accept a transition period up until the end of 2022. Extending transition will entail making future budget contributions for the additional years that the UK remains in the transition period.

The longer that the UK remains in transition, the longer the UK and the EU have to negotiate a future relationship without the need for the provisions of the Protocol on Ireland and Northern Ireland – the ‘backstop’ – to be triggered. Until the transition period ends, frontier controls on the island of Ireland will continue to be eliminated because the UK will remain in the Customs Union and the Single Market. While offering a relatively smooth transition from EU membership – things would remain more or less as they are until the new agreement became applicable – an extended transition period has certain drawbacks.

A longer transition opens the UK Government to the accusation of delivering a ‘zombie’ Brexit that transgresses its own red lines. In transition the UK will have formally left the EU but will remain within the Customs Union, the Single Market – including free movement of people – and remain subject to the jurisdiction of the Court of Justice. Extending transition also entails additional budgetary contributions. The other less obvious but potentially significant problem with parking the UK in transition is that it doesn’t help identify what the UK would be transitioning towards and so might make it less easy for businesses to anticipate the adjustments they may need to make. That said, the political declaration ought to go some way towards illuminating the path towards the future relationship even if it stops short of building a direct legal bridge towards the ultimate destination.

The less obvious route to a future relationship with the EU is through the ‘backstop’. There are two reasons why we have perhaps not given sufficient thought to the backstop as an additional bridging device. The first is that we have tended to treat the ‘Irish problem’ as somehow distinct from the wider discussion about the UK-EU future relationship. This was odd given that it should have been clear that any solution to the border issues on the island of Ireland was always going to be a strong signifier of how the UK and the EU might structure their economic relationship to reduce any friction on trade. It would be a tall order to devise one solution to manage the border issues in Ireland as a ‘backstop’ and at the same time devise a different but equivalent solution for the future relationship. Nonetheless, with some factions pushing the Government towards a more minimalist free trade agreement – which would leave unresolved the Irish border issues – treating the backstop as an exceptional device became part and parcel of how we thought about it. Secondly, the language of ‘backstop’, or ‘insurance policy’ or ‘safety net’ has underscored the idea that this is a device which is not intended to be used.  Instead the focus has been on agreeing the future relationship to avoid ever having to invoke the backstop’s provisions.

However, when we consider what the UK and the EU have agreed as a backstop it becomes much clearer that this may be less a residual fall-back and more of a policy choice as a way of bridging the gap between EU membership and a future relationship. The backstop may turn out not to be a safety net, but a trampoline.

At the core of the backstop is the ‘single customs territory’ encompassing the customs territory of the EU and the customs territory of the whole of the UK including Northern Ireland. Good produced in either territory move without payment of any customs duties, as do goods from third countries that have paid the relevant tariffs applied by the EU and the UK to goods from outside the single customs territory (the UK will align its tariffs and its trade policy with that of the EU).

During the operation of the backstop, the UK has committed to certain ‘level playing field’ obligations in respect of taxation including compliance with EU and international standards as well as certain EU directives. In the spheres of environmental, social and employment regulation, there are  ‘non-regression’ clauses. These commit the UK to not reduce its level of protection in things like air quality targets and waste management. The UK has also agreed to implement a system of carbon pricing in line with the EU’s carbon trading system. In the area of employment protection, the Protocol requires the UK not to reduce standards in areas such as health and safety at work, working conditions and employment standards (but without application of the dispute resolution mechanism laid down in the Agreement).

In addition to all of this, the Protocol requires the UK to comply with EU state aid rules (with certain exemptions for agricultural production) albeit enforced not by the European Commission but the UK Competition and Markets Authority (the UK’s competition regulator). That said, the European Commission is to be allowed to bring cases in UK courts for alleged breaches of state aid rules. The EU’s competition rules on cartels and abusive market behaviour is also applicable.

In short, while the backstop means that the UK is out of the EU Customs Union and its Single Market, the coordination of the UK and EU customs territories and the maintenance of certain obligations aimed at ensuring that competition is not distorted ensure that the whole of the UK will enter into an economic relationship with the EU that may anticipate the type of future relationship that the UK and EU might seek to build. To be sure, an agreement on a future relationship will seek to go beyond this not least in terms of trade in services and other non-economic spheres of cooperation like foreign and security policies. But at least as regards trade in goods, entering into a backstop arrangement pending the finalisation of a complete package of agreements on a future relationship might seem preferable to an extension of the transition period.

What then becomes interesting is that the other provisions of the backstop that are specific to North-South relations on the island of Ireland and which would keep Northern Ireland more closely aligned with the EU Single Market than the rest of the UK – in order to avoid non-tariff barriers to trade on the island of Ireland – becomes the exceptional part rather than the dominant part of the agreement.

That the backstop may perform a more active role in defining what happens after 29 March 2019 can be easily evidenced. The Preamble to the Protocol itself makes clear that:

‘HAVING REGARD to the Union and to the United Kingdom’s common objective of a close future relationship, which will establish ambitious customs arrangements that build on the single customs territory provided for in this Protocol, in full respect of their respective legal orders.’

The UK Government’s own explanation of what the Withdrawal Agreement entails – while describing the backstop as an ‘uncomfortable arrangement’ – nonetheless states that:

‘If the future relationship is not going to be ready by 1 January 2021, the UK has two choices: request an extension of the [transition period] or activate the backstop.’

This presents the backstop as a distinctive policy choice. It would move the UK out of a stand-still transition in which the UK would have the obligations and not the benefits of EU membership into what would in effect constitute an ‘interim agreement leading to the formation of a free trade area/customs union’ within the meaning of Article XXIV of the General Agreement on Tariffs and Trade 1994. The enforcement mechanisms contained in the Withdrawal Agreement would apply in place of the normal enforcement mechanisms that apply to EU Member States and which will apply to the UK during transition. The free movement of people would come to an end.

Legally, using the backstop as an interim trade deal is not without its difficulties and may even be incompatible with the use of Article 50 TEU as a legal basis particularly if the backstop dragged on. Indeed, while there has been much discussion about the inability of the UK to unilaterally exit the backstop, were the backstop to become an enduring basis of UK-EU relations the legality of the arrangement would likely be challenged.

If the Withdrawal Agreement ever enters into force – and currently it looks unlikely to obtain approval in the House of Commons – we may yet look back and realise that turning the backstop into an interim trade arrangement was the key to making Brexit happen.

Extending the Transition Period: 3 Options

Following her visit to the European Council meeting in Brussels, the Prime Minister Theresa May indicated that the UK might seek to extend the Brexit transition period ‘for a matter of months’. A recent European Policy Centre discussion paper has proposed a one-off mechanism to extend the transition period for a year. However, this week newspapers reported that the Cabinet had been warned that the UK could end up in a long-running transition following its departure from the EU. In a new Faculty of Law Research Paper,  I explore three options open to the UK to extend the transition period and conclude that creating an extended transition and implementation facility would allow transition to end early as new agreements between the UK and EU enter into force.

For some time now, both the United Kingdom and the European Union have been agreed that once the UK ceases to be a Member State of the EU on 29 March 2019, it will enter into a ‘stand-still’ period during which the UK will continue to be bound by its existing EU obligations (alternatives to this approach were explored in an earlier blog). The rationale behind this is to avoid a ‘cliff-edge’ departure which would otherwise see tariffs and regulatory controls imposed on cross-border trade between the UK and the EU.

To the extent there has been disagreement between the two sides it has been on terminology – the EU refers to this as a ‘transition period’ while the UK insists on calling it an ‘implementation period’ – and duration – the UK sought a two-year period whereas the EU was only willing to agree a transition that would end on 31 December 2020 (coinciding with the end of the current budgetary ‘multi-annual framework’). The UK agreed to the EU’s offer of a transitionending in December 2020.

However, the duration of the transition period has come back to the fore of the negotiations for two reasons.

The UK believes that the issue of how to avoid a hard border on the island of Ireland can only properly be resolved in the context of the negotiations on the future economic relationship. The UK had hoped that this might be negotiated in parallel with the withdrawal arrangements. However, the EU has insisted that it is only the framework for future cooperation that can be discussed in the context of the withdrawal negotiations meaning that the terms of a future economic relationship can only be agreed once the UK leaves. As long as the UK is in transition, the issue of frontier controls on the island of Ireland does not arise. But with the transitional period ending at the end of 2020, EU negotiators have insisted on the need for a ‘backstop’ to ensure that if transition ends without a deal on a future relationship that meets the commitments made in the 2017 Joint Report, a ‘hard border’ in Ireland will be avoided. It is the failure to reach agreement on a backstop which is making negotiators on both sides reconsider a time-limited transition period.

The second reason for revisiting the duration of the transition period is that the pace of negotiations thus far, coupled with deep disagreement over the UK Government’s ‘Chequers Plan’ for a new UK-EU relationship, suggest that the transition period as currently conceived will be too short to allow for negotiations on a future relationship to be concluded. Taken together with the backstop issue, minds have turned to whether it would be prudent to extend transition,

In a recent European Policy Centre paper, Tobias Lock and Fabian Zuleeg make a strong case for the extension of transition, suggesting that a one-time one-year option to extend transition would be a workable solution.

In a new Research Paper, I explore three potential models for an extended transition:

  • A one-off option to extend transition for a year following the end of the initial transition period (the Lock and Zuleeg model)
  • A rolling or open-ended transition with an exit mechanism
  • An extended transition and implementation facility.

The Research Paper suggests that while Lock and Zuleeg make a good case, their proposal still risks a ‘second cliff-edge’ at the end of an extended transitional period if there is no agreement on a future relationship. A one-year optional extension may not give negotiators sufficient time to reach an agreement and might not create sufficient confidence to avoid the need to negotiate a backstop.

The most obvious way to avoid a backstop would be to keep the UK in transition unless and until a new economic partnership between the UK and the EU was agreed (provided also that this met the commitments on the Irish border agreed in the 2017 Joint Report). However, a perpetual transition would be politically unacceptable, be difficult to manage in budgetary terms and would conflict with EU law. It would, therefore, need an exit mechanism. This could be modelled on Article 50 itself and allow either the UK or the EU to notify the other of their intention to end the transition period. After a defined period, the transition period would come to an end with or without a deal on a future relationship.

A compromise solution draws on the existing draft Agreement and would allow transition to end once new agreements on customs and trade, foreign, security and defence policy are agreed and became applicable. Unlike an open transition, this facility would have to have a defined endpoint and a proposed deadline of 31 December 2022 is suggested. This is beyond the next General Election which is scheduled for 5 May 2022. The aim would be to give negotiators the flexibility to agree new partnership arrangements but with incentives to reach agreements early to avoid the need to continue to use the transition and implementation facility. The UK and EU could depart transition well before the facility expired. This does not ‘solve’ the Irish border issue. The Withdrawal Agreement must contain commitments which have already been made to avoid a hard border. The pressure remains on the UK to define how a future relationship with the EU would meet those commitments. But by expanding the time available to continue negotiations, at least some of the current pressure on negotiators may be released. The alternative is that no deal is done on withdrawal and the UK departs the EU without a Withdrawal Agreement. In which case the issue of frontier controls comes quickly back onto the agenda. Extending transition in the hope of finding solutions may be the least worst outcome.