Professor Michael Dougan is Professor of European Law and Jean Monnet Chair in EU Law in the University of Liverpool Law School
This is the text upon which the video was based, but there may be minor deviations between this text and actual delivery.
Welcome to another short video from the Liverpool Law School. This time, we’re going to concentrate on an issue which has shot to the top of the political agenda and looks set to dominate discussions for at least the next few months: a transitional agreement between the UK and the EU.
On its face, this sounds like a relatively specialist issue. And there’s certainly a lot to say: I’ve just finished a lengthy article exploring the detailed issues raised by transition, for publication in the Common Market Law Review later this year. But transition isn’t just a technical question; it is of fundamental importance to the UK’s entire plans (such as they are). Put simply: if transition works, it makes the task of an orderly withdrawal much easier; if it doesn’t, things could well get pretty messy, pretty quickly.
The starting point for our discussion is Theresa May’s speech in Florence on 22 September 2017, where she called for an “implementation period” between the date of UK withdrawal and the birth of a new “deep and special partnership” with the EU. However, it was only after the European Council in December 2017 that detailed negotiating instructions on transition could be adopted for the Commission. The expectation remains that a legal text covering both separation issues and transition, plus a political declaration on the outlines for a future EU-UK relationship, should all be finalised by October 2018.
At the outset, it is important to be clear about what the UK is not asking for here. On the one hand, the UK is not asking for a direct prolongation of its formal EU membership – beyond the two years provided for (by default) under Article 50 TEU. The date of withdrawal remains as planned: on 29th March 2019, the UK will become a third country in relation to the EU.
On the other hand, nor is the UK Government trying to negotiate an “implementation period” in the sense of a phased entry into force of a final deal on future relations with the EU, also to be done and dusted by October 2018. Remember that that was the transition proposal originally set out in the Government’s White Paper of February 2017 and repeated many times since. Of course, it was never a credible proposal: there was no prospect whatsoever of reaching a final deal on the future relationship, while the UK was still a Member State, under the auspices of Article 50 TEU, and within such a restricted timescale. And obviously: there can be no phased implementation of an agreement which does not actually exist.
Instead, the UK is requesting that the Article 50 TEU agreement – in addition to dealing with citizens rights, the situation of Ireland and the divorce finances – should provide for a post-withdrawal transitional period designed to “ease the pain” of what would otherwise be both an imminent and an abrupt UK departure. The Government’s dogged insistence upon continuing to use the phrase “implementation period” is simply an attempt to disguise its own fundamental political miscalculations in the Article 50 TEU negotiations so far.
Be that as it may, the UK’s request raises some obvious questions. What are the motivations behind the proposed transitional deal? What do we know about the two sides’ political preferences, as regards the scope of and basis for cooperation during transition? And what constitutional or legal issues might a transitional agreement raise, particularly for the EU?
Let’s start with the motivations underpinning the proposed transitional deal. Here, the EU’s and the UK’s interests appear to have converged around two main points.
First, both sides want to give public authorities more time to prepare for the consequences which will flow from the very fact of withdrawal. Most people assume that refers to obvious tasks such as the recruitment and training of personnel, or the physical preparation of ports and other infrastructure, as required for the introduction or massive expansion of customs controls.
However, as our viewers will know from previous videos, the challenges go much, much further than that. Such is the sheer scale of the task which the UK Government has brought upon itself, in order to prepare internally for withdrawal from the EU, without a serious risk of experiencing wide-scale regulatory and administrative malfunction, that the UK simply needs more time in order to complete the necessary domestic work at even the minimum acceptable level of competence.
We refer here not only to the vast amount of complex technical work, important policy choices and new institutional arrangements that need to be undertaken pursuant to the (already seriously delayed) European Union (Withdrawal) Bill, simply in order to safeguard basic standards of legal continuity and legal certainty. In addition, the UK needs to design and implement new regimes to govern entire sectors such as agriculture, fisheries, customs and (EU) immigration. That is besides reaching agreement on a resettlement of the devolution regimes for Northern Ireland, Wales and Scotland. And the challenges are not only internal: the UK still has a mountain to climb in regularising and / or rebuilding a wide range of its international relations in fields such as trade, the environment and security. Let’s be honest about it: the UK needs transition far more than the EU does.
Secondly, both sides wish to allow businesses and public services more time to make their own operational preparations for the practical consequences of UK withdrawal: all across Europe, existing supply chains may need to be adjusted, recruitment practices and training needs may need to be rethought, new legal structures may need to be adopted, fresh supervisory requirements may need to be fulfilled.
Here, however, the UK Government is perhaps overselling the benefits of transition by suggesting that it will offer businesses the chance to avoid undergoing two sets of regulatory adaptations. There is absolutely no guarantee that transitional will mean “only one regulatory change” for businesses. It seems at least as likely that transition will have expired, but complex and difficult negotiations over the future relationship will still be ongoing, or at least not yet cleared through the multiple hurdles of successful ratification across the EU as well as the UK.
But anyhow, what is clear is that EU and UK interests have converged around the principle of a post-withdrawal transitional regime which should (as far as politically and legally possible) be based on a temporary continuation of the status quo. And that brings us to our next main question: what do we know about the political preferences of the EU and the UK, when it comes to the more detailed framework required to support continued cooperation during a post-withdrawal status quo transition? Here, we can highlight several key issues.
First, in principle, which fields of cooperation would be covered by transition? The UK only ever mentions trade and security. But the EU understanding is much more comprehensive: transition should cover the whole scope of existing EU law and policy; subject only to minor exceptions (for example) in fields where the UK had opt-outs as a Member State.
Secondly, within those fields of cooperation, what would be the more precise basis for continued cooperation between the EU and the UK? Both sides agree that transition must be based on the EU’s rules. But the EU goes further – for example, insisting that Union law should continue to produce the same legal effects within the UK as it does across the EU itself during the transitional regime. That means continuing with principles such as direct effect and supremacy; probably also loyal interpretation and effective judicial protection; presumably too the Charter of Fundamental Rights. If so, the Government will have to put many of its plans under the EU (Withdrawal) Bill on ice during transition.
Similarly, the EU insists that the UK should be obliged automatically to follow any new changes in Union law adopted during transition. There is scant interest in any British desire for a screening or filtering mechanism on this point. If those who screech that this would reduce the UK to a vassal state, were at all capable of rational self-reflection, they should really be explaining to the British public: whatever happened to that promise about the UK “holding all the cards”?
Thirdly, the UK has nevertheless made several specific suggestions to deviate from the status quo during transition. Some such suggestions are relatively uncontroversial, e.g. the ability for the UK enter into formal trade negotiations with third countries, provided that the entry into force of any new deals is delayed until transition expires. In fact, the EU has even held out the possibility that certain new UK agreements could enter into force during transition itself – provided the EU itself agrees. After all, what does the EU have to lose here? The UK is unlikely to achieve very much during transition, given that our main focus is actually on trying to persuade third countries to simply copy and paste existing EU agreements over for the benefit of the UK – subject to whatever concessions they can ring out of us by taking advantage of the Government’s relative inexperience and apparent desperation – then implement them into UK law under the sweeping powers of executive decree being claimed for himself by Liam Fox under the Trade Bill.
Potentially more problematic is the situation regarding the continued free movement of persons. The EU position here is robust: not only must free movement continue in full during transition; but in addition, the “specified date” for calculating entitlement to protection under the citizens’ rights provisions of the Article 50 TEU agreement must be the end of transition (not just the date of withdrawal). The UK Government’s precise position on this issue remains unclear, but Theresa May recently indicated that, even if the UK accepts temporary free movement, it will not extend the “specified date”. The Government’s pandering to populist hostility against EU migration risks this becoming a real sticking point in the negotiations.
Fourthly, what would be the institutional arrangements governing transition? The European Council has been crystal clear: existing EU regulatory, budgetary, supervisory, judicial and enforcement structures must apply. However, the UK would no longer participate in or nominate or elect members of the Union institutions. Moreover, the UK would be offered only operational, not decision-making, participation in the EU’s various agencies (in fields such as medicines, chemicals or police cooperation). Again, the basic price of transition is plain: the UK must transform itself voluntarily from leading rule-maker into passive rule-taker. David Davis has tried to push back – demanding ways to ensure that the British voice is still heard – but has offered no concrete proposals.
In any case, the UK has resigned itself to the fact that it would remain subject to the continued enforcement powers of the Commission and the full jurisdiction of the Court of Justice during any transitional period. But the Government wants the powers of the Court to be replaced as soon as possible with alternative (though again undefined) dispute settlement arrangements. Many lawyers find it difficult to fathom the irrational hatred of the Court that seems to torment the waking hours of the average British Europhobe. But so far, the EU has shown not the slightest inclination to accommodate such political shenanigans. On the contrary, as I wrote in my Common Market Law Review paper: the EU has a good case to push for stronger powers to incentivise full UK compliance with its transitional obligations: for example, the possibility of suspending parts of the agreement as a penalty for systematic misbehaviour. So it’s interesting to see the news reports during the last few hours, suggesting that that is exactly what the EU is now proposing.
Fifthly, what would be the duration of the transitional regime? The UK Government insists that transition should be strictly time limited but expects the period to last “around 2 years”. The EU27 are proposing a shorter transition of around 21 months, to expire by 31 December 2020. Either period is a lot shorter than many businesses would like. But so far, there seems little support an explicit facility to extend the duration of transition, should the need arise.
Finally, what would be the territorial scope of transition? It remains to be clarified whether transition might also benefit those overseas territories (such as the Falkland Islands, Cayman Islands or Bermuda) that currently enjoy a special status under EU law, thanks to UK membership. However, the main question is whether the EU27 will allow Spain to exercise a de facto veto over extending any transitional deal so as also to cover Gibraltar.
So: although the two sides agree on many of the key principles of transition, some important political differences remain to be bridged. But transition is not just about politics. The EU27 have said that any deal must also be “legally possible”. And some influential voices have raised concerns about how far transition would be compatible with the legal powers contained in Article 50 TEU. Let’s highlight three main legal issues.
First, an ambitious transitional deal is certain to touch upon issues of national as well as Union competence. One would normally expect such “mixed agreements” to require national as well as EU level ratification. If so, the process of securing transition would suddenly become much more cumbersome, potentially prolonged and ultimately uncertain. However, the Council has declared that Article 50 TEU gives the Union an exceptional power solely to negotiate the terms of withdrawal on behalf of the remaining Member States, even as regards issues falling within national competence. That is a very convenient political understanding, but it remains vulnerable challenge, for example, by a disgruntled Member State, should the unity of the EU27 break down at a later stage in the negotiations. And so the UK’s apparent strategy of seeking to “divide and rule” the EU27 carries real risks, precisely if breaking the unity of the other Member States only ends up creating a disgruntled country that objects to the Union’s current understanding of the Article 50 process.
Secondly, EU constitutional law seeks to insulate the internal functioning of the EU institutional and legal system from any external interference or distortion. Such principles would become relevant, should the UK try to ask for special privileges that would not normally be available to any third country, e.g. pushing for full (decision-making) membership of EU agencies; or arguing that references to the Court of Justice by British judges should be advisory (rather than binding) in nature.
Thirdly and perhaps most difficult, Article 50 TEU adopts the fundamental premise that the Treaties will cease to apply to the UK, at the moment of its withdrawal, when it formally becomes a third country. However, the EU-UK plan is for an ambitious transitional agreement based on the wholesale extension of Union law to the UK just as if it were still a Member State.
There are no proposals to construct an entire edifice of free-standing, comprehensive and detailed EU-third country cooperation mechanisms that would give specific legal expression to the two sides’ overall political conception of a “status quo” transition. Far from it: the plan seems to be that vast tracts of the Treaties and Union legislation would not actually cease to apply to the UK from the moment of its withdrawal, but will instead be extended wholesale to the territory, public authorities and citizens of a third country. There are good practical reasons for that – given how much is still left to be done, and how little time remains to do it. But it is difficult to square with the explicit text of the Treaties.
Perhaps the two sides should explore the potential of other creative solutions. Consider the possibility that the withdrawal agreement might provide for different dates of entry into force for different provisions: say, one date for UK withdrawal from the EU’s basic institutional framework; but a later date for UK withdrawal from the substantive rules of Union law (such as the Single Market and the Customs Union). That could offer a neat and legally more compelling solution.
And in any case, we should bear in mind some important potential limits to the utility of any EU-UK transitional arrangements. In particular: we know that there is immense uncertainty surrounding the UK’s future status in relation to the EU’s existing international agreements – many hundreds of them, covering everything from trade to aviation, the environment and security – many of which are applicable only to the EU and its Member States and would thus cease to benefit the UK upon its withdrawal, unless all the parties agreed otherwise.
A transitional deal which is still premised on the transformation of the UK into a third country wouldn’t in itself do anything to help clarify the status and effects of those existing international agreements. As both the EU and the UK now explicitly acknowledge: they cannot oblige other countries to carry on treating the UK just as before (at least not without those countries’ positive consent). Again, however, it’s possible that our more creative solution – different dates for the entry into force of different parts of the UK’s withdrawal agreement – could help address some of these external relations problems as well.
Where does all of that leave us? For both legal and political reasons, the negotiation of an ambitious transition may prove more difficult and more controversial, and indeed take longer, than many politicians appear to assume. Definitive answers to the most difficult legal questions can only be provided by the ECJ – yet judicial action (even if settled urgently) would just slow matters down even further. Either way, some of the main benefits to agreeing a quick transitional regime may prove more difficult to deliver in practice than they appear in theory.