Professor Steve Peers, University of Essex
With a revised version of the Brexit withdrawal agreement now on the table, this is an opportune time to update my previous blog posts on the first version of the withdrawal agreement. The first analysis was an overview of the revised agreement, and this blog post (updating my spring 2018 post) concerns the transition period in the agreement. (The revised deal comprises a revised Protocol on the Irish border – for a full text of the revised withdrawal agreement following this change, see here – and a revised political declaration on the future relationship.) Update: Subsequent blog posts analyse the provisions in the revised withdrawal agreement on dispute settlement, citizens' rights and the revised political declaration on the future relationship between the UK and the EU.
This blog post explains the overall context of the transition period and then annotates the text. I have not repeated some of my analysis of the drafting history, but that can be found in the 2018 version of this post.
The basic idea of the transition period is that substantive EU law (including newly adopted measures) continues to apply to the UK until the end of 2020 – although this date could be extended by one or two years. However, there are exceptions to this general rule, as explained below. After the end of that period, the relationship between the EU and UK ceases, unless new treaties have been negotiated (with the exception of Northern Ireland, which is subject to special rules).
Structure of the withdrawal agreement
Part One of the withdrawal agreement sets out the “Common Provisions”. These deal with basic issues like definitions and territorial scope.
Part Two of the withdrawal agreement deals with citizens’ rights. It will mostly not apply until the end of the transition period, and free movement law will continue to apply during the transition period.
Part Three of the agreement sets out “separation provisions”. These deal with issues like what happens to European Arrest Warrants pending at the end of the transition period. This part will largely apply as from the end of that period.
Next, Part Four sets out the rules on the transition period as such. These provisions are annotated below.
Part Five concerns the financial settlement. It incorporates the earlier agreement that the UK is takes part in the EU’s financial rules until the end of the transition period. (The end-2020 cut-off date of the transition period matches the end of the current EU budget cycle).
Part Six sets out “Final Provisions”. Some of this applies immediately from Brexit Day, and some from the end of the transition period. For instance, the rules on ECJ jurisdiction over EU citizens apply, for the most part, from eight years after the end of the transition period. So does the clause on a new authority to help guarantee EU citizens’ rights, which might be shut down at the end of that same eight-year period.
There will also be Protocols on Irish border issues and UK bases in Cyprus, both of which would mostly apply from the end of the transition period; the former was revised as part of this week’s ‘deal’.
I aim to update my other blog posts on the previous version of the withdrawal agreement (on citizens’ rights and dispute settlement) and on the related political declaration shortly.
Barnard & Peers: chapter 27
Photo credit: Der Speigel
There shall be a transition or implementation period, which shall start on the date of entry into force of this Agreement and end on 31 December 2020.
Comments: The EU preferred the term ‘transition’, while the UK preferred ‘implementation’. As a compromise, both terms are used here, although the withdrawal agreement refers solely to a ‘transition’ period in all other Articles of the withdrawal agreement.
The key issues are how the transition period relates to the rest of the agreement, and whether it can be extended. See the discussion above on the first issue, and Article 132 below on the latter issue.
The end date is convenient for the EU27 side as it corresponds with the end of the current multi-annual EU budget cycle. In the revised withdrawal agreement, the ‘backstop’ for the entire UK is removed, creating a ‘cliff edge’ at the end of the period except as regards Northern Ireland.
Note that Article 127(2), discussed below, provides conversely for the transition period to be potentially curtailed early as regards foreign policy issues.
Scope of the transition
1. Unless otherwise provided in this Agreement, Union law shall be applicable to and in the United Kingdom during the transition period.
However, the following provisions of the Treaties and acts adopted by the institutions, bodies, offices or agencies of the Union shall not be applicable to and in the United Kingdom during the transition period:
(a) provisions of the Treaties and acts which, pursuant to Protocol (No 15) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union or Protocol (No 21) on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, or pursuant to the provisions of the Treaties on enhanced cooperation, were not binding upon and in the United Kingdom before the date of entry into force of this Agreement as well as acts amending such acts;
(b) Article 11(4) TEU, point (b) of Articles 20(2), Article 22 and the first paragraph of Article 24 TFEU, Articles 39 and 40 of the Charter of Fundamental Rights of the European Union, and acts adopted on the basis of those provisions.
Comments: Union law is defined in Article 2. Sub-paragraph 1(a) keeps the UK’s existing opt outs from the single currency, Schengen, Justice and Home Affairs (JHA) law and enhanced cooperation (a system where some Member States go ahead and adopt EU law without the others), except where the UK opted in to EU laws in these areas before Brexit day. Paragraph 4 says more about enhanced cooperation, while para 5 says more about JHA.
Sub-paragraph 1(b) excludes the Treaty rules and legislation related to the European citizens’ initiative (on that process, see the case law discussed here) and also voting and standing for office in the European Parliament and local government. There is no transitional clause on the situation of those EU27 citizens who were elected to local government in the UK (and vice versa) before Brexit day, even in the “Separation Provisions” of Part Three of the withdrawal agreement. Conversely other EU citizenship provisions will logically still apply. This includes the “Ruiz Zambrano” case law on UK citizen children with non-EU parents, which I discussed here.
2. In the event that the Union and the United Kingdom reach an agreement governing their future relationship in the area of the Common Foreign and Security Policy and the Common Security and Defence Policy which becomes applicable during the transition period, Chapter 2 of Title V of the TEU and the acts adopted on the basis of those provisions shall cease to apply to the United Kingdom from the date of application of that agreement.
Comments: There are also provisions on foreign policy in paragraph 7 and in Article 129(6) and (7).
This is the only area where the transition period contemplates a potential early end to the transitional period. By contrast, Theresa May’s Florence speech referred to the possibility of ending the transition period early for a number of issues at different times. An early end to the transition period in this field would avoid the awkward situation where the UK becomes bound by foreign policy measures which it could have vetoed if it were a Member State, although note that Article 129(6) preserves that possibility in certain circumstances. It would also end a possibility for linking defence issues to trade issues, although the UK policy in the Florence speech (and since) was not to insist upon such a link. A later speech by Theresa May (discussed here) went into more detail on what a “future relationship” treaty in this area might include.
Legally it is questionable whether the UK and EU would actually be constrained by the withdrawal agreement if they wanted to sign a treaty replacing these rules in other fields of EU law during the transition period.
3. During the transition period, the Union law applicable pursuant to paragraph 1 shall produce in respect of and in the United Kingdom the same legal effects as those which it produces within the Union and its Member States, and shall be interpreted and applied in accordance with the same methods and general principles as those applicable within the Union.
4. The United Kingdom shall not participate in any enhanced cooperation:
(a) in relation to which authorisation has been granted after the date of entry into force of this Agreement; or
(b) within the framework of which no acts were adopted before the date of entry into force of this Agreement.
Comments: On “enhanced cooperation”, see also para 1(b) of this Article, discussed above. This clause is particularly relevant to the proposal on the financial transaction tax, which is subject to the enhanced cooperation process (without UK participation) but where there is no agreement yet (see more on the background to the tax proposal here). In light of this provision, the suggestion that the UK might somehow become bound as such by the tax during the transition period is frankly scaremongering. There is a risk that the tax would have some extraterritorial effect upon the City of London, but that risk would equally exist if the UK were still a Member State, since it could not veto an enhanced cooperation measure that it was not participating in. It could also have such an effect if the UK were no longer even a “transition” ex-Member State.
5. During the transition period, in relation to measures which amend, build upon or replace an existing measure adopted pursuant to Title V of Part Three of the TFEU by which the United Kingdom is bound before the date of entry into force of this Agreement, Article 5 of Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union and Article 4a of Protocol (No 21) on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice shall continue to apply mutatis mutandis. The United Kingdom shall not, however, have the right to notify its wish to take part in the application of new measures pursuant to Title V of Part Three of the TFEU other than those referred to in Article 4a of Protocol No 21.
In order to support continuing cooperation between the Union and the United Kingdom, under the conditions set out for cooperation with third countries in the relevant measures, the Union may invite the United Kingdom to cooperate in relation to new measures adopted under Title V of Part III TFEU.
Comment: This issue is also the subject of a speech by Theresa May. For an analysis of the speech and a proposed “future relationship” treaty in this area, see here.
This provision means that the UK can opt in to new JHA laws amending JHA laws which it is already bound by. Note that the UK has already opted out of the ‘Dublin IV’ proposal on allocation of asylum seekers, so the suggestion that it could be bound by that law during the transitional period is pure scaremongering. On the other hand, it cannot opt in to new JHA measures which do not amend JHA laws which it is already bound by. At most it can seek to cooperate with the EU in those measures as a non-EU country, on the same basis as other non-EU countries.
At the end of the transition period, the winding up of cooperation in this field is dealt with by the separation provisions in the agreement, on criminal law and civil litigation. There is no provision for how to deal with pending proposals to transfer responsibility for asylum seekers (the “Dublin III” Regulation) at the end of that period.
One provision relevant to this field appears in Article 185 of the treaty. It provides for the possibility, as from Brexit Day, of refusing to surrender a State’s own citizens under the European Arrest Warrant (EAW) law:
When making the written notification referred to in the first paragraph, the Union, in respect of any Member State which has raised reasons related to fundamental principles of national law of that Member State, may declare that, during the transition period, in addition to grounds for non-execution of a European arrest warrant referred to in Framework Decision 2002/584/JHA, the executing judicial authorities of that Member State may refuse to surrender its nationals to the United Kingdom pursuant to a European arrest warrant. In such a case, the United Kingdom may declare, no later than 1 month after the receipt of the Union's declaration that its executing judicial authorities may refuse to surrender its nationals to that Member State.
This provision raises some key questions, in particular what separation rule will apply to a European Arrest Warrant pending on Brexit Day which is covered by this declaration, and whether some other obligation applies instead of surrender (extradition treaties often contain an “extradite or prosecute” rule, although the EAW law also applies to those who have been convicted already; in that case the obvious course would be to transfer the sentence using the applicable EU rules). Note that the majority of those surrendered are not nationals of the State surrendering them; Germany could still return UK citizens to the UK, for instance.
6. Unless otherwise provided in this Agreement, during the transition period, any reference to Member States in the Union law applicable pursuant to paragraph 1, including as implemented and applied by Member States, shall be understood as including the United Kingdom.
7. By way of derogation from paragraph 6:
(a) for the purposes of Articles 42(6) and 46 TEU and of Protocol (No 10) on permanent structured cooperation established by Article 42 of the Treaty on European Union, any references to Member States shall be understood as not including the United Kingdom. This shall not preclude the possibility for the United Kingdom to be invited to participate as a third country in individual projects under the conditions set out in Council Decision (CFSP) 2017/2315 on an exceptional basis, or in any other form of cooperation to the extent allowed and under the conditions set out by future Union acts adopted on the basis of Articles 42(6) and 46 TEU;
(b) where acts of the Union provide for the participation of Member States, nationals of Member States or natural or legal persons residing or established in a Member State in an information exchange, procedure or programme which continues to be implemented or starts after the end of the transition period, and where such participation would grant access to security related sensitive information that only Member States (or nationals of Member States, or natural or legal persons residing or established in a Member State) are to have knowledge of, in such exceptional circumstances the references to Member States in such Union acts shall be understood as not including the United Kingdom. The Union shall notify the United Kingdom of the application of this derogation;
(c) for the purposes of the recruitment of officials and other servants of the institutions, bodies, offices or agencies of the Union, any references to Member States in Articles 27 and 28(a) of the Staff Regulations and in Article 1 of Annex X thereto and in Articles 12, 82 and 128 of the Conditions of Employment of Other Servants of the European Union, or in the relevant provisions of other staff rules applicable to those institutions, bodies, offices or agencies, shall be understood as not including the United Kingdom.
Comments: Paragraph 7(a) concerns “permanent structured cooperation” in the area of defence, from which the UK decided to opt out when most Member States decided to trigger that process recently (in the 2017 Council Decision referred to in the text of para 7(a)). The text sets out a compromise: the UK continues its opt out but, like JHA measures, can cooperate as a non-EU country in this and other future defence measures. Note that following paragraph 2 there may be an early EU/UK treaty in this area which would likely address this issue.
It is often falsely claimed that the withdrawal agreement ties the UK into an “EU army”: this provision makes clear that this is not the case.
1. Notwithstanding Article 127, during the transition period Article 7 shall apply.
Comments: Article 7 states that the UK should be regarded as a Member State when Union law (defined in Article 2(a)), refers to Member States, except as regards EU institutions, governance of agencies, or voting in the committees that oversee the adoption of implementing measures by the Commission.
In effect, although Article 2(b) implicitly defines the UK as not a Member State, the UK will remain a de facto Member State during the transition period for the purposes of substantive EU law, but not institutional EU law.
Note that paragraph 5 is an express derogation from paragraph 1, and that Articles 129 and 130 lay out specific rules on external action and fisheries.
2. For the purposes of the Treaties, during the transition period, the parliament of the United Kingdom shall not be considered to be a national parliament of a Member State, except as regards Article 1 of Protocol (No 1) on the role of national parliaments in the European Union and, in respect of proposals which are in the public domain, Article 2 of that Protocol.
Comments: The exception for Articles 1 and 2 of the Protocol on national parliaments means that consultation documents and proposals for EU legislation will still be sent to the UK parliament. However, the rest of that Protocol will no longer apply to the UK parliament: it concerns national parliament objections (Article 3); a waiting period (Article 4); Council agendas (Article 5); simplified Treaty amendments (Article 6); the Court of Auditors (Article 7); bicameral parliaments (Article 8); and COSAC, the joint EP/national parliament body (Title II).
It arguably is implicit that if the UK is not part of the EU institutions, there is no requirement to consult the UK’s national parliament on proposed EU measures. But even if there is no longer a legal obligation to do so, it is hard to see what harm would be caused by consulting the UK parliament, or what legal rule would prevent the EU agreeing to do so outside the context of the formal role for national parliaments of Member States set out in the Treaties. Ultimately it seems that there was a compromise which partly accepts the case for a continued link with the UK parliament during the transition period.
3. During the transition period, provisions of the Treaties which grant institutional rights to Member States enabling them to submit proposals, initiatives or requests to the institutions shall be understood as not including the United Kingdom.
Comments: A footnote here states “This should in particular concern Articles 7, 30, 42(4), 48(2) – (6) and 49 TEU and Articles 25, 76(b), 82(3), 83(3), 86(1), 87(3), 135, 218(8), 223(1), 262, 311 and 341 TFEU.” This exclusion follows from the removal of the UK from the institutional law of the EU.
4. For the purposes of participation in the institutional arrangements laid down in Articles 282 and 283 TFEU and in Protocol (No 4) on the Statute of the European system of central banks and of the European Central Bank with the exception of Article 21(2) of that Protocol, during the transition period, the Bank of England shall not be considered to be a national central bank of a Member State.
Comments: The exception for Article 21(2) of the ECB Protocol means that the Bank of England can still act as a fiscal agent for those buying government debt without this violating the Treaties’ no-bailout clause. Arguably it’s implicit that if the UK is not part of the EU institutions, it follows that the Bank of England does not have the status of a national central bank in its relations with the ECB.
5. By way of derogation from paragraph 1 and from Article 6, during the transition period, representatives or experts of the United Kingdom, or experts designated by the United Kingdom, may, upon invitation, exceptionally attend meetings or parts of meetings of the committees referred to in Article 3(2) of Regulation (EU) No 182/2011, of Commission expert groups, of other similar entities, or of bodies, offices or agencies where and when representatives or experts of the Member States or experts designated by Member States take part, provided that one the following conditions is fulfilled:
(a) the discussion concerns individual acts to be addressed during the transition period to the United Kingdom or to natural or legal persons residing or established in the United Kingdom;
(b) the presence of the United Kingdom is necessary and in the interest of the Union, in particular for the effective implementation of Union law during the transition period.
During such meetings or parts of meetings, the representatives or experts of the United Kingdom or experts designated by it shall have no voting rights and their presence shall be limited to the specific agenda items that fulfil the conditions set out in point (a) or (b).
Comments: Note that a statement by the Commission commits itself to issue a guidance document on how to apply this rule consistently in practice. Regulation 182/2011 sets out general rules for Member States’ participation in committees which govern the Commission’s use of implementing powers.
As in many other aspects of the transition period rules, it is questionable whether it is really necessary to limit the UK’s purely consultative role to this extent. Certainly there is only a weak argument that it is legally required.
6. During the transition period, the United Kingdom shall not act as leading authority for risk assessments, examinations, approvals or authorisations at the level of the Union or at the level of Member States acting jointly as referred to in the acts and provisions listed in Annex VII.
Comments: It is not so obviously implicit that the UK’s exclusion from the EU institutions means that it cannot have a role as lead authority in risk assessment et al. Put another way, this is arguably an issue of EU substantive law – where the UK will in effect remain a Member State during the transition period – rather than EU institutional law, where it will not. If the EU can trust the UK to implement EU law, why not accept that it can have a role in risk assessment, et al?
7. During the transition period, where draft Union acts identify or refer directly to specific Member State authorities, procedures, or documents, the United Kingdom shall be consulted by the Union on such drafts with a view to ensuring the proper implementation and application of that act by and in the United Kingdom.
Specific arrangements relating to the Union's external action
1. Without prejudice to Article 127(2), during the transition period, the United Kingdom shall be bound by the obligations stemming from the international agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly as referred to in point (a)(iv) of Article 2.*
Comments: A footnote states that: “The Union will notify the other parties to these agreements that during the transition period, the United Kingdom is to be treated as a Member State for the purposes of these agreements.” For the text of the notification which would be issued, see here.
The UK will still be bound to the EU as regards treaties with non-EU states. Logically this applies vice versa and it would have been preferable to spell that out directly. It should follow that individuals can still invoke the direct effect of such treaties (where it exists) in the UK during the transition period (for instance, Turkish citizens with rights under the EU/Turkey association agreement framework).
However, the UK is not bound to non-EU countries to apply such treaties; neither can non-EU countries directly invoke such treaties against the UK. Since this could in particular affect UK exports, it makes sense for the UK to focus on replicating such treaties: see para 4 below.
The assumption seems to be to hope that a unilateral notification by the EU regarding its customs territory (and other issues) will suffice for non-EU countries, legally and politically. Time will tell if this assumption is correct.
2. During the transition period, representatives of the United Kingdom shall not participate in the work of any bodies set up by international agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly, unless:
(a) the United Kingdom participates in its own right; or
(b) the Union exceptionally invites the United Kingdom to attend, as part of the Union's delegation, meetings or parts of meetings of such bodies, where the Union considers that the presence of the United Kingdom is necessary and in the interest of the Union, in particular for the effective implementation of those agreements during the transition period; such presence shall only be allowed where Member States participation is permitted under the applicable agreements.
3. In accordance with the principle of sincere cooperation, the United Kingdom shall refrain, during the transition period, from any action or initiative which is likely to be prejudicial to the Union's interests, in particular in the framework of any international organisation, agency, conference or forum of which the United Kingdom is a party in its own right.
Comments: This para explicitly sets out the obligation that would anyway arguably still apply implicitly, since other EU Treaty provisions on sincere cooperation would still be applicable to the UK. The particular relevance of the “sincere cooperation” principle in EU external relations law is that it limits Member States from negotiating treaties; but that issue is explicitly addressed by para 4. Note that the UK would presumably have more freedom to act once any early post-Brexit treaty on EU/UK security and defence cooperation came into force (see Article 127(2) above).
4. Notwithstanding paragraph 3, during the transition period, the United Kingdom may negotiate, sign and ratify international agreements entered into in its own capacity in the areas of exclusive competence of the Union, provided those agreements do not enter into force or apply during the transition period, unless so authorised by the Union.
Comments: This para only applies to “exclusive” competence of the EU, which narrows the limits on the UK’s external action. Note that the exact extent of exclusivity of EU external competence is often disputed and even litigated.
There is no mention of the process of approval of the UK becoming bound by treaties. Note that one of the statements attached to the Council negotiation Directives says that the Council will approve the UK becoming bound by such treaties, in accordance with the usual Treaty rules.
5. Without prejudice to Article 127(2), whenever there is a need for coordination, the United Kingdom may be consulted, on a case-by-case basis.
Comments: This paragraph takes account of the UK’s significant foreign policy rule, in particular regarding sanctions, although there is ultimately no specific reference to them. As with para 3, in the foreign policy context the UK would presumably have more freedom to act once any early post-Brexit treaty on EU/UK security and defence cooperation came into force (see Article 127(2) above).
6. Following a decision of the Council falling under Chapter 2 of Title V TEU, the United Kingdom may make a formal declaration to the High Representative of the Union for Foreign Affairs and Security Policy, indicating that, for vital and stated reasons of national policy, in those exceptional cases it will not apply the decision. In a spirit of mutual solidarity, the United Kingdom shall refrain from any action likely to conflict with or impede Union action based on that decision, and the Member States shall respect the position of the United Kingdom.
Comment: This is a significant possibility for the UK not to be bound by an EU measure in this field during the transition period. It reinforces the absurdity of the false claims that the withdrawal agreement would bind the UK to a future “EU army”.
The wording is adapted from two different rules on foreign policy decision-making in Article 31 TEU, although note that the consequence of a UK government declaration here would not be exactly the same as the provisions in the EU Treaty. This would not be a veto as such – since the EU could still adopt the planned act. Rather it would be what the EU calls a “constructive abstention” – the UK would not be bound by what the EU does, but would have to avoid frustrating it.
Note that since Union law applies to the UK during the transition period, this must include Article 275 TFEU, which limits Court of Justice jurisdiction over EU foreign policy measures to cases about sanctions and disputes over EU competence.
The future relationship treaty foreseen in Article 127(2) may make this provision redundant.
7. During the transition period, the United Kingdom shall not provide commanders of civilian operations, heads of mission, operation commanders or force commanders for missions or operations conducted under Articles 42, 43 and 44 TEU, nor shall it provide the operational headquarters for such missions or operations or serve as framework nation for Union battlegroups. During the transition period, the United Kingdom shall not provide the head of any operational actions under Article 28 TEU.
Comments: The future relationship treaty foreseen in Article 127(2) may make this provision redundant. While this para is consistent with the overall thrust of removing the UK from roles in EU bodies, it is liable to make it harder to run an effective EU defence policy, given the extent of the contribution by the UK military.
Specific arrangements relating to fishing opportunities
1. As regards the fixing of fishing opportunities within the meaning of Article 43(3) TFEU for any period falling within the transition period, the United Kingdom shall be consulted in respect of the fishing opportunities related to the United Kingdom, including in the context of the preparation of relevant international consultations and negotiations.
2. For the purposes of paragraph 1, the Union shall offer the opportunity to the United Kingdom to provide comments on the Annual Communication from the European Commission on fishing opportunities, the scientific advice from the relevant scientific bodies and the proposals from the European Commission for fishing opportunities for any period falling within the transition period.
3. Notwithstanding point (b) of Article 129(2), with a view to allowing the United Kingdom to prepare its future membership in relevant international fora, the Union may exceptionally invite the United Kingdom to attend, as part of the Union's delegation, international consultations and negotiations referred to in paragraph 1 of this Article, to the extent allowed for Member States and permitted by the specific forum.
4. Without prejudice to Article 122(1), the relative stability keys for the allocation of fishing opportunities referred to in paragraph 1 of this Article shall be maintained.
Comments: Fisheries was a controversial issue during the negotiations on a transition period, although it should also be noted that the deal equally preserves full market access for UK fisheries’ main export market during that period. The catch allocation/market access trade off is going to be central to the future relationship talks with the EU, given the EU’s intention to link these two issues.
If the transition period ends as proposed at the end of 2020, this provision would only be relevant for one year. It could continue for longer if the transition period is extended.
Paras 2 and 3 elaborate further upon the consultations and international negotiations points referred to in para 1, but para 4 is separate: it freezes the catch allocations existing on Brexit day. As such it is a compromise which prevents a possible “grab” of the UK fisheries catch by EU countries during the transition period.
Supervision and enforcement
During the transition period, the institutions, bodies, offices and agencies of the Union shall have the powers conferred upon them by Union law in relation to the United Kingdom and to natural and legal persons residing or established in the United Kingdom. In particular, the Court of Justice of the European Union shall have jurisdiction as provided for in the Treaties.
The first paragraph shall also apply during the transition period as regards the interpretation and application of this Agreement.
Comments: As noted already, “Union law” is defined in Article 2 of the agreement.
Extension of the transition period
1. Notwithstanding Article 126, the Joint Committee may, before 1 July 2020, adopt a single decision extending the transition period for up to 1 or 2 years.*
Comment: Note the requirement that the UK and EU both agree to an extension, and that there is only a single extension permitted. The footnote reads: * “In case of extension, the Union will notify other parties to international agreements thereof.”
2. In the event that the Joint Committee adopts a decision under paragraph 1, the following shall apply:
(a) by way of derogation from Article 127(6), the United Kingdom shall be considered as a third country for the purposes of the implementation of the Union programmes and activities committed under the multiannual financial framework applying as from the year 2021;
(b) by way of derogation from Article 127(1) and without prejudice to Part Five of this Agreement, the applicable Union law concerning the Union's own resources relating to the financial years covered by the extension of the transition period shall not apply to the United Kingdom after 31 December 2020;
(c) by way of derogation from Article 127(1) of this Agreement, Articles 107, 108 and 109 TFEU shall not apply to measures of the United Kingdom authorities, including on rural development, supporting the production of and trade in agricultural products in the United Kingdom up to an annual level of support which shall not be more than the total amount of expenditure incurred in the United Kingdom under the Common Agricultural Policy in 2019, and provided that a minimum percentage of that exempted support complies with the provisions of Annex 2 to the WTO Agreement on Agriculture. Such minimum percentage shall be determined on the basis of the last available percentage by which the overall expenditure under the Common Agricultural Policy in the Union complied with the provisions of Annex 2 to the WTO Agreement on Agriculture. In the event that the period by which the transition period is extended is not a multiple of 12 months, the maximum annual level of exempted support in the year for which the extended transition period covers less than 12 months shall be reduced pro rata;
(d) for the period from 1 January 2021 to the end of the transition period, the United Kingdom shall make a contribution to the Union budget, as determined in accordance with paragraph 3;
(e) subject to point (d) of paragraph 3, Part Five of this Agreement shall not be affected.
3. A decision of the Joint Committee under paragraph 1 shall:
(a) establish the appropriate amount of the contribution of the United Kingdom to the Union budget for the period from 1 January 2021 to the end of the transition period, taking into account the status of the United Kingdom during that period, as well as the modalities of payment of that amount;
(b) specify the maximum level of exempted support, as well as the minimum percentage thereof that shall comply with the provisions of Annex 2 to the WTO Agreement on Agriculture, as referred to in point (c) of paragraph 2;
(c) lay down any other measure necessary for the implementation of paragraph 2;
(d) adapt the dates or periods referred to in Articles 51, 62, 63, 84, 96, 125, 141, 156, 157 and Annexes IV and V to reflect the extension of the transition period.
Comments: EU budget law will not as such apply to the UK in event of an extension, but ad hoc contributions would be negotiated instead. This would likely be a difficult negotiation.