Thursday 30 January 2020

Avoiding the next Brexit Cliff-Edge: Extending the Transition Period for the UK after 1 July 2020

René Repasi, Associate Professor of EU Law at Erasmus University Rotterdam, Netherlands

After the elections in the UK and the clear majority of the Conservative Party under Prime Minister Boris Johnson in UK House of Commons the Withdrawal Agreement (WA) concerning the UK’s exit from the EU was promptly ratified, with the UK leaving the EU on 31 January 2020. This completes phase 1 of ‘Brexit’: Dealing with the legacy of the UK’s membership.

We are now entering phase 2: The negotiation of and the decision about the future relationship between the EU27 and the UK. Originally, phase 2 should be concluded during the transition period of the Withdrawal Agreement, during which the UK remains part of the internal market and subject to EU law. This transition period expires on 31 December 2020 (Article 126 WA). The Joint Committee (JC) of the WA (composed of officials of the European Commission and the UK Government and co-chaired by a Member of the European Commission and a Minister of the Crown) can adopt, by mutual consensus, a single decision extending the transition period for up to one or two years (Article 132(1) WA). Such decision can be requested from both the EU and the UK. The purpose of this prolongation possibility was originally (in March 2019) and still is to avoid an undesired ‘hard Brexit’ because of unfinished trade negotiations. The decision of the JC to extend the transition period must be taken before 1 July 2020.

The newly elected Prime Minister Johnson does not intend to make use of this prolongation possibility and wants to strike a trade deal with the EU before 31 December 2020. In order to emphasise this commitment, the Withdrawal Agreement Act includes a section 33, according to which ‘[a] Minister of the Crown may not agree in the Joint Committee to an extension of the implementation period’. This means that – in the event a trade agreement between the EU27 and the UK is not ratified on 31 December 2020 – there will be a ‘hard Brexit’ on 1 January 2021 if the deadline of 1 July 2020 elapses without any prolongation decision of the JC.

Extending the Transition Period after 1 July 2020 if there is a political will

This situation begs the question whether there are other possibilities – past 1 July 2020 – to prolong the transition period, during which the UK remains part of the EU’s internal market and subject to EU law, until a trade agreement is ratified, if there is a political will on both sides to do so. As a baseline, any prolongation of the transition period after 1 July 2020 is legally excluded because the WA does not provide for any other mechanism to do so. There are, however, two legal pathways to explore that might nevertheless lead to a prolongation of the transition period:

-          A new transition period could be established by a new and distinct agreement between the EU and the UK;
-          The ‘old’ transition period of the WA could be prolonged by replacing the original end date in Article 126 WA through amendment of the WA.

New and Distinct Agreement would Undermine EU Rules on Membership

A new and distinct agreement that includes a new transition period starting on 1 January 2021 would need, on the EU’s side, an explicit or at least implied competence to grant such a ‘status’ to a third country (Article 216(1) TFEU), which the UK will be after 31 January 2020. Article 50 TEU, being the legal base on the part of the EU for the establishment of the original transition period in the Withdrawal Agreement, would not serve as a legal basis for such an agreement as the new and distinct agreement would be concluded with a third country and not with ‘[a] Member State which decides to withdraw’. We may now think of a construct that the ‘transition’ equals some sort of a ‘temporary association arrangement’ of the UK with the EU so that Article 217 TFEU might suffice as a legal base. Yet, looking at previous instances when Article 217 TFEU was used, an association implies stability and permanency, which runs counter to the very idea of a transition period. Finally, Article 207(1) TFEU could also not be used on its own as rights and obligations that the ‘transition period’ implies go beyond the ‘common commercial policy’. The transition period prolongs, in substance, the EU membership beyond the official exit date of a Member State. The substance of EU membership covers more than the ‘common commercial policy’.

What remains, would be basing a new and distinct agreement that introduces a new transition period (for example, together with a future customs arrangement between the UK and the EU) on a combination of legal bases and Article 352(1) TFEU, as it was done previously when the EU joined the WTO agreements (cf. CJEU, Opinion 1/94). Whilst this construct certainly allows for quite a comprehensive scope of an agreement, triggering mixity so that also national Parliaments have to ratify it, it would not work for extending the transition period. This follows from the fact that Article 352(1) TFEU ‘cannot be used as a basis for the adoption of provisions whose effect would, in substance, be to amend the Treaty without following the procedure which it provides for that purpose’ (CJEU, Opinion 2/94, para 30).

If we were to apply Article 352(1) TFEU in order to introduce a new transition period, which would keep the UK in the internal market and keep it subject to EU law, we would create the legal possibility to grant (temporarily) EU membership (which is, in essence, being part of the internal market and subject to EU law) to any other third country. This would undermine Article 49 TEU and the necessity for being a formal Member State in order to have such a status. The Treaties only provide for one exception to deviate from this rule: a country that used to be a Member State can keep up its rights and obligations deriving from membership for a limited period of time after the withdrawal. The Treaties created with Article 50 TEU a special exclusive Union competence to grant such a status to a prospective third country.

For these reasons, a new and distinct agreement between the EU and the UK cannot introduce a new transition period starting as of 1 January 2021. It should be noted that this reasoning does not apply to any special arrangement that only includes a subset of previous EU rights and obligations and a partial access to the internal market. Such arrangement would, however, also not qualify as a ‘transition period’.

Extending the Transition Period by Amendment of the Withdrawal Agreement

The second pathway to prolong the transition period would be an amendment of the original Withdrawal Agreement itself by exchanging the end date in Article 126 WA. Some argue now that any other way to change the transition period than its prolongation by the JC is legally impossible. The argument is based on the reading of Article 50 TEU that its applicability to the Withdrawal Agreement ceases in the moment the UK has exited the EU and that besides Article 50 TEU there is no legal base in the EU Treaties that would allow the EU to amend the WA.

General Public International Law Allows for Amendments of the WA

Another reading of the legal situation is, however, supportable. The argument is built on general public international law. The Vienna Convention on the Law of the Treaties (VCLT), which is considered to codify customary international law when it comes to the law of the Treaties, provides in Article 39 for a general rule, according to which a ‘treaty may be amended by agreement between the parties. The rules laid down in Part II [on the conclusion and the entry into force of Treaties] apply to such an agreement except insofar as the treaty may otherwise provide’. The WA provides for a legal base for the JC to ‘adopt decisions amending this Agreement’ (Article 164(5)(d) WA) but excludes ‘Part Four’ from its scope, which contains the end date of the WA. Although this is a specific treaty rule that allows for amendments of the treaty text, it only covers parts of it. Drawing the conclusion from the presence of such a limited amendment rule that the treaty parties are deprived from amending the treaty text themselves seems stretched. Such clauses enable quick technical amendments in place of lengthy ratification procedures. But they cannot bar the treaty Parties from amending the treaty text between them. In other words, the WA is silent on the revision of its text by the treaty parties in general and, more specifically, of Part Four of the WA with the end date of the transition period.

This brings us back to the starting point, according to which general public international law allows for an amendment of the WA including the end date of the transition period after 1 July 2020. This leads to the follow-up question on the legal base and the procedure to follow for such an amendment. On the part of the UK, the legal base and the procedure to follow is to be found in domestic law. The capacity of the UK to conclude treaties includes the capacity to amend them. Provided that domestic law does not prescribe any special rules for the amendment of the WA, the traditional rules on treaty ratification apply.

In Search of The Union Competence to Amend the Withdrawal Agreement

On the part of the EU, the situation is more complicated. The EU may only act if it is at least implicitly empowered to act. There must hence be a legal base for amending the WA. A literal reading of the original legal base for the conclusion of the WA excludes the use of Article 50(2) TEU. This article requires an agreement with a ‘Member State which decides to withdraw’. Once the other Treaty party involved in the WA is no more a Member State, Article 50(2) TEU seems to cease to apply. Besides Article 50(2) TEU, once again, Article 207 TFEU or Article 217 TFEU could be considered as possible legal bases, given that the amendment of an agreement is formally just another agreement. Yet, the WA exceeds the scope of Article 207 TFEU as its content covers more than ‘common commercial policy’. Also, Article 217 TFEU seems to be a rather weak legal base as it would require the establishment of an ‘association’. Although it is not completely unimaginable to qualify the ‘reciprocal rights and obligations’ in the WA as the creation of some sort of association between the UK and the EU, the entire purpose of the WA (except for the Protocol on Ireland/Northern Ireland) is not meant to create an association that lasts but to deal with legacy issues of the former membership of the UK in the EU.

A further thought would be to consider Article 352(1) TFEU. For the same reasons as mentioned above, Article 352(1) TFEU cannot serve as a legal base to extend the transition period of the WA by means of Treaty amendment. This leads us to the (interim) conclusion that EU law does not provide for any legal base to enter into an agreement that amends the WA so that any amendments of the WA are ruled out by EU law.

This understanding of EU Law makes the WA a ‘fossilised’ international agreement that could never be changed. Such treaties (especially bilateral ones such as the WA) are unknown to public international law. The existence of such treaties would run counter the general international law principle (which is even considered to have the quality of ius cogens) enshrined in Article 6 VCLT, according to which the legal capacity to conclude Treaties cannot be limited by Treaties. Violation of treaty obligations because of the conclusion of another treaty may be sanctioned according to the principles of state responsibility but the capacity to enter into other treaties may not be limited by treaty obligations. This finding holds also true for the EU. On this basis, it is valid to state, that as a matter of principle, whenever the EU enters into an international agreement, it must also have the competence to amend this agreement or to suspend it in accordance with either the procedures foreseen by the agreement or general public international law.

Analogous Application of Article 50 TEU

Against this background, EU law seems to have a lacuna in the case of Withdrawal Agreements if the legal basis for concluding such agreements ceases to apply at the moment of their entry into force. The existence of such a lacuna paves the way for an analogous application of Article 50(2) TEU. This provision must then be read as including a former Member State in its capacity as Treaty party to a Withdrawal Agreement with the EU. Such analogous application is not barred by an understanding that Article 50 TEU expires upon the withdrawal of a Member States. The article remains the source of existence of the WA and can be invoked for implementing measures of the WA as well as for amendments of the original Treaty text. Only for the conclusion and ratification of a new and distinct agreement with a former Member State of the EU, Article 50 TEU ceases to apply.

The decision-making procedure for amendments of a Withdrawal Agreement is hence also defined by Article 50 TEU: a qualified majority voting in Council of the EU27 upon consent of the European Parliament.

If therefore the deadline of 1 July 2020 elapses unused and it turns out in November 2020 that a ‘hard Brexit’ on 1 January 2021 can only be avoided by extending the transition period of the WA in its Article 126, general public international law says that this is legally possible and an analogous application to Article 50 TEU provides for the necessary legal base on the part of the EU.

*An earlier version of this post was published on Verfassungsblog

Barnard & Peers: chapter 27
Photo credit: Tobias Helfrich via Wikicommons

1 comment:

  1. I think that you wrongly assume that the parties would want to do in November what they could have done in the joint committee in July. If the Withdrawal Agreement were extended just for some or all of the purposes referred to in Article 207 (e.g. trade in goods, services, and direct investment) surely that provision would provide a legal basis? Free movement of persons, judicial cooperation and other matters could be prolonged, if desired, using the relevant other legal bases.