Analysis 1 of the Revised Brexit Withdrawal Agreement: Overview

Professor Steve Peers, University of Essex

Introduction

It’s not certain, at time of writing, whether the Brexit withdrawal agreement will be approved or not. But the UK Parliament is about to vote again on the issue, following the recent agreement on a new version of the agreement – with 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.  (There was already a minor amendment to the text agreed in April, after UK membership was extended for several months: the text of the agreement as it stood after that is here.) So this is an opportune time to update my previous overview of the first version of the withdrawal agreement. 

This blog post is a summary and explanation of the text for non-lawyers. It outlines the structure of the agreement and the main content of each part of it in turn. It does not aim to be exhaustive, but only to give a broad indication of what the revised agreement entails. I have also updated my blog posts on the transition period, dispute settlement, citizens’rights and the related politicaldeclaration.

Throughout the blog post, I’ve scattered the answers to ‘key questions’ which have been raised about what the revised withdrawal agreement does. Let’s start with this question, in light of the imminent vote on the withdrawal agreement:

Key question: What if the withdrawal agreement is not ratified?

If Parliament this week votes against ratifying the withdrawal agreement, and also votes against leaving the EU with no deal, then the provisions of the ‘Benn Act’ kick in, requiring the Prime Minister to request a three-month extension of EU membership. I discussed the workings of that Act in detail here. It’s possible that the EU refuses to extend membership, in which case the UK leaves with no deal on October 31, unless it decides to revoke its notification to leave the EU, which is possible unilaterally (as confirmed by the CJEU, and discussed here). There’s also a legal challenge to ratification at this point.

It’s also possible that parliament votes in favour of the withdrawal agreement, but runs out of time or votes against the bill to give effect to the withdrawal agreement. In that scenario there may be a fresh attempt at securing an extension of membership. If that fails, the UK again leaves with no deal on October 31, unless it decides to revoke the notification to leave. Note that there’s a proposed amendment to the government’s motion to approve the withdrawal agreement, which aims expressly to trigger the Benn Act to give more time to consider it.

   

The EU Commission has issued preparedness notices setting out its view on what would happen if the UK leaves the EU without a withdrawal agreement. The UK government has also issued its own no deal notices.

In order to address the possibility of a no deal outcome, the EU has also adopted legislation (a few amendments to this legislation will likely be adopted before October 31). This includes a law waiving visa requirements for short-term visits by UK citizens to the EU (for 90/180 days), which I discussed here. This will not address residence for longer periods, which will be subject to EU and national laws on non-EU citizens, which are more restrictive than EU free movement rules. (For more details of the law applicable to UK citizens visiting or staying in the EU after Brexit, see my discussion here. For more details of the position of UK citizens in the EU27 who might be able to claim long-term residence status, see discussion here; this point may be relevant even if the withdrawal agreement is ratified).

Another key issue is what exactly the imminent vote is about. It’s often claimed that a vote to approve the withdrawal agreement (or to leave with no deal) would ‘get Brexit done’, but is that the case?

Key question: Does the withdrawal agreement cover the long-term relationship between the UK and EU after Brexit?

Other than the provisions related to Northern Ireland (discussed further below), the withdrawal agreement governs only the details of leaving the EU, not the long-term relationship between the UK and EU. On that issue, alongside the text of the agreement, there was also a political declaration on the future UK/EU relationship (discussed here), which has now been revised as part of the new overall ‘deal’. This is the basis for negotiations that would take place after Brexit day. There would also be an issue of whether to extend the transition period due to expire at the end of 2020, as discussed below. So there will certainly be lots of Brexit discussion in future, even if the revised withdrawal agreement is approved.

Structure of the withdrawal agreement

Part One of the withdrawal agreement (Articles 1-8) sets out the “Common Provisions”. These deal with basic issues like definitions and territorial scope.

Part Two of the withdrawal agreement (Articles 9-39) deals with citizens’ rights, for those EU27 citizens in the UK, and UK citizens in the EU27, before the end of the transition period.

Part Three of the agreement sets out “separation provisions” (Articles 40-125), ie the exact details of phasing out the application of EU law in the UK at the end of the transition period.

Next, Part Four sets out the rules on the transition period (Articles 126-132), during which substantive EU law still applies to the EU for two to four years after Brexit day.

Part Five concerns the financial settlement (Articles 133-157).

Part Six sets out “Institutional and Final Provisions” (Articles 158-185). This includes rules on CJEU jurisdiction over EU27 citizens, dispute settlement, making further decisions to implement the agreement and rules on entry into force and dates of application.

In addition there are three Protocols to the agreement (these have the same legal force as the main treaty), on Irish border issues, UK bases in Cyprus, and Gibraltar.

Part One: Common Provisions

The main legal issue in Part one is the legal effect of EU law for the UK. The agreement must have the same legal effect for the UK as EU law does for EU Member States – including the principles of direct effect (meaning that the agreement as such can be enforced in national courts) and implicitly supremacy (meaning that national law which breaches the agreement must be disapplied by national courts). The UK must also pass an Act of Parliament to give effect to the Agreement; this is above and beyond the latest planned ‘meaningful vote’ on the revised agreement in Parliament.

All references to EU law require it to be interpreted in accordance with the normal rules of EU law. As for case law of the CJEU, references to EU law must be ‘interpreted in conformity with’ CJEU case law delivered before the end of the transition period. However, the rule is different for CJEU case law after the end of the transition period: in that case, the UK courts and authorities are only required to have ‘due regard’ for the case law. Note that none of this gives jurisdiction to the CJEU as such as regards the UK (although other parts of the Treaty give the Court some jurisdiction).

References to EU law include that law as amended until the end of the transition period, while references to Member States include the UK except when they refer to having voting or representation rights on EU bodies etc.

Part Two: Citizens’ rights

This part will mostly not apply until after the end of the transition period, since free movement of people will continue during that period. In principle, it provides that EU27 citizens in the UK before the end of that period (and UK citizens who are in the EU27 before the end of that period) will retain the same rights as those who arrived before Brexit day. To that end, it requires the two sides to keep applying EU free movement legislation to the people concerned, including legislation on social security coordination and the recognition of qualifications.

Some aspects of their legal status will change, however: the UK or EU27 Member States may require them to apply to prove their right to stay on the territory. The UK in particular plans to implement this, by means of a ‘settled status’ scheme. The risk is that some people will not have the documentation to prove their right to stay. Some categories of people currently covered by EU law (such as UK citizens returning to the UK with non-EU family members, or UK children in the sole care of one non-EU parent) will not be covered by the withdrawal agreement, so their position will be up to UK law. Similarly a number of EU27 citizens who would not qualify for status because they do not meet the ‘comprehensive sickness insurance’ requirement will be covered by a unilateral waiver of this rule by the UK, not the withdrawal agreement.

Also, the rules on family reunion in EU free movement law (which are more favourable than those under national law or EU law on non-EU families) will only apply where the family relationship existed before the end of the transition period, or the family member was legally resident in the same State then. If the citizens commit a criminal offence after the end of the transition period, national rules on expulsions will apply – and they may be more stringent than EU free movement rules on this issue.

The CJEU will have jurisdiction to rule on how the rules apply to EU27 citizens in the UK, on the basis of requests from UK courts, for eight years after the transitional period ends. There will also be an independent monitoring body in the UK with power to bring court cases on their behalf.

For further details, see my annotation of a previous version of the citizens’ rights Part of the treaty, which is only a little different from the final version.

Key question: Does the withdrawal agreement end free movement of people?

Yes, free movement between the UK and EU (remember this applies both ways) stops at the end of the transition period, unless the UK and EU decide to sign a separate treaty as part of the future relationship extending free movement in the future. Currently the UK government opposes this idea. The protocol on Northern Ireland does not include free movement of people, but only the continuation of the UK/Ireland common travel area, which is more limited.

The withdrawal agreement also ends free movement between Member States for UK citizens already in the EU27, unless (again) a separate treaty as part of the future relationship addresses this issue. UK citizens in the EU27 might, however, be able to qualify for a status (long-term resident of the EU) allowing movement between Member States on a more restrictive basis, as discussed here.

Part Three: Separation provisions

This part tells out exactly how EU law ceases to apply at the end of the transition period, for a list of different issues. The biggest difficulties during negotiations were over geographical indications (ie, protection for those who call their product ‘Parma ham’) and what happens to cases pending before the CJEU on Brexit day.

Key question: Is the UK bound to EU law on geographical indications forever?

No, but it would be guaranteeing the continued protection of geographical indications for products which were protected at the end of the transition period.

More precisely, this part sets out rules for ending the application of EU law as regards thirteen issues: goods placed on the market; ongoing customs procedures; ongoing VAT and excise procedures; intellectual property protection; police and criminal law cooperation; cross-border civil litigation; personal data; public procurement; Euratom; judicial and administrative procedures; administrative cooperation; privileges and immunities; and other issues, such as the European Schools.

Key question: Does the CJEU have jurisdiction in the UK indefinitely?

No. Some have misread Article 89 of the withdrawal agreement, which refers to CJEU jurisdiction as regards cases coming from the UK, to mean that the UK will be covered by the Court’s jurisdiction forever. In fact, Article 89 simply confirms that the Court will have jurisdiction for cases sent from UK courts before the end of the transition period.

After that point, UK courts can send the CJEU cases only in limited contexts: for eight years after the transition period ends as regards EU27 citizens in the UK, or the protocols on Northern Ireland (in part) and Cyprus. Also, the Court has jurisdiction after this point to decide on how to interpret EU law if a dispute about the withdrawal agreement goes to arbitration (see Part Six).

Furthermore, the Commission can sue the UK in the CJEU for failure to implement EU law correctly for four years after the end of the transition period (though this can only concern alleged breaches which occurred as an EU Member State, or during the transition period Part of the agreement). Finally, the Commission can sue the UK to enforce State aid and competition decisions which were based on proceedings which started before the end of the transition period, but concluded afterward.  (I have discussed the CJEU provisions of the withdrawal agreement in more detail here).

It is possible that the future relationship will provide for continued EU/UK cooperation on some of these issues, in which case some of these separation clauses either will not come into practical effect at all, or will only apply in part. For instance, the EU and UK might end up agreeing in a new security treaty on another form of fast-track extradition instead of the European Arrest Warrant (EAW), and may therefore choose to agree different rules on transition from the EAW system to that new fast-track system.

Part Four: transition period 

This is a short part of the withdrawal agreement, yet it has the biggest effect: it keeps most substantive EU law in place in the UK until at least the end of 2020, with a possible extension.

The key elements of the transition period are that EU law (including new EU law) applies to the UK, except in areas covered by UK opt-outs (such as the single currency and justice and home affairs law; in the latter case, the UK retains part of its power to opt-in to new proposals on a case-by-case basis). There are special rules on external relations: for instance, the EU will notify non-EU countries that the UK should still be regarded as covered by EU free trade agreements, or other types of EU treaties between the EU and non-EU countries (the non-EU countries aren’t obliged to agree to this. For the text of the notification, see here). The current rules on the allocation of fisheries catches can’t be changed to benefit either the EU or UK fishing fleets.

However, the UK will not be represented on any EU institutions or bodies – including on the CJEU, which will continue to have its usual jurisdiction regarding the UK during the transition period. The UK will only be consulted on new EU measures as a special exception. In one area – foreign and defence policy – the UK can refuse to apply new EU measures if it has fundamental objections to them, and the withdrawal agreement foresees an early treaty between the EU and UK that will replace the transition period rules in this area. The UK will remain opted out from the rules on further defence cooperation between Member States (known as ‘PESCO’).

For a detailed annotation of the transition period clauses – except for the extension clause which was added later – see my earlier blog post.

Key question: Which EU laws does the transition period cover?

I’m often asked if the transition period covers a particular EU law like driving licences or aspects of the free movement of people, because readers can’t find a specific reference to that law in the withdrawal agreement. The simple answer is that the transition period covers all laws applying to the UK except a handful of exclusions, so the drafters didn’t bother with a list of those EU laws which are covered by it.

The EU laws which are not covered by the transition period are those about 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. The UK (or its devolved legislatures) can, if it chooses, unilaterally continue to let EU27 citizens vote in local elections, and EU27 countries can choose to do the same for UK citizens. Also, as noted above, EU foreign and defence policy might not fully apply to the UK for the whole of the transition period.

This brings us to the potential extension of the transition period. It’s possible for the Joint Committee set up by the withdrawal agreement – which works by the mutual consent of the EU and UK – to decide by July 2020 if the transition period will be extended, for a single extension of up to one or two years.

In that case, the transition period rules continue to apply to the UK for that extended period, except there would have to be an ad hoc negotiation on how much the UK pays into the EU budget during the extended period.  There are also special rules on agricultural support.

Key question: Can the UK be forced to stay in the transition period indefinitely?

No. First of all, any extension of the transition period has to be agreed jointly, as noted already. So the UK could veto it. Secondly, any extension won’t be indefinite, since the withdrawal agreement sets a maximum extension time limit of two years.

On the other hand, the UK might theoretically end up applying the rules relating to Northern Ireland (discussed further below) indefinitely. However, these rules are more limited in scope than the transition period, as they concern only some EU laws (on equality law, external trade, customs, goods regulation, electricity, and State aids), and they only apply to Northern Ireland. In particular, the backstop does not concern the free movement of people or services, or contribution to the EU budget.

Part Five: financial settlement 

This part incorporates the earlier agreement that the UK takes part in the EU’s spending until the end of the current budget cycle (end 2020), which matches the end of the transition period (unless that period is extended). As noted above, though, if the transition period is extended, the UK and EU will negotiate a separate EU contribution to the EU budget. It also includes UK payments to the budget incurred because the EU often makes financial commitments in one year and then pays them out in later years (the system known as reste à liquider). Furthermore, it includes continued payments to ‘off-budget’ EU spending such as commitments to developing countries, until the current versions of those programmes expire. For a detailed discussion of the finances of the deal, see reports from the OBR, the National Audit Office and the Institute for Government.

Key question: Has the UK agreed to pay £39 billion in return for nothing?

No. First of all, some of that money has already been contributed during the period of extension of EU membership. Secondly, this begs the question: the EU regards the financial settlement as money which is payable in any event regardless of any future relationship, and took the view that the future relationship could not be formally negotiated before Brexit day anyway. Even on its own terms, the argument that ‘£39 billion is paid for nothing’ is wrong, since about half of of the money relates to the UK still applying substantive EU law during the transition period (see the OBR report), during which the UK still has its current access to EU goods and services markets (and vice versa).

Part Six: Institutional and Final Provisions

First of all, as noted above (in Part Two), the CJEU will have jurisdiction to rule on how the rules on citizens’ acquired rights apply to EU27 citizens in the UK, on the basis of requests from UK courts, for eight years after the transitional period ends. There will also be an independent monitoring body in the UK with power to bring court cases on their behalf. The two sides might agree to wind up the monitoring body at the end of the same time period.

Secondly, the CJEU will have jurisdiction, after the end of the transitional period, over the reference to EU law in the financial settlement part of the agreement, in references from national courts or as regards Commission infringement actions brought against the UK.

Next, there’s a Joint Committee set up to oversee and implement the agreement. It will meet at least once a year, and there are a number of sub-committees dealing with specific issues like Northern Ireland and citizens’ rights. It can take certain decisions to add to the agreement – such as an extension of the transition period – but for all these decisions the EU and UK must both agree.

There are detailed rules on dispute settlement, providing for arguments about the agreement to go to a panel of arbitrators. However, if the arbitrators have to decide an issue of EU law when settling the dispute, they will have to ask the CJEU to give a ruling. This is unavoidable, since CJEU case law insists that the EU and its Member States cannot be bound by an interpretation of EU law other than the CJEU’s (see, for instance, CJEU Opinion 1/92).

As noted above, the CJEU has jurisdiction over part of the Protocol on Northern Ireland, as well as the Protocol on bases in Cyprus.

Key question: Does the CJEU have jurisdiction over the entire agreement?

No. The Court has its usual jurisdiction under the transition period, and following that specific jurisdiction over EU27 citizens’ rights and EU law referred to in the financial settlement, as well as the protocols on Northern Ireland (in part) and bases in Cyprus. But the arbitrators can only refer disputes over EU law to it, not disputes over the entire agreement – although a lot of the agreement does refer to EU law.

Note that this part of the agreement differs a lot from the dispute settlement clauses as the Commission proposed them in March 2018 (see discussion here) – which included powers (tilted toward the EU) for both sides to impose sanctions on each other. The final version looks a lot more like traditional international dispute settlement, and is presumably a concession by the EU to the UK.

Finally, the last provisions of the main withdrawal agreement set out ‘boilerplate’ rules: confirming that the three Protocols and nine Annexes are binding; setting out the authentic languages of the text and the depositary; and setting the date of entry in force (which was amended in April 2019). The withdrawal agreement applies from that date, except the parts on citizens’ rights, separation provisions, dispute settlement and the three Protocols mostly apply from the end of the transition period (with specified exceptions which apply immediately). There’s also a commitment to negotiate on the future relationship, referring to the separate joint declaration on that issue, ‘with a view to’ agreeing those texts by the end of the transition period ‘to the extent possible’.

Protocol on Irish border issues

The changes to the Northern Ireland Protocol, as compared to the previous version of this Protocol, have been tracked here. Article 1 specifies that it does not affect the UK’s territorial integrity. But the provisions emphasising that the Protocol is meant to be temporary have been dropped, as have a link back to the possible extension of the transition period and a review clause. However, the possibility of replacing the Protocol by future UK/EU trade arrangements is maintained.

Next, Article 2 and 3 of the Protocol, which are unamended, refer to equality rights and the common travel area between the UK and Ireland (these issues were never controversial).

Key question: Does the common travel area continue the free movement of people between the UK and EU?

No. The absence of border checks makes it impossible to refuse entry to people at the border with Ireland, but that does not mean any EU27 citizens crossing that border (besides Irish citizens) have the right to reside or work in the UK (and vice versa for people crossing into Ireland, besides UK and EU citizens). There is UK legislation on liability for employers, landlords et al who hire or do business with people who are not authorised to work or reside that will be relevant here.

The revised Protocol then drops the previous UK-wide customs union backstop. This text had linked to Annexes on: a) trade in goods between EU/UK/non-EU states; b) customs cooperation; and c) a ‘level playing field’, which meant some degree of continued harmonisation of law relating to tax, the environment, labour law, state aid, competition, and public companies/monopolies.

However, this had fallen short of the obligations of EU Member States; there had been limited obligations to keep up with new EU legislation and CJEU case law; and the arbitration rules (including CJEU jurisdiction) mostly had not applied to this ‘level playing field’. There’s a lot of EU law that wouldn’t have applied to the UK – most notably the free movement of persons, services and capital, and contributions to the EU budget. So while the backstop would still have committed the UK to a chunk of EU law on trade in goods, and in a limited way to some law in the ‘level playing field’ areas, the continued application of EU law would have been much less than under the rules on the transition period.

In place of the UK/EU customs union backstop, in the revised Protocol a new Article 4 first specifies that Northern Ireland is part of the UK’s customs territory for international trade purposes. A new Article 5 then, first of all, regulates trade between Great Britain and Northern Ireland. No customs duties are charged on goods moved from Great Britain to Northern Ireland, unless there is a risk that the goods may be sold in the EU. The further definition of what that means must be worked out by the Joint Committee by the end of the transition period. There is an exemption for personal property. As before, an Annex applies a long list of EU laws on customs, trade and goods regulation to Northern Ireland – although in the previous version some of these laws would have applied to the whole UK.  It’s now specified explicitly that customs duties charged for goods entering Northern Ireland are kept by the UK, not given to the EU.

The Protocol also retains provisions on the UK internal market, as well as lists of specific EU laws that apply in Northern Ireland: product regulation, VAT and excise tax, a single electricity market, and State aids. However, an Annex on agriculture and the environment has been dropped, and the VAT provisions have been amended to clarify that the UK keeps the revenue, can reduce VAT rates for Northern Ireland, and to give the Joint Committee powers to amend these rules. The vague reference to other North/South cooperation is retained.

The institutional provisions of the Protocol are retained, including the proviso that EU bodies, including the CJEU, have competence to apply or interpret the provisions of the Protocol that are specific to Northern Ireland.  Finally, a new provision on ‘consent’ specifies that the Northern Ireland Assembly can, under certain conditions, terminate the customs and other economic provisions of the Protocol. There’s also a unilateral UK declaration related to this. (The absence of a power to end the previous backstop unilaterally had been controversial).

Protocol on UK bases in Cyprus

This Protocol confirms that the bases in Cyprus remain within EU customs territory after Brexit, and EU regulations on goods, including agricultural and fisheries laws, still apply. EU law on excise taxes and VAT also continues to apply. Goods supplied to the staff on the bases are exempt from customs and taxes, and the UK and Cyprus may agree further rules on social security coordination. There are rules on checks at the border of the bases area, and a general obligation to cooperate to prevent fraud. Finally, the EU institutions, including the CJEU, have competence to apply and interpret EU law referred to in the Protocol.

Protocol on Gibraltar

First of all, this Protocol provides for the UK and Spain to cooperate on workers’ rights as regards the Spain/Gibraltar crossing. Next, it retains the status quo on access to aviation, unless the Joint Committee decides differently. It also contains general provisions on cooperation on tax and fraud, environmental protection and fishing, and police cooperation.

Assessment

The only changes in the revised withdrawal agreement as compared to the previous version relate to the ‘backstop’ (I’ll come back to changes to the political declaration in a further blog post). These changes replace the UK/EU customs union, with associated ‘level playing field’ rules on tax, the environment and labour law, which was theoretically temporary, with permanent provisions which relate to Northern Ireland only, moreover dropping the bulk of ‘level playing field’ rules. This entails new provisions on trade between Great Britain and Northern Ireland, as well as on the related Northern Ireland political process.

While the potential continued application of some EU laws to the UK as a whole has been dropped, most of the EU laws that would have continued to apply specifically to Northern Ireland have been retained, and the agreement now regulates aspects of internal trade and the internal political process. In short, the quid pro quo for limiting the ongoing relationship between the UK as a whole with the EU as compared to the previous withdrawal agreement is retaining, and even strengthening, the ongoing relationship between Northern Ireland and the EU.

The absence of a UK-wide backstop means that the end of the transition period will create a new ‘no deal’ cliff edge for the UK/EU relationship as regards trade – as there would no longer be a guarantee that the backstop provisions on trade in goods would apply in the event of any failure to agree a new broad trade relationship.  ‘Level playing field’ rules will not kick in either in this scenario. It’s therefore possible that the whole drama of a potential no deal outcome will simply be replayed at some point in the near future (except as regards Northern Ireland – unless the Assembly there wants to terminate the key provisions of the relevant Protocol, probably at a separate date).

The greater divergence from the UK and the EU provided for in this revised agreement also therefore has a cost of a potentially larger drop in reciprocal market access at the end of the transition period, which would be accompanied by a greater possibility for the UK to deregulate as regards tax, labour and environmental standards.

Those MPs who opposed the previous withdrawal agreement formed part of different groups, who opposed that agreement for various conflicting reasons: to obtain a ‘harder’ Brexit (fewer ties to the EU, more capacity to deregulate); a ‘softer’ Brexit (stronger ties to the EU, less capacity to deregulate); and to increase the chances of preventing Brexit completely. These three aims were necessarily in conflict: only one of the three groups could achieve its intended objective, and the other two groups would have gambled and lost, putting themselves further away than before from their ideal outcome.  As things stand, if the revised withdrawal agreement is approved, it’s the hard Brexiters who won their gamble, and the soft Brexiters and Remainers who made a serious tactical mistake.   

Barnard & Peers: chapter 27

Photo credit: Sky News

The Day the Unicorns Cried: the deal on phase 1 of the Brexit talks

Professor Steve Peers, University of Essex

Introduction

The recent ‘joint report’ on the progress in the Brexit negotiations (accompanied by a Commission paper) amounted to an informal deal to proceed to the second phase of Brexit talks. Indeed, on the basis of the joint report, the EU27 side has since agreed there is ‘sufficient progress’ in the talks to move to the second phase. This phase will focus on a transition period (discussed here; and see the EU negotiation guidelines on the transition period here) and (starting possibly in March 2018) the framework for the post-Brexit relationship between the UK and the EU.

I have previously blogged on the parts of the deal dealing with the rights of citizens of the EU27 in the UK, and British citizens in the EU27. Here I want to focus on the rest of the joint report, concerning the Irish border, the financial settlement, and ‘winding up’ issues. As I discussed in the Conversation, the joint report is not legally binding, but sets out political commitments, which will be crucial to the final conclusion of the withdrawal agreement and the negotiation of the future EU/UK relationship. Moreover, they will be set out in detail when drawing up the formal text of the withdrawal agreement, which will begin shortly. It should be noted that some points still need to be negotiated or fleshed out, and any agreement on what happens in the transition period will have to be added to the withdrawal agreement. Yet overall the recent deal is undeniably significant, making it rather more likely that a final complete withdrawal agreement will be agreed.

In the citizens’ rights part of the deal, the UK has committed to bring forward a bill for an Act of Parliament giving domestic legal effect to the withdrawal agreement, making express reference to the agreement and making the citizens’ rights provisions part of UK law. However, there is no explicit commitment that the other provisions of the agreement must be made part of UK law.

Irish border issues

These proved to be the most difficult parts of the joint report to agree, given the divergence of views between Ireland (backed by the rest of the EU27), the Democratic Unionist Party (the DUP: unionist MPs from Northern Ireland who prop up the Conservative party’s minority government), and within the Conservative government.

The starting point is the continued commitment of both sides to the Good Friday Agreement, which effectively ended the long period of violent conflict relating to the status of Northern Ireland. The joint report also refers to the UK government’s intention to avoid a ‘hard border’ between Northern Ireland and Ireland, meaning the absence of ‘physical infrastructure or related checks or controls’ at the land border. To reassure the DUP, both sides agree to uphold the ‘principle of consent’ in the Good Friday Agreement (ie, Northern Ireland would have to vote in favour of unification with Ireland), and the UK supports Northern Ireland remaining part of the UK in the absence of such consent. The UK respects both Ireland staying part of the EU internal market and customs union and Northern Ireland saying part of the UK’s internal market, as the UK leaves the EU’s internal market and customs union. It’s the difficulty reconciling these positions with the intention to avoid a hard border that causes problems.

The joint report does not ‘predetermine’ the broader talks on the EU/UK relationship, which may be ‘specific’ as regards the ‘unique circumstances’ on the island of Ireland. The commitments are ‘made and must be upheld in all circumstances, irrespective of the nature of any future agreement between’ the UK and the EU. However, it is hard to see how this could amount to a legal obligation that will apply even in the event of a failure to agree a withdrawal agreement.

Next, the joint report refers to the importance of maintaining North-South cooperation on the island of Ireland, which is linked to cooperation within the EU framework in a number of areas. Then comes the crucial paragraph 49. The UK ‘remains committed’ to North-South cooperation and its ‘guarantee’ of avoiding a hard border, and:

Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market or the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement. 

But this reassurance to Ireland is then followed by a reassurance to the DUP: the UK will not create new regulatory barriers between Northern Ireland and the rest of the UK, unless Northern Ireland bodies consent to this.

The joint report goes on to address related issues. It recognises that Irish citizenship – and therefore EU citizenship – will still be held by many in Northern Ireland, as a consequence of Irish citizenship law. Human rights and equality law shall continue to be protected – including no diminution of equality rights as protected by EU discrimination law. The Common Travel Area for persons can continue to apply. Indeed the UK’s position paper on Northern Ireland notes its intention not to apply checks on persons crossing the land border with Ireland, but rather to ensure migration control via checks in country instead, via workplaces, banks, universities and landlords (for instance), as is currently the case for non-EU citizens. Finally, the funding programmes relating to the peace process will continue, and their future application will be ‘examined favourably’. In fact, the Commission paper commits to propose to continue these programmes in the next EU multi-annual funding cycle (a proposal is due in May 2018).

The key issue in this part of the joint report is the means to avoid a hard border and continue North-South cooperation more broadly. Some interpret paragraph 49 as a commitment from the UK implicitly to stay part of the EU’s internal market and customs union – but this is hard to reconcile with the paragraph which explicitly notes that the UK is leaving the internal market and customs union. (The EU27 guidelines on the transitional period note this again).

Read closely, the obligation of ‘full alignment’ only applies if the commitments on ‘no hard border’ and North-South cooperation cannot be achieved via means of the overall EU/UK agreement, or by a specific solution. Even then it is a commitment to align with ‘those rules’ in the internal market or customs union which support North-South cooperation et al. If the intention is to commit to staying in the entire customs union and internal market, why refer only to some rules in this context?

The reality is that this form of words is a fudge, intended to serve as a vague compromise that would be enough to get the nod for ‘sufficient progress’ to move to the next phase of talks. There is far less concrete detail in the ‘Irish border’ section of the joint report than in the sections on citizens’ rights and the financial settlement. It remains to be seen whether the two sides are content to leave this point ambiguous for now, given that talks on the future trade relationship have yet to start and a ‘status quo’ transitional period would defer the necessity to decide the issue definitively for awhile.

If they do intend to address the issue in detail at an earlier stage (as the wording of the joint report suggests), it will be necessary to address how much paragraph 49 merely refers to border controls, and how much it refers to broader issues of North-South cooperation and the all-island economy. Border controls do not concern all aspects of the internal market, given that checks on persons are referred to separately in the joint report and issues concerning regulation of services or establishment have little or nothing to do with checks at land borders. (It’s worth noting that the issues on which Jeremy Corbyn’s Labour leadership would most like to diverge from single market rules – competition, state aid, regulation of public services – do not have much to do with land border checks either).

Specifically on land border checks, the UK’s Northern Ireland paper suggested that trade and regulatory rules could differ somewhat but a hard border could still be avoided, by means of new high-tech systems keeping track of trade remotely. Two such methods were proposed (the ‘highly streamlined customs arrangement’ and the ‘new customs partnership’), but there was little detail on either. (See now the discussion paper on the planned Customs Bill).

On the other hand, ensuring regulatory alignment regarding North-South cooperation and the all-island economy would encompass a broader proportion of the internal market, although not necessarily all of it. On either interpretation this leads to the question of whether the EU27 would accept a solution entailing participation in only some EU rules, not all of them. While the EU27 side has said it would not accept ‘cherry-picking’ of the internal market rules by the UK, it has also said that it will contemplate a ‘unique’ solution for Ireland in light of its special circumstances. There is as much tension between those two positions as there is in the UK’s positions that it will simultaneously avoid a hard border, keep Northern Ireland in the UK internal market, and diverge from EU regulations. The UK has often been rightly criticised for a ‘have your cake and eat it’ Brexit strategy; but there appears to be some magical munching on the EU27 side too. 

Financial settlement

EU budgetary law is the type of law only an accountant could love. Nevertheless, it’s necessary to look at the details of the deal on this issue, since the principle of paying anything to the EU after Brexit is bitterly resented by some. Some general points: the EU27 side was not simply asking for a lump sum (as some claimed), but for a detailed list of commitments relating to specific amounts that it believed were payable as an ongoing consequence of the UK’s membership of the EU prior to Brexit day. But also it should be noted that the financial settlement represents money the UK would be paying anyway if it remained an EU Member State; so it’s misleading to suggest it’s an extra fee that has to be paid because of Brexit. There isn’t enough space on British roads to accommodate another false claim about the UK’s financial contributions to the EU. However, the size of the financial settlement further undercuts those earlier false claims about how much the UK stood to save from Brexit.

The starting point is that the two sides have agreed a ‘methodology’ for the financial settlement, rather than an exact sum. It contains four elements: a list of components as to what is owed; principles for calculating the value of the settlement; arrangements for the UK to continue being part of the current EU budget until its normal end in 2020; and arrangements for the UK’s role in other EU spending.  Some points are left to the second phase of talks (paras 60, 67c, 70, 72, 80 and 85) or, in effect, to the future relationship talks (paras 66, 73).

Components of the settlement

The UK agrees to stay a participant in the current EU budget until the end of 2020, despite leaving the EU in March 2019. While the EU27 side sees this as an outstanding obligation, the UK side sees it as an aspect of the post-Brexit transition period, as proposed in the Prime Minister’s Florence speech. In principle, I agree with the UK’s legal argument here; in practice, it’s a distinction without a difference.

Notably, the joint report says that changes to the EU’s basic laws on spending or revenue adopted after Brexit day which affect the UK will not apply to it. This protects the UK against its budget rebate being abolished or curtailed, or having to pay a share of any (hypothetical) increased EU spending, in the absence of its veto. It’s expressly a ‘derogation’ from the rule (later proposed in the EU27 guidelines) that the UK would be bound by new EU laws adopted in the transition period. Conversely, it’s necessarily implicit that the UK would be bound by the annual EU budgets for the whole of 2019 and also 2020 (except for any parts of those annual budgets affected by changes in the basic budget laws), and any changes to the EU’s Financial Regulations (which set out the technicalities of the EU spending process in more detail, but don’t determine the actual amounts spent). 

The UK has agreed to pay its share of funding commitments that the EU promises before the end of the budget cycle in 2020, but does not actually fund until later. Known by the unlovely French acronym ‘RAL’, this is probably the biggest chunk of the financial settlement. There is a detailed agreement on how to work out the UK share of EU liabilities in general.

Principles for calculating the value of the settlement

This part of the joint report includes details of how to calculate the UK’s share of EU spending. It includes a requirement that UK contributions be paid in euro – so the UK will pay extra due to the drop in the value of the pound following the Brexit vote and the decision to leave the single market.

Current EU budget

It’s made clear in the joint report that the UK will fully benefit from EU spending up until the end of the 2020 budget cycle. This will mean, for instance, that EU regional funds, agricultural subsidies and research spending will be spent in the UK until the end of 2020. The UK states a wish to continue participating in some EU programmes after Brexit – but this is an issue for negotiations on the future relationship.

Other EU spending

The UK has agreed to guarantee its ‘callable capital’ in the European Investment Bank, and there’s a schedule to return the UK’s capital in the Bank over twelve years (at the rate of €300 million/year).  Again, the UK wants a continuing relationship, but that’s an issue left for future talks. The UK’s capital in the European Central Bank will also be returned; the details will be agreed by the Bank.

The UK will continue participating in EU off-budget spending relating to Turkey and Africa (as regards migration and refugees) and in the European Development Fund, the aid programme for African, Caribbean and Pacific countries. Presumably this spending, while it lasts, will still be considered part of the UK’s commitment to spend 0.7% of GDP on international aid. That means there’s no money here to be saved as such – although in the absence of these commitments, the UK could, if it wished, have spent that aid money differently. The joint report includes an agreement to discuss ‘governance arrangements’ to take account of the off-budget status of this fund, presumably retaining the UK’s decision-making role here whereas it will lose its representation in EU institutions.
 

Finally there’s a recognition of the UK’s intention to discuss reducing the withdrawal costs of the EU agencies leaving London. It does seem odd that these agencies would not be able to cut those costs by subletting their office space to other tenants.

‘Winding up’ rules

These are the least high-profile of the issues in the joint report, but are important for the nitty-gritty of relations between the UK and the EU. Anything agreed on this issue may turn out to be irrelevant, at least for now, if the substantive law of UK/EU relations remains the same during the transitional period (as the EU27 proposes). Indeed, it may turn out to be irrelevant forever, to the extent that the UK and EU agree to keep applying current rules even after the transitional period: but it’s likely that a big chunk of current rules will indeed change sooner or later.

On these issues, the joint report (paras 87-95) notes that ‘further discussion’ is required on some issues in the second phase. The Commission paper notes that there has been no discussion yet of EU27 papers on issues relating to intellectual property law, customs, public procurement and data protection. However, there are some agreed principles on winding up UK participation in Euratom, the atomic energy body (discussed further here), although the Commission paper notes that some issues have not yet been resolved. Some points have been agreed on goods placed on the market before Brexit day, although the Commission paper says there is no agreement yet on the definition of ‘placing on the market’ or on regulatory competence.

As for civil law cooperation (discussed further here), the two sides agree to continue applying current conflict of laws rules where the contract was signed, or the damage occurred, before Brexit Day. Current rules on jurisdiction of courts will apply where proceedings started before Brexit Day. But there is no full agreement yet on the details of mutual recognition of civil judgments or decisions: a judgment handed down before Brexit Day will be recognised, but the two sides have not yet agreed whether a case pending on Brexit Day but decided afterwards will be. There is disagreement on what happens if a ‘choice of court’ rule is triggered after Brexit Day, but civil cooperation proceedings pending on Brexit Day (for instance, the service of documents, or a request for evidence) will be completed.

As for criminal law, the two sides have agreed that pending procedures will be completed, but have not yet agreed on the date for a cut-off. Procedural rights for suspects will be guaranteed, as regards the legislation which the UK has opted into. (For more on criminal law cooperation after Brexit, see discussion here).

On issues specific to the EU institutions, the UK has accepted the EU27 position that where the ECJ has been seized of cases relating to the UK before Brexit Day, it will remain competent to give a judgment after Brexit Day. (Presumably it will be clarified that such a judgment will still bind the UK, given that the ECJ insists that its judgments must always be binding). On the other hand, as the Commission report notes, the two sides still disagree on what happens to cases concerning EU law pending in the UK courts on Brexit Day (ie could they still be sent to the ECJ for a decision?).

Also there is no agreement yet on what to do with administrative proceedings pending before EU institutions on Brexit Day, such as competition and state aid processes. But there is agreement on issues relating to immunities, professional secrecy and classified information.

There is also no agreement yet on ‘governance issues’, notably the role of a Joint Committee and the dispute settlement process, including as regard sthe role of the ECJ in such a process (note this is a separate question from the role of the ECJ as regards citizens’ rights, which has been agreed).

Conclusions

Hard core Brexiteers once insisted that the UK could quickly obtain a short, simple trade agreement from the EU, with the EU capitulating immediately to the UK’s demands. The length and complexity of the Brexit talks to date – before trade talks have even begun – shows the falsehood of these assertions.

So do the details of the agreement to date. If the UK ‘holds all the cards in negotiations’, why did it agree to a financial settlement in the tens of billions? If the UK/Ireland border could simply remain unaffected by the Brexit process, why was there a need for such convoluted language on this issue – with many details still to be worked out? If the citizens’ rights issues could be settled by a simple exchange of letters, why has the UK agreed to the continued application of key aspects of EU law to EU27 citizens in the UK?

It seems evident that the UK/Ireland relationship will continue to remain a central issue not just as regards the withdrawal agreement, but also the UK/EU future relationship. The ironies pile up here. First, while the UK government tried to use discussions of Irish border issues to bring forward talks on the future EU/UK trade relationship, the EU27’s willingness to do just that then exposed the lack of agreement within the UK government (and between the government and the DUP) as to exactly what the UK wants from that future relationship.

Secondly, the joint report treats Northern Ireland as Schrodinger’s province: simultaneously reaffirming its identity as a uniform part of the UK and its distinct status as a part of the UK closely linked to the Republic of Ireland. Perhaps this is to be expected from the influence of the Democratic Unionist Party, which sees no contradiction in simultaneously insisting on Northern Ireland’s uniformity with the rest of the UK and on the need for lower taxes, more spending and different laws on same-sex marriage and abortion there than in the rest of the UK.

Thirdly, the huge overlap between hard core Brexiteers and hard core unionists contains inherent contradictions. Because of the Good Friday Agreement, retaining a close link between Northern Ireland and the rest of the UK necessarily means retaining a close link between the entire UK and Ireland – and therefore with the rest of the EU. Brexiteers are keen to enhance links with the USA and the Commonwealth; but Ireland was not the ex-colony they were looking for. 

Overall, agreement on the first phase of Brexit talks means that ‘no deal’ in the talks is somewhat less likely – though this might be mirrored by the Remain option being less likely too, if it means that leaving the EU produces only a gradual economic impact, rather than a huge shock. Coupled with the plans for a transitional period which mostly or entirely retains the substantive status quo of EU membership, the joint report envisages a process in which the UK moves gradually from being a semi-detached member of the EU to a semi-detached non-member of the EU.

The UK government has yet to resile from all the magical thinking which Brexiteers have indulged in. But its willingness to compromise on some difficult issues does suggest it recognises that ‘no deal’ is a bad idea. It has also recognised that a transition is necessary, that a financial settlement is inevitable, and (tentatively) that Brexit leprechauns will not solve Irish border issues. The move to the next phase of Brexit talks was a bad day for disaster capitalists and fantasists. But while the sky will be clearer without flocks of flying pigs and unicorns, it does mean that everyone on the ground will now have to listen to the same endless moaning from hard Brexiteers which they have long accused Remainers of.

Barnard & Peers: chapter 27

Art credit: Steve Cutts