What happens if a UK government removes benefits from EU citizens in breach of the withdrawal agreement?

 

 

Professor Steve Peers, Law School, Royal Holloway University of London

 

Photo credit: Martin Robson, via Wikimedia Commons

 

Recently the Reform Party proposed that in government it would withdraw benefits from all non-UK citizens, including from those EU citizens who had moved to the UK before the end of 2020. It acknowledged that this would breach the Brexit withdrawal agreement (for an annotated text of the rules on EU and UK citizens’ rights under the agreement, see here, particularly Article 15).

 

Legally the EU response if the UK breached the withdrawal agreement on this issue (I’m assuming the Reform government would amend UK legislation as needed, to ensure that the breach was valid as domestic law) would be to challenge it in the arbitration process which the withdrawal agreement set up. (For an annotated text of the dispute settlement rules, see here). A dispute can be settled politically; if not settled, it goes to arbitration. An arbitration decision is binding, so if a party is found in breach of the withdrawal agreement, it is legally obliged to comply with the ruling.

 

But what if it does not comply with the ruling? The key provision is Article 178, which provides first of all that fines can be imposed upon the party that remains in breach of the treaty despite an arbitration ruling. Article 178 goes on to refer to possible additional retaliation for a continuing breach, but (in paragraph 2(a)) it says that such retaliation cannot concern Part Two of the withdrawal agreement, ie the citizens’ rights provisions. Therefore, the EU cannot respond to the UK breach of EU citizens’ rights by taking UK citizens’ reciprocal rights away. Instead, Article 178 refers to possible retaliation under other agreements (paragraph 2(b)), which brings us to the Trade and Cooperation Agreement (TCA).

 

The TCA has a separate set of dispute settlement rules, which I have annotated here. The key provision on links with the withdrawal agreement is Article 749(4) of the TCA. It states that a continuing breach of the withdrawal agreement can also result in suspension of parts of the TCA, ie tariffs on goods or suspension of other provisions of the agreement (subject again to some limits on the subject-matter of retaliation, ie the retaliation cannot affect social security).

 

The retaliation must be proportionate though, and if the party in breach argues that the amount of that suspension is disproportionate, the arbitration panel can be recalled to rule on the point (Article 178(3) of the withdrawal agreement).

 

One possible form of retaliation which would arguably be proportionate would be to reimpose tariffs equal to the amount of benefits EU citizens would be losing as a result of the breach, to which they would otherwise be entitled under the withdrawal agreement. So if the breach of the agreement caused EU citizens to lose €1 billion in benefits, UK goods exports would face €1 billion in tariffs. Under the World Trade Organisation, in comparable cases, the EU has targeted high profile exports from its trading partner in breach of the rules; for the UK, that might mean higher tariffs in particular on Scottish salmon or whisky, or Jaguar cars. To be clear, this is speculation – the EU might prefer another type of retaliation which is allowed under the agreements. And the EU would be charging its usual tariff rate for countries which it does not have a free trade deal with, which would only mean a big increase for some products.

 

It’s possible it wouldn’t get to this stage: the EU might decide to negotiate changes to the withdrawal agreement; indeed the Reform Party document states that it will ‘renegotiate’ the treaty. But a treaty can only be renegotiated if all parties agree; and it seems very unlikely politically that the EU would agree, given the priority which it placed on the issue before. (On the EU side, an amendment would need to be agreed by a qualified majority of Member States, having been proposed by the Commission, after consent of the European Parliament).

 

As for additional possible sanctions, the EU might, for instance, suspend talks on other issues with the UK. It could even suspend or terminate the entire TCA, although arguably the rule on proportionality of retaliation applies here. In practice, during prior disputes with the UK, the EU has preferred the negotiation and dispute settlement route rather than escalation: both the EU and the UK have previously triggered disputes under the withdrawal agreement and the later Trade and Cooperation Agreement, although only one dispute has got as far as an arbitration decision.

 

For instance, when the EU disputed the UK’s application of (what was then) the Northern Ireland protocol to the withdrawal agreement, it suspended talks on the UK’s participation in EU research programmes and began dispute settlement proceedings, but it put the latter on hold pending negotiations, which eventually resulted in a revised version of the protocol known as the Windsor Framework – after Liz Truss lost her nail-biting contest with a lettuce.

 

As for terminating the whole withdrawal agreement, as discussed further here, there is no termination clause (apart from the trade aspects of the Windsor Framework, subject to certain conditions), and in any event the EU would have no interest in terminating the basis for the Windsor Framework and the protection of its citizens’ rights. Nor does a breach of a treaty automatically terminate it, under international law – which has a whole Latin phrase (pacta sunt servanda) for the importance of upholding treaties. (Though to be fair, international law has a Latin phrase for nearly everything)

 

Anyway, as has been pointed out, EU citizens might choose to apply for UK citizenship before any new UK rules took effect.

 

All of this points to a policy that, on this point at least, seems as ill-thought-through as Mr Farage’s decision not to declare the significant gifts he received shortly before becoming an MP, including those from a convicted money-launderer.