A focus on the rest of the joint EU/UK report, concerning the Irish border, the financial settlement, and ‘winding up’ issues.
The recent ‘joint
’ on the progress in the Brexit negotiations (accompanied by a Commission
) 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
) and (starting possibly in March 2018) the framework for the
post-Brexit relationship between the UK and the EU.
I have previously
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
, 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
, 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:
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
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
the internal market and
customs union. (The EU27 guidelines on the transitional period note this
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
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
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
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
. 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
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
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.
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
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
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
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
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
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).
Hard core Brexiteers once insisted
that the UK could quickly
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
(This piece was first published in EU Law Analysis - Expert insight into EU law developments)
(Cover: Dreamstime / Elena Schweitzer - Brexiteer unicorns dream of having their cake and still being able to eat it.)