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Phase 2 of the Brexit talks: Annotation of the EU27 negotiation position.



Last Monday, it took only two minutes for the EU ministers of the EU27 attending a meeting of the General Affairs Council to approve the draft negotiating directives. Earlier that week, Steve Peers annotated the directives in detail. A very interesting read.


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On Monday 29th January, the EU Council is due to adopt its negotiating directives relating to the second phase of Brexit talks, mainly concerning a transition period after Brexit Day when substantive EU law will still apply to the UK.  The apparently final version of those negotiating directives has been leaked, and so I have taken the opportunity to annotate them in detail. I will amend this blog post if it turns out that the leaked draft is further amended when it becomes final.

The EU27 position still has to be agreed with the UK, of course. The UK set out its view on a transitional period in the Prime Minister’s Florence speech last September, which I commented on here and here. There seem to be some broad areas of agreement between the two sides’ positions, but there will likely be some important differences of detail to negotiate. Furthermore, phase 2 of the negotiations will build on from the partial agreement on Brexit issues in December, which I discussed here (as regards the acquired rights of EU27 citizens in the UK, and EU citizens in the EU27) and here (as regards other issues).

These negotiation directives build upon the broader Phase 2 negotiation guidelines which EU27 leaders (the ‘European Council’) adopted in December. They are also based on a proposal from the EU Commission in December, but the Council has changed some of the Commission proposal. Where those changes are significant, I note what they are.


ANNEX

Supplementary directives for the negotiation of an agreement with the United Kingdom of Great Britain and Northern Ireland setting out the arrangements for its withdrawal from the European Union

1. In line with the European Council guidelines of 29 April 2017 and the Council negotiating directives of 22 May 2017, the first phase of the negotiations focused on the rights of citizens, the financial settlement, the issues relating to the island of Ireland, other separation issues, and the governance of the Withdrawal Agreement.

2. Noting the progress made so far, on 20 October 2017, the European Council called for work to continue with a view to consolidating the convergence achieved and pursuing negotiations in order to be able to move to the second phase of the negotiations as soon as possible. The European Council thus invited the Council and together with the Union negotiator to start internal preparatory discussions, including on possible transitional arrangements.

3. Based on:

– the recommendation made by the Commission Communication on the state of progress of the negotiations with the United Kingdom under Article 50 of the Treaty on European Union of 8 December 2017

– the Joint Report from the negotiators of the European Union and the United Kingdom Government on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom's orderly withdrawal from the European Union of 8 December 2017, on which the Commission's recommendation is based,

the European Council, on 15 December 2017, welcomed the progress achieved during the first phase of the negotiations and decided that it was sufficient to move to the second phase related to transition and the framework for the future relationship.

4. The European Council also made clear that negotiations in the second phase could only progress as long as all commitments undertaken during the first phase were respected in full and translated faithfully in legal terms as quickly as possible. During the second phase of the negotiations, an overall understanding on the framework for the future relationship of the Union with the United Kingdom should also be reached. For that purpose, the European Council decided that it would adopt additional guidelines on this framework in March 2018 and called for further clarity on the United Kingdom’s position on the framework for the future relationship.

5. The present set of negotiating directives supplements the first set of negotiating directives adopted on 22 May 2017. The European Council guidelines of 29 April 2017 as well as the general principles and the procedural arrangements for the conduct of the negotiations established in the Council negotiating directives of 22 May 2017 continue to apply in their entirety to this phase of the negotiations, including as regards the territorial scope of the withdrawal agreement, including its provisions on transitional arrangements, and of the future framework; these negotiating directives should therefore, as the first set of the negotiating directives, fully respect paragraphs 4 and 24 of the European Council guidelines of 29 April 2017, notably as regards Gibraltar.

Note that this refers to a Spanish veto on any post-Brexit arrangements on the relationship between Gibraltar and the EU.

6. During the second phase of the negotiations, in view of the unique circumstances and specific nature of issues related to the island of Ireland, the work on detailed arrangements required to give effect to the principles and commitments set out in the Joint Report should continue in a distinct strand.

Note: the final version drops the following words proposed by the Commission: ‘…some of which would be translated in the Withdrawal Agreement, others in the framework for the future relationship.’ The original wording meant that some issues related to Ireland would definitely be addressed as post-Brexit issues. Dropping this wording suggests that they will either be fully addressed in the withdrawal agreement, or leaves the issue open. In practice it will be difficult to address them all in the withdrawal agreement, since they are unavoidably closely linked to the future relationship. The words ‘unique circumstances’ were also added. I discussed the issues relating to the Irish border, as set out in the December joint report, here.

6.a Since the arrangements applicable to relations between the Union and the Sovereign Base Areas in Cyprus will continue to be defined within the context of the Republic of Cyprus’ membership of the Union, appropriate arrangements should be determined during the negotiations as necessary, to achieve the objectives set out in Protocol 3 to the Act of Accession of the Republic of Cyprus to the Union.

This entire paragraph was added.


I. ISSUES RELATED TO THE ORDERLY WITHDRAWAL OF THE UNITED KINGDOM FROM THE EUROPEAN UNION

7. In line with the European Council guidelines of 15 December 2017 and with the negotiating directives annexed to the Council Decision of 22 May 2017 as supplemented by these negotiating directives, it is necessary to complete the work on all withdrawal issues, including those not yet addressed in the first phase. These include – without being confined to – issues such as the governance of the Withdrawal Agreement, intellectual property rights, ongoing public procurement procedures, customs-related matters needed for an orderly withdrawal from the Union, protection of personal data and use of information obtained or processed before the withdrawal date.

The entire second sentence was added by the Council. Commission negotiation papers on these subjects can be found here. Note that there was partial agreement on some of the ‘winding up’ issues in the December joint report, as I discussed here. Technically there is no need to include these issues in the withdrawal agreement if the UK is going to continue applying the status quo of EU membership for awhile; they could be addressed as part of ending the transition period. But the EU27 side seems keen to wrap them up now. The governance issues include dispute settlement, where the exact role of the ECJ will be difficult to agree.

8. Negotiations in the second phase should furthermore translate into clear and unambiguous legal terms the results of the negotiations, including those obtained during the first phase, which should, where appropriate, be adapted in the light of the existence of the transitional arrangements referred to below. In particular, the provisions of the Citizens' rights part of the withdrawal agreement should apply as from the end of the transition period. The 'specified date' referred to in paragraph 8 of the Joint Report should consequently be defined as that of the end of the transitional period.

The words ‘clear and unambiguous’ and the entire second and third sentences were added by the Council. The following sentence, proposed by the Commission, was dropped: ‘As specified in the first set of the negotiating directives, the Withdrawal Agreement should recall that Union law ceases to apply on the withdrawal date to the overseas countries and territories having special relations with the United Kingdom and to the European territories for whose external relations the United Kingdom is responsible, to which the Treaties apply by virtue of Article 355 of the Treaty on the Functioning of the European Union.’

This paragraph emphasises the importance of drawing up a formal legal text of the withdrawal agreement. When and if agreed and ratified, that text will be the decisive legal basis for the UK/EU27 withdrawal process – not negotiation documents like these. The position that the cut-off date for acquired rights of EU27 citizens in the UK/UK citizens in the EU27 will be the end of the transition period reflects the prior view of the Commission. The UK side may well object to this.

I discussed the citizens’ rights provisions of the joint report in more detail here. As I noted, while some issues have been agreed in detail, some points – like the freedom of UK citizens in one Member State to move to other Member States – were left for further discussion.

II. TRANSITIONAL ARRANGEMENTS

9. The European Council guidelines of 29 April 2017 set out general core principles applying to any agreement with the United Kingdom as well as to any transitional arrangements:

– any agreement will have to be based on a balance of rights and obligations, and ensure a level playing field;

– preserving the integrity of the Single Market excludes participation based on a sectorby-sector approach;

– a non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member;

– the four freedoms of the Single Market are indivisible and there can be no "cherry picking";

– the Union will preserve its autonomy as regards its decision-making as well as the role of the Court of Justice of the European Union. According to the European Council guidelines of 15 December 2017, this refers notably to the competence of the Court of Justice of the European Union.

10. In addition to these core principles, the European Council guidelines of 29 April 2017 set out specific conditions applicable to any possible transitional arrangements. To the extent necessary and legally possible, the negotiations may seek to determine transitional arrangements which are in the interest of the Union and, as appropriate, to provide for bridges towards the foreseeable framework for the future relationship in the light of the progress made. As reiterated by the European Council Guidelines of 15 December 2017, any such transitional arrangements must be clearly defined, and precisely limited in time. They must also be subject to effective enforcement mechanisms.

11. These supplementary negotiating directives are based on and further develop the principles and conditions laid down in the European Council guidelines of 15 December 2017.

12. In line with those guidelines, which further specify and develop the core principles laid out in the European Council guidelines of 29 April 2017, any transitional arrangements provided for in the Withdrawal Agreement should cover the whole of the Union acquis, including Euratom matters. Notwithstanding paragraph 17 of these negotiating directives, the Union acquis should apply to and in the United Kingdom as if it were a Member State. Any changes to the Union acquis should automatically apply to and in the United Kingdom during the transition period. For acts adopted in the Area of Freedom, Security and Justice by which the United Kingdom is bound before its withdrawal, Articles 4a of Protocol (No 21) and 5 of Protocol (No 19) annexed to the Treaties, which allow the United Kingdom not to participate in an act amending a measure by which it is already bound, should continue to apply during the transition period including the possibility for the Union to determine that this non participation would make the relevant measure inoperable and therefore that the measure should cease to apply to the United Kingdom. The United Kingdom should however no longer be allowed to opt-in to measures in this Area other than those amending, replacing or building upon the above mentioned existing acts.

As for the application of new EU laws, there will be a slowdown in EU legislative activity between about May and December 2019 due to the European Parliament elections and the changeover of the Commission. Many measures adopted afterward won’t apply to the UK anyway, if the transitional period ends as proposed at the end of 2020, because Directives usually have a two-year deadline to implement them and the main focus will be on adopting new funding legislation, which won’t apply until after 2020 either. Note that the UK will lose the right of veto which has it has now in areas such as tax and foreign policy rules. However, the December joint report noted that the UK would not be bound by changes to the basic laws on revenue and spending – so the UK will keep its budget rebate until the end of 2020.

The legalese on the ‘Area of Freedom, Security and Justice’ means that the UK will still be able to opt in to new EU legislation on EU asylum, criminal law or policing, but only on the condition that such legislation amends existing EU legislation. (In most cases, it does). Where such legislation is entirely new, ie not amending existing law, the UK loses the right to opt in, and will not be bound. The current rule that the UK can be ‘thrown out’ of existing laws in this area if it does not opt in to measures amending those existing laws will still apply. (That power has not been used to date).

13. During the transition period, Union law covered by these transitional arrangements should deploy in the United Kingdom the same legal effects as those which it deploys within the Member States of the Union. This means, in particular, that the direct effect and primacy of Union law should be preserved.

The final sentence was added by the Council. This means that the current rules on the legal effect of EU law in the UK domestic legal systems would not be changed during the transitional period. The UK has previously agreed to this as regards acquired rights of EU27 citizens, as I discussed here.

14. During the transition period, and in line with the European Council guidelines of 29 April 2017, the United Kingdom will remain bound by the obligations stemming from the agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly, while the United Kingdom should however no longer participate in any bodies set up by those agreements.

The Council replaced the words ‘will no longer benefit from’ with ‘will remain bound by the obligations stemming from’. It also deleted the words ‘Where it is in the interest of the Union, the Union may consider whether and how arrangements can be agreed that would maintain the effects of the agreements as regards the United Kingdom during the transition period’.

The intention seems to be that the UK will still have obligations to the EU to apply agreements concluded with non-EU countries by the EU (or the EU jointly with its Member States). However, since the withdrawal agreement cannot bind non-EU countries, those non-EU countries will no longer have obligations to the UK, unless they agree with the UK to continue their existing obligations in force. The negotiation of treaties between the UK and non-EU countries is the subject of the next paragraph.

15. In line with the European Council guidelines of 15 December 2017, any transitional arrangements require the United Kingdom's continued participation in the Customs Union and the Single Market (with all four freedoms) during the transition. The United Kingdom should take all necessary measures to preserve the integrity of the Single Market and of the Customs Union. The United Kingdom should continue to comply with the Union trade policy. It should also in particular ensure that its customs authorities continue to act in accordance with the mission of EU customs authorities including by collecting Common Customs Tariff duties and by performing all checks required under Union law at the border vis-à-vis other third countries. During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.

The final sentence was added by the Council. This paragraph ensures no change in the application of the single market or the customs union to the UK during the transitional period. The limit on the UK’s power to enter into treaties raises questions. This only applies if such treaties are within the EU’s fields of competence; but for EU members there is complex external relations case law of the ECJ which states when they can sign treaties even within areas of law that the EU could also sign treaties in. It is not clear if the intention is to replicate that case law, or rather to subject to the UK to more constraints than it would have as a Member State.

For the UK side, the key point may be whether it is free to negotiate and sign treaties within the transitional period, even if those treaties only come into force afterward. The negotiation directives are silent on this issue. The UK might also reasonably argue that simply replicating its existing rights and obligations in a new treaty with a non-EU country should be approved by the EU, or should not need EU approval at all.

16. In line with the European Council guidelines of 29 April 2017 and the first set of negotiating directives of 22 May 2017, any time-limited prolongation of the Union acquis requires existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply, including the competence of the Court of Justice of the European Union.

17. In relation to the application of the Union acquis to the United Kingdom, the Withdrawal Agreement should therefore, during the transitional period, preserve the full competences of the Union institutions (in particular the full jurisdiction of the Court of Justice of the European Union), bodies, offices and agencies in relation to the United Kingdom and to United Kingdom natural or legal persons. In particular, Union institutions, bodies and agencies should conduct all supervision and control proceedings foreseen by Union law. In line with the European Council guidelines of 15 December 2017, the United Kingdom will however no longer participate in or nominate or elect members of the Union institutions, nor participate in the decision-making or the governance of the Union bodies, offices and agencies.

The second sentence was added by the Council. The text means that the UK will not be part of the EU’s institutions (such as the Council, Commission, European Parliament or EU court) but will still be subject to their decisions, as noted above.

While the text refers to applying all of the current powers of the ECJ, in practice the EU27 side previously agreed to more limited powers for the ECJ as regards citizens’ rights, as I discussed.

18. During the transition period, as a general rule, the UK will not attend meetings of committees referred to in Article 3 (2) of Regulation (EU) No 182/2011 or Commission experts groups and other similar entities of the agencies, offices or bodies where Member States are represented. Exceptionally on a case-by-case basis, the United Kingdom could be invited to attend without voting rights such meetings:

– where the discussion concerns individual acts to be addressed to the United Kingdom or to United Kingdom natural or legal persons; or

– where the presence of the United Kingdom is necessary from a Union perspective for the effective implementation of the acquis during the transition period.

The Regulation referred to sets out general rules on control of the Commission when it adopts measures implementing EU legislation.

19. The Withdrawal Agreement should define the precise conditions and the clear framework under which such exceptional attendance should be allowed.

20. Specific consultations should also be foreseen with regard to for the fixing of fishing opportunities during the transition period, in full respect of the Union acquis.

21. The transition period should apply as from the date of entry into force of the Withdrawal Agreement and should not last beyond 31 December 2020.

This date is convenient for the EU27 side as it coincides with the end of the current multi-year budget cycle. There is no reference to any possible extension of the transitional period, and paragraph 10 states that the period should be ‘precisely limited’ in time. Any idea that the period should be extended indefinitely could potentially spark legal challenges. It would be possible to sign a new agreement post-Brexit that would extend the transitional period, but this would surely require unanimous agreement and possibly also national ratification in part.🔷

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(This piece was first published on EU Law Analysis.)


(Cover: Flickr/Number 10 - Prime Minister Theresa May with Jean-Claude Juncker in Brussels, 8 December 2017.)


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Professor of EU, Human Rights & World Trade Law, University of Essex. Latest book: European Union Law (edited with @CSBarnard24, 2nd ed, OUP).
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