The EU Council guideline have called for the UK to remain bound by the obligations entered into under trade agreements concluded while a member of the EU throughout the transition period in EU27/UK trade relations. According to remarks by Chief Negotiator Barnier this obligation should be enshrined in the EU/UK Withdrawal Agreement concluded as part of the Article 50 negotiations. However Michel Barnier made it clear that the EU’s commitment in this regard cannot ensure ‘the UK keeps the benefits from these international agreements’, with this depending on the views of the EU’s international trade partners.
On the 29th January 2018 the EU Council agreed supplementary negotiating instructions dealing with the second phase of EU27/UK Brexit negotiations. The EU Council accepted the EC’s recommendation that the transition period should run until December 31st 2020, the end of the current EU five year financing cycle (1).
In presenting the EU Council guidelines to the press the President in Office of the EU Council suggested there was some ‘flexibility’ on the length of the transition period, with this depending on progress made in negotiations on the long term EU27/UK trade arrangement. However, it was stressed that the transition period cannot be endless (2).
In this context while many Conservative Party politicians remain in denial over the complexity of reconstituting the UK-EU27 trade relationship on a new basis, there appears to be an emerging consensus amongst both EU and UK officials that it may prove difficult to complete these negotiations on the long term basis for EU27/UK trade relations by December 2020 (2).
The first priority identified in the guidelines was to translate the agreement reached on first phase issues into legally binding text. This it was held should include an elaboration of the ‘detailed arrangements’ required to give effect to the Irish border issue (1).
In terms of the arrangements for the transition period the Council guidelines reiterated many of the negotiating principles set out for the conduct of the Brexit negotiations. This included a requirement that any transitional agreement should:
- be based on ‘a balance of rights and obligations, and ensure a level playing field’;
- preserve ‘the integrity of the Single Market’ with this excluding ‘participation based on a sector by sector approach’;
- acknowledge that ‘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’;
- recognise ‘the four freedoms of the Single Market are indivisible and there can be no “cherry picking“’;
- preserve the autonomy of decision making of the EU ‘as well as the role of the Court of Justice of the European Union’;
- ensure the EU acquis would apply in its entirety to the UK throughout the transition period, with any ‘changes to the Union acquis’ automatically applying to the UK during this period;
- no longer involve UK participation in EU institutions or decision making bodies, although the possibility was kept open for the UK to make known its views where the ‘UK’s involvement is necessary and in the interests of the Union’ (1).
From an ACP perspective the most important provisions in the guidelines were contained in paragraphs 15 and 16. Paragraph 15 declared ‘the United Kingdom should 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’ (1).
Paragraph 16 for its part went on to declare: ‘the United Kingdom should continue to comply with the Union trade policy’ including ‘performing all checks required under Union law at the border vis-à-vis other third countries’ (1).
It further stipulated ‘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’ (1).
Speaking to the press on the Council’s adoption of the negotiating directives for the transition period, Michel Barnier stated that ensuring the UK remained ‘bound by the obligations stemming from all existing EU international agreements’ was crucial, to ‘the good functioning of the Single Market and the Customs Union’. He indicated that ensuring the UK remained bound by these pre-existing obligations during the transition period should be agreed ‘in the Article 50 Agreement between the EU and the UK’, thereby becoming part of the legally binding Withdrawal Agreement (3).
However Michel Barnier also noted the EU ‘cannot ensure in the Article 50 Agreement that the UK keeps the benefits from these international agreements’. He pointed out how the EU’s ‘partners around the world may have their own views on this’ (3). While reference was made to the signatories of existing EU agreements it was left implicit that the ‘partners’ concerned extended beyond actual trade agreement signatories.
Significantly in this context the EC press release highlighted how ‘the United Kingdom will be a third country as of 30 March 2019’ (4).
In this context senior EU officials have highlighted ‘how the UK was yet to formally request Brussels authorisation or assistance in “rolling over” Brussels deals with the rest of the world’ (5).
|Comment and Analysis
Significantly from an ACP perspective the EU negotiating instructions to the EC have now called on the UK to respect all EU trade agreement obligations during the transition period. This will also require the UK to fully implement all EU regulations related to agro-food imports during the transition period. This will include the EU’s new Public Health Regulation which will only fully come into effect on 13 December 2019.
The EU Council decision, if fully complied with by the UK, should ensure that all impacts of Brexit on ACP agro-food exports will be deferred until after 31st December 2020. Specifically this would defer:
· any threat of loss of duty free quota free access to the UK for ACP exporters currently trading under EU EPAs
· any divergence in UK and EU SPS and food safety standards;
· any loss of the value of current trade preferences arising from changes in UK tariff policy;
· any disruption of triangular supply chains serving the UK market via initial ports of landing in an EU27 member state or serving EU27 markets via an initial port of landing in the UK;
· any disruption of the functioning of EU27 markets of current interest to ACP exporters;
· any displacement of EU27/UK mutual trade onto ACP markets as a result of a ‘hard’ Brexit
This would provide ACP exporters with a breathing space until at least 1st January 2021 to plan for adjustments which may be required in the full post-Brexit period.
However, it needs to be recognised that there are elements of the EU Council mandate for the transition which will be politically unpalatable to the ‘hard’ Brexit wing of the Conservative Party. Any deferment of the effects of Brexit on ACP exporters will thus be contingent on Prime Minister May maintaining the delicate balance between the ‘hard’ and ‘soft’ Brexit wings of the Conservative Party.
An important point to note arising from the EU Council guidelines is that it leaves unclear whether the rolling over of the UK’s obligations under EU trade agreements will take place on a reciprocal or a non-reciprocal basis. The reference to ‘obligations’ in the EU negotiating instruction may represent an implicit recognition of the complications which could arise in relations with major WTO members. These complications could easily arise if preferential access for UK exporters to third country markets currently covered by EU trade agreements was to be rolled over for the UK, outside of the framework of a WTO compatible free trade area agreement (so called ‘grandfathering’ – see companion article ‘Capacity constraints and complexities of ‘grandfathering’ highlighted by Parliament Report’, 27 March 2017).
The EU may not wish to get entangled in this issue, beyond insisting that during the transition the UK respect in full the trade obligations it entered into while part of the EU.
What is clear is that during the transition the UK will not be allowed to conclude new international trade agreements ‘unless authorised to do so by the Union’.
In this context any discussions on rolling-over reciprocal preferential ACP trade agreements into ‘UK-only’ reciprocal preferential trade agreements will need to involve the governments of the UK, the governments of the ACP countries concerned and the European Commission, on behalf of the EU27 member states. Even then this could still give rise to conflicts with WTO members. Respecting the trade obligations which the UK took on while a member of the EU may well require these trade preferences to be extended unilaterally, if conflict with WTO members is to be averted.
(1) Council of the European Union, ‘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’, 29 January 2018
(2)The Independent, ‘UK’s transition period could be extended past start of 2021, says EU’, 30 January 2018
(3) EC, ‘Press statement by Michel Barnier following the General Affairs Council (Article 50) on the adoption of negotiating directives on transitional arrangements’, Brussels, 29 January 2018
(4) EC, ‘European Commission receives mandate to begin negotiations with the United Kingdom on transitional arrangements’, Brussels, 29 January 2018
(5) The Guardian ‘UK too slow in making its Brexit demands for trade, say EU diplomats’, 25 January 2018