Summary
The EU Council has agreed an extension of the Article 50 process until 31st October 2019. The UK will be bound by the same rights and obligations as other EU members during this period. This extension period could come to an end earlier if the Withdrawal Agreement is ratified. In this context while there is now time to find a negotiated position this would require: ratification of the Withdrawal Agreement; revising the UK’s whole Brexit strategy or revoking Article 50. This will hinge solely around political developments in the UK. The prospect of a ‘no-deal Brexit’ remains, with critical decision points relating to the conduct of European Parliament elections in the UK, and the June 21st EU Council review of the Brexit process. In addition a ‘no-deal Brexit’ or a ‘hard Brexit’ could still occur on the 31st October 2019. Against this background ACP EPA signatories will still need to retain the option of signing Continuity Agreements with the UK if a ‘no-deal Brexit’ looks imminent. Even under a ‘hard Brexit’ ACP governments would need to address the range of issues identified as requiring the inclusion of a detailed “Annex of Concerns” in each of the concluded Continuity Agreements. This will be vital to ensuring both a smooth transition to post-Brexit trade relations with the UK and the future value to ACP exporters of the rolled over tariff preferences which Continuity Agreements seek to enshrine in ‘UK only’ trade agreements with ACP countries.
Following a letter from Prime Minister May requesting a further extension of the Article 50 process until 30th June 2019 on 10th April the EU Council agreed a further extension which would be ‘as long as necessary and in any event, no longer than 31 October 2019’. Should the Withdrawal Agreement be ratified by the UK Parliament, the UK’s withdrawal from the EU ‘should take place on the first day of the month following the completion of the ratification procedures or on 1 November 2019, whichever is the earliest’ (1). Significantly the EC Council conclusions and legal act reiterated the EU position that ‘this extension excludes any re-opening of the Withdrawal Agreement’ (1).
What is more the EU Council legal act highlighted how ‘this further extension cannot be allowed to undermine the regular functioning of the Union and its institutions’, but notes how ‘the United Kingdom will remain a Member State until the new withdrawal date, with full rights and obligations’. The UK also retains the right to revoke its article 50 notification throughout this period (1).
The EU Council noted the UK’s commitment to ‘act in a constructive and responsible manner throughout the extension period in accordance with the duty of sincere cooperation, and expects the United Kingdom to fulfil this commitment… in a manner that reflects its situation as a withdrawing Member State’ (1). Against this background the UK ‘should refrain from any measure which could jeopardise the attainment of the Union’s objectives, in particular when participating in the decision-making processes of the Union’ (1).
This needs to be seen in a context where EU leaders are reportedly concerned that ‘a hard-Brexit prime minister such as Boris Johnson or Dominic Raab could cause trouble in Brussels during any extension period to article 50, ignoring May’s promises of sincere cooperation’. It was reported that the 31st October deadline for the extended transition was in part motivated by fears that a longer extension would bring Prime Minister May into a position where should could once again be challenged as leader of the Conservative party (from 12th December 2019) (2).
In addition the EU Council legal act states clearly if the UK is still a member state on 23-26 May and the Withdrawal Agreement has not been ratified by 22 May 2019, the UK will be required to hold European Parliament elections. If these elections do not take place ‘the extension should cease on 31 May 2019’ (1).
The EU Council has committed itself to reviewing the progress achieved within the Brexit process at its June 2019 meeting (1), to be held from the 20-21st June.
In his remarks following the EU Council decision, the EU Council President Donald Tusk stressed the flexible nature of the 6 month extension stressing how ‘during this time, the course of action will be entirely in the UK’s hands’. He highlighted how in the coming six months the UK has the option of:
- ratifying the Withdrawal Agreement;
- revising its whole Brexit strategy;
- revoking Article 50.
He expressed his believe the six month extension provided enough time to ‘find the best possible solution’ and urged the UK government not to waste time (3).
Everything now hinges around what happens in the UK, in what remains a highly fractious political situation. A critical issue in this regard will be the future of Prime Minister May.
Initial press reports suggest that while ‘Eurosceptic Conservative MPs are furious about the delay to Brexit, many Tories now believe the tipping point for May’s leadership is more likely to come if she were to sign up to a customs union with Labour, with many now speculating that she might not be able to get such a deal through parliament even with opposition votes’ (4).
Brexit hardliner Steve Baker (MP) meanwhile has acknowledged ‘MPs were not yet prepared to take the kamikaze step of voting with Labour in a no-confidence motion against the government, in the hope of forcing May’s resignation’. Baker was firmly of the view that Prime Minister May ‘would resist any pressure to step down’, before a Withdrawal Agreement is secured, with this potentially triggering a second no-confidence vote which would then precipitate a general election in the UK.
Against this background there was reportedly ‘resignation that the prime minister will not be forced out’, with her position only being under threat if half the Cabinet resigned.
A key question now becomes what happens in the governments discussions with the Labour Party? Hard Brexiteers would be likely to try and force Prime Minister May out if an agreement with the Labour Party was reached which locked down an inflexible customs union (4). However the government and Labour Party remain a long way apart in the ongoing talks aimed at establishing a common position on the way forward in the Brexit process (2).
Meanwhile press reports indicate ‘senior Tory figures fighting against a hard Brexit are anxious to keep May until the UK leaves the EU in order to prevent her successor opting for no deal’ (2).
| Comment and Analysis
While the decision of the European Council to grant the United Kingdom a flexible extension of the Article 50 period until the 31st of October eases the immediate threat of disruption of ACP exports to not only the UK market but also for some products EU27 markets, it does not remove the threat of disruption to ACP exports beyond 1st November 2019. Indeed despite the six month extension now granted there remain no less than three potential dates at which a no-deal Brexit could still occur: · 31st May if the UK has failed to participate in the European Parliament elections · 21st June if the EU Council deems the UK has not abided by its ‘sincere cooperation’ commitments; · 1st November if after the further six month extension the Withdrawal Agreement has not been ratified by the UK Parliament. The critical issues remain: will the UK leave the EU customs union and if so on what terms? It is the question of whether or not the UK will leave the EU customs union and the basis on which the UK’s departure from the customs union will take place which is important not only to ACP exporters serving UK and EU27 markets but also ACP producers serving domestic and regional markets which could be impacted by any diversion of current EU27/UK trade onto ACP markets (e.g. for all animal products). This needs to be seen in a context where despite the six month extension to the Article 50 process agreed three types of Brexit remain possible: · a “Soft” Brexit – in which the UK remains part of the customs union and single market · a “Hard” Brexit – in which the UK leaves the EU customs union and single market · a “No-Deal Brexit” – in which the UK crashes out of the EU without a deal on 1st November 2019 Only a “Soft” Brexit would fully preserve the interests of the ACP and remove the need for Continuity Agreements with the UK and the associated “Annex of Concerns”, which will be required to address a host of both short term and longer term issues which are vital to the future value to ACP countries of any rolled over trade agreements with the UK. For a “No-Deal Brexit” to be avoided one of the following courses of action would need to happen: · the UK Parliament would need to ratify the Withdrawal Agreement, in which case the extension will be terminated and the transition period would be initiated during which the long term basis for EU/UK trade relations will be negotiated; · the UK government could reconsider the whole Brexit strategy, which might lead to changes in the Political Declaration, but not in the Withdrawal Agreement, with this including continued membership of the EU customs union and single market as advocated by the Labour Party; · the UK Government could revoke Article 50 and cancel Brexit altogether, thereby remaining an integral part of the EU customs union and single market. Under a “Hard” Brexit, but especially under a “No-Deal Brexit” the issues raised in the proposed “Annex of Concerns” to any Continuity Agreement concluded with the UK would need to be addressed. However as EU Council President Donald Tusk has pointed out ‘during this time, the course of action will be entirely in the UK’s hands’. Everything will hinge around the future of Prime Minister May and the fractious political situation in the UK. Against this background the prospect of a “No-Deal Brexit” may only have been deferred, while the prospect of a “Hard Brexit” remains as likely as ever. |
Sources:
(1) EU Council, ‘European Council decision taken in agreement with the United Kingdom extending the period under Article 50(3)TEU’, Legal Acts, EUCP XT 20013/19, 11 April 2019
https://www.consilium.europa.eu/media/39043/10-euco-art50-decision-en.pdf
(2) Guardian, ‘Theresa May stands by pledge to cling on until Brexit deal is done’, 10 April 2019
https://www.theguardian.com/politics/2019/apr/10/theresa-may-stands-by-pledge-to-cling-on-until-brexit-deal-is-done
(3) EU Council, ‘Remarks by President Donald Tusk after the special meeting of the European Council (Art. 50) ‘, on 10 April 2019
https://www.consilium.europa.eu/en/press/press-releases/2019/04/10/remarks-by-president-donald-tusk-after-the-special-meeting-of-the-european-council-art-50-on-10-april-2019/
(4) Guardian, ‘Tories resigned to long Brexit delay but warn against customs union’, 10 April 2019
https://www.theguardian.com/politics/2019/apr/10/tories-resigned-to-long-brexit-delay-but-warn-against-customs-union