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Brexit Blog

Brexit updates tailored to law students: Steve Peers provides regular bite-sized explanations and analyses of Brexit developments.


Blog Post 5: Negotiating the future relationship between the UK and EU

Negotiating the future relationship between the UK and EU:
overview of the negotiations

By Professor Steve Peers

August 2020

For several months, the UK and EU have been negotiating the future relationship between them. Both the EU’s proposal for a single treaty and the UK’s proposals for multiple treaties have been published. The following is an overview of the issues being discussed.

Timing of the talks

Due to objections by the UK to any extension, the transition period in the withdrawal agreement (discussed here) expires at the end of the year. At that point, the current de facto treatment of the UK as a Member State of the EU will expire. The withdrawal agreement’s provisions on issues like citizens’ rights and Northern Ireland will then kick in, but otherwise most of the relationship between the UK and EU will then end unless new treaties replace it.

The ‘political declaration’ on the future relationship (discussed here) referred to ‘best endeavours’ to agree a new fisheries treaty by July 2020 (para 74 of the political declaration), as well as a unilateral decision on financial equivalence in June (para 36). Although these dates have been missed, they are not legally binding deadlines. 

Legal framework

The EU proposal is for a single treaty covering all aspects of the EU/UK future relationship. However, the EU has extracted the foreign policy provisions from its proposal and published them separately, because the UK is not interested in negotiating on this subject.

On the other hand, the UK has proposed ten treaties: on free trade in goods and services; fisheries; transport; energy; social security; and justice and home affairs. Note that the political declaration left open the question of whether there should be a single treaty or multiple treaties between the two sides.

The EU Council gave the European Commission legal authority to negotiate an association agreement with the UK on the basis of Article 217 TFEU, although it avoids using those actual words. The Q and As note that when it comes to the end of the negotiations, things might be different. Legally, an association agreement (if that's what is eventually negotiated) requires unanimity in Council and consent of the European Parliament. It might need ratification by national parliaments of EU countries, but that depends on the content (as the Q and As point out). It can be put in force provisionally (at least partially) if needed.

Summary of the proposals

The EU proposal begins with a general part which specifies that human rights, arms control, climate change, data protection and counter-terrorism are important joint objectives.

Economic partnership:
The core of the UK/EU economic partnership would be a free trade agreement (FTA) covering both goods and services. But note that an FTA falls short of EU single market participation.

Free trade in goods:
The proposals on both sides provide for no tariffs or quotas. However, unlike the position as a Member State (and during the transition period), both of them provide for ‘rules of origin’, to determine where goods come from. This is an extra burden on trade between the UK and EU compared to EU membership, and is a consequence of the UK's decision not to negotiate a customs union with the EU. The two sides have different approaches to rules of origin, so this would have to be sorted out during negotiations.

The two sides also seek to negotiate customs facilitation and agreement on non-tariff barriers (technical and sanitary rules), going beyond WTO provisions.

Free trade in services:
Both sides have proposed an FTA in services going beyond WTO commitments, but as usual the EU wants to exclude audio visual services. There would be specific provisions on certain services sectors, for instance financial services and transport services. The UK wants some aspects of transport to be the subject of separate treaties.  Both sides propose rules on movement of service providers (as required by WTO rules on FTAs in services), but this falls short of free movement of people.

Public procurement:
As is common for FTAs, the EU seeks to open up public procurement markets more than under the WTO procurement agreement. However, the UK is not interested in negotiating on this issue, except as regards digital services (although it is willing to discuss public procurement with non-EU countries). In any event, the UK is signing up to the WTO procurement agreement in its own name.

Neither side seeks free movement of people here. Both sides are willing to negotiate on social security coordination, and the EU proposes text waiving visa requirements for short term travel, which the EU has done already unilaterally on the condition of reciprocity (see discussion here). Member States could still impose visa requirements for paid activities, which would impact upon the music industry, for instance.

EU programmes:
The EU proposals would set out general rules on UK participation in EU programmes, such as research funding and Erasmus. Note that the EU has not yet agreed the conditions for non-EU countries to access the next phase of EU programmes: for the draft text on this, see Article 16 of the proposed new Erasmus programme.

The two sides have different views on fisheries issues, with the EU aiming to retain traditional EU fishing in UK waters, with a link to the rest of the economic partnership, while the UK takes a different approach in the form of a separate treaty.

Level playing field:
The term ‘level playing field’ (LPF) might be used differently in other contexts, but for these discussions it refers to law on State aid, competition law, and aspects of tax, labour and environmental law. It’s common for the EU (and also the US and Canada) to require some form of LPF clauses in its FTAs, but the question is whether to include far-reaching provisions in the EU/UK FTA. The EU side argues yes, on the grounds that the FTA would go further in abolishing all tariffs than other EU FTAs go, that the UK is particularly significant for the EU, and that this is consistent with the EU approach to nearby European non-EU countries. The UK argues no, on the grounds that it seeks a relationship similar to Canada or Japan (which have fewer LPF commitments with the EU), and that extensive LPF commitments would impinge upon UK sovereignty.

Although both sides signed up to the concept of an LPF in the political declaration, the text is ambiguous and each side has stretched it greatly in opposite directions. The EU sides argues that the UK should be obliged to retain existing EU standards in the areas covered by the LPF, and to follow new EU State aid standards (subject to penalties if it does not). There would be a strong method of enforcement, including (for State aid) references from UK courts to the CJEU. For its part, the UK prefers to copy the text in the EU/Canada FTA, which refers to international standards, has no reference to EU law, and provides for limited dispute settlement, meaning that there is no prospect of the CJEU being involved.

Security cooperation:
The EU proposes that security cooperation would be made dependent not only on UK adherence to the ECHR, but also the Human Rights Act (HRA), along with the planned unilateral adequacy decision on data protection. The data protection point reflects, by analogy, frequent CJEU challenges to the adequacy decisions relating to the US (see the most recent CJEU judgment, striking down for the second time an adequacy decision related to the US, discussed here). For its part, the UK suggests instead that each party should be free to end security cooperation as it sees fit, upon grounds that it determines.

Both parties propose rules to continue cooperation on extradition, mutual assistance in criminal matters (i.e. exchange of evidence), and police cooperation on exchange of information, including criminal records, passenger name records (PNR), DNA/fingerprint/vehicle info, and exchange of information in individual cases. The UK would like to continue cooperation in the Schengen Information System (which the UK currently applies as regards criminal law data), but the EU rules that out. As for PNR, the issue is affected by a CJEU case discussed here, which sets out limits on what the EU can exchange with non-EU countries to comply with data protection standards. (Note that several national courts have recently asked the CJEU to rule if the EU’s own PNR legislation is compatible with the EU Charter of Rights).

For fast track extradition, the EU proposes to copy its treaty with Norway and Iceland (with the addition of a clause on child suspects), which is very similar to the European Arrest Warrant applied between EU countries, but with certain exceptions – such as the possibility for Member States refusing to extradite their own citizens (three Member States already do this during the transition period).  For its part, the UK seeks exceptions related to human rights, trial readiness, and proportionality. There are some areas that the two sides cannot agree whether to negotiate: the UK seeks talks on prisoner exchange and freezing and confiscation of assets, while the EU wants to negotiate on money laundering.

Governance and dispute settlement:
The future relationship treaties would have a joint committee to oversee and implement them (which is standard in international treaties). To settle disputes, the EU proposes consultation then binding arbitration very similar to the system agreed under the withdrawal agreement (discussed here).  The arbitrators would have to ask the CJEU to rule if a dispute concerned the provisions or concepts of EU law. However, the UK seeks either only political dispute settlement, or a different form of arbitration in which the issue of CJEU jurisdiction would not arise.

Professor Steve Peers, University of Essex

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