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The challenge of transition

Today, I’m speaking at a “UK in a changing Europe” event on transition. You’ll find a nice report there, but here’s a taster of some of my comments:

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Transition serves a number of functions.

Firstly, it provides a legal underpinning to EU-UK relationship until a new legal document can be brought in to operationalise the new, long-term ties.

The model contained within the draft Withdrawal Agreement agreed in March 2018 is that of ‘membership minus’: the UK will continue to operate in effect like a member state, differing only in that it will have no rights to vote on decisions and only very limited representation in discussions.

That means continuing to abide by and apply EU law and decisions, including of the Court of Justice; maintaining its contributions to the EU’s budget; keeping access to EU programmes and activities, and; maintaining the free movement of goods, services, capital and people.

The logic of this is that since there will be a change between membership and the new relationship, and since that new relationship is undefined, there is only cost in changing practices for what is intended to be a short period, if those might have to change again – or even revert to have they used to be – further down the line. This model means there’s only one set of changes, at the point of moving from transition to the new relationship.

To put it differently, this model is the least complicated way of managing the transition period. The exceptions listed in the draft text cover only a small number of areas – mainly on security and border issues – for the reason that to agree a transitional arrangement that significantly diverges from the current one both requires time within the already-pressed Article 50 negotiation schedule and a sense of how it fits with the new relationship.

But this is not all that transition does.

Its second function is to provide a location for the negotiation of that future relationship between the EU and UK.

The draft text specifies that transition will only last until the end of 2020. This fits with the medium-term planning cycle of the EU under its multiannual financial framework, which determines budgetary arrangements and policy priorities. The EU27 has recently begun their discussions of the next cycle, running from 2021 to 2027, and will likely only conclude those in mid-2020.

Thus there is a planning incentive on the EU’s side to move to the new relationship with the UK by that time, just as much as there is a desire on the UK’s part to secure its definitive new arrangements.

As a result, in the immediate departure of the UK in March 2019, the EU will adopt new guidelines on the negotiation of a legal agreement to embody that new relationship, leading to a new round of negotiations and their ratification.

Importantly, this will see the UK being treated, in legal terms, as a third country, falling under the relevant legal bases in the EU’s treaties, so Article 50 will no longer apply.

However, this also highlights the third function of transition: managing the on-going relationship between the UK and the EU.

While no longer a member state, the UK will still be deeply involved in the EU, and vice-versa. This is the result of both the ‘membership minus’ model and of the negotiations to move to the new relationship.

Without its previous representation and voting rights, the UK needs to have a forum in which it can manage both specific and more strategic issues with the EU. This is achieved by the creation of a Joint Committee to allow for debate, as well as a dispute settlement mechanism.

The latter of these remains to be agreed, since it concerns the relative powers of the EU’s Court of Justice and of British courts, but the need for mechanism of some kind is not in doubt: there has to be some arbitration function that can provide definitive answers in cases of disagreement on points of law.

The first challenge of transition: legitimacy

The practical logic of a transition period, in the form that is provisionally-agreed by the UK and EU, is clear. As both a regulatory necessity and as a gesture of good faith, there needs to be something between the ‘here’ of membership and the ‘there’ of the new relationship.

But this comes with a profound challenge to political and constitutional legitimacy. How can the two parties, which both profess to uphold democratic ideals of representation and accountability, operate a system wherein those ideals take, at best, a back-seat?

The challenge is clearly strong to the British side of the discussion. All of the obligations of membership extend into the transition, but not all of the rights. Should the EU make a decision during this time that it would not have been able to if the UK could have voted, then how can a British government explain that to either Parliament or the general public? The model does not allow for any generalised mechanism of exceptions or exemptions from the application of EU rules and decisions, so much would hang on the work of the Joint Committee and whatever dispute settlement mechanism that could be agreed.

In practice, if transition keeps to its planned length, then the issue might not be so grave. The speed of EU decision-making, especially on major pieces of legislation, is slow enough that much of the output that might occur prior to the end of 2020 has already begun to wend its way through the system, so the UK is already shaping that agenda and detail of work.

Moreover, the commitment in the draft Withdrawal Agreement to consult the UK on matters of particular relevance and the more general habit of EU decision-making to avoid divisive outcomes in legislating potentially further soften the blow. However, none of this can fully account for the inevitable uncertainty of what might come down the road.

It’s also important to note that the EU has never given a non-member state voting rights of any kind, even in its closest of relationships, and there is no reason to see that changing for the UK. Thus, no other model of transition will address this challenge.

Indeed, the only option that would do this would be an extension that consisted of an extension of Article 50 to the end of the period, during which the UK would continue to be a full member state. Article 50 provides for such an outcome, with a Withdrawal Agreement still being concluded in time for March 2019, but with withdrawal itself coming at a later date.

However, this option is currently outside the range of possibilities being considered by either side in the negotiations, not least for the further uncertainty it would introduce into the future trajectory of the relationship. To take just one element of this, since the UK would not be a third state, the EU could not use its existing legal competences to open negotiations on the future relationship.

The second challenge of transition: negotiation

Even within the draft transition model, negotiations on the future relationship will be complex.

The UK will be simultaneously applying and enforcing EU decisions and negotiating what are likely to be substantial areas where these would no longer apply in future.

The Joint Committee is intended to provide a means of addressing issues around the first part of this, but does not have an explicit mandate to connect that to the second part, despite the likelihood that the two will be profoundly interlinked.

Given that much of EU legislation relies on member states translating decisions into national legal frameworks, there are issues of both time and appropriateness.

Often, the EU will give member states over a year to transpose legislation in this way, either by primary domestic law or by secondary statutory instruments. In the context of a Brexit transition period of 19 months, this might mean most deadlines fall past the end of 2020, so how far is the UK obliged to make any effort on that front, especially if it’s on a subject where no future maintenance of EU practice is foreseen?

Again, this is partly offset by the legislation that is and will be agreed prior to March 2019 and which will need transposing before the end of transition, but it still highlights the dynamic nature of the current relationship and the potential for problems in this arena to affect the negotiations on the future one. In particular, the likely centrality of the Irish dimension and the potential for differentiated situations in the nations of the UK make this highly salient.

The third challenge of transition: extension

The most intractable challenge of the proposed transition relates to time.

As we have noted already, transition is designed to cover the period from one state of the relationship to another. But from what we know so far, the time being allocated to agree what that future state should be does not appear to suffice. And, more importantly, there look to be legal and political obstacles to getting more time.

The future EU-UK relationship will be negotiated under Article 218 of the EU’s treaties, which relates to agreements with third states. In this, the EU has much experience and a recognised method of working.

That experience suggests that even limited agreements can take several years to negotiate, with more substantial ones taking substantially longer. Even just the ratification process – which would require unanimous approval by the EU27 – would be unlikely to take any less than one year to complete.

Add to this, the uncertainty that surrounds the exceptional nature of this particular negotiation – moving to a less close relationship – and the lack of a consensus view either within the UK or between the UK and EU about what the future relationship should look like, and it is very likely indeed that having a new arrangement fully in place by January 2021 could happen.

Part of this can be softened by an interim application, pending ratification, as happened with the CETA between the EU and Canada during the delay caused by the Walloon parliament’s problematic approval. But even this does not provide a failsafe for a situation where negotiations – for whatever reason – are not concluded by the end of 2020.

The draft transition model does not provide for extension of transition. This is explained by three factors. First, neither party want Brexit to drag on any longer than necessary. Second, it fits the financial planning, as discussed above. Third, there is a legal question about whether transition can be extended at all.

There is no provision for transition at all in Article 50 and several legal scholars have suggested that while a short, fixed-term transition might be within the terms of that provision, any extension – be that a one-off or a more generalised mechanism – would risk creating a situation the infringes on other treaty provisions. In particular, it would mean that the EU would have a de facto relationship with a third state, but not under the Article 218 provisions (which provide a different mechanism for being agreed).

Bound as it is, even if both the UK and EU had a material interest in extension, they could find themselves unable to do this, resulting in a situation that would be akin to a ‘no-deal’ outcome to Article 50, differing only in that it would occur at the end of 2020, rather than March 2019. And because the UK would not be a member state in the run-up to that date, the range of political solutions would be more limited.

A final set of challenges would still remain even if extension could take place.

Firstly, it would take the UK into the next cycle of financial planning, in which it has played no role in negotiating. The EU intends to remove the budgetary rebate that the UK has used to moderate its contributions, so potentially the country would be paying substantially more than at present, for a set of policies that would necessarily reflect British priorities much less.

Secondly, the longer that transition lasts, the more difficult become the first two challenges already outlined. That raises ever more difficult questions for all involved about how justifiable the model is.

And finally, a longer extension – and especially an open-ended one – will risk leaving the UK-EU relationship in a limbo, where there is much less time pressure to advance on the negotiations on the future relationship. That in turn will raise questions in the UK about whether it is an appropriate political response to the 2016 referendum, given what it involves.

While that might be a function of British political indecision, it will not change the reality of the situation, namely that this will have impacts on both the UK and the EU, as well as the continuing relationship.



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