Theresa May intends to negotiate a transitional period after March 2019, during which people, businesses and services would have time to adapt to Brexit while the current regulatory framework is maintained. But it is still unclear how Britain will do this. Federico Ortino and Holger Hestermeyer argue that as far as the legal picture is concerned, Article 50 does allow the UK to postpone the beginning of the withdrawal agreement until a later date, giving the government valuable time to implement Brexit.
Campo Marzio, Rome… not built in a day. Credit: Irina Koryagina (CC BY-SA 2.0)
Ever since the EU referendum took place, the British government’s stance on implementing the vote has followed two apparently conflicting approaches: principles and pragmatism. The former is evidenced most clearly in the drawing, relatively quickly, of the so-called red lines (including control over immigration, law-making, trade policy and freedom from the jurisdiction of the Court of Justice of the EU). These red lines have remained relatively unchanged – notwithstanding the various calls to modify (and particularly to soften) them.
Pragmatism, on the other hand, finds its most emphatic expression in the British government’s attempt to keep the post-Brexit world as much as possible unchanged compared to the pre-Brexit one (save, of course, for exiting the EU based on the red lines mentioned above). This pragmatism is a function of the need to (a) alleviate the complexity of the government’s task to actually implement Brexit in a short period of time and (b) reassure business that there will be no dramatic changes in the regulatory framework under which they currently operate.
A good example of this pragmatism is the EU (Withdrawal) Bill, which aims to reproduce all existing EU legislation into domestic UK law to ensure continuity and a smooth transition on the day the UK leaves the EU. Similarly, pragmatism can be observed in the key policy choices so far undertaken by the British government with regard to trade policy (and most recently confirmed in the DIT policy paper “Preparing for our future UK trade policy”). These include:
- Continuing membership of the WTO based on commitments that mirror as much as possible those currently applicable to the UK as a member of the EU.
- Ensuring that existing EU free trade agreements with third countries will continue to be applicable (at least on an interim basis) between the UK and those third countries following Brexit.
Pragmatism also underlies the Prime Minister’s recognition of the need for a period of implementation (or transition) in order “to adjust to the new arrangements in a smooth and orderly way”. In line with that pragmatism, the Prime Minister’s current thinking with regard to the kind of transitional mechanism appeared to be aimed at ‘simply’ prolonging the current regulatory framework for a (limited) period of time: “a period of standstill”, in the words of the Prime Minister in her Florence speech. This period of standstill would have the added advantage that people, businesses and public services would only need to confront one set of changes – namely the one after the end of the standstill period.
Accordingly, in an ideal scenario, by 29 March 2019, the UK and the EU would have been able to agree on (a) the withdrawal agreement (concerning in particular the rights of EU nationals, the Irish border and the divorce bill) and (b) the heads of terms of the future long-term relationship, described in Article 50 TEU as the “framework for its future relationship with the Union”. The period of standstill would then give everyone the time to adjust to the post-Brexit world. We do recognise, however, that there is uncertainty surrounding the issue of a transition period: in a statement to the Commons, the Prime Minister seems to have changed her approach to transition, stating that the transition is supposed to be a time period for implementing the future relationship and thus without a deal in place, there would be no need for such an implementation period.
When it comes to actually devising a transitional framework, several options have been put forward. One is rejoining EFTA and operating under the EEA. Another is to establish an interim association agreement. A third would extend the negotiating period beyond 29 March 2019. We want to suggest one further option that has not yet been fully considered. It is based on a textual and purposive interpretation of Article 50(3) TFEU.
Article 50(3) provides that “[t]he Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2 [unless the period is extended]”. Our suggestion is that the agreement on withdrawal reached by 29 March 2019 (at the latest) will expressly specify that its entry into force will take place at a later date (say, two years later, on 29 March 2021). This would have several practical and political implications:
- By postponing its entry into force, the status quo is preserved for the chosen period of time.
- At least formally, it would be subject only to a qualified majority vote in the Council and consent of the European Parliament.
- While Brexit Day would be effectively postponed, withdrawal from the EU would have been finalised, so that at least that part of the negotiations would be over.
- It would provide additional time to finalise the details of the future, more complex relationship (including ratification by EU Member States).
We acknowledge that the solution we propose hardly resolves all the problems raised by the transition period. Crucially, it does not resolve the issue of institutional representation of the UK in the EU during the transition period. Under our approach the treaties would continue in force until the entry into force of the withdrawal agreement – and accordingly, the UK would need to organise elections for the European Parliament in 2019 (and, of course, continue to be represented in the Commission, the Court of Justice and other organs).
To resolve this issue, the EU and the UK would have to find a more thorough, bespoke solution in the withdrawal agreement and provide for its entry into force. This, however, comes with its own difficulties as it is unclear to what extent Art. 50 TEU can serve as a legal basis for a bespoke transition agreement. A fully-fledged or interim association agreement based on Art. 218 TFEU, however, requires procedures that could not be done within the remaining timeframe. Accordingly, moving away from the status quo may bring about legal and political difficulties that it might not be possible to overcome in time. Pragmatism will (need to) dictate the extent of this tinkering, if any.
Does the option suggested here conform with Article 50(3)? We believe it does. The crucial question is how one interprets ‘failing that’ in the first sentence: “The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification…” There seem to be two ways to read the reference of “failing that”. On the one hand it could mean “in case the parties do not reach a withdrawal agreement”. On the other it could be read as “in case a withdrawal agreement does not come into force within two years of notification”.
The second reading imposes a strict deadline: the treaties end two years after notification (on 29 March 2019). Any withdrawal agreement must come into force before that date or else there would be a “gap” between the treaties losing force and the withdrawal agreement coming into force. The first reading, however, regards the withdrawal agreement as determinative as soon as that agreement is concluded, even if it enters into force on a later date, i.e. after 29 March 2019. Which reading is the better one?
We think that there are strong arguments for the first reading. First, ‘that’ must refer to the existence of a withdrawal agreement, rather than to the entry into force of one such agreement. The English version is not entirely clear in that respect, nor is the French, German, or Spanish one, all of which fail to define what precisely “that” refers to. The Italian and Swedish versions, however, clearly support such an interpretation as they read respectively “in mancanza di tale accordo” (‘failing such agreement’) and “om det inte finns något sådant avtal” (‘if there is no such agreement’). If the two years were supposed to set the maximum period for the withdrawal to actually happen (with or without an exit agreement), the drafters could have easily specified that in Article 50(3).
Second, the commentaries to the various (constitutional treaty) drafts of what is now Article 50 make clear the underlying rationale of the provision on withdrawal. They state in the relevant part:
“while it is desirable that an agreement should be concluded between the Union and the withdrawing State on the arrangements for withdrawal and on their future relationship, it was felt that such an agreement should not constitute a condition for withdrawal so as not to void the concept of voluntary withdrawal of its substance”.
In other words, the ultimate objective of Article 50 is to reach an agreement on withdrawal to ensure an orderly exit, while the two-year deadline is there to reassure the withdrawing Member that its decision to withdraw from the Union will not be ultimately frustrated. If the withdrawing Member and the Union reach agreement, that agreement takes precedence – even where it stipulates that it enters into force after the two-year period. Accordingly, the interpretation suggested here conforms with the spirit and purpose of the provision.
Rome was not built in a day. Neither was the EU. Brexit is a complicated, complex process that should proceed with the aim of finding an optimal solution, rather than a quick one. The transitional framework suggested here offers an additional pragmatic option.
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Note: This article originally appeared at our sister site, LSE Brexit. It gives the views of the authors, not the position of EUROPP – European Politics and Policy or the London School of Economics.
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Federico Ortino – King’s College London
Federico Ortino is Reader in International Economic Law at King’s College London and Consultant on International trade law to Clifford Chance, London.
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Holger Hestermeyer – King’s College London
Holger Hestermeyer is the the Shell Reader in International Dispute Resolution at King’s College London.
Please write an article about a possible future relationship ….. and then feel free to discuss “transitional arrangements” towards that destination.
There is no need for a conflict between principles and pragmatism
Such a conflict seems to occur in the minds of those who obsess about “cliff-edges” – because they assume immediate and great divergence.
As David Davis said, (and most Leavers believe) there is no sensible reason for any so-called “cliff-edge”.
Business-as-usual is perfectly possible.
Free trade and frictionless borders can occur – just absent EU jurisdiction over domestic laws.
So any obstacles would clearly be of the EU’s making.
As DD has pointed out ….
…. any activity with business-as-usual on Brexit-day requires NO implementation period.
This is why so many Leavers see talk of a “transtional period” before any clarity on the destination as just a device to stall Brexit.
There are countless issues that are directly raised by the basics of what May has outlined (i.e. no ECJ jurisdiction, no single market membership). To give just one, there are numerous EU agencies that are responsible for regulating aspects of our economy. If we’re leaving these agencies and haven’t set any comparable British agency up to take their place then it would lead to a regulatory mess overnight, hence why a transition period is entirely sensible.
This is the kind of nuts and bolts issue sensible people consider on a daily basis, but which ideologically driven Brexiteers ignore in the desire to push overly-simplistic lines (like the decidedly silly suggestion anyone who supports a transition period must be simply trying to stall/prevent Brexit – to which I would simply say, get a better argument, because that one stinks).
Ideologically driven brexiteers understand how the EU works. The EU sets regulation it does not enforce that regulation practical terms. To take some popular examples, Nuclear regs, Euratom sets the regs each EU member state have an agency with manpower to check, the UK’s is ONR (Office for Nuclear Regulation). Flight Safety EASA sets the regs, in the UK the CAA checks and implements, Cars in the UK the leg work is done by VCA .
There is no EU agency that is responsible for regulating our economy. There are only EU agencies setting the regs that our own agencies regulate our economy.
You’re dancing on the head of a pin here. Of course EU level agencies rely on member state implementation, but that doesn’t mean you can flick a switch overnight and we will have the ability to immediately replicate everything that occurs at the EU level using existing UK capacity. And that’s just one example of the kind of change that will have to be made in a little over a year’s time if we don’t have a transition period. To suggest, as our friend above does, that nothing remotely important will change and that anyone who is proposing a transition period is simply intent on blocking Brexit is complete nonsense.
Why would we want to immediately replicate everything that the EU does in regulation?
I can think of some bad examples of EU regulation, clinical trials directive for one. Every year the EU chemicals industry turns up in Brussels and says you are regulating us out business and all our investment is going into America. Do not mistake product regulations required to sell goods into the EU with the overall regulatory regime. Our experts in the various national agencies go to Brussels to sit on the working groups (as do other nations) and contribute and work on the overall regulations. So they have experience of drafting and setting regulations as well as enforcing them. In short we have all the manpower we require.
So in terms of the regulatory environment, over night very little will change. It may well diverge over time but that is another issue.
I do not think this proposal does what it says on the tin.
The proposal would delay Brexit Day. Until Brexit Day the UK would be an EU member just as it has been all this time. Nothing would change.
It would allow more time to prepare for Brexit Day + 1, but there would be no transition pre Brexit Day.
There would still be the question whether on Brexit Day + 1 we go straight to the permanent new regime or whether there would be a transitional period.
So, delaying Brexit might obviate the need for a transition period by allowing a longer preparation period. But it would not be a transition period.