House of Commons Library: Briefing Papers on 1) The UK's EU Withdrawal Agreement and 2) The Political Declaration on the Framework for Future EU-UK Relations

This briefing looks in detail at the Withdrawal Agreement negotiated between the EU and UK and finalised on 14 November. It was endorsed by EU Member State leaders at a special European Council summit on 25 November and the UK Prime Minister has promoted it in the UK Parliament and around the country. But it will be debated at length in Parliament over the coming days before being put to the so-called 'meaningful vote' on 11 December. 

Agreement is reached

On 13 November 2018 the EU decided that “decisive progress” had been made in the Brexit negotiations, and on 14 November the European Commission and UK Government published a draft withdrawal agreement, together with three protocols (on the border between Ireland and Northern Ireland, the UK’s Sovereign Base Areas in Cyprus, and Gibraltar) and nine annexes. The text of the negotiated Withdrawal Agreement, together with the Political Declaration on the framework for future EU-UK relations, was endorsed by EU leaders at a specially convened European Council meeting on 25 November 2018.

Structure of the negotiated Withdrawal Agreement

Part 1 Common Provisions (p 6)

Part 2 Citizens’ Rights (p 16)

Part 3 Separation Provisions (p 69)

Part 4 Transition (p 196)

Part 5 Financial Provisions (p 210)

Part 6 institutional and Final Provisions (p 268).

Protocol on Ireland/Northern Ireland (p 302) and Annexes to Ireland/N.I. protocol (p 331)

Protocol on Sovereign Base Areas of UK in Cyprus (p 476)

Protocol on Gibraltar (p 496)

Annex I on Social Security Coordination (p 505)

Annex II on Provisions of EU law referred to in Article 41(4) (animal health) (p 529)

Annex III on Time limits for situations or customs procedures referred to in Article 49(1) (p 531)

Annex IV on List of networks, information systems and databases referred to in Articles 50, 53, 99 and 100 (p 533)

Annex V on Euratom (p 547)

Annex VI on List of administrative cooperation procedures referred to in Article 98 (p 552)

Annex VII on List of Acts/Provisions referred to in Article 128(6) (p 555)

Annex VIII on Rules of Procedure of the Joint Committee and Specialised Committees (p 560)

Annex IX, Rules of Procedure for dispute settlement (p 569)

Part one: Common Provisions

Part 1 of the Withdrawal Agreement contains so-called ‘Common Provisions’. They set out its territorial scope, key definitions, and how the Withdrawal Agreement (and particularly, its EU law content) is to be given effect in the UK. An important difference from the March draft Withdrawal Agreement is that Article 4 makes clear that the entire Withdrawal Agreement (rather than just Part Two on Citizens’ Rights) is intended to be directly effective in the UK where its provisions are clear, precise and unconditional.

Part two: Citizens’ Rights

The citizens’ rights provisions were agreed by the UK and the EU in the March draft withdrawal agreement. There are no substantive changes or additions, except in provisions on the rights of nationals of Iceland, Liechtenstein, Norway and Switzerland.

Free movement will continue until the end of the transition (or implementation) period and EU and UK nationals will be able to move to the UK or Member States as is currently permitted by EU law. EU citizens living in their host state before the end of transition will have permanent residence rights under the withdrawal agreement, subject to certain requirements. The UK and the EU27 have discretion under the agreement to require EU or UK nationals to apply for a new residency status.

The UK has chosen to implement a scheme which requires EU citizens to apply for a new residency status known as settled or pre-settled status. It is still unclear whether each of the EU27 will exercise their discretion under the withdrawal agreement to require UK residents to apply for a new residency status.

The Government is expected to publish an Immigration White Paper in the coming weeks in preparation for next year’s Immigration Bill. Much about the future relationship between the UK and EU in relation to immigration is yet unknown.

Part Three: Separation Provisions

Part Three of the WA is intended to create an orderly exit from the EU.  Ongoing processes and arrangements will be allowed to come to an end under current rules following the end of transition. It contains provisions on market access for goods, ongoing customs, VAT and excise matters, intellectual property, ongoing police and judicial cooperation in both criminal and civil/commercial matters, the protection of data obtained before the end of transition, ongoing public procurement procedures, Euratom issues, ongoing EU judicial/administrative processes, privileges and immunities, and a few provisions relating to the functioning of the EU institutions.

Some examples are summarised below.

Goods Placed on the Market 

The December 2017 Joint Report included high-level agreement on goods placed on the market. Most of the draft legal text was shown as agreed in the March 2018 draft. The final part, on the sharing of information on tests on goods (conformity assessment), was agreed in the June 2018 joint statement.

Ongoing Customs Procedures 

Early in 2018 the UK and EU had agreed on the broad principle here – that movements of goods which commence before the UK’s withdrawal from the EU Customs Union should be allowed to complete their movement under the rules which were in place at the start of their movement (UK Government, Technical note: other separation issues - phase 2, March 2018). The WA has an added requirement that the UK will reimburse the EU for the actual costs of facilitating access to the EU networks and databases.

Ongoing VAT and Excise Duty Matters

The current EU VAT arrangements will apply to goods dispatched or transported from the UK to an EU Member State, or vice versa, where the dispatch or transport started before the end of the transition period and ended afterwards. Unless the future relations agreement provides otherwise, goods exported from the UK to the EU and vice versa after the end of the transition will attract VAT and customs formalities. There is equivalent provision for EU excise arrangements for fuel, alcohol and tobacco products. After transition, exports of excisable products from the UK to the EU will be subject to customs formalities before they can be moved within the EU. To meet these requirements, the UK may have access to relevant network and information systems and databases.

Intellectual Property 

Intellectual property (IP) laws are harmonised to a large extent across Europe, and much of the UK legislative framework in this area is currently composed of directly effective EU Regulations and transposed EU Directives. Under the EU Withdrawal Act the existing body of directly applicable EU law will be converted into domestic law. However, because the UK would no longer be a Member State, this would affect the unitary character of EU IP rights, meaning that they would not be protected in UK law.

Ongoing Police and Judicial Cooperation in Criminal Matters 

The UK currently participates in approximately 40 EU measures that aim to support and enhance internal security and policing and judicial cooperation in criminal matters. Measures identified as being of particular significance include the European Arrest Warrant (EAW); access to databases, including the Second Generation Schengen Information System (SIS II), European Criminal Records Information Exchange System (ECRIS) and Passenger Name Records (PNR); and participation in agencies, in particular Europol and Eurojust.

Ongoing Judicial Cooperation in Civil and Commercial Matters 

The UK currently participates in certain measures designed to facilitate judicial cooperation in civil, family and commercial matters. These concern the choice of court to be used to determine disputes, the applicable law, and the automatic recognition and enforcement of legal decisions in different Member States.

Agriculture

The Government’s Agriculture Bill will take forward measures for new UK agricultural support schemes. The WA disapplies EU state aid rules that continue to apply to the UK more generally to enable the UK to operate agricultural support schemes during transition/extended transition periods. However, although CAP rules will not apply directly, the UK’s 2020 scheme must be equivalent to the EU CAP and expenditure on UK schemes during the transition period are limited to CAP spend levels. The Ireland/NI Protocol includes similar measures which come into effect when the WA does.

Certain EU regulations on food and agriculture continue to apply to NI during the ‘backstop’ period (see below). Existing checks on animals and animal products moving from GB into NI will need to be scaled up. The Political Declaration states that provisions should be put in place to tackle sanitary and phytosanitary (animal and plant health) barriers to trade, that “build on and go beyond” WTO agreements.

Data Protection

Under the EU’s data protection framework, personal data can only be transferred to third countries (such as the UK when it leaves the EU) when an “adequate” level of protection is guaranteed. One option is for the European Commission to make an adequacy decision. The WA covers data processed or obtained before the end of the transition period or on the basis of the Agreement.  EU data protection law would apply in the UK in respect of the processing of personal data of subjects outside the UK where the data was processed under EU law before the end of transition period or the data was processed after the end of the transition period. These rules would not apply if the processing was covered by an adequacy decision. If an adequacy decision ceased to apply, the UK would have to ensure its data processing was “essentially equivalent” to EU law.

Immunities and privileges

The WA generally provides for a continuation of existing privileges and immunities for activities that took place before the end of the transition period.

Euratom

The UK will be responsible for nuclear safeguards and there are provisions on ownership of materials and equipment in relation to third countries and Euratom Member States. The UK will keep assets in the UK but would purchase from Euratom any equipment and other property related to the provision of safeguards in the UK as it implements its own safeguards regime. The UK will continue to fulfil obligations with third countries and will continue to be responsible for its nuclear waste, even if it is on another Member State’s territory.

Part Four: Transition

The transition period, also described as the ‘implementation period’ is meant to bridge the period between the date of the UK’s exit from the EU and the entry into force of the new, yet to be negotiated, UK-EU partnership arrangements. The transition will run until the end of December 2020, with the possibility of extension for up to two years. A decision on extension must be taken by 1 July 2020. The UK will continue to apply EU law during the transition period, with a few exceptions, as if it were a Member State. But the UK will have no institutional representation and no role in decision-making. The EU institutions and other bodies, offices and agencies will continue to exercise their powers under EU law in relation to the UK. The CJEU will have jurisdiction in relation to the UK and to the interpretation and application of the Withdrawal Agreement.  

Part Five: Financial Settlement

After the first round of withdrawal negotiations, the UK and EU set out an agreed approach to the financial settlement in the December 2017 Joint Report. The settlement sets out the financial commitments that will be covered, the methodology for calculating the UK’s share and the payment schedule. The withdrawal agreement turns the approach set out in this Report into legal text and provides for further negotiations on UK contributions to the EU budget if there is an extension of the transition period. Any extension would not impact on the financial settlement, which would continue as agreed.

Part six: Institutional and Final provisions

Part six sets out the institutional arrangements underpinning the Agreement, and how disputes about the WA are to be resolved. The key changes to Part Six of the March draft relate to dispute settlement regarding the agreement itself, which the Commission had originally proposed should be resolved by the CJEU if they could not be resolved in the Joint Committee. The November draft instead proposes in Article 170 that any disputes not resolved in the Joint Committee are taken to an independent arbitral tribunal, which will issue a binding decision regarding the dispute. However, where the dispute requires the interpretation of concepts or provisions of EU law, under Article 174 the tribunal is obliged to refer those to the CJEU for a binding interpretation which must then apply.

Protocols

The Protocol on Ireland/Northern Ireland 

The NI Protocol, including the ‘backstop’, is intended to be temporary and applies unless and until it is superseded by a future relations agreement, which the parties will try to achieve by 31 December 2020. The Protocol refers to equality rights, the Common Travel Area and North-South cooperation. Under the ‘backstop’ the UK will form a customs union with the EU (except for trade in fisheries and aquaculture products, which should be the subject of a further agreement on fishing opportunities by 1 July 2020).

The UK will conform to specific EU legislation on customs, including with respect to third countries, and some harmonisation of law will continue on taxation, the environment, labour law, state aid, competition and public companies/monopolies, but with no obligation to keep up with new EU legislation and CJEU case law. To provide a ‘level playing field’ the UK commits to non-regression on EU environmental protection, labour and social standards, state aid and competition, and state-owned undertakings in respect of administration of tax. The UK will be able to conclude trade agreements with third countries, however, the 'customs union' would substantially limit the UK's ability to have significantly different trade realtionships with them, particularly in relation to goods. There would be greater scope for the UK to offer different terms on trade in services and areas such as procurement.

In the UK in respect of NI, specific additional EU legislation applies on customs, certain VAT and excise provisions, and certain technical standards relating to goods. EU law on free movement of persons, services and capital, and contributions to the EU budget, will not apply. But there will be free movement for goods moving from NI to the rest of the UK and the EU. The EU and the UK will seek to facilitate trade between Britain and NI with a view to avoiding controls at NI ports and airports.

UK authorities are responsible for implementing and applying EU law applicable under the Protocol but also, where EU law continues to apply to the UK in respect of NI, the EU institutions and bodies will have the same powers as they have under the EU Treaties. EU bodies including the CJEU can apply and interpret Protocol provisions specific to Northern Ireland. EU law applicable to the UK in respect of NI can be amended or replaced. But new EU legislation not listed in the Protocol but in its scope would need to be adopted by the Joint Committee – failing which the EU can take appropriate remedial measures. The Protocol is subject to review and may be ended in whole or part by decision of the Joint Committee.

Protocols on Sovereign Base Areas in Cyprus and Gibraltar

Gibraltar, other UK Overseas Territories and Crown Dependencies are covered by the territorial scope of the Withdrawal Agreement, including part four on the transition period. The extent of application to each of these territories reflects its relationship with the EU before Brexit.

The Protocol on the Sovereign Base Areas in Cyprus aims to protect the interests of Cypriots who live and work in the Sovereign Base Areas after Brexit and to ensure that EU law, in the areas stipulated in Protocol 3 to the Cyprus Act of Accession, continues to apply in the SBAs, with no loss of rights, especially for Cypriot civilians living and working in the SBA areas. This applies to policy areas such as taxation, goods, agriculture, fisheries and veterinary and phytosanitary rules. The arrangements aim to ensure that the laws applicable to Cypriots in the SBAs are the same as the laws of the Republic of Cyprus. The Protocol confers responsibility on Cyprus for the implementation and enforcement of EU law in relation to most of the areas covered, except for security and military affairs.

The Protocol on Gibraltar will apply to the end of the transition period, except for provisions on citizens’ rights, which will continue beyond. The Protocol covers preparation for the application of the Citizens’ Rights part of the WA, allows EU law to be applied to Gibraltar Airport if the UK and Spain reach agreement on it; establishes cooperation between Spain and the UK on fiscal matters, environmental protection and fishing, and police and customs matters. Memoranda of Understanding between the UK and Spain facilitate working-level collaboration between competent authorities in Gibraltar and Spain, including through the use of joint committees, on citizens’ rights, the environment, police and customs and tobacco.

Ratification of the texts in the EU and UK

Parliamentary approval in the UK

The UK Parliament will need to undertake two approval processes before the UK can ratify the withdrawal agreement. Both the EU (Withdrawal) Act 2018 and the Constitutional Reform and Governance Act 2010 (CRAG) impose procedural hurdles on the capacity of the UK to ratify what has been negotiated. The Withdrawal Act also provides for a Parliamentary process in the event that a deal is rejected by the Commons, or if no negotiated agreement is ever put to it. The Government has committed to holding a vote on a resolution in both Houses of Parliament before the EP holds its vote, where each House will be asked to approve the withdrawal agreement. If approved, an EU (Withdrawal Agreement) Bill will be introduced to implement the withdrawal agreement in UK law. Further to the Library’s paper, The User’s Guide to the Meaningful Vote, this paper provides an updated account of the domestic constitutional requirements for ratifying the withdrawal agreement. This includes a summary of the Procedure Committee’s recommendations for how the ‘Meaningful Vote’ should be conducted in the Commons.

Second Referendum?

The possibility of a second referendum on the question of EU membership has been raised both within and outwith Parliament. The paper provides an overview of the practical steps that would need to be considered for any such referendum to take place, should Parliament decide that such a referendum ought to take place. Issues of importance, beyond the merits or otherwise of holding such a poll concern, among other things the timing of the referendum, the question or questions on the ballot paper, the legislation required to underpin the poll and arrangements for the regulation of the campaign, its participants, donations and expenditure.

EU approval

If the EP approves the agreement by a simple majority, for it be ‘concluded’ (ratified) by the EU it must be passed by a super qualified majority of the European Council of the remaining 27 Member States (20 of the other EU27 representing 65% of the EU27 population).

Constitutional implications in the UK

Both the draft Withdrawal Agreement and the Political Declaration have potentially significant implications for the UK constitution. Some constitutional issues that are likely to arise in any bill to implement the withdrawal agreement include:

• the status of the European Convention on Human Rights in any future relationship;
• the role of Parliament in any decision to extend the transition period;
• the role of Parliament in the conversion of the Political Declaration into a treaty on the future relationship;
• the constitutional status of the Withdrawal Agreement;
• the domestic legislation required to give effect to EU law during transition; and
• the role of the CJEU and domestic courts in interpreting and applying the Withdrawal Agreement during and beyond transition.

Terminology

In this paper the negotiated Withdrawal Agreement endorsed by EU leaders on 25 November is abbreviated to WA, and the Political Declaration setting out the framework for the future relationship between the EU and the UK is abbreviated to PD. Earlier drafts of these documents are referenced as such (e.g. the March draft).

The Government published the following texts on the Gov.uk website:

• Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, 14 November 2018 (this includes Protocols on Ireland / Northern Ireland, the Sovereign Base Areas in Cyprus and Gibraltar)

 

• Withdrawal Agreement explainer and Technical Explanatory note on Articles 6-8 on the Northern Ireland Protocol
• Explanatory slides for the Withdrawal Agreement and Political Declaration on our future relationship with the EU
• Political Declaration setting out the Framework for the Future Relationship between the European Union and the United Kingdom, 25 November 2018
• Explainer for the Political Declaration setting out the framework for the future relationship between the United Kingdom and the European Union, 25 November 2018
• Four Memorandums of Understanding and a Concordat between the UK and Spain on matters concerning GibraltarDraft withdrawal agreement, 14 November 2018

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The UK's EU Withdrawal Agreement

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This paper looks at the Political Declaration on the Framework for the Future Relationship between the European Union and the United Kingdom, which was agreed by EU leaders on 25 November. 

The Political Declaration

On 22 November 2018 the negotiators agreed a Political Declaration setting out the Framework for the Future Relationship between the European Union and the United Kingdom, which expanded on and replaced the earlier ‘outline’ political declaration of 14 November. The Declaration was endorsed by EU leaders at a special meeting of the European Council on 25 November 2018.

Legal status

The Political Declaration (PD) is not a binding legal document and it is unlikely that it will bind the parties to anything beyond a commitment to negotiate for a future relationship in good faith, which is set out in Article 184 of the Withdrawal Agreement.

Structure

The PD is structured in five parts:

Part I: Basis for Cooperation

Part II: Economic Partnership

Part III: Security Partnership

Part IV: Institutional and other Horizontal Arrangements

Part V: Forward Process

Part I: Basis for Cooperation

This section establishes that the future relationship should be based on the shared EU and UK values and principles such as respect for human

rights, democracy, the rule of law, working together globally, and the non-proliferation of nuclear weapons. It includes the UK’s commitment to respect “the framework” of the European Convention on Human Rights (rather than the ECHR itself) and the EU’s and the EU27’s commitment to the EU’s Charter of Fundamental Rights.

It includes a mutual commitment to “ensuring a high level of personal data protection” to facilitate data flows, and an EU intention to start work on adequacy decisions on the UK’s data framework “as soon as possible” after Brexit, “endeavouring” to adopt decisions by the end of 2020. There is also an intention that the UK will seek and the EU will grant, where legally possible and with a UK financial contribution, UK participation in EU programmes in areas such as science and innovation, youth, culture and education, overseas development, external action, defence capabilities, civil protection and space.

Part II: Economic Partnership

The PD calls on the UK and EU to agree an ambitious, wide-ranging future economic partnership. It leaves many details to be decided during future negotiations and keeps a range of options open.

The future relationship will encompass a free trade area and cooperation in particular sectors where this is in the parties’ mutual interest. The economic partnership will cover trade in goods, trade in services and investment, and a number of sectors including financial services, digital, transport, energy and fishing. There are also sections on movement of people and on procurement. Some of these are described below.

Trade in goods

The economic partnership should maintain the current situation of no tariffs or quotas on trade in goods between the UK and EU. Customs arrangements should “build and improve on” the single customs territory set out in the Withdrawal Agreement. At the same time, the PD refers to the UK having an independent trade policy.

The PD refers to a trading relationship which is “as close as possible”. There are no references to ‘frictionless’ trade or a ‘common rulebook’ for trade in goods, which were prominent features of the Chequers agreement. A range of outcomes for checks and controls are possible, depending on the final design of the customs and regulatory arrangements.

The importance of avoiding a hard Irish border is reiterated, with a commitment to considering technological solutions to the Irish border issue (although no specific solutions are proposed).

Trade in services

The PD leaves the settlement of trade in services and investment open for future EU-UK negotiations. It builds on the premise that the UK leaves the single market for services and pursues regulatory autonomy. On services and investment, the UK and the EU have an ambition to go well beyond the current commitments under the World Trade Organization (WTO) and existing free trade agreements (FTAs). The Government has noted that the principles agreed for services offer the UK the flexibility and regulatory autonomy needed.^[1]

The PD also sets out principles of market access and non-discrimination, as well as broad terms of regulatory autonomy and cooperation.

Public procurement

The PD suggests that the UK and EU will open additional public procurement markets beyond those they are committing to open up via the WTO Government Procurement Agreement. The UK and EU may agree other measures that would encourage the two markets to be open to each other in practice.  There will be mechanisms for reviewing and remedying breaches of the procurement rules.

Financial services

The PD recognises the interdependence of financial services across boundaries and the common interest in honest and sound markets and fair competition within them. To that end it highlights the need for continuing close cooperation between different regulators and regimes. The future basis of cooperation will be ‘equivalence’ which is different, and less extensive, than the current system of passported services.

A forthcoming Library Briefing Paper, Brexit deal: Economic analyses, will look at the economic impact of Brexit in more detail.

Part III: Security Partnership

Law enforcement and judicial cooperation in criminal matters

The future relationship will cover arrangements across three areas: data exchange; operational cooperation between law enforcement authorities and judicial cooperation in criminal matters; and anti-money laundering and counter terrorism financing.

There will be arrangements for exchanges of Passenger Name Record (PNR) data, DNA, fingerprints and vehicle registration data (Prüm) and extradition arrangements; data-sharing arrangements for wanted and missing persons, exchange of criminal records and cooperation between the UK and Europol and Eurojust.

Foreign policy and defence 

The PD reiterates many of the principles of future cooperation in foreign policy and defence already agreed in the negotiations, such as the need for “close, flexible and scalable cooperation” that respects the autonomy of both Parties; structured consultation between the UK and EU at different levels; the exchange of information, and the need for “close cooperation in Union-led crisis management missions and operations, both civilian and military”. But there is limited detail on how such principles will be delivered. While the language of the Declaration suggests a degree of compromise in certain areas, such as operational planning and defence industrial cooperation, it is unclear what either side has ceded or achieved in that discussion and what is left to be resolved once formal negotiations on the future security partnership commence.

Part IV: Institutional and Other Horizontal Arrangements

An overarching institutional will be underpinned by mechanisms for dialogue and arrangements for setting the direction and implementing the future relationship. Dispute resolution will be based on the dispute resolution mechanism in the Withdrawal Agreement.

Part V: Forward Process

Once the WA is concluded and before the UK leaves the EU, preparatory work will begin for the formal negotiations on the future relationship. The priority will be to find alternative, permanent arrangements for ensuring there is no hard border between Northern Ireland and Ireland.

Negotiations to conclude (ratify) the legal agreement(s) will begin as soon as the UK is a third country (30 March 2019) and both parties have committed to “best endeavours” to ensure the future relationship enters into force by the end of the transition period.

Before withdrawal

Between the approval of the PD and the UK’s exit from the EU, both parties will engage in preparatory organisational work in order to enable formal negotiations on the future partnership to commence rapidly.

After withdrawal

A procedure for EU negotiation of agreements with third countries is set out. After formal negotiations are launched the UK and EU will negotiate in parallel agreements on the future relationship.

Review

The UK and EU will convene a high level conference every six months after the UK’s departure “to take stock of progress and agree, as far as is possible between them, actions to move forward”.

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The Political Declaration on the Framework for Future EU-UK Relations