Brexit: Council Directives for Negotiations on Transition

Council of Ministers’ negotiating directives expand on the European Council’s overall political guidelines for a negotiation, so as to give the European Commission (as negotiator for the Article 50 Treaty on European Union – TEU - process) clear instructions on the outer limits of the EU’s negotiating position. For Phase 2 of the Article 50 TEU negotiations, as these cover new aspects of the withdrawal process – namely, a possible transition period and a framework for a future partnership – the Council set out new negotiating directives on 29 January 2018 (‘January Directives’).

The January Directives have two sections. Section I sets out outstanding issues from the Phase 1 negotiations that will need to be discussed early in the Phase 2 negotiations. It also includes a commitment to turn the Phase 1 Joint Report into binding legal commitments for both the EU and the UK.

Section II sets out the EU’s position on a transition agreement (also referred to as an implementation agreement within the UK). In summary, it specifies that in the view of the EU, a transition will:

• Be time-limited, and end by 31 December 2020.
• Require the entire body (‘acquis’) of EU law to continue to apply to the UK, including in areas relating to free movement of people and the EU’s customs and trade laws and policies, and including new EU laws that will enter into force during the transition period.
• Require the UK to remain within the CJEU’s jurisdiction.
• Preclude the UK from ‘being able to conclude’ its own trade agreements, unless specifically authorised to do so by the EU.
• Preclude the UK from having representatives in the EU institutions and in EU agencies, as it will no longer be a ‘Member State’.
• The January Directives are very similar to the European Council political guidelines for Phase 2, and commentators have consequently noted that there does not seem to be significant scope for negotiation in the EU’s position on transition.

The position on transition articulated in the Council Directives has implications for the ability of the UK government to achieve a number of the priorities that it has set out for Brexit, at least during the transition.

First, divergence from EU law will not be possible in this proposed transition framework. Second, a commitment to remain in the EU’s customs union and to adhere to its trade policies, as well as the preclusion of the UK becoming bound by new trade agreements, has consequences for the development of the UK’s global trade strategy. Third, a new immigration policy for EU nationals cannot be implemented during the transition agreement under the Council Directives. Finally, the EU demands that the CJEU will continue to be a binding source of authority in the UK during the transition, making the UK’s ‘red line’ of ending CJEU jurisdiction unachievable during that time.

There is divergence between the UK and the EU positions on transition, as has become clear in the 21 February DExEU response to the 7 February draft transition agreement text produced by the Commission on the basis of the January Directives. There appears to be room for clarification on many aspects of both parties’ positions on a transition agreement, but there are some ‘substantial’ differences in areas such as the extent of coverage of EU law to the UK, and the ability for the UK to express opinions on new legislative initiatives.

A ‘joint declaration’ on a transition agreement is desired by the 22-23 March European Council meeting, so that the negotiating parties can then proceed to the Phase 2 discussions about the framework for a future partnership.