Revisions to the Political Declaration on the framework for future EU-UK relations

Summary

The revised Political Declaration (PD) on the future EU-UK relationship agreed on 17 October 2019 changed the previous version agreed in November 2018 in a number of ways. Among the revisions in the new PD, references to building on provisions in the November 2018 Withdrawal Agreement (WA) relating to the envisaged UK-EU single customs territory and the level playing field provisions that came with it (common standards in employment, environmental, state aid and competition policy) have been removed. These provisions are also no longer in the WA.

References to close UK alignment with EU rules and to a trading relationship that is “as close as possible” are also removed. The revised PD also no longer proposes building on the dispute resolution and enforcement arrangements set out in the WA.

The November 2018 Political Declaration

The Political Declaration setting out the Framework for the Future Relationship between the European Union and the United Kingdom was agreed by the UK and EU on 25 November 2018 alongside the Withdrawal Agreement (WA).

The Political Declaration (PD) fulfils a requirement in Article 50 of the Treaty on European Union (TEU) that the withdrawal agreement (or “divorce settlement”) with a leaving Member State must take account of “the framework for its future relationship with the Union”.

The 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.

There is nothing to preclude the UK and the EU in the future agreeing a relationship framework that goes beyond the parameters set by the PD. Alternatively a looser arrangement could be agreed.

The Political Declaration (PD) outlined a set of commitments on a proposed future agreement on the UK-EU relationship and provided some parameters for the future negotiations. It was 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

Economic Partnership

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

It said that 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. The PD also referred to the development of an independent trade policy by the UK.

Trade in goods: The PD said that the economic partnership should maintain the current situation of no tariffs or quotas on trade in goods between the UK and EU. A range of outcomes for checks and controls would be possible, depending on the final design of the customs and regulatory arrangements.

Trade in services: The PD left the settlement of trade in services and investment open for future EU-UK negotiations. It built on the premise that the UK leaves the single market for services and pursues regulatory autonomy. However, it said the UK and the EU would aim at a level of services liberalisation well beyond the current commitments under the World Trade Organization (WTO) and existing free trade agreements (FTAs).

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

Financial services: The future basis of cooperation would be ‘equivalence’ which is different, and less extensive, than the current system of passported services.

Security Partnership

Law enforcement and judicial cooperation in criminal matters: The future relationship would 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.

Foreign policy and defence: The PD referred to the need for 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.

Institutional and Other Horizontal Arrangements

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

Forward Process

The PD commits the UK and EU to begin the formal negotiations on the future relationship as soon as the UK leave the EU, and endeavour to have a new relationship framework in place by the of 2020 (the scheduled end of the transition period provided for in the Withdrawal Agreement).

Revised Political Declaration, 17 October 2019

On 17 October 2019 a revised Political Declaration (PD) agreed by UK and EU negotiators was published, alongside a revised Withdrawal Agreement (see CBP08713). This made a number of changes to the previous PD, reflecting a change of approach from the UK Government.

Notably, changes to the Protocol on Ireland/Northern Ireland in the Withdrawal Agreement (WA) are reflected in the revised PD. The changes in the Protocol eliminate the ‘backstop’ provisions which could have kept the whole of the UK in a single customs territory with the EU for an indefinite period. Consequently, the provisions in the protocol are no longer referred to in the revised PD as a basis on which to develop future co-operation between the UK and the EU.

Revisions to the PD also reflect a change in the UK Government’s position on alignment with EU rules. This was signalled in Boris Johnson’s letter to European Commission President Jean-Claude Juncker on 2 October. The Prime Minister described the backstop “as a bridge to a proposed future relationship with the EU in which the UK would be closely integrated with EU customs arrangements and would align with EU law in many areas”. He said that this proposed future relationship is not the goal of the current UK Government.

Among the revisions to the PD are the following:

Economic Partnership

• All references in the previous PD to a “free trade area” have been replaced with a Free Trade Agreement.
• References in the previous PD to building upon the single UK-EU customs territory (as provided for by the backstop provisions) have been removed.
• Linked to the removal of references to the single customs territory, the new text acknowledges that Rules of Origin (which determine the country of origin of goods for tariff purposes) will resurface between the UK and the EU.
• An Article providing for consideration of UK alignment with EU rules has been removed.
• Paragraph 24 on customs now also explicitly references VAT matters.
• Level Playing Field for Open and Fair Competition: Paragraph 77 on level playing field provisions has been rewritten and is significantly more detailed. This relates to the removal of the backstop provisions in the WA which previously included level playing provisions alongside the envisaged single customs territory. The November 2018 PD said that these WA provisions – aimed at preventing non-regression of standards in relation to taxation, environmental protection, employment, and state aid and competition policy - would be built upon for the future relationship. The new text calls for robust commitments to prevent distortions of trade given the UK’s close geographical proximity to the EU. The precise nature of commitments would be commensurate with the scope of the future relationship.

Security Partnership

• Law enforcement and judicial co-operation in criminal matters: The text is identical apart from the removal of a reference to the Court of Justice of the EU (CJEU) in interpreting EU law with respect to dispute resolution. However, it refers to later Articles in the PD that do reference the CJEU’s role in this respect.
• Foreign Policy, Security and Defence: additional text to stress that UK involvement in Common Security and Defence Policy operations would be without prejudice to UK sovereignty and the autonomy of EU decision-making, and that the UK will maintain the right to determine how it will respond to invitations to participate.
• Revision of existing text on collaboration regarding research and industrial co-operation between the UK and EU to protect the effectiveness of Armed Forces. The UK will consider the extent to which it is possible, rather than agree to enable it to the extent possible.

Institutional and Other Horizontal Arrangements

• Removal of references to continuing the arrangements set out in the Withdrawal Agreement regarding dispute resolution and enforcement.
• Less specific language on enforcement and dialogue, so that this will be at “appropriate levels” rather than at “summit, ministerial and technical level” as envisaged in the November 2018 PD.
• A new provision on dispute settlement to provide for expedient problem-solving through a “flexible mediation mechanism”. This would be without prejudice to the dispute settlement mechanisms provided for under the PD involving the Joint Committee and independent arbitration panel.
• Revised language relating to the role of the CJEU, including a new stress on the CJEU not being involved where there is no EU law to be interpreted.
• Revised language on remedies and financial compensation where either of the parties fail to comply with the outcome of the arbitration process.

Forward Process

• New wording making clear that the European Commission is ready to propose provisional application of relevant parts of the future relationship, where the relevant legal frameworks and practices are there.
• Less specific language on future high-level meetings. Rather than these being every six months (as provided for in the November 2018 PD) only a single meeting is explicitly identified as taking place. This will be in June 2020.

Further reading

Commons Library Briefing Paper 8713: The October 2019 EU UK Withdrawal Agreement

Commons Library Insight: Brexit deal: Potential economic impact