Transition or extension?

One of several unlikely but possible scenarios

The realisation that any post-Brexit transition period will leave the UK still subject to EU legislation, including modifications to such legislation and to new legislation, has given rise to the idea that Britain should extend its membership so as to serve any transition period as a voting member rather than as a “vassal state”.

I even had a prominent UKIP MEP come up to me to say that he was against having a transitional period, but if there was to be one then “shouldn’t we be here taking part in the decisions?”

Until recently most serious observers considered that such an idea would be unacceptable to the EU. Why should they continue to tolerate British ministers around the table, shaping and possibly blocking decisions, any longer than necessary, if Britain were about to leave?

However, one tricky problem may have changed that equation. This is the legal difficulty in rolling over some 750 international agreements that the EU has signed with third countries. The day Britain leaves the EU, they no longer apply to Britain. They cover not just trade, but a whole range of subjects from aircraft landing rights to data protection, fishing rights, insurance guarantees and much else besides.

[Here is a full list of the 750 agreements (FT paywall) relevant to the UK that, as things stand, we will fall out of on 29 March next year.]

This is a problem for the EU as well as for the UK. Take trade agreements where EU products (defined under WTO rules of origin as having a certain percentage of their added value produced in the EU) may no longer qualify for duty free access to other markets because, once you deduct the UK contribution to the supply chain, they fall below the necessary threshold to qualify as an EU product; car exports spring to mind.

Clever lawyers have been working on this problem and the best that they have come up with is that the EU and the UK should send a joint letter to all the countries concerned saying that, for the purpose of the agreements in question, they should treat the EU and the UK as a continuing single entity for the duration of transition period. The hope is that no country would object, and if they do, the legal wrangle would take so long to settle that the transition period would be over by then.

That may be true for a challenge on trade at the WTO (although it could lead to a retrospective penalty), but there is no guarantee that this would work without problems in other fields. Take aircraft landing rights: what if a rival airline challenged their legal validity in a domestic court? What about insurance? Will insurance companies still guarantee payment when there is legal doubt?

Unless the lawyers find an intricate and innovative solution to all such problems, this poses a major difficulty. It can only be solved in one of two ways: either negotiate some 750 three-way agreements between the EU, the UK and the third countries concerned to extend the status quo for the transition period (or longer), bearing in mind that there are just 13 months left to negotiate (and often ratify in national parliaments) such agreements, or extend the UK’s EU membership for the transitional period.

This can be done through the UK withdrawal agreement – assuming one is agreed – setting a later date for departure. The 29 March 2019 deadline is, under Article 50 of the EU Treaty, the deadline for departure only if there is no agreement. If there is an agreement, then this agreement sets the date of departure, which need not be March 2019.

Of course an extension would be anathema to the right-wing of the Tory party. But would they actually oppose a Brexit deal that legally secured their precious Brexit, albeit a delayed one? Rationally not, but then again, rationality has never been their strong suit.

Agreeing a temporary extension of membership rather than a transition period after departure remains a tall order. But as things stand, it should not be ruled out.

Nonetheless, let us not get carried away: it would simply postpone the cliff edge for around two years. The problem of rolling over or, post-Brexit, replacing the International agreements to which we are party via the EU will simply return later. If it proceeds with Brexit, the UK will ultimately have to replicate or replace these 750 agreements. The third countries concerned will have their own agendas and demands in a new negotiation in a new situation. So, how long will it take?

If  we had 750 negotiating teams, it might take two to five years.

At the moment, the government doesn’t even have a single competent team…

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One Comment

  1. I ‘m pleased that this notion of a simple 50.3 extension which I began to propagate in mid October after first checking its viability with the author of Article 50 Lord Kerr is spreading nicely now. The complexities of drawing up a ‘transiition period’ agreement are vast, and not helped by the absence of any clear agreement within the Government as to where the UK is supposed to be transiting to.

    This is the relevant clause: . “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 referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

    The interesting point is that there is no extension time limit defined. The period could be extended “for an indefinite period until further agreement” if the 27 were so minded,

    My MEP advisor assures me that the 27 will agree an extension providing it is not seen as a ploy to gain advantage in negotiations. The UK would have to show a genuine wish to conclude a fair agreement, with ‘sufficient progress’ made, in order to be granted an extension. Or – the UK might ask for more time to conduct a referendum on any deal, but a referendum which includes the option of Stay would most likely be better received by the 27.

    The stumbling block for any referendum proposal is whether any sensible draft deal (i.e. withdrawal agreement) can ever be agreed, with the current PM and Cabinet in place. It is all very volatile and unpredictable. Place your bets, ladies and gentlemen.

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