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A full text of the draft agreement on the withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community can be seen as a success. And it should be welcomed, even if it still comes in colours: green for what is agreed, yellow where there is an agreement on the policy objective but changes are still needed and white where discussions are ongoing. One can say that the EU strategy to publish its draft has indeed facilitated progress. The parts on financial settlement, citizens’ rights and transition are all in green. Governance and the Irish issue remain as the main outstanding issues. But there are many other separation issues that are completely open.
What is worth emphasising is that, if there is no progress on those remaining issues, there will be no transition phase. Transition will only take place if the agreement is settled: and, as of today, that cannot be taken for granted.
Having some mechanisms to ensure its implementation already agreed, in particular regarding citizens, is good news – for example, regarding direct effect of the provisions on citizens’ rights in the withdrawal agreement, and on governance. But these mechanisms have not been yet agreed with regard to other areas of the withdrawal deal.
There are examples of commitments valid for the entire agreement, like the good faith clause commonly used in international agreements. Also, it is rather clear that the UK is to be considered as a member state during the transition period (except for its participation in the institutions and bodies of the EU), and that the powers of the European Commission and the Court of Justice will continue to apply.
But if one reads the part of the draft agreement on institutional provisions (Title II of Part Six), only the issue of the Joint Committee has been discussed so far. Nothing else on governance of the agreement as a whole has been agreed.
For the European Parliament, the internal composition of the Joint Committee will be important. This, however, is an internal EU issue to be agreed by the EU at a later stage. The question is whether it can be based on Article 218 TFEU, as the UK will be a third country as of 30 March 2019.
For the Parliament, the agreement reached (Article 152) concerning relations with the UK independent authority responsible for monitoring the implementation of the citizens’ rights obligations in the withdrawal agreement is very important. Equally important is Article 155, giving the European Commission the option to intervene in cases before UK courts and tribunals regarding the interpretation of the withdrawal agreement.
The possibility of a dialogue (envisaged in Article 156) also matters significantly. Even if, during the transition, the entire architecture of the EU will remain in place, a special platform for dialogue between the EU and the UK is needed like in any international agreement.
It is also a good solution to provide for the possibility of having not only a centralised Joint Committee, but also specialised subcommittees competent for specific chapters of the agreement, allowing the UK and EU to deal with potential conflicts where technical issues are at stake.
Of course, there is the thorny issue of possible situations where the UK might not respect Court of Justice rulings during transition. The transition will be a very short period, and thus a special sanction mechanism is needed in order to ensure enforcement. This reasoning is behind the proposals in Article 165, according to which there would also be a warning to the UK on potential sanctions, as well as a possibility of appealing to the ECJ. These provisions are, however, not yet agreed.
We have seen that the UK government has accepted the length of the transition period. Any extension running into the new multi-annual financial framework would require a reopening of the financial settlement deal.
A positive development is Article 122(2), which has an enabling clause in case an agreement on the Common Foreign and Security Policy is reached earlier than the overall future relationship deal. Its application during the transition could be possible, of course under the condition of unanimity. Any member state could veto such an agreement.
The EU has also taken a more open approach with the wording of Article 122(5), under which the Union may invite the UK as a third country to cooperate on new measures adopted by the EU under Title V of Part III of the treaty (Area of Freedom, Security and Justice). Of course, the relevant future EU law would have to allow for this.
A somewhat surprising provision, in the context of the future limitations on the institutional participation of the UK in the EU (see Article 123), is Article 125(3), which allows the UK to participate in the Union’s international delegations during the transition to facilitate its future international involvement in the field of fisheries. This is indeed as if the UK were a member state.
The draft deal, however, does not leave any doubt about excluding any participation of the UK during the transition in new enhanced cooperation mechanisms. Concerning Permanent Structured Cooperation on security and defence (PESCO), the UK can be invited to participate as a third country in individual projects.
What must be noted is the absence of financial services in the draft text. This is justified. The Union has the power to introduce, unilaterally if needed, any grandfathering solution. And it is working on strengthening its equivalence regime. What is, however, fundamental today for industry is contingency planning and preparation. For business, the transition should already be in full swing. You cannot build the future of your company on a political agreement. Preparedness is key.
Overall, there is much yet to do if the EU and UK are to ensure a full withdrawal agreement is reached, including on the terms of transition.
Prof Danuta Hübner MEP is Chair of the European Parliament’s Committee on Constitutional Affairs and former European Commissioner for Regional Policy. She is Advisory Board member of the Scottish Centre on European Relations.