As discussed in a previous blog post, the next Prime Minister will have the same limited options that Theresa May has had for addressing Brexit. One of these options would be to seek to ensure that the UK leaves the EU on the current exit day of 31 October 2019, irrespective of whether a Withdrawal Agreement has been ratified.
This blog examines how negotiation of the UK’s future relationship with the EU might be affected if the UK Government decided to pursue a no-deal Brexit on 31 October.
No implementation period
In the event that the UK leaves the EU without concluding a Withdrawal Agreement, the first casualty would be the implementation or transition period. An implementation period would ensure continuity of arrangements after the UK’s withdrawal and allow time for the negotiations on the future UK-EU relationship to progress. However, provision for the implementation period forms part of the current Withdrawal Agreement, if the UK leaves in a no-deal scenario, the Withdrawal Agreement would fall and consequently the implementation period included as part of the Agreement would also fall.
The absence of such an implementation period would mean that the UK would immediately be treated as a third country once it left the EU. This was confirmed by Stefaan de Rynck, a member of Michel Barnier’s Article 50 negotiating team in a tweet on 21 June. He wrote:
“UK goods become “non-Union goods” on day 1 of a no deal #Brexit. UK would be 3rd country without any customs or preferential trade agreement.”
Conditions for negotiating the future relationship
As Stefaan De Rynck has indicated, if the UK leaves the EU in a no-deal scenario it will immediately become a third country from an EU perspective leading to the UK trading with the EU on WTO terms. This would mean tariffs would be applied to UK goods entering the EU’s single market and all goods would be checked to ensure they complied with EU standards.
The European Commission President has suggested that if the UK leaves without finalising a withdrawal agreement, the EU will place conditions on the start of any negotiations about the future EU-UK relationship. These conditions will focus on the three issues which the EU identified as priorities for ensuring the UK’s orderly withdrawal:
- citizens’ rights
- financial settlement
- the Irish border.
On 3 April 2019, Jean-Claude Juncker told the European Parliament:
“No-deal” does not mean no commitments. And these three issues will not go away. They will be a strict condition to rebuild trust and to start talking on the way forward.”
If the EU sticks to this position, it would mean a future UK Government seeking to start negotiations on a future trade agreement with the EU would first need to sign up to conditions which are the same or very similar to those in the current Withdrawal Agreement.
If the UK leaves the EU without a Withdrawal Agreement, it is likely that both sides will look to begin negotiations to address the fall-out of a no-deal fairly quickly. As the UK will no longer be an EU member state, the legal basis set out in Article 50 will have fallen away, and so the EU will need to use another legal basis to agree a new relationship. In addition, the opportunity to negotiate any sort of new implementation period will be more challenging. Professor Tobias Lock has discussed whether the UK and the EU might seek to negotiate a new version of the Withdrawal Agreement after a no-deal Brexit and the implications of any such decision.
Agreeing and ratifying the future relationship
Assuming the outstanding issues from the Withdrawal Agreement can be resolved, negotiations would then move on to the future UK-EU relationship. The EU’s legal infrastructure will guide the process and present challenges in terms of how an agreement is reached and ratified.
Article 218 of the Treaty on the Functioning of the EU (TFEU) sets out the procedure for the EU’s negotiation of international agreements with third countries (the Institute for Government has produced a useful explainer) and it is highlighted in the Political Declaration as the process by which the future relationship negotiations should be conducted. In terms of getting agreement on the future relationship two factors are worth considering:
- how the final deal is agreed at EU level
- whether member state ratification is required.
Article 218(8) states that any agreement will be achieved by a qualified majority vote of the Council. This means that 72% of the 27-member states (representing at least 65% of the total population of the 27-member states) need to vote in favour of the agreement.
However, Article 218(8) adds that the Council must act unanimously when the “agreement covers a field for which unanimity is required for the adoption of a Union act, as well as for association agreements”. In addition, Article 207(4) provides that negotiations under Article 218 where they include the fields of trade in services, the commercial aspects of intellectual property and foreign direct investment should also require unanimous agreement in the Council.
Given the Political Declaration on the Future Relationship suggests that the overall institutional framework needed to govern the future relationship could take the form of an Association Agreement, it is likely that the future UK-EU relationship will require to be agreed unanimously by the Council. The requirement for unanimity presents the possibility that any one Member State Government could seek to block an agreement until it feels its own national interests are provided for in the final text.
From an EU perspective, if the final agreement on the future UK-EU relationship relates only to exclusive EU competences, then it will only require EU level ratification (in the Council following the consent of the European Parliament). However, it is likely that the comprehensiveness of a future UK-EU agreement would include member state competences meaning it will be a mixed agreement and need member state ratification. Both the EU-Canada trade agreement and EU-Ukraine Association Agreement were deemed to be mixed agreements.
Recent history (for example Wallonia’s initial refusal to ratify the EU-Canada trade agreement) has shown that where the EU’s agreements need individual member state (and where necessary sub-state) ratification this can be problematic and can delay the entry into force of any such agreement.
The challenges that would follow a no-deal Brexit serve to show that if the UK Government chooses to leave the EU on 31 October with no-deal, it doesn’t bring an end to the Brexit process. Negotiations from that point would take place with the UK as a third country and not benefiting from the continuity provided for by the implementation period negotiated as part of the Withdrawal Agreement.
Iain McIver, SPICe Research