Over the last week the United Kingdom government has understandably been occupied responding to the effects of the Coronavirus (COVID 19) global pandemic. The pandemic’s impact in the UK and the EU led to the second round of negotiations on the future relationship being postponed.
In announcing the postponement, the UK government statement indicated that “both sides remain committed to the negotiations” and that the UK government remains in regular contact with the European Commission to consider alternative ways to continue discussions. The statement also reiterated that the end of the transition period (31 December 2020) is enshrined in UK law. This additional line was a clear indication from the UK government that despite the current health emergency, the government’s policy remains that the deadline for agreeing the future relationship with the EU is the end of this year.
However, given the timescale for defeating Coronavirus (COVID 19) appears to be measured in months rather than weeks, it is likely future negotiating rounds may also be postponed. Given that most experts have already argued that agreeing the future relationship by the end of this year was going to be extremely challenging, the impact of Coronavirus (COVID 19) makes agreeing a deal seem even more challenging.
In addition, the UK Government’s ability to engage with the future relationship negotiations is also likely to be severely curtailed by the amount of time and effort required to address the impact of the global pandemic. For these reasons, an extension to the transition period seems a logical course of events. Peter Foster, the Daily Telegraph’s Europe Editor reported that EU officials now expect the UK government to seek a formal extension to the transition period to allow further time for the future relationship negotiations.
However, a decision whether or not to request an extension to the transition period is not as simple as it first seems. This blog sets out three key challenges for the UK government in its considerations over whether an extension to the transition period should be sought.
Is an extension actually needed?
The UK Government’s stated negotiating priorities indicate it is seeking a basic free trade agreement with the EU. Experts have argued that this would not be a huge difference (economically at least) to a no-deal situation. Therefore, it is possible that the UK government might choose to proceed on the basis that failing to reach a trade deal at the end of 2020 would not represent much more damage economically than the move from transition (in effect EU membership) to a basic free trade agreement.
However, Professor Anand Menon, Director of the UK in a Changing Europe has suggested that Coronavirus (COVID 19) has made the case for an extension much stronger, not least because the economic damage that will be done by the global pandemic will leave business unprepared to then address the changes brought about by the end of transition. As a result, it is possible the UK Government might choose to seek an extension, not so much to allow more time for negotiation but to delay the economic effect of the end of the transition period as UK businesses will be struggling following the global pandemic.
The Withdrawal Agreement provides for the Joint Committee to agree an extension of the transition period for up to one or two years but states that a decision on extending the period must be taken by 1 July 2020. As a result, there is limited time to decide whether an extension is required. If the UK Government decides an extension is required as a result of Coronavirus (COVID 19), a further question is how long to extend transition for. This is an important decision as an extension can only be requested once under the Withdrawal Agreement. The length of time UK government and EU attention is absorbed by Coronavirus (COVID 19) may impact on when future relationship negotiations can begin properly again and therefore when a deal might be reached.
Given a key element of any decision to request an extension will involve deciding how long to extend for, it is possible that the UK government will wish to wait until later in the year before triggering such a request in the hope there is clarity about the fight against Coronavirus (COVID 19). In addition, the UK government may feel an extension request may be politically more acceptable in the UK later in the year when the full effect of Coronavirus (COVID 19) is clearer.
Change to the law
A further complicating factor in any extension request is caused by the UK government’s decision to make any extension to transition unlawful. Clause 33 of the European Union (Withdrawal Agreement) Act provides that a UK Minister “may not agree in the Joint Committee to an extension of the implementation period”. Therefore, an extension to transition will first require a change to UK law which would involve primary legislation. Given the current uncertainty over UK parliamentary time as a result of Coronavirus (COVID 19), this presents another potential headache for a UK government which wishes to extend transition.
The impact of Coronavirus (COVID 19) appears to have increased the likelihood that the UK government will seek an extension to the transition period to allow more time for the EU and UK to negotiate the future relationship.
However, any decision to request an extension presents both political and logistical challenges for the UK government. The logistical challenges around length of extension and the need for a change in the law appear to point to a decision being made nearer to the end of June for requesting an extension. And the political challenges may be addressed by the economic impact and timeframe of Coronavirus (COVID 19) as the year unfolds.
Politically, it might be easier for the UK government if the EU choose to request an extension. This approach might make it more palatable for the UK government to accede to such a request as opposed to making the request itself. An EU request would not however remove the logistical challenges the UK government faces if it wishes to ensure an extension to transition.
Iain McIver, SPICe Research