Forget transition, extend the Article 50 period instead

Almost nine months after Theresa May triggered the two-year Article 50 process for negotiating Britain’s departure from the European Union (and eighteen months after the referendum), negotiations on ‘transition’ and the post-Brexit relationship between Britain and the EU are finally about to start.

As things stand Britain will leave the EU on 30 March, 2019. But what will we know about the final terms of Brexit at that point? Very little, because, following the agreement between the EU27 and Britain painfully arrived at in December last year, 2018 will be spent negotiating the Withdrawal Agreement.

This will include the arrangements for the ‘transition’ period after 29 March 2019 and an ‘overall understanding on a framework for the future relationship’ between Britain and the EU27.

The substance of that relationship, including trading relations, will only be addressed after 29 March 2019 – when Britain will be outside the EU. So even if the British Parliament gets a “meaningful vote” on the draft Withdrawal Agreement, they will not be voting on anything like a final Brexit deal.

Very little time is available to negotiate the Withdrawal Agreement, and we can expect considerable difficulties along the way. The EU27 set out in the Phase 1 agreement and their revised Negotiating Guidelines a clear statement of what the arrangements for the transition will be. Much of it is anathema to hard-line Brexiters in the May government.

Even translating the Phase 1 agreement into a legal form, which the EU27 insist is a priority, will be problematic as the terms of the agreement are interpreted very differently within the May cabinet.

We can expect these negotiations to go down to the wire in October 2018, the date Michel Barnier has said is the deadline for the draft agreement to give sufficient time for the member states, the Council, the European Parliament and the British Parliament to ratify the Agreement.

Given the time frame and complexity, an increasing number of commentators are arguing that ‘transition’ is a bad idea and that the focus should instead be on extending the Article 50 negotiating period. The time spent negotiating transition arrangements, which will only last for 20 months, would be better spent on the substance of the future relationship.

Secondly, transition will be the status quo without democratic representation; Britain will probably remain in the single market and customs union with the four freedoms, continue to pay into the EU budget, be subject to the European Court of Justice. It will have no vote, and will be a rule-taker rather than a rule-maker.

Third, arrangements for the transition will be complex and messy, something which so far has been underestimated. They will have to work out how Britain relates to the EU institutions while outside the EU. More importantly, Britain will simply fall out of around 750 trade and other agreements that the EU has with non-EU countries.

But ‘transition’ is a spectacularly bad idea mainly because it is a one-way street: it means that Britain leaves the EU on 30 March, 2019 well before the terms of the final Brexit settlement are known.

The British people and the political authorities will be denied the opportunity to reflect properly on the political and practical implications of the final Brexit arrangement and whether it is really in the interests of the country.

This is very important. Many British people, roughly half the population and most businesses, think that the Brexit decision was wrong. There is reason to believe that it will both damage the UK and weaken the EU, and encourage the emerging nationalist trends observed across several countries in the world.

It may lead to the break-up of the UK; Scotland and Northern Ireland voted to remain in the EU. Moreover, there are signs that the British people are beginning to have second thoughts on the matter.

This is not so much evidenced by people openly admitting they have changed their minds, but rather by the growing numbers who think that Brexit is going to be a bad deal, and would like a second referendum to be held, now that the full consequences of Brexit are becoming clearer.

Extending the Article 50 period would keep options open for a longer period as the final Brexit terms become clearer. It has the enormous advantage of giving the British people, and the British government, the time to reflect on the Brexit decision and, if so inclined, to abandon Brexit altogether.

It would require the unanimous approval of all the member states, and so far neither side seems inclined to propose it. True, there are practical and political problems in extending the negotiation period, the implications for the European Parliament elections in June 2019 and the negotiations on the EU budget 2021-27. These matters, however, are soluble and much less problematic than those of ‘transition’.

It seems unlikely that the current UK government would propose an extension to Article 50 instead of ‘transition’. But, if the EU27 were, at an appropriate moment, to make such a proposal there is a good chance that the British Parliament would insist on the UK government accepting it, if only to avoid all the problems discussed above.

But this requires unanimity on the part of all the member states. So as well as blogging and tweeting in a UK bubble, we must turn our attention to persuading the Europeans that an extension of Article 50 is also in their interests.

By John Speed and Stephen McCarthy, former officials of respectively the European Court of Auditors and the European Investment Bank.

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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  • David Cutts

    In order to make this work you have to argue for an extension of the Art 50 process until the end of the next EU budget cycle, which puts us into 2029 or something like that. It would help, of course, to work up to the end of the current budget, but it could not be satisfactory beyond that. I have long thought that extending Art 50 indefinitely is both possible within the terms of Art 50 and a viable, if difficult, way of holding off the disaster whilst taking stock.

  • Tony Murray

    This is what the Secretary of State David Davis appears to be missing when he complains about the EU notifying businesses about the UK becoming a third party at the end of the Article 50 period. He is looking for them to remind everyone about the transition, but forgetting or not understanding that during the transition period the UK will already be a third country. Therefore the EU is merely warning businesses to be aware of this as it may have legal implications, no matter how generous the transition terms are. Stopping Article 50 is the only intelligent way to prevent change whilst all the details of the future relationship are worked out. Anything else carries a certain amount of danger and Mr Davis is at best disingenuous when he indicates that nothing will have changed post March 29th, 2019.

  • Denzil

    To add to your reasons, from a UK or EU viewpoint, for your
    proposal for a pre-Brexit extension:

    1. The reason for the short two-year
    time limit in the Treaty of Lisbon perhaps received some discussion. Lord Kerr
    of Kinlochard in Politico online 28th March 2017 “We
    needed a time limit in order to reassure the departing state that it could
    really depart — it would get out, it couldn’t be enmeshed forever in endless
    negotiation, it could escape.” Since the provision was designed to reassure
    the seceding state, it should not be applied strictly against it.

    2. There is near-universal recognition in published opinions, of the need for a longer period of
    transition. Among many pressing factors requiring an extension are (a)
    the time needed to set up new customs arrangements and new “rules of origin”
    and related procedures and (b) the time to work out new VAT arrangements for
    importers.

    3. The idea behind this paper has authority
    from a group of Cambridge legal academics in a paper dated October 2017
    entitled “Implementing Transition: How would it work?”, in which they declare that: “the most
    straightforward legal vehicle for a transitional period (in the sense of
    deferring exit from the EU so as to provide more time for agreeing the future
    relationship between the EU and the UK) would be extension of the Article 50
    negotiation period, albeit that adopting such a course would be fraught with
    political difficulty.”

    4. The extension period will allow a
    wider scope for the post-withdrawal arrangements to be negotiated. While there
    is no limit to what the EU27 may agree to apply during the extension period,
    there is an uncertain constraint on what they may agree to apply during a
    transition period after withdrawal. As Professor Kenneth Armstrong wrote in written
    evidence to Parliament in December 2017 “The more substantive and
    forward-looking that an Article 50 transitional agreement becomes, the greater
    the legal risk that it could be considered to be outside the limits of the
    Union’s competence under Article 50 TEU”. If the provisions of the
    transitional agreement become effectively a trade agreement, it falls to be negotiated
    under Article 217 TFEU and it requires unanimity.

    5. During the extension period
    Britain could continue to vote, or at least to be consulted, on EU law-making
    and thus to exercise influence over a longer period than it would on the
    alternative of a period of transition or implementation. The UK could
    demonstrate how any post-Brexit consultation over law-making (as is accorded to
    Norway and must be essential if UK is to stay in the single market for any length
    of time) might work. The extension period could help parties habituate
    to the “deep and special” post-Brexit relationship desired by UK government.

    6. An extension period will give
    time to Britons not only to reflect their choice but also to observe the future
    direction taken by the EU exemplified, for instance, in talk of a European
    Labour Office and other instruments of closer integration or euro zone dominance.

    Objections to a pre-Brexit extension:

    1. Whereas delay will, as it is
    reported in the FT on 12th January 2018, exasperate Brussels and the member
    states’ political circles, once Brexit is certain and settled, efforts to arrange
    trade and to work together with the EU27 could be undertaken in a more positive
    spirit.

    2. During the extension period the UK
    will likely have to pay into the EU budget more than it might have to pay
    during a transition period, since it would carry its full burden of the EU
    budget, perhaps even unalleviated by the UK rebate.

  • Denzil

    To add to your reasons, from a UK or EU viewpoint, for your
    proposal for a pre-Brexit extension:

    1. The reason for the short two-year
    time limit in the Treaty of Lisbon perhaps received some discussion. Lord Kerr
    of Kinlochard in Politico online 28th March 2017 “We
    needed a time limit in order to reassure the departing state that it could
    really depart — it would get out, it couldn’t be enmeshed forever in endless
    negotiation, it could escape.” Since the provision was designed to reassure
    the seceding state, it should not be applied strictly against it.

    2. There is near-universal
    recognition in published opinions, of the need for a longer period of
    transition. Among many pressing factors requiring an extension are (a)
    the time needed to set up new customs arrangements and new “rules of origin”
    and related procedures and (b) the time to work out new VAT arrangements for
    importers.

    3. The idea behind this paper has
    authority from a group of Cambridge legal academics in October 2017: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3052328 “the most straightforward legal
    vehicle for a transitional period (in the sense of deferring exit from the EU
    so as to provide more time for agreeing the future relationship between the EU
    and the UK) would be extension of the Article 50 negotiation period, albeit
    that adopting such a course would be fraught with political difficulty.”

    4. The extension period will allow
    more flexible arrangements to be negotiated. While there is no limit to what
    the EU27 may agree to apply during the extension period, there will be a constraint
    on what they may agree to apply during a transition period after withdrawal. As
    Professor Kenneth Armstrong wrote in written evidence to Parliament in December 2017 ”
    The more substantive and forward-looking that an Article 50 transitional
    agreement becomes, the greater the legal risk that it could be considered to be
    outside the limits of the Union’s competence under Article 50 TEU”. If the
    provisions of the transitional agreement become effectively a trade agreement,
    it falls to be negotiated under Article 217 TFEU and it requires unanimity.

    5. During the extension period
    Britain could continue to vote, or at least be consulted on EU law-making and
    thus exercise influence for longer time than it would on the alternative of a
    period of transition or implementation. The UK could demonstrate how any
    post-Brexit consultation over law-making (as is accorded to Norway and must be
    essential if UK is to stay in the single market for any length of time) might
    work. The extension period could help parties habituate to the “deep and
    special” post-Brexit relationship desired by UK government.

    6. An extension period will give
    time to Britons not only to reflect their choice but also to observe the future
    direction taken by the EU exemplified, for instance, for instance, in talk of a
    European Labour Office and other instruments of closer integration.

    Objections to a pre-Brexit extension:

    1.
    Whereas
    delay will, as it is reported in the FT on 2th January 2018, exasperate
    Brussels and the member states’ political circles, once Brexit is certain and
    settled, efforts to trade and work together with the EU27 could be undertaken
    in a more positive spirit and framework.

    During the extension period the UK will likely have to pay into the EU
    budget more than it might pay during a transition period, since it would carry
    its full burden of the EU budget, even perhaps shorn of the UK rebate.

  • Denzil

    To add to your reasons, from a UK or EU viewpoint, for your
    proposal for a pre-Brexit extension:

    1. The reason for the short two-year
    time limit in the Treaty of Lisbon perhaps received some discussion. Lord Kerr
    of Kinlochard in Politico online 28th March 2017 “We
    needed a time limit in order to reassure the departing state that it could
    really depart — it would get out, it couldn’t be enmeshed forever in endless
    negotiation, it could escape.” Since the provision was designed to reassure
    the seceding state, it should not be applied strictly against it.

    2. There is near-universal
    recognition in published opinions, of the need for a longer period of
    transition. Among many pressing factors requiring an extension are (a)
    the time needed to set up new customs arrangements and new “rules of origin”
    and related procedures and (b) the time to work out new VAT arrangements for
    importers.

    3. The idea behind this paper has
    authority from a group of Cambridge legal academics in October 2017: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3052328 “the most straightforward legal
    vehicle for a transitional period (in the sense of deferring exit from the EU
    so as to provide more time for agreeing the future relationship between the EU
    and the UK) would be extension of the Article 50 negotiation period, albeit
    that adopting such a course would be fraught with political difficulty.”

    4. The extension period will allow
    more flexible arrangements to be negotiated. While there is no limit to what
    the EU27 may agree to apply during the extension period, there will be a constraint
    on what they may agree to apply during a transition period after withdrawal. As
    Professor Kenneth Armstrong wrote in written evidence to Parliament in December 2017 ”
    The more substantive and forward-looking that an Article 50 transitional
    agreement becomes, the greater the legal risk that it could be considered to be
    outside the limits of the Union’s competence under Article 50 TEU”. If the
    provisions of the transitional agreement become effectively a trade agreement,
    it falls to be negotiated under Article 217 TFEU and it requires unanimity.

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