What are the legal challenges of transition?

The Treaties, on which the European Union is based, describe the process for leaving the Union rather sparingly. When negotiating the treaties, the Member States did not spend all that much time thinking about how a State could leave the Union.

Rather reasonably, they were, at the time, preoccupied with the construction, not the deconstruction of the Union.

One of the major challenges the process for leaving the EU poses is that it envisages only the negotiation of a Withdrawal Agreement and a framework for the future relationship rather than the actual future relationship itself before the withdrawing Member State actually leaves.

It also imposes a strict two-year time limit (yes, extendable, but only by unanimous decision of the UK and the EU27) for the negotiation of the Withdrawal Agreement, after which the treaties cease to apply to the leaving Member State even if no agreement is reached.

This creates a problem: on Brexit day, the treaties cease to apply to the UK, but there is no – in fact cannot be any – agreement on the future relationship that will take their place.

While the UK can provide for some continuity concerning its internal laws, all the rules that govern the UK’s interaction with its neighbours and a good many of those that determine its relationship with the world would at times be replaced by outdated treaties, at times by nothing at all.

The solution that clever EU and UK lawyers came up with is “transition”. The idea is to put provisions into the Withdrawal Agreement that say, roughly, that EU law will continue to apply to the UK, but the UK loses its institutional representation in the EU.

The transition is supposed to bridge the time between Brexit day and the entry into force of the future relationship.

While there is still no agreement on the whole Withdrawal Agreement, the EU and the UK have now consented to the provisions on transition. They provide that the transition period will begin on Brexit day and expire on 31 December 2020.

The parties could not agree on the name of the period, however. Article 121 of the current draft of the Withdrawal Agreement accordingly refers to it as “a transition or implementation period”.

As the transition forms part of the Withdrawal Agreement, it will only enter into force if the parties conclude that agreement.

Amongst the many difficult legal questions that the transition raises, three seem particularly pertinent: is a transition period legal? Is the period long enough and can it be extended? What is the effect of transition on agreements with third countries?

The legality of transition

Two objections have been raised with respect to the legality of the transition period. The first is that the EU lacks the competence to agree on a transition.

Whatever you think of the EU’s competences – whether you think it has too many or too few – the EU can only act within competences conferred on it in the treaties.

If you skim the treaties, however, you will find no  provision explicitly granting the EU a competence to sign what amounts to a carbon copy of the EU treaties without institutional representation, especially one that in this case would seem to imply an extensive, mixed agreement.

The competence the EU wants to use is Article 50 of the Treaty on the Functioning of the European Union (TFEU). That provision grants the EU the power to negotiate a Withdrawal Agreement with a withdrawing Member State.

There are good arguments why such an agreement may contain a transition period; after all, the scheme imposed by the treaty itself separates withdrawal and future relationship and creates the need for a transition.

But the competence is limited: it allows a stand-still transition, but not an agreement that under the name of “transition” actually regulates the future relationship.

Relying on Article 50 has yet another consequence: the EU can only agree on a transition in an agreement with a withdrawing member. After Brexit day, the UK is no longer a withdrawing member and the EU cannot sign a Withdrawal Agreement with it that is based on Article 50.

The second objection raised with regard to the transition period relates to the lack of institutional representation for the UK. The treaties provide that the Union is founded on the basis of the values of representative democracy (Article 10(5) of theTFEU) and that it shall uphold and promote its values also in its relations with the wider world (Article 3(5) of the TFEU).

As Piet Eeckhout has noted, extending EU law obligations to the UK without representation thus constitutes a problem. One might justify a strictly time-limited transition on the basis that it is required to avert severe problems.

Most legal acts passed by the EU during that time would still have benefited from UK input, anyway. However, the longer the transition is, the more this objection begins to bite.

The length of transition

The length of the transition raises yet more problems. If its purpose is to bridge the gap between Brexit day and the entry into force of the future relationship between the UK and the EU, the period as it currently stands is likely too short.

The EU and the UK both have expressed ambitious plans for their future relationship and experience shows that such ambitious agreements take time to negotiate.

The obvious solution – simply agreeing on a new transition after this one expires – is not available. After the expiry of the transition period the EU can no longer use the legal basis of Article 50 as by then the UK will have left the EU.

There is a way out, however: the parties should include a provision allowing the extension of the transition period by a joint decision of the Commission and the UK government in the Withdrawal Agreement.

This approach is not without risk, as a longer transition period poses more offense to the democratic principles cited above. However, it is preferable to risking a cliff edge without a way out. So far, the UK has not asked for a possibility to extend transition.

Agreements with third countries

Finally, the question arises whether the transition can also allow the UK to continue to profit from the EU Free Trade Agreements from which it currently benefits.

The Withdrawal Agreement does what it can to achieve this result: The UK will continue to be bound by EU agreements and the Union will notify the other parties that the UK “is to be treated as a Member State for the purposes of these agreements”.

This, however, is a legal fiction. After Brexit and even during the transition period the UK is not an EU Member State. Whether third states will accept this fiction and act accordingly or not is up to them – and currently uncertain.

By Dr Holger Hestermeyer, Shell reader in International Dispute Resolution at King’s College London and a senior research fellow at the Transnational Law Institute. This piece originally appeared in our report ‘The challenges of transition‘.

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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