What is happening with the Brexit transition period?

What is happening with the Brexit transition period?

After exiting the EU on 31 January 2020, the UK entered into a time-limited transition or implementation period, during which the transitional arrangements provided in Part 4 of the Withdrawal Agreement apply.

The transition period was intended as a standstill period during which the UK and EU could finalise the implementation of the Withdrawal Agreement and negotiate and implement the terms of their future relationship. The transition period is due to end on 31 December 2020, but Article 132 of the Withdrawal Agreement made provision for the transition period to be extended by agreement for up to one or two years on a one-off basis. Despite the tight timescales, the UK pledged not to request or agree any extension early on, and has stuck to this pledge despite calls to reconsider, particularly in light of the impact of coronavirus (COVID-19). Article 132 of the Withdrawal Agreement specified that any extension to the transition period must be agreed in the Joint Committee before 1 July 2020. With this deadline passed, many consider the question of an extension to be closed, but there is much left to resolve in order to prepare fully for the end of transition and the new regime taking effect on 1 January 2021.

 

The UK government has long insisted that it would not seek an extension to the post-Brexit transition period beyond 31 December 2020. This position was written into law, via section 15A of the European Union (Withdrawal) Act 2018 (which prohibited any extension being agreed in the Joint Committee) and confirmed at the second meeting of the Withdrawal Agreement Joint Committee on 12 June 2020, see: LNB News 12/06/2020 77. As this was the last scheduled Joint Committee meeting before the extension deadline, the UK considered the matter to be closed at that point. Though EU representatives remained open to the option of extending, the UK's decision was noted by the EU. While the passing of the deadline was expected, it is still a significant development in the process, particularly given the lack of progress in UK-EU negotiations in the first half of the year and the amount of work left to do in order to prepare for the end of the transition period on 31 December 2020.

 

The mid-year deadline for any extension to the transitional arrangements was set in the expectation that significant progress on key transition workstreams (including Withdrawal Agreement implementation and negotiation of the future relationship) would need to be made by this point in order for the arrangements to be finalised, ratified and implemented by the end of the original transition period. UK and EU leaders convened on 15 June 2020 to take stock of progress 'with the aim of agreeing actions to move forward in negotiations on the future relationship'. In that meeting, Prime Minister Boris Johnson, European Commission President Ursula von der Leyen, European Council President Charles Michel, and European Parliament President David Sassoli agreed that new momentum was required and gave support to plans to 'intensify' talks on the future relationship 'to create the most conducive conditions for concluding and ratifying a deal before the end of 2020'. For further reading, see: LNB News 15/06/2020 82. These talks opened on 29 June 2020 with restricted sessions aiming to make progress on some of the more challenging areas.

 

The challenges ahead are not limited to workstreams and negotiations ongoing between the UK and the EU. The government is also working to implement its own international trade policy, negotiating with new and existing international partners on new arrangements to come into effect after transition ends. The government also has work to do in order to establish a clear and aligned regulatory regime governing the UK single market, once powers and competences previously exercised at EU level are fully repatriated. The question of extending transition has fuelled existing tensions between the government and the devolved administrations, with the government rejecting calls from UK devolved administrations to reconsider its position. While acknowledging differences of policy and approach, particularly on the question of the transition period, the government made it clear that the matter was reserved to Westminster.

 

Going forward, the government position is that it is willing to engage with the Scottish, Welsh and Northern Ireland administrations on matters relating to the ongoing negotiations with the EU and beyond, but ultimately these are international negotiations conducted on behalf of the whole of the UK. When it comes to domestic implementation of these arrangements, the UK is looking to ensure an aligned approach within the UK single market after the transition period ends, even in key areas of devolved competence. Effective engagement and co-operation is important to achieving these objectives, though if necessary the government does have powers to introduce legislation temporarily freezing the devolved competences in order to establish UK-wide frameworks required in connection with Brexit. Genuine and productive engagement is needed in order for the government to avoid using these controversial powers.

 

The UK government has consistently held the position that fixed deadlines focus the mind and add certainty, but in practice we have seen deadlines extended before. Indeed, the 'fixed' deadline for the UK's withdrawal from the EU was amended several times during the withdrawal period under Article 50 TEU (resulting in the shortening of the transition period). However, in those cases, the legal basis for extending was well established under EU law, and there was a UK parliamentary majority in favour of extending, which facilitated the necessary changes in domestic law. The current situation is very different with the UK now a third country and the government holding a strong parliamentary majority against further extensions. With the specific mechanism under Article 132 of the Withdrawal Agreement exhausted, and an extension prohibited in domestic law in any event, the legal basis and procedures for agreeing any extension or phasing out of the transitional arrangements under the Withdrawal Agreement is uncertain and open to debate. In previous commentary, Professor Adam Cygan noted that even if there was a change of policy on the UK side, a political decision to agree an extension beyond the deadline would be problematic legally:

 

'An extension in the form of a "fudge" may be possible but there are many issues around this. The deadline under Article 132 is absolute and so any extension agreement would need to come before this date, in order to comply with the Withdrawal Agreement. An extension agreed after this date for the transition to go beyond 31 December 2020 would be a new agreement (ie made outside the scope of the Withdrawal Agreement) between the UK and EU. This could be problematic legally for the EU as it would constitute a new trade agreement with the UK which is a mixed agreement and therefore raises ratification issues. Though some sort of political "fudge" extension may be possible in the European Council, the terms of such an extension would have to be very specific including setting out the objectives and end point of any such extension.'

 

Time is short to finalise the implementation of the Withdrawal Agreement and to agree a future relationship deal and associated arrangements that can be ratified and implemented by the end of the year. While negotiators have committed to continuing the talks into the summer, they will only continue as long as they are constructive. Meanwhile both the UK and EU have already started to return to preparations and contingency planning. Practitioners preparing for the end of the transitional arrangements will expect to see the introduction of further domestic legislation and guidance, which has been relatively light touch since exit day. Previous legislation, guidance and materials addressing the risks and implications of a no-deal scenario at the end of the withdrawal period may be relevant at the end of the implementation period. However, this material should be kept under review as it may be updated and/or replaced. The European Commission and the UK government have already started to update this guidance in some areas. As revised Brexit notices and guidance documents are being issued it is a good idea to bookmark the relevant pages and check for updates, in particular:

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About the author:
Holly joined LexisNexis in July 2014 and works primarily on the PSL Public Law module. Holly read law at university and qualified as a solicitor in private practice. Before starting her legal career, she gained experience working in local government and spent a year studying politics. Prior to joining LexisNexis, Holly worked in the Global Technology and Sourcing team at BP, supporting a variety of global procurement and compliance projects. Upon joining LexisPSL, she worked in the Commercial and LexisAsk teams before assisting with the development and launch of the PSL Public Law module. Holly looks after a number of core public law subject areas, including Brexit.