EU Council issues Draft Negotiating Guidelines

Posted in UK and EU legal framework

Following the delivery on March 29 by the UK to the European Council of notice of its intention to withdraw from the EU, the EU Council has published its draft guidelines  for the following.

As expected, the Council has resisted the UK’s demand that the withdrawal process be negotiated simultaneously with a new trade treaty between the UK and the EU and insists on a phased approach, consisting of:

  1. A first phase in which the parties (i) settle the disentanglement of the UK from the EU, particularly the financial consequences of Brexit, and (ii) provide as much clarity and legal certainty as possible to citizens, businesses, stakeholders and international partners living in, or doing business with, the EU and the UK;
  2. A second phase in which an “overall understanding on the framework for the future relationship” can be identified. This phase can begin only when the European Council determines that sufficient progress has been made on the first phase. The Council acknowledges that there might be transitional arrangements which are “clearly defined, limited in time, and subject to effective enforcement mechanisms”; and
  3. A third phase in which a free trade agreement is concluded between the EU and the UK. Such an agreement may only be concluded following Brexit.

One of the red line issues highlighted by the UK has been the continuing role of the CJEU in the departure process. The Guidelines do not expressly propose a role for the CJEU in the three phase process. They provide that the withdrawal agreement should “should include appropriate dispute settlement mechanisms…..bearing in mind the Union's interest to effectively protect its autonomy and its legal order, including the role of the Court of Justice of the European Union”. Any transitional arrangements must be subject to “effective enforcement mechanisms”. It is only if there is a time limited prolongation of the Union acquis (i.e. the whole body of EU law) that existing Union “regulatory and enforcement procedures” are required to apply.

The Guidelines also provide that UK will no longer be covered by agreements concluded by the Union or by Member States acting on its behalf or by both acting jointly. There are several hundred such treaties, mostly trade agreements with third party jurisdictions, and, if the Guidelines are correct, the UK will cease to be party to such agreements on Brexit if it does not make appropriate arrangements to accede to them immediately thereafter. Any such lapse may cause diplomatic, legal and commercial difficulties for the UK. By way of example, the UK and the EU have both ratified the Cape Town Convention on International Interests in Mobile Equipment, which is therefore a mixed agreement. It has been incorporated into UK law by secondary legislation using delegated powers under the European Communities Act. Following Brexit, unless appropriate action is taken, that secondary legislation (which will need to be grandfathered in the Great Repeal Bill) will be purporting to provide for the application within the UK of a treaty to which it is no longer a contracting state.

The Guidelines also require arrangements to be made in respect of the three territories under UK jurisdiction which have land borders with the rest of the EU – Northern Ireland and the Sovereign Base Areas in Cyprus and Gibraltar – and acknowledges that such arrangements may need to be imaginative. There has been substantial press and political reaction in the UK to the statement that no agreement concluded between the EU and the UK after the UK has left the EU may apply to Gibraltar without Spain’s agreement: it should be remembered that Spain (and every other EU Member State) will be required to agree to all of the terms of any agreement beyond that contemplated within Article 50 and that therefore that statement is not as immediately provocative as some have claimed.

Brexit: planning for the future as negotiations continue

We have created this Brexit blog to provide up to date analysis and legal commentary as the new Brexit landscape evolves, addressing key questions and topics of interest to our clients across the different industry sectors in which they operate.

For Brexit Q&As tailored to your industry and more insights visit our Beyond Brexit webpages.

Blog Network