Key Terms of the Withdrawal Agreement and What Happens Next
This article addresses some of the key issues concerning the draft Withdrawal Agreement from the key principles contained within it to whether it is even likely to come into effect.
Given the hurdles that the Withdrawal Agreement will need to overcome simply in order to come into force, page 3 of this article addresses some of those issues while pages 1 and 2 address some of the legal principles contained with the draft agreement.
The range of issues and volume of specific legislation affected means that it is not possible to address each and every element in detail. In the event that you require advice on a particular consequence of the Withdrawal Agreement then please get in touch with your usual Ashfords contact who will be happy to assist you.
Key Terms of the Withdrawal Agreement
What is the Withdrawal Agreement?
It is the culmination of negotiations between the EU and the UK over the last two years and sets out the terms of ongoing relations between the EU and the UK during a transition period from 29 March 2019 (the date the UK leaves the EU) and the end of 2020. During this transitionary period the EU and UK will negotiate and agree the 'future trade agreement' (FTA) which will govern the relationship once the transitionary period is over. The UK and EU have published an “Outline Political Declaration” (currently just 26 pages long) that sets out the framework and guiding principles that will determine the nature of the FTA.
The Withdrawal Agreement may be extended for an unspecified one-off period by agreement. Any such extension must be agreed before 1 July 2020.
In broad terms little will change during the transitionary period - existing EU law will continue to apply to the UK as if it were a member state and the UK will continue to participate in the EU Customs Union and the Single Market. The key difference will be that the UK will no longer take part in the decision-making bodies of the EU. The direct effect and primacy of EU law will be preserved during the transition period.
Northern Ireland 'backstop' and prohibition on a UK unilateral exit of the Withdrawal Agreement
If, by the end of the transition period, the UK and EU are unable to agree a FTA that avoids a hard border in Northern Ireland then the UK will be obliged to request an extension to the transition period or enter into an ongoing customs union with the EU. Such an arrangement would prevent the UK from negotiating its own free trade deals. It is this position, combined with the fact that the UK will not be able to unilaterally pull out of the Withdrawal Agreement, that is cited as one of the primary stumbling blocks to the Withdrawal Agreement being passed by the House of Commons.
Goods placed on the market in the EU or UK
Goods placed on the market in the EU or UK before the end of the transition period may continue to circulate freely in between these two markets until they reach their end users, even if they reach the end user after the end of the transition period. It should be noted that live animals and animal products are an exception to this principle.
Cross border access for financial services will continue during the transition period under the Withdrawal Agreement.
Common Agricultural Policy (CAP)
The UK will continue to participate in the CAP during the transition period but this will cease at the end of 2020 irrespective of whether the Withdrawal Agreement is extended beyond that date.
Ongoing interpretation of case law of the Court of Justice of the European Union (CJEU)
The Withdrawal Agreement requires that the UK maintains consistent interpretation of the case law of the Court of Justice of the European Union for the duration of the transition period. UK courts will also be required to "pay due regard" to CJEU case law following the end of the transition period.
Working Time Directive
The UK will continue to be bound by the working time directive and other labour legislation "with the aim of ensuring the proper functioning of the single customs territory".
Safeguarding of citizens' rights
EU citizens in the UK and UK citizens in the EU will be entitled to "stay and continue their current activities".
Freedom of movement continues
Freedom of movement will continue during the transition period, entitling citizens to continue to move to live and work throughout the UK and the EU. Citizens that take up residence before the end of the transition will be able to remain beyond transition and those that remain for 5 years will be allowed to remain permanently.
Transferable IP rights confirmed
The Withdrawal Agreement confirms that EU trademarks and designs will continue to be valid in the UK.
The UK will continue to apply existing data rules during the transition period and is likely to look to maintain data protection safeguards which are essentially equivalent to those in the EU following the conclusion of the transition period.
Click here to view our Brexit infrographic.
What happens next?
Procedural steps for the Withdrawal Agreement to come into effect
The Withdrawal Agreement was ratified at a summit of EU leaders on 25 November 2018.
The next step in the process is for the Withdrawal Agreement to pass a vote in the House of Commons, expected to be in early December 2018. If the Prime Minister loses this vote she will have 21 days to put forward a revised plan.
The final stage will be for the Withdrawal Agreement to be passed by the European Parliament and the EU Council.
What might happen if the House of Commons does not pass the Withdrawal Agreement in December 2018?
Given the level of opposition to the Withdrawal Agreement expressed by Conservative and DUP MPs there is a real possibility that the House of Commons will not approve the draft Withdrawal Agreement. Labour MPs are likely, for other reasons, to oppose the Withdrawal Agreement as well.
It has been suggested that if the Prime Minister could not pass the Withdrawal Agreement then she could look to renegotiate its terms and/or ask for an extension of time to the 29 March 2019 deadline to allow more time to negotiate a revised agreement. On 19 November 2018, the former President of the European Council, Herman Van Rompuy, told the BBC that there “was almost no room” for re-opening discussions on the terms of the Withdrawal Agreement.
It is possible that Conservative MPs could trigger a vote of no confidence in the Prime Minister. In order to do so they will require 48 letters supporting that position. Once secured a vote could be held as quickly as within 48 hours. If Mrs May lost, there would be a leadership election to determine the new leader of the Conservatives and therefore Prime Minister. If Mrs May won any such vote, she could not be challenged again for a further 12 months.
It has also been suggested that there may be a General Election - whether called by Mrs May if she cannot pass the Withdrawal Agreement, or if she is removed from power. Two thirds of MPs would need to vote in favour of such an election.
There is also lobbying taking place in favour of a second referendum – the so-called “People’s Vote”. It is not clear what such a referendum would do – although its supporters claim that it would give the public a decision on whether to accept the final terms of withdrawal or opt to remain in the EU. It is not clear, however, what would happen if such a referendum showed a majority wanted to remain in the EU – for example would the EU agree to the UK being able to “re-join” on the same terms as existed prior to the UK triggering its departure from the EU on 29 March 2017.
What happens if the Withdrawal Agreement does not come into effect?
In the absence of either: a replacement Withdrawal Agreement having been agreed and passed; or an extension to the 29 March 2019 deadline under Article 50 having been agreed, then the UK could be leaving the EU under a 'no deal' scenario on 29 March 2019. The consequences of which are beyond the scope of this article. In the event that you require advice on this scenario then please get in touch with your usual Ashfords contact who will be happy to assist you.