Professor Steve Peers, University of Essex*

*Thanks to Georgina Wright, of the Institute for Government, for a ’track changes’ version of the negotiation mandate. The usual disclaimer applies.

This week, the UK-EU future relationship negotiation process progressed. The EU Council approved the negotiation mandate, differing from the initial proposal. This post provides an updated analysis, comparing the final mandate to the political declaration, highlighting differences between the EU and UK’s positions that are expected to make negotiations difficult.

Legal Framework

Adopting the negotiation mandate is the latest procedural step for the EU. Article 218 TFEU outlines the process for negotiating international treaties, starting with the Commission’s proposal, followed by the Council’s decision, which was unanimous in this instance.

Formal negotiations with the UK, with the Commission as the negotiator acting on the mandate from Member States, are set to begin next week. A special committee of Member States’ officials will oversee the Commission’s progress, as required by Article 218 TFEU.

While the European Parliament has no formal role at this stage, it can pass non-binding resolutions and holds veto power over the final agreement. National parliaments’ ratification requirements remain undetermined, depending on the final agreement’s content.

Timeline

The transition period, during which the UK effectively remains an EU member, expires at year-end. Unless new treaties are in place, most UK-EU relations will cease, although certain withdrawal agreement provisions, such as those on citizens’ rights and Northern Ireland, will remain.

Despite the possibility of extending the transition period by one or two years (with a June 30th deadline for agreement), the UK opposes any extension. The EU aims to conclude negotiations within the given timeframe, acknowledging the possibility of an extension. While aiming for a new fisheries treaty by July 2020, the mandate doesn’t make it a prerequisite for further talks and suggests parallel negotiations.

Relationship Structure

The Commission initially proposed a ‘single package’ encompassing general provisions, economic arrangements, and security arrangements, potentially suggesting a single treaty. While the Council mandate doesn’t explicitly state this, it grants the Commission authority to negotiate an association agreement based on Article 217 TFEU. However, the final form may vary, potentially involving multiple treaties or a narrower scope, impacting the legal basis.

An association agreement requires Council unanimity, European Parliament consent, and potentially national parliament ratification. Provisional implementation is possible.

Geographic Scope

Gibraltar is excluded from the negotiation mandate. This longstanding EU stance, often misconstrued as a territorial claim, dates back to 2018. Any agreement concerning Gibraltar would be separate, requiring Spain’s approval, as per the European Council’s view. This doesn’t preclude separate EU-UK agreements regarding Gibraltar, subject to Spain’s prior consent and respecting EU member states’ territorial integrity.

Each Member State holds veto power over the future relationship treaty if it remains an association agreement.

Data Protection

The negotiation mandate mentions an adequacy decision on UK data protection law, a unilateral EU decision under the GDPR. The political declaration aimed for such decisions by the end of 2020. Data protection is also mentioned in the mandate’s security section. Unlike the political declaration, the mandate doesn’t explicitly mention cooperation between regulators.

EU Programs

The mandate addresses UK participation in EU programs like research funding and Erasmus, mirroring the political declaration. Northern Ireland peace funding is also mentioned. Notably absent is the explicit mention of associating with European research infrastructure, as found in the political declaration. The EU hasn’t finalized terms for non-EU countries’ access to future programs.

The mandate doesn’t explicitly mention negotiating UK links to the European Investment Bank, despite the political declaration mentioning the UK’s intent to pursue such links.

Economic Partnership

The core of the UK-EU economic partnership would be a free trade agreement (FTA) encompassing both goods and services. Contrary to inaccurate claims, an FTA in services has always been the intention of both sides, although it falls short of single market participation. Unlike the political declaration, the mandate explicitly links the economic partnership to fisheries and a level playing field.

Free Trade in Goods

The mandate proposes zero tariffs and quotas. However, unlike EU membership benefits, the mandate introduces rules of origin, adding complexity to UK-EU trade. This stems from the UK’s decision against a customs union, aligning with the political declaration, which added a reference to rules of origin in its revised version.

Using the EU’s standard preferential rules of origin, likely referring to the pan-European rules (PEM Convention) used across Europe, the Middle East, and North Africa, is a new element compared to the political declaration. This simplifies and expedites negotiations, as rules of origin often take considerable time.

The mandate also introduces potential trade barriers by mentioning anti-dumping duties, anti-subsidy duties, and economic safeguards based on WTO rules, which are common in FTAs. This isn’t a “punishment” but a consequence of the UK’s decision to leave the single market. However, requiring the UK to adhere to EU State aids law while potentially subjecting it to anti-subsidy measures seems inconsistent compared to EEA countries.

The mandate further includes customs facilitation and agreements on non-tariff barriers like technical and sanitary rules, exceeding WTO provisions. It omits any mention of UK links with EU medical, chemical, and aviation safety agencies, despite the political declaration’s reference to this possibility.

Lastly, the Council included a paragraph on cooperation regarding the return of stolen cultural property. This is based on current EU law, which only covers property stolen after 1993, not a demand for the return of specific items.

Free Trade in Services

The mandate aims for an FTA in services exceeding WTO commitments but excludes audio-visual services, a predictable move not explicitly mentioned in the political declaration. It echoes the political declaration by including certain service sectors: professional and business services, telecommunications, courier and postal services, distribution, environmental services, financial services, and transport.

This includes the movement of service providers, as required by WTO rules on services FTAs, but doesn’t equal free movement of people. While a general reference to investment agreements exists, details are limited, as in the political declaration. The mandate also includes recognizing professional qualifications. Financial services equivalence decisions will be unilateral.

Intellectual Property

FTAs commonly include provisions on intellectual property beyond WTO and other international rules. The EU seeks protection for future “geographical indications” (GIs) which dictate product origin (e.g., “feta cheese” from Greece). Current GIs are protected under the withdrawal agreement.

Maintaining existing protection in other IP areas governed by extensive EU legislation is also mentioned. Absent is any reference to the UK hosting part of the Unified Patent Court or the unified EU patent plan. The political declaration’s specific references to databases, resale rights, and exhaustion of rights are not explicitly present. Applying EU standards might be contentious regarding the recent EU copyright law, which the UK now intends not to apply despite supporting it during its adoption.

Public Procurement

The mandate proposes opening public procurement markets beyond the WTO procurement agreement, aligning with the political declaration. This clashes with the UK’s conflicting “Buy British” and “Global Britain” slogans. As the UK adopts the WTO procurement agreement and other countries might seek procurement obligations in FTAs, “Buy British” may be challenging. However, reciprocal market opening allows British companies to export goods and services.

Mobility

The mandate does not propose free movement of people. It mentions waiving visa requirements for short trips, which the EU has already implemented unilaterally, contingent on reciprocity. A visa waiver treaty could go further, potentially waiving requirements for paid activities, benefiting sectors like the music industry, but it’s unclear if that’s the intent. This is separate from service sector negotiations, which might include some movement of people.

“Setting out conditions” for student and researcher migration is mentioned, areas where the EU already has legislation for non-EU migration. Social security coordination agreements are possible, but only for future UK-EU migration. The withdrawal agreement covers those who moved before the transition period’s end, including the common travel area. Facilitating travel, as mentioned in the political declaration, is absent, likely due to the UK’s plan to mirror the EU’s planned travel authorization system.

The Council added negotiating family law civil judicial cooperation, reflecting the political declaration, even though the initial mandate omitted it.

Transport

On air transport, the mandate states that while the UK won’t have the same access as EU members, the EU is open to negotiations. It also references aviation safety standards.

For land transport, it proposes market access for road haulage but excludes cabotage (hauling within a single or multiple member states). This links to maintaining current social rules for drivers and tachograph (devices tracking driving hours) discussions. Private motorists, mentioned in the political declaration, are absent.

International law on coach transport suggests no additional UK-EU provisions. For rail, there’s a reference to the Channel Tunnel, with the Council adding Dublin/Belfast rail links per the political declaration.

The Council added maritime transport negotiations, mirroring the political declaration. However, the reference to cooperating with the EU maritime safety agency from the political declaration is absent.

Energy

The mandate includes several references to renewable energy, a level playing field for carbon pricing, and a Euratom deal with maintained nuclear safety standards and addressed isotope issues. The Council added nuclear waste, possibly reflecting concerns about Sellafield.

Fisheries

The mandate focuses on EU fishing access to UK waters, linked to the broader economic partnership and the agreed July target date, which doesn’t appear to be a strict requirement. The Council strengthened the EU’s position, emphasizing “upholding” existing access levels. This topic, along with the following, could derail negotiations.

Level Playing Field

In this context, “level playing field” refers to State aid, competition law, and aspects of tax, labor, and environmental law. While LPF clauses are common in EU FTAs, the question is whether to exceed standard provisions in the EU-UK FTA, given the more comprehensive tariff removal compared to other EU FTAs.

Importantly, the UK agreed to the LPF concept in the political declaration. Both sides agreed on:

• A level playing field “commensurate with the scope and depth of the future relationship and the economic connectedness of the Parties,” preventing trade distortions and unfair advantages.
• Upholding common high standards applicable in the EU and UK at the transition period’s end in state aid, competition, social and employment standards, environment, climate change, and relevant tax matters.
• Maintaining a robust framework for competition and state aid control.
• Committing to good governance in taxation and curbing harmful tax practices.
• Maintaining environmental, social, and employment standards at current levels.
• Relying on relevant EU and international standards.
• Including effective implementation mechanisms domestically, enforcement, and dispute settlement as part of the future relationship.
• Promoting adherence to and effective implementation of internationally agreed principles and rules, including the Paris Agreement.

The mandate repeats some of this while adding further points. It proposes the EU’s ability to apply autonomous, including interim, measures to address disruptions to equal conditions of competition, referencing EU standards. Regarding future measures, it suggests a commitment to continuously improving protection levels to ensure corresponding high levels over time, with the governing body empowered to expand or modify the LPF (jointly). The Council added general references to a “sustainable and long-lasting relationship,” mentioning not only “common high standards” but also “corresponding high standards over time with Union standards as a reference point.”

On specifics, EU State aid should apply to and within the UK, enforced by an independent UK body, not the Commission. Disputes over State aid rules in the UK would be subject to dispute settlement. For competition law, general provisions similar to EU law should apply to EU-UK trade, along with effective enforcement. There should be limitations on special rights for state-owned enterprises.

On tax, a commitment to international standards is expected. The UK should apply common standards applicable within the EU and UK at the transition period’s end in areas including: income information exchange, financial accounts, tax rulings, country-by-country reports, beneficial ownership, and potential cross-border tax planning arrangements. The fight against tax avoidance practices and public country-by-country reporting by financial institutions is also included. Without referencing common standards, it mentions the commitment to curb harmful tax measures, considering the G20-OECD BEPS Action Plan, and the UK reaffirming its commitment to the Code of Conduct for Business Taxation.

Regarding employment law, there should be no reduction below the standards applicable within the EU and UK at the transition period’s end in areas including fundamental rights at work, occupational health and safety (including the precautionary principle), fair working conditions, employment standards, and information and consultation rights at the company level and during restructuring. Effective enforcement within the UK through well-resourced domestic authorities, labor inspections, and administrative and judicial proceedings is also expected.

For the environment and health (added by the Council), the LPF should prevent reducing the common level of environmental protection below the standards applicable within the EU and UK at the transition period’s end. This covers areas including access to environmental information, public participation, environmental justice, environmental impact assessments, industrial emissions, air quality, nature and biodiversity conservation, waste management, protecting aquatic and marine environments, health, and product safety in the agri-food sector, preventing risks from chemical substances, and climate change. The inclusion of food standards overlaps with trade issues and LPF clauses.

The LPF should establish minimum commitments reflecting standards, including existing targets. It should ensure respecting the precautionary principle, prioritizing rectifying environmental damage at the source, and polluter pays principles. For enforcement, the UK should implement a transparent system for effective monitoring, reporting, oversight, and enforcement by an independent and adequately resourced body.

Specific climate change provisions include the UK maintaining a carbon pricing system at least as effective as existing EU standards and targets, considering linking a UK emissions trading system with the EU ETS, and not reducing protection levels below those agreed within the EU by the transition period’s end.

The mandate also refers to adhering to and effectively implementing relevant international rules, including International Labour Organisation conventions, the European Social Charter, and multilateral environmental agreements like the Paris Agreement. Parties with higher standards than the minimum commitments should not lower them to encourage trade and investment.

Whether the EU has shifted the goalposts is debatable. The political declaration mentions EU and UK standards, vaguely refers to dispute settlement, and indirectly alludes to future measures. The EU’s interpretation is unsurprising, but the UK’s minimalist view disregards the commitment to maintaining EU standards. Compared to the political declaration, dispute settlement remains unclear, though the potential for EU action in case of future divergent standards is explicit. The commitment to maintaining current standards remains. The EU’s stance on whether the UK must keep pace with future EU measures or if it’s about retaining the right to react is ambiguous.

Dispute settlement is crucial because the initial withdrawal agreement, containing details now in the negotiation mandate, had limitations. Not all issues were subject to the dispute settlement mechanism, notably excluding the substance of labor and environmental commitments. Only disputes about enforcement systems were included. Consequently, even with references to EU law in the LPF, the CJEU wouldn’t have jurisdiction over interpretation via dispute settlement arbitrators, as such disputes wouldn’t fall under their purview.

This also meant no EU retaliation for breaches was possible, as it was tied to the dispute settlement system. While the mandate mentions potential EU retaliation for LPF breaches, it’s unclear if limitations on such retaliation (regarding issues covered by dispute settlement and constraints within the system) would differ from the initial withdrawal agreement. The UK might argue for reciprocal retaliatory powers as it had in the first agreement.

Compared to other EU FTAs, the mandate’s references to EU law are unique, although the UK previously agreed to this. However, it’s uncertain if dispute settlement arrangements will differ. The possibility of the EU withdrawing preferences due to divergence exists in the EEA, which avoids CJEU involvement by making the process automatic if dispute resolution fails. The EEA’s dispute settlement approach, where arbitrators assess the proportionality of a party’s reaction without ruling on the underlying EU law dispute, could be a model for the EU and UK, circumventing mandatory CJEU involvement.

Security Cooperation

The mandate separates security cooperation from the LPF and fisheries. It makes it conditional on the UK’s adherence not just to the ECHR but also to the Human Rights Act (HRA) and a data protection adequacy decision, explicitly mentioning potential CJEU challenges. While the ECHR and data protection reflect the political declaration, the HRA goes further. Fair trial and double jeopardy standards are also included.

The mandate reflects existing issues about data protection and human rights standards in the UK, already litigated regarding non-EU countries and other member states.

For police cooperation, the mandate covers passenger name records, DNA/fingerprint/vehicle information exchange in individual cases. The Schengen Information System, currently applied by the UK for criminal law data, is absent. Regarding PNR, the mandate references a CJEU case setting limits on data exchange with non-EU countries to comply with data protection standards. The mandate reflects the political declaration on PNR and DNA data exchange. However, it explicitly states the use of individual information exchanges instead of the Schengen Information System, an issue the political declaration avoided due to disagreements.

On criminal justice cooperation, fast-track extradition is mentioned. The EU, Norway, and Iceland have a similar extradition treaty to the European Arrest Warrant used between EU countries, with some exceptions. The Council added provisions for Member States potentially refusing to extradite their own citizens and unspecified guarantees. Exchanging evidence and criminal records is also mentioned, potentially exceeding agreements with other non-EU countries.

Foreign Policy

The mandate proposes “alignment” on sanctions. Involvement in defense missions or defense industry projects would be on a case-by-case basis, reflecting the political declaration’s stance that the UK wouldn’t be obligated to participate against its will. Limited access to Galileo is included. The Council added a reference to health security cooperation.

Governance and Dispute Resolution

The future relationship treaties would be overseen and implemented by a joint committee, a standard practice. Dispute resolution involves consultation followed by binding arbitration. The Council added provisions for dispute settlement between different agreements. CJEU involvement is limited to interpreting EU law, as per the political declaration. There’s no provision for CJEU involvement in other matters. Dispute settlement details remain undefined, potentially drawing upon the withdrawal agreement.

As discussed, certain aspects might not be subject to dispute settlement, rendering CJEU involvement or remedies moot unless the agreement allows for remedies without needing dispute settlement. Therefore, the CJEU’s jurisdiction over the UK in the future relationship treaty applies only when the agreement a) references EU law and b) includes dispute settlement provisions. The details are crucial, as seen with the limited scope of dispute settlement in the initial withdrawal agreement.

Barnard & Peers: chapter 27

Photo credit: Michael D Beckwith, via Wikimedia commons