Georgina Wright / Apr 2020
The outbreak of the Covid-19 coronavirus is disrupting government activity, business and the lives of citizens across the world. It is eating up the already very limited time that the UK and the EU have left to agree a new relationship and make the necessary preparations to apply the Withdrawal Agreement – and has complicated the process of the talks, with chief negotiators Michel Barnier and David Frost both self-isolating.
While EU governments are as keen as the UK to get the Brexit talks out of the way, they are sceptical that everything can be done by the end of the year. Many are coming round to the view that it would make sense to use the provision in the Withdrawal Agreement to extend the Brexit transition period for up to two years.
Under the terms of the Withdrawal Agreement, 1 July 2020 is the latest date to agree an extension – but so far, neither side has requested one. Extending the transition period would mean more time for negotiations and for businesses – many of which are already facing huge disruption due to coronavirus – to prepare for a new UK–EU trade regime. The agreed extension could also be brought to an early close once a UK–EU deal is in place.
While Brexit talks have been characterised by last-minute breakthroughs, talks on an extension are about more than just settling a new date. The 31 December 2020 cut off point was chosen to make sure the transition period ended before the start of the new seven-year EU budget on 1 January 2021. While the UK–EU joint committee has until 1 July to sign off on an extension, it can only do so once it has agreed the terms and conditions, including how long the extension lasts and the UK’s contributions to the EU budget during that time. These will not be straightforward negotiations. To complicate matters further, the joint committee is not scheduled to meet again until June.
From an EU point of view, the joint committee should start discussing the terms of an extension as soon as possible – especially if it needs several rounds to come to an agreement. The EU Commission must also secure the approval of member states before it agrees to anything in the joint committee. That could also take time.
However, EU leaders know that an extension is a tricky sell – both in the EU and the UK. The UK will need to contribute financially to the EU budget for the extra time. It will also have to adopt new EU rules and regulations. For a British prime minister who has vowed to take the UK out of the single market and customs union by the end of the year, and who won an election on a slogan of “Get Brexit Done”, this won’t be easy to explain.
At the same time, EU leaders don’t want to be seen to be pushing for an outcome which would see the UK following, but not shaping, EU rules. It would prefer it if the UK made the request.
But there is nothing in the Withdrawal Agreement that says that one side or the other must be the one to request an extension. The easiest choreography would be for the joint committee to agree what a longer extension looks like before the UK-EU high level conference in June – which is when both sides are due to take stock of negotiations. For example, it could include a clause that would allow the UK and EU to end the transition period once a new agreement is in place. The UK and EU could jointly endorse the extension at the conference; the joint committee would then have enough time to formally approve the decision before the 1 July deadline. A joint endorsement, coupled with an early break clause, could go some way to assuage those in the UK and the EU who are worried that the transition period could last indefinitely.
Despite suggestions that the Withdrawal Agreement could be re-opened to amend the July deadline, or that an entirely new transition period could begin on 1 January 2021, both the EU and the UK would be wise to focus on the existing deadline to extend rather than any rule-shifting alternatives.
Re-opening the agreement looks unlikely, with some in the EU worrying that member states would use this opportunity to table other amendments to the treaty. A second transition period would require agreement – between the EU and the UK – on a new treaty and new rules before the current transition period expires. There is no guarantee of that being achieved. A new arrangement would also almost certainly require the approval of all member states, possibly even their national and regional assemblies. There is no guarantee of that either – especially now that most EU assemblies are not sitting because of lockdown measures in place.
Coronavirus has knocked Brexit down the UK's and the EU’s list of priorities, but Brexit deadlines remain firmly in place. Logic suggests an extension to the transition period is inevitable – but discussions on how to get there will not be straightforward. Rushing any talks could lead to a suboptimal outcome or, worse still, to no agreement at all. The EU is ready to engage; it is time for the UK, even in private, to do the same.
For more commentary and analysis visit the Institute for Government website