Who blinked?

21 March 2018

The headlines on the Draft Withdrawal Agreement between the UK and the EU have to be that first, it happened; and second, it went further than expected to pave the way for a Free Trade Agreement (FTA) between the two sides. This stems from two substantial concessions from Brussels: a Joint Committee to oversee transition, first seen in draft at the end of February; and an altogether new departure, the UK’s freedom to negotiate FTAs with third parties during the transitional period. In addition, the EU has sotto voce abandoned the notion that Northern Ireland must be squared away before moving on.

Otherwise concessions on both sides were minor: the EU walked back from the extremes of their negotiating guidelines on the financial arrangements; and promised to act in “good faith” over the period during which the UK is outside the EU’s decision-making, but nominally bound by such new rules as might arise. The UK accepted that any standstill agreement must cut both ways: there is to be no change in citizen’s rights or fishing over the transitional period. In addition, the period itself is at the low end of expectations, so as to tie in with the EU’s year-end.

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The introduction of the Joint Committee calls for a brief expansion. It promises to dissolve what risked becoming a deal-breaker. Let’s remind ourselves of the history. The EU’s original guidelines stressed the exclusive jurisdiction of the ECJ over dispute-resolution in future arrangements between the two sides. The UK pointed out that this was unprecedented in FTAs and put up alternatives. The EU has quietly plumped for one - the Joint Committee. Brussels is still arguing that over the transitional period, the Joint Committee should be subject to the ultimate jurisdiction of the ECJ. I’m guessing HMG will concede the principle for this agreement, while introducing language which pretty much rules it out in practice. The real point is that Brussels has been taken to the brink of conceding the principle for the final FTA. It may be that this was always inevitable - after all the EU’s ask was cheeky in the extreme. But it could have become a showstopper. This is a real achievement for British diplomacy.

As to the details, only the Agreement’s authors could relish wading through its 117 pages, comprising 184 articles, 22 titles, 21 chapters, six parts and two protocols. This is further sub-divided into agreed text, language agreed in principle, and matters “on which discussion is ongoing”, ie, wholly unagreed. Let’s just say that I must be confirmed as a dull dog and that the following specifics make this a longer blog than usual. If you’re just after the gist, you can stop here.

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Part One - Common provisions
This runs to four pages and seven articles. Only Article 4a on “Good faith” is of note. It contains agreed text, representing a concession by the EU in binding itself to the obligation to

“refrain from any measures which could jeopardise the attainment of the objectives of this Agreement.”

The UK sought this as restraining the EU from introducing laws which mess up the UK during the transitional period over which Britain will no longer be formally represented in EU decision-making. This is intended as a rebuttal to Rees-Mogg’s “vassal state” jibe.

Part Two - Citizens’ rights
This runs to 21 pages, comprising 28 articles, five titles and three chapters. It is agreed throughout. Everything is kicked into touch. Here the UK has blinked, accepting that it cannot alter the status quo in one area if it expects a standstill elsewhere.

Part Three - Separation provisions
This runs to 46 pages, comprising 85 articles, thirteen titles and six chapters. This vast exercise in legal draftsmanship contains little of note. “Title VIII - Public procurement” (Articles 71 to 74) might be interesting were it not that here too, all has been kicked into touch. This leaves much for the Europeans to scrabble for in an eventual FTA, defending the interests of Veolia (France) supplying environmental services; EDF (France) supplying electricity; and those supplying transport services, eg Abellio (Holland - rail and bus networks) Arriva and its owner, DB (Germany - rail and bus networks), Nederlande Spoorwegen (Holland - railways) and RATP (France - busses).

Unagreed details in Part Three embrace transfer of data, certificates of origin, intellectual property, plant protection certificates (ash die-back?), police and judicial co-operation, jurisdiction and enforcement, data protection, confidentiality, non-discrimination, and ownership of fissile materials. But the real point is that nothing has been agreed in the fourteen articles on adjudication covered in Titles X and XI (Articles 82 to 95). This is where the UK has yet to get in the right sort of language.

Part Four - Transition
This runs to just five pages and six articles. Article 121 sets the period as twenty-one months. It is hard to know how seriously this should be seen as a setback for HMG, which spoke of 21 to 27 months. It is probably best understood as administrative convenience: transition ends to coincide with the close of the EU’s financial year, itself coincident with the calendar year. Article 124.4 gives the UK the material concession of negotiating Free Trade Negotiations to come into force at the end of the period. This more than offsets the effects of Article 125, which states that arrangements for fishing remain unchanged. Here too HMG has accepted that it cannot alter the status quo in one area if it wants a standstill overall. There has been some chatter as to the consultation opportunities offered to the UK; to my mind the language is weak:

“opportunity to…provide comments” (Article 125.2); and

“…the Union may exceptionally invite the United Kingdom to attend…international consultations and negotiations…” (Article 125.3).

On the other hand, this is only a twenty-one month transition period, so what’s the fuss about? Once again, kicked into touch.

Part Five - Financial
This runs to 22 pages, comprising 24 articles and seven chapters. All of this section is agreed. It is sensible throughout, recognising that assets should match liabilities, as the EU’s original guidelines did not; and that net sums should be paid periodically, generally at the end of the year, illustrating the administrative convenience of ending the transition period at the end of December.

Part 6 Institutional and final provisions
This runs for just seven pages, but extends to some eighteen articles. Articles 157 to 161 contain agreed text establishing a Joint Committee as the first resort for resolving disputes. As discussed above, this represents the single most substantial negotiating achievement of the UK, a concession from the EU which paves the way for a realistic FTA. This said, there remain unagreed elements in the text which refer to the ECJ as the final adjudicative body. The UK has also conceded the principle of the suspension of benefits on its non-compliance, but the language concerned is weak, eg,

“Any suspension…shall be proportionate…and shall not exceed 3 months.” (Article 165.2)

Protocol on Northern Ireland
This embraces sixteen articles kicking off with a wordy and emotional preamble. The excitable manner fails to conceal the lack of matter. Explanatory text at the beginning of the Draft Agreement touches on the “backstop”, calling for EU rules to apply in Northern Ireland unless another solution can be found, but the backstop itself is not present in the Protocol. On the other hand, the language establishing a common regulatory regime for goods in the island of Ireland is marked as agreed in principle. HMG has accepted this as aligned with its general intention of “frictionless” trade in goods in the final FTA.

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There remains much to be done, with much kicked down the road. This notably includes the final resolution of citizens’ rights and fishing; details on public procurement; plus squaring the circle on Northern Ireland. All plus the thorny matters of trade. But the headlines are that dispute-resolution is in sight of settlement. This speaks volumes for the tenacity of both sides in achieving accord. I’m not ruling out the theatrical bust-up I called in my last post, but the evidence is accumulating that both sides are determined to make a final deal.