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David Mundy David Mundy Partner
08 December 2017

29: Great Repeal Bill – Good morning, good morning

Early this morning, the UK and European Commission announced that they had reached an agreement that should allow them to move Brexit talks on to the next stage, and published a Joint report on progress during phase 1 of negotiations under Article 50 TEU on the United Kingdom’s orderly withdrawal from the European Union.

Under the caveat (standard for EU agreements) that ‘nothing is agreed until everything is agreed’ (para. 5), the Joint Report sets out that the UK and EU have reached agreement in principle across the three areas under consideration in the first phase of negotiations, ie:

  • protecting the rights of Union citizens in the UK and UK citizens in the Union (paras 6 to 41);
  • the framework for addressing the unique circumstances in Northern Ireland (paras 42 to 56); and
  • the financial settlement (paras 57 to 86).

and that these commitments will be reflected in the Withdrawal Agreement.

Progress in the negotiations is welcome but, unsurprisingly, there is plenty in the detail of the Joint Report to chew over. Here’s just a few thoughts and highlights on an initial read through.

On citizens’ rights:

  • the overall objective of the Withdrawal Agreement is to provide:
‘… reciprocal protection for Union and UK citizens, to enable the effective exercise of rights derived from Union law and based on past life choices, where those citizens have exercised free movement rights by the specified date.’
  • note that ‘past life choices’ means ‘made prior to Brexit day’ (probably 29 March 2019) and so includes choices which haven’t yet been made para 12 states that ‘family members … not residing in the host State on the specified date will be entitled to join a Union citizen or UK national right holder after the specified date’ but only ‘for the life time of the right holder’ – so what happens when the ‘national right holder’ (eg their husband or wife) dies?
  • there will be no automatic right of residence for existing EU citizens in the UK and vice versa – some administrative steps to obtain new status will be required (paras 16 and 17). Expect plenty of Guardian stories about administrative difficulties and perceived unfair application of new rules.
  • plenty of existing EU rules on matters such as social security coordination, healthcare, employment, self-employment and education will continue to apply (paras. 28 to 32). How will Brexiteers react to that?
  • the UK’s proposed ‘Withdrawal Agreement and Implementation Bill’ will incorporate EU citizens’ rights into UK law (and will prevail over inconsistent or incompatible legislation) and the Withdrawal Agreement will bind the EU (para 36). The implementation and application of the citizens’ rights will be monitored in the Union by the Commission acting in conformity with the Union Treaties and, in the UK, this role will be fulfilled by an independent national authority (whose scope and functions, including its role in acting on citizens’ complaints, will be discussed between the parties in the next phase of the negotiations and reflected in the Withdrawal Agreement) (para 40).
  • the UK’s courts are to have ‘due regard to relevant decisions of the CJEU after the specified date’ and may (for eight years) ‘ask the CJEU questions of interpretation of those rights where they consider that a CJEU ruling on the question is necessary for the UK court or tribunal to be able to give judgment in a case before it’ (para 38). Again, that may be too much of a role for some Brexiteers, who see a continued role for the CJEU as a ‘red line’.

On the Irish border, there is plenty of text to remind us that the border represents ‘a significant and unique challenge’, that the Good Friday Agreement is important, that Northern Ireland is unique, etc.

In terms of substance:

  • the UK will seek to avoid a hard border through the future EU-UK trade relationship but, should this not prove possible, the UK will propose (as yet undefined) ‘specific solutions to address the unique circumstances of the island of Ireland’ (para 49). That likely puts a lot of onus on the ‘highly streamlined customs arrangement’ or ‘new customs partnership’ trailed in the Government’s Customs White Paper – neither of which are fully defined, costed or agreed with the EU – and amounts to an agreement to agree during Phase 2 of the negotiations;
  • if a solution cannot be found, the UK will maintain ‘full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement’. Brexiteers have already indicated that ongoing full alignment is not acceptable and inconsistent with the referendum result – and as discussed here, it seem logically inconsistent with leaving the Single Market and Customs Union;
  • the Joint Report (para 50) also says that regulatory divergence between Northern Ireland and UK can only arise with the consent of the NI Executive and Assembly – which arguably gives NI politicians (of all political hues) a potential veto over changes to UK-wide regulations. The SNP, Plaid Cymru, the Mayor of London and Brexiteers may all have significant issues with that; and
  • and they’re not done talking about the border: ‘Given the specific nature of issues related to Ireland and Northern Ireland … both Parties agree that in the next phase work will continue in a distinct strand of the negotiations on the detailed arrangements required to give them effect.’ (para 56)

The terms of financial settlement go beyond my area of expertise, but my understanding from the Joint Report is that the parties have agreed a methodology for assessing the UK’s obligations, consisting of:

  • ‘a list of components’ – The UK will contribute to, and participate in, the implementation of the Union annual budgets for the years 2019 and 2020 as if it had remained in the Union – so no walking away paying nothing – including amendments agreed before the UK’s withdrawal (para 59). For other obligations, the cut-off date is generally the end of 2020 (para 60 to 66);
  • ‘a set of principles for calculating the value of the financial settlement and payment modalities’, including that the financial settlement will be paid in euro (para 68) – so will get more expensive if sterling drops in value – but further details are to be worked out in Phase 2 (par. 70);
  • arrangements for the UK’s continued participation in the programmes of the current Multiannual Financial Framework (MFF) until their closure (paras 71 to 73); and
  • ‘financial and related arrangements for particular EU bodies’, eg European Investment Bank, European Central Bank, European Development Fund (paras 74 to 86), including the relocation of EU agencies in London (no chance of them staying then).

The media has been obsessed with putting a figure on the UK’s obligations but, of course, the exact UK share will depend on exchange rates, on interest rates, on the number of financial commitments that never turn into payments, and more. When payments are to be made also still needs to resolved, but it will clearly last for many years.

So, with agreement reached, Phase 2 (the future trade agreement and any transition period) can start next week. But it will not be straightforward. The UK seeks a deep and special relationship which goes beyond a mere free trade agreement, but Michel Barnier, the EU’s chief negotiator, has said that the UK’s red lines about leaving the single market, the customs union and the jurisdiction of the CJEU mean that it could only expect a trade deal along the lines of that recently agreed with Canada, which does not cover financial services.

On the transition period (to be discussed at a summit next week), it has been reported that the EU may insist that, during any such period, the UK will have to accept current and new EU laws, as well as the jurisdiction of the European Court of Justice, without having any seats in decision-making institutions.

Donald Tusk, President of the European Council, said this morning ‘… The most difficult challenge is still ahead. We all know that breaking up is hard. But breaking up and building a new relation is much harder.’

‘Good morning, good morning’ (The Beatles, Good Morning, Good Morning)
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