The Road to Brexit: explaining the process towards a deal/no deal

by White & Case LLP
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Brexit seems almost inevitable. However, the negotiations between the European Union and the United Kingdom under Article 50 TEU are far from finalized. This paper aims to explain the steps towards Brexit date by date.

BREXIT COUNTDOWN ›
Our Brexit countdown illustrates the key dates and milestones on the road to Brexit.

Negotiation process

Article 50 TEU sets out three cumulative requirements for an orderly withdrawal from the EU: a unilateral notification of withdrawal, a withdrawal agreement (WA) and a framework for the EU-UK future relationship. The UK fulfilled the first requirement on 29 March 2017 when it formally notified the European Council of its intention to withdraw from the EU.

Withdrawal agreement

The WA, the second requirement, is set to be an international treaty between the EU and the UK comprised of good faith commitments, which are legally binding on both parties under international law. The final version must include a transition agreement and, in a separate political declaration, commitments to finalizing a treaty on the future relationship between the EU and UK after Brexit day.

The EU and the UK started to negotiate the WA on 19 June 2017. During the first phase of negotiations, they discussed issues in relation to citizens' rights, financial settlement and the Irish/Northern Irish border. As result of the first phase, they released the Draft Agreement on the withdrawal from the UK from the EU and European Atomic Energy Community on 28 February 2018, including a Protocol on Ireland/Northern Ireland.

Transition period

At the end of 2017, the parties had made sufficient progress to launch the second phase of negotiations on the transition period and the future framework. In the second phase, the parties agreed that the transition period would run from Brexit day to 31 December 2020. During this time, EU law and jurisprudence would continue to apply to the UK as if it were an EU Member State; but being a third country, the UK would no longer participate in the EU institutions or have any voting rights. During the transition period, it is also envisaged that the UK will remain in the EU Single Market, the EU Customs Union and within the jurisdiction of the Court of the European Union. After the transition period, the UK would be free of all EU obligations, and able to adopt its own trade deals with other countries.

Ratifying the WA

So far, the EU and the UK have agreed on approximately 80% of the WA, including the security of citizens’ rights, financial settlement and the transition period. The initial target date to agree on the remaining 20% (data protection, geographic indications, governance and especially the Irish/Northern Irish border) was originally set for 18-19 October 2018, however both sides have implied that the process could be delayed until mid-November. A delay in the timeline will add pressure to the complex ratification process.

The EU can only adopt the WA, whilst considering the future framework declaration, if the Council of the EU and the European Parliament give their consent. The Members of the European Parliament, including the MEPs from the UK, have to vote with a simple majority. Then, the WA has to pass the Council with a strong qualified majority, without the UK being allowed to vote (Article 238(3)b TEU). In principle, the WA does not require ratification by the remaining Member States.

In the UK, the WA and the future framework declaration firstly need parliamentary approval; only the House of Commons can block the ratification. If the House of Commons  was to do so, an emergency session would be held. In case no deal has been reached by the end of 21 January 2019, the UK Parliament will then discuss next steps, contingency measures or seek an extension to the Article 50 TEU process. If Parliament approves, the UK then has to pass the Withdrawal Bill (see below for further detail) to implement the WA into domestic law. After the WA has been signed it has to be laid before both Houses for a period of 21 sitting days as required by the Constitutional Reform and Governance Act 2010, before it may be ratified.

By ratifying the treaty, the parties give their consent to be bound in accordance with international law. The ratified WA will enter into force on Brexit day, and the transition period will start.

Future framework

The EU and the UK are still negotiating the third withdrawal requirement: a framework for their future relationship. Although it merely constitutes a political act, the framework has to be agreed alongside the WA to ensure an orderly withdrawal. Once the UK has left the EU, the parties will have to negotiate an actual treaty in accordance with the process used to reach agreements with third countries outlined in Article 218(3) TFEU. Both have made proposals concerning the framework, in particular with regard to their future economic relationship, their security partnership and the governance of future EU-UK arrangements; nevertheless, there is still need for substantial compromise, especially in the area of trade and customs.

Under the much-disputed Chequers plan, the UK has supported laws introducing a free trade area and a common rulebook for goods but not services. However, the EU has not agreed to this plan. The informal EU summit in Salzburg on 19-20 September 2018 did not produce a solution in respect of any of these issues.

UK Brexit legislation

To prepare for post-Brexit, the UK Parliament passed the EU (Withdrawal) Act 2018 on 26 June 2018. The Act repeals the 1972 European Communities Act (ECA), but is without prejudice to the outcome of the negotiations. On 29 March 2019, the Act will convert all EU law in force at that date and applicable to the UK into a new domestic legal category called "retained EU law". This category preserves the rights in EU treaties on which individuals can directly rely on in court as well as all laws made in the UK to implement EU obligations. Ultimately, from the UK perspective this process "freezes" EU law in time. To circumvent the likely disadvantages caused by applying a static body of EU law, the UK authorities will assume the competencies of the EU institutions, and after 29 March 2019 Ministers will be able to amend or remove retained EU law where necessary.

If a WA is reached, the UK will need to delay the Act’s key effects to ensure the continued application of EU law during the transition period. To that extent, it is envisaged that the UK Parliament would pass the transitional EU (Withdrawal Agreement and Implementation) Bill before ratification of the WA. The Bill would delay Union law from turning into "retained EU law" and preserve the necessary parts of the ECA during the transition period. It would also implement the WA into UK law and prolong the period for the UK to apply correcting powers to EU legislation until 31 December 2022 to ensure a coherent and functioning UK statute book. The Bill would sunset at the end of the transition period giving the Act full effect.

Brexit

Whether or not there will be a deal, 29 March 2019 11pm GMT is the point of no return; from that moment onwards, the UK will no longer be an EU Member State.

As matters currently stand, if the UK and EU have not ratified the WA by that date, the UK on the one hand and the EU Member States on the other will immediately become third countries with respect to each other.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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