Explanatory Memorandum to COM(2018)834 - Conclusion of the Agreement on the withdrawal of the United Kingdom from the EU and Euratom

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dossier COM(2018)834 - Conclusion of the Agreement on the withdrawal of the United Kingdom from the EU and Euratom.
source COM(2018)834 EN
date 05-12-2018


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

On 29 March 2017, the United Kingdom notified the European Council pursuant to Article 50 of the Treaty on European Union of its intention to withdraw from the European Union and from the European Atomic Energy Community. In accordance with Article 50 of the Treaty on European Union, the Union shall negotiate with the withdrawing State an agreement setting out the arrangements for its withdrawal (the Withdrawal Agreement), taking account of the framework for its future relationship with the Union. The Withdrawal Agreement is to be concluded on behalf of the Union by the Council, after obtaining the consent of the European Parliament.

Following the notification, the European Council (Article 50) adopted guidelines on 29 April 2017. In the light of these guidelines, the Council authorised the Commission on 22 May 2017 to open the negotiations for an agreement with the United Kingdom setting out the arrangements for its withdrawal from the European Union and from the European Atomic Energy Community, and adopted the negotiating directives for these negotiations. On 15 December 2017, the European Council adopted guidelines supplementing the ones from 29 April 2017 and setting out the principles and conditions for any transitional arrangements, after which, the Council, on 29 January 2018, adopted supplementary negotiating directives.

The negotiations have been conducted in the light of the above European Council guidelines and in line with the negotiating directives issued by the Council, and with due regard to the resolutions of the European Parliament of 5 April 2017, 3 October 2017, 13 December 2017 and 14 March 2018.

The negotiations were completed and initialled at the level of the Chief Negotiators on 14 November 2018.

An agreement on a future relationship between the Union and the United Kingdom can only be concluded once the United Kingdom has become a third country. However, Article 50 of the Treaty on European Union requires that the framework for the future relationship with the Union is taken into account in the agreement setting out the arrangements for the withdrawal. An overall understanding with the United Kingdom on the framework for the future relationship was identified during negotiations under Article 50 in the Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom that has been approved by the European Council on 25 November 2018 1 .

• Consistency with other Union policies

The Withdrawal Agreement fully respects the Treaties and preserves the integrity and the autonomy of the Union legal order. It promotes the values, objectives, and interests of the Union, and ensures the consistency, effectiveness and continuity of its policies and actions. In particular, Article 4 of the Withdrawal Agreement lays down methods and principles relating to the effect, the implementation and the application of the agreement that ensure the same legal effect of Union law provisions made applicable by the Withdrawal Agreement in the United Kingdom as within the Union and its Member States.

• Fundamental rights

According to Article 6 of the Treaty on European Union, the Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union, which has the same legal value as the Treaties. Moreover, fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, constitute general principles of the Union's law.

These rights, freedoms and principles are fully preserved and protected in the Union after the withdrawal of the United Kingdom from the Union. Moreover, the Withdrawal Agreement ensures that whenever Union law provisions or concepts are referred to, they are interpreted and applied using the methods and general principles of interpretation applicable within the Union, including consistent interpretation with the Charter of Fundamental Rights. This is particularly relevant for the Part of the Agreement on citizens' rights which relies extensively on Union law.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The United Kingdom has notified its intention to withdraw from the European Union. As a consequence, Article 50 of the Treaty on European Union constitutes the legal basis for the conclusion of a withdrawal agreement. It is recalled that in accordance with Article 106a of the Treaty establishing the European Atomic Energy Community, Article 50 of the Treaty on European Union applies also to the European Atomic Energy Community.

In accordance with Article 50 i of the Treaty on European Union, the Withdrawal Agreement shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

• Proportionality

The Withdrawal Agreement settles all disentanglement issues and sets out clearly the terms and conditions of the transition and its duration. In so doing, the Withdrawal Agreement is adequate and proportionate to the objective of ensuring an orderly withdrawal of the United Kingdom from the Union.

• Choice of the instrument

In accordance with Article 50 i of the Treaty on European Union, the arrangements for the withdrawal have to be laid down in an agreement between the withdrawing state and the Union; the conclusion of such an agreement is decided by a Council decision.

3. BUDGETARY IMPLICATIONS

Since the Withdrawal Agreement ensures that the Union and the United Kingdom both respect the financial obligations resulting from the whole period of the UK membership in the Union, the only budgetary impact of the Withdrawal agreement for the Union results from establishment of the Joint Committee, composed of representatives of the Union and of the United Kingdom. The Joint Committee will among others supervise and facilitate the implementation and application of the Withdrawal agreement. The Joint Committee will meet at least once a year, at the request of either party. In addition, there could also be costs linked to the possible initiation of an arbitration procedure under the dispute settlement of the Agreement. Should the transition period be extended, the United Kingdom will make a contribution for that new period to the Union budget that will be treated as General Revenues. The legislative financial statement attached to this proposal gives additional details on its estimated financial impact for the Union's budget.

4. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

Title 2 of Part Six of the Withdrawal Agreement establishes a Joint Committee that will continuously monitor the implementation and application of this agreement. The Joint Committee is comprised of representatives of the Union and representatives of the United Kingdom who will meet at least once a year and will supervise and facilitate the implementation and application of the agreement, decide on the tasks of the specialised committees and supervise their work and make amendment to the Agreement where specifically provided for in the Agreement itself. The Joint Committee can only make its decisions and recommendations by agreement between the Union and the United Kingdom. It can in no way restrict the decision-making at Union level. The Union and the United Kingdom may, through the Joint Committee, decide to amend certain aspects of the Agreement, only in those cases where this is specifically provided therein. When the Parties approve such a decision, it has to be subject to their respective applicable internal requirements and procedures.

Contents

1.

The following specialised committees will operate under the control of the Joint Committee, i.e. one sub-committee for each of the main parts of the Withdrawal Agreement:


(a)the Committee on citizens' rights;

(b)the Committee on the other separation provisions;

(c)the Committee on issues related to the implementation of the Protocol on Ireland/Northern Ireland;

(d)the Committee on issues related to the implementation of the Protocol relating to the Sovereign Base Areas in Cyprus;

2.

(e)the Committee on issues related to the implementation of the Protocol on Gibraltar; and


(f)the Committee on the financial provisions.

The proposal also foresees a role for the Joint Committee in dispute settlement, which is addressed in Title 3 of Part Six of the Withdrawal Agreement.

Implementation and application of the Withdrawal Agreement in the Union

In accordance with Article 216 i of the Treaty on the Functioning of the European Union, agreements concluded by the Union are binding upon the institutions of the Union and its Member States. The implementation and application of the Withdrawal Agreement in the Union should take place in full respect of the allocation of tasks between on the one hand the Union and its Member States and, on the other hand, between the different Union institutions. It would therefore be, by virtue of its tasks as laid down in Article 17(1) of the Treaty on European Union, mostly for the Commission to act on behalf of the Union and of the Euratom. In certain cases, and in line with the Council's policy-making function as laid down in Article 16(1) TEU, the Council will act on behalf of the Union and of the Euratom.

For example, where the Agreement states that the Union shall provide the United Kingdom with particular information or notifications, this should in principle be done by the Commission on behalf of the Union, if necessary based on the information provided by the Member States or other institutions or relevant Union bodies or entities. The foregoing applies in particular to the following provisions of the Agreement:

(a)Article 18(1)(c) : notification by the Union that technical problems prevent the host State either from registering the application or from issuing the certificate of application referred to in point (b) of that Article;

(b)Article 33 i: notification by the Union of the date of entry into force of the agreements referred to in Article 33(1);

(c)Article 36(1): information to be provided by the Union to the United Kingdom on new or amending relevant legislation pertaining to the social security provisions;

(d)Article 36 i: information to be provided by the Union to the United Kingdom in the Joint Committee on the proposals for adaptation of the relevant annex of the Agreement for the purposes of alignment with Decisions and Recommendations of the Administrative Commission on Social Security;

(e)Article 55(3): communication by the Union to the United Kingdom of the information necessary for the registration or grant in the United Kingdom of the intellectual property rights referred to in Article 54(1) or i;

(f)Article 96(6): information by the Union at the request of the United Kingdom to comply with its reporting obligation under Article 7 of the Montreal Protocol on Substances that Deplete the Ozone Layer; and to apply penalties in accordance with Article 25 of Regulation (EU) No 517/2014 and Article 29 of Regulation (EC) No 1005/2009.

(g)Article 102: notification by the Union to the United Kingdom when Union premises, buildings, property or assets are no longer in such use or have been removed from the United Kingdom;

(h)Article 103: notification by the Union to the United Kingdom of the removal of any Union archives from the United Kingdom;

(i)Article 116(3) : notification by the Union to the authorities of the status of any person which is relevant to that person's entitlement to a privilege or immunity under this Title;

(j)Article 119: notification by the Union to the United Kingdom of the completion date of the relocation of the agencies;

(k)Article 127(7) (b): notification by the Union to the United Kingdom when during the transition period the latter will not be considered a Member State for the purposes of an information exchange, procedure or programme which continues to be implemented or starts after the end of the transition period, and where such participation would grant access to security related sensitive information that only Member States are to have knowledge of;

(l)Article 134: information to be provided by the Union to the relevant entrusted entities communicated by the United Kingdom;

(m)Article 140 i and (3): information to be provided by the Union to the United Kingdom on the amounts of outstanding commitments referred to in these provisions;

(n)Article 142 (3), i and (5): information to be provided to the United Kingdom on the liabilities at the end of 2020 referred to in these provisions;

(o)Article 143 (1) (b), i, (3) and i: reports and information to be provided by the Union to the United Kingdom on relevant contingent financial liabilities related to loans for financial assistance, EFSI, EFSD and the external lending mandate referred to in these provisions;

(p)Article 144 (1): information to be provided by the Union to the United Kingdom concerning the financial instruments under direct or indirect implementation financed by the programmes of the MFF 2014-2020 or under earlier financial perspectives;

(q)Article 147 i: information to be provided by the Union to the United Kingdom regarding contingent liabilities related to legal cases;

(r)Article 148 i: information to be provided by the Union to the United Kingdom pursuant to this provision regarding payments after 2020;

(s)Article 159 i: annual information to be provided by the Union to the specialised Committee on citizens’ rights;

(t)Article 185: notification to the United Kingdom on behalf of the Union in respect of any Member State which has declared, in accordance with the provision that during the transition period, that Member State will not surrender its nationals pursuant to Framework Decision 2002/584/JHA.

3.

In certain cases, the Withdrawal Agreement identifies another Union institution or body that has to transmit that information, for example:


4.

(a)Article 149: reimbursement by the European Central Bank of the paid-in capital; or


(b)Article 150 i: reimbursement by the European Investment Bank of the paid-in capital.

Where the Agreement states that the Union may decide to invite the United Kingdom, during the transition period, to participate exceptionally in certain meetings of committees or expert groups or meetings of bodies, offices and agencies of the Union (i.e. Article 128(5) of the Agreement) or in international negotiation and consultation meetings (i.e. Article 129 i b) and Article 130 (3) of the Agreement), such invitations to the United Kingdom should in principle be done by the Commission on behalf of the Union. Where the meeting is organised by Union bodies, offices or agencies, it will be for those Union bodies, offices or agencies to send the appropriate invitations. Such invitations may only be issued provided that the conditions laid down in the Agreement are fulfilled. The Commission intends to issue guidance in this respect, so as to ensure consistent application of these provisions.

Where the Agreement states that the Union shall consult the United Kingdom during the transition period: such consultation should also be done by the Commission on behalf of the Union. This applies in particular to the following provisions of the Agreement:

(a)Article 128(7): the obligation for the Union to consult the United Kingdom on draft Union acts which identify or refer directly to specific Member State authorities, procedures, or documents;

(b)Article 129(5): possibility to consult the United Kingdom pursuant to that provision;

(c)Article 130(1): the obligation for the Union to consult the United Kingdom on fishing opportunities relating to EU waters and outside EU waters pursuant to that provision;

(d)Article 130 i: the obligation for the Union to provide the United Kingdom with an opportunity to provide comments pursuant to that provision.

It will also be for the Commission to agree with the United Kingdom on the administrative arrangements such as those referred to in Article 134 (administrative arrangements between the auditors of the Union and the United Kingdom to facilitate the audit process) or in Article 12 of the Protocol on Ireland/Northern Ireland (administrative arrangements necessary for the proper implementation of the state aid provisions of the Protocol).

The Commission will also act on behalf of the Union on all steps of the procedure regarding dispute settlement under Title III of Part VI of the Agreement.

• Detailed explanation of the specific provisions of the proposal

The Commission's draft text proposal for the Withdrawal Agreement consists of 185 Articles structured in six Parts (further divided into Titles and Chapters), three Protocols and nine Annexes, as follows:

Part One (Common Provisions) contains the common provisions of the Withdrawal Agreement (“the Agreement”), including definitions, the territorial scope of the Withdrawal Agreement, the methods and principles relating to the effect, the implementation and the application of the Agreement.

Part Two (Citizens’ Rights) sets out the provisions aimed at safeguarding the status and rights derived from Union law of EU and UK citizens, and their families, affected by the United Kingdom withdrawal. Part Two includes 4 titles: Title I (General provisions), Title II (Rights and obligations), Title III (Coordination of Social Security systems), and Title IV (Other provisions).

Part Three (Separation Provisions) sets out the provisions for other issues relating to the disentanglement of the United Kingdom from the Union. Part Three includes 13 titles: Title I (Goods placed on the market), Title II (Ongoing customs procedures), Title III (Ongoing value added tax and excise duty matters), Title IV (Intellectual property), Title V (Ongoing police and judicial cooperation in criminal matters), Title VI (Ongoing judicial cooperation in civil and commercial matters), Title VII (Data and information processed or obtained before the date of entry into force, or on the basis of this Agreement), Title VIII (Ongoing public procurement and similar procedures), Title IX (Euratom related issues), Title X (Union judicial and administrative procedures), Title XI (Administrative cooperation procedures between Member States and the United Kingdom), Title XII (Privileges and immunities) and Title XIII (Other issues relating to the functioning of the institutions, bodies, offices and agencies of the Union).

Part Four (Transition) sets out a transition period during which the whole EU acquis will apply to the United Kingdom, with some exceptions. During transition, the United Kingdom will no longer be represented in the Union institutions, nor participate in the decision-shaping and decision-making process of the Union. Furthermore, Part Four establishes the transitional arrangements applicable to United Kingdom with regard to the international agreements concluded by the Union, or by Member States acting on its behalf, or by the Union and its Member States acting jointly. In accordance with Article 129, the United Kingdom will be bound by the obligations stemming from those agreements. Article 130 provides for a consultation mechanism for the fixing of fishing opportunities of the United Kingdom for the transition period. Article 131 will ensure that the full competence of all Union institutions will be preserved in relation to the United Kingdom, including the competence of the Court of Justice of the European Union. Article 132 provides for the possibility of adopting a single decision extending the transition period for up to 1 or 2 years.

Part Five (Financial provisions) lays down detailed rules on the financial settlement, including detailed rules on the components of the financial settlement as well as the rules for the calculation of the value of the financial settlement and payment modalities. Rules are also set for the arrangements for continued participation of the United Kingdom in the programmes of the current Multiannual Financial Framework (MFF) until their closure.

Part Six (Institutional and final provisions) sets out rules for the consistent interpretation and application of the Agreement and establishes a Joint Committee as well as a dispute settlement mechanism. This Part contains also a best endeavours obligation on Parties to try to reach agreement on their future relationship before the end of the transition period, as well as the provisions on the entry into force of the Agreement

The protocol on Ireland/Northern Ireland and its 10 Annexes include the provisions necessary for the so-called “backstop” solution for avoiding a hard border between Ireland and Northern Ireland. This will apply unless and until it is superseded, in whole or in part, by any subsequent agreement. The Protocol creates a single EU-UK customs territory. This will avoid the need for tariffs, quotas or checks on rules of origin between the EU and the UK. It also foresees a set of measures to ensure that there is a level playing field between the EU and the UK. Furthermore, the Protocol ensures that the Union's Customs Code (UCC), setting out, inter alia, the provisions for releasing products into free circulation within the EU, will continue to apply to Northern Ireland. This will ensure that Northern Irish businesses will not face restrictions when placing products on the EU’s Single Market. The Protocol also foresees that the United Kingdom in respect of Northern Ireland will remain aligned to a limited set of rules that are related to the EU’s Single Market and indispensable for avoiding a hard border: legislation on goods, sanitary and phytosanitary rules (“SPS rules”), rules on agricultural production, VAT and excise, and state aid rules. There are also provisions maintaining the Single Electricity Market on the island of Ireland. Pursuant to the Protocol, the Common Travel Area between Ireland and the United Kingdom and its associated rights and privileges will continue to apply in conformity with EU law, in particular on free movement of EU citizens. North-South cooperation will also continue as set out in the Protocol, including in the areas of environment, health, agriculture, transport, education and tourism, as well as in the areas of energy, telecommunications, broadcasting, inland fisheries, justice and security, higher education and sport.

The Withdrawal Agreement also includes a protocol relating to the Sovereign Base Areas of the United Kingdom in Cyprus (the protocol on the SBAs). Since the relations between the Union and the Sovereign Base Areas in Cyprus are to be defined against the background of the Republic of Cyprus’ membership of the Union, the protocol on the SBAs should establishes appropriate mechanisms to achieve, after the withdrawal of the United Kingdom from the Union, the objectives of the arrangements set out in Protocol 3 to the Act of Accession of the Republic of Cyprus to the Union. As outlined in the Joint Statement of 19 June 2018, both the Union and the United Kingdom committed to establishing appropriate arrangements for the Sovereign Base Areas, "in particular with the aim to protect the interests of Cypriots who live and work in the SBAs following the UK's withdrawal from the Union, in full respect of the rights and obligations under the Treaty of Establishment." The Union and the United Kingdom have agreed on the terms of a Protocol which will give effect to this and which is annexed to the Withdrawal Agreement. The aim of the Protocol is to ensure that EU law, in the areas stipulated in Protocol 3 to Cyprus's Act of Accession, will continue to apply in the Sovereign Base Areas, with no disruption or loss of rights especially for the approximately 11,000 Cypriot civilians living and working in the areas of the SBAs. This applies to a number of policy areas such as taxation, goods, agriculture, fisheries and veterinary and phytosanitary rules. The Protocol confers responsibility on the Republic of Cyprus for the implementation and enforcement of Union law in relation to most of the areas covered, with the exception of security and military affairs.

Finally, the Withdrawal Agreement includes a protocol on Gibraltar addressing the specific issues that the withdrawal of the United Kingdom from the Union creates in relation to Gibraltar. The European Council guidelines of 29 April 2017 set out that "no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom." This has been recalled in the Council supplementary negotiating directives of 29 January 2018 and in the European Council guidelines of 14 March 2018. In the statements to the minutes of the European Council meeting of 25 November 2018, the following declaration of the European Council and of the Commission has been included: "After the United Kingdom leaves the Union, Gibraltar will not be included in the territorial scope of the agreements to be concluded between the Union and the United Kingdom. However, this does not preclude the possibility to have separate agreements between the Union and the United Kingdom in respect of Gibraltar. Without prejudice to the competences of the Union and in full respect of the territorial integrity of its Member States as guaranteed by Article 4 i of the Treaty on European Union, those separate agreements will require a prior agreement of the Kingdom of Spain". Moreover, at the same occasion, the European Council and the Commission have issued an interpretative declaration relating to the Article 184 of the Withdrawal Agreement and territorial scope of future agreements.

Bilateral negotiations between Spain and the United Kingdom have now concluded. A Protocol referring to these bilateral arrangements is annexed to the Withdrawal Agreement. The Protocol forms a package with bilateral memoranda of understanding between Spain and the United Kingdom in respect of Gibraltar. This concerns bilateral cooperation on citizens' rights, tobacco and other products, environment, police and customs matters, as well as a bilateral agreement in relation to taxation and the protection of financial interests. On citizens' rights, the Protocol establishes the basis for administrative cooperation between the competent authorities for the implementation of the Withdrawal in relation to people living in the Gibraltar area, and in particular frontier workers. On air transport law, it establishes the possibility, in case of an agreement between Spain and the United Kingdom on the use of the Gibraltar airport, to make applicable to Gibraltar during the transition the Union legislation previously not applicable there. On fiscal matters and protection of financial interests, the Protocol establishes the basis for administrative cooperation between the competent authorities for achieving full transparency in tax matters, fighting against fraud, smuggling, and money laundering. The United Kingdom also commits that international standards in this area are complied with in Gibraltar. In relation to tobacco, the United Kingdom commits to ratify certain conventions in respect of Gibraltar and to put in place before 30 June 2020 a system of traceability and security measures on cigarettes. In respect of alcohol and petrol, the United Kingdom commits to ensure that a tax system which aims at preventing fraud is in force in Gibraltar. On environment protection and fishing and cooperation in police and customs matters, the Protocol establishes the basis for administrative cooperation between the competent authorities. A specialised committee is also established for overseeing the application of this Protocol.

5.

The Agreement also includes the following annexes:


·Annex I on Social Security coordination

·Annex II on the provisions of Union law referred to in Article 41 i;

·Annex III on Time limits for the situations or customs procedures referred to in Article 49 (1)

· Annex IV on the list of networks, information systems and databases referred in Articles 50, 53, 99 and 100;

·Annex V on EURATOM;

·Annex VI on the list of administrative cooperation procedures referred to in Article 98;

·Annex VII on the List of acts/provisions referred to in Article 128(6)

·Annex VIII on the rules of procedure of the Joint Committee and specialised committees

·Annex IX on rules of procedure for dispute settlement;

The Agreement shall enter into force on 30 March 2019.