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Brexit: New Guidelines on the Framework for Future EU-UK Relations

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Brexit: New Guidelines on the Framework for Future EU-UK Relations BRIEFING PAPER Number 8289, 19 April 2018 Brexit: new guidelines on By Library subject the framework for future specialists EU-UK relations Contents: 1. The new guidelines: background 2. Economic relationship 3. Climate change, sustainable development and cross- border pollution 4. Reciprocal access to fishing waters 5. Free movement 6. Transport 7. UK participation in EU agencies and programmes 8. Regulatory alignment and adherence to standards 9. Enforcement and dispute settlement 10. Other areas of cooperation 11. Areas of agreement and disagreement www.parliament.uk/commons-library | intranet.parliament.uk/commons-library | [email protected] | @commonslibrary 2 Brexit: new guidelines on the framework for future EU-UK relations Contents Summary 5 1. The new guidelines: background 8 1.1 The Article 50 process 8 Drafts and revisions 8 New guidelines are adopted 9 General principles are retained 10 1.2 Political Declaration on the framework for future relations 10 What will be in it? 10 Not legally binding 11 2. Economic relationship 12 2.1 Ambitious and wide-ranging free trade agreement 12 2.2 Trade in goods 14 2.3 Appropriate customs cooperation 16 2.4 Technical barriers to trade and SPS measures 17 2.5 Voluntary regulatory cooperation 20 2.6 Trade in services 20 2.7 Public procurement markets 24 2.8 Investments 27 2.9 Protection of intellectual property rights 29 3. Climate change, sustainable development and cross- border pollution 32 UK position 32 European Parliament position 32 3.1 Climate change 33 UK position 33 European Commission position on climate change 34 3.2 Sustainable Development 35 The Sustainable Development Goals 35 EU trade policy and sustainable development 36 3.3 Cross-border pollution 37 4. Reciprocal access to fishing waters 39 4.1 Transitional Agreement Outcome 39 4.2 Fisheries in a future deal 40 5. Free movement 43 5.1 EU position 43 5.2 UK position 44 5.3 Social security 47 6. Transport 50 6.1 European Common Aviation Area (ECAA) 51 6.2 European Aviation Safety Agency (EASA) 52 6.3 Road haulage 53 7. UK participation in EU agencies and programmes 55 7.1 EU Agencies and Programmes 55 7.2 International agreements on third party participation 58 7.3 UK position 59 8. Regulatory alignment and adherence to standards 67 3 Commons Library Briefing, 19 April 2018 8.1 The ‘level playing field’ condition 67 8.2 Taxation 68 8.3 Environmental and labour standards 68 8.4 EU cherry-picking? 69 9. Enforcement and dispute settlement 70 9.1 Existing EU dispute resolution mechanisms 70 The UK position 70 9.2 CJEU legal autonomy 71 10. Other areas of cooperation 74 10.1 Law enforcement and judicial cooperation in criminal matters 74 UK position 74 EU position 76 10.2 Cooperation in foreign, security and defence policy 80 10.3 Data protection 81 The EU data protection framework 81 Third countries and adequacy 82 The UK position 82 11. Areas of agreement and disagreement 84 11.1 Agreement 84 11.2 No agreement 87 11.3 Nothing on financial services 91 How EU financial services work at present 92 What the City and the UK Government want 95 Contributing Authors: Elena Ares, Lorna Booth, Louise Butcher, Sarah Coe, Joanna Dawson, Emma Downing, Tim Edmonds, Melanie Gower, Steven Kennedy, Claire Mills, Sylvia de Mars, Vaughne Miller, Sara Priestley, Louise Smith, Richard Ware, Dominic Webb, John Woodhouse Cover page image copyright British and European flags in front of the Berlaymont building by Lieven Creemers. Copyright: European Union, 2016 / image cropped. Source: EC - Audiovisual Service 4 Brexit: new guidelines on the framework for future EU-UK relations 5 Commons Library Briefing, 19 April 2018 Summary New guidelines for the Brexit negotiations On 7 March new draft guidelines were published for the next phase of the negotiations on the framework for future relations between the EU and the UK, and in mid-March there were reports of an amended text. On 23 March 2018 the European Council adopted the new guidelines. The two earlier sets of guidelines will continue to apply. There are no new supplementary negotiating directives. A solution to the problem of how to avoid a hard border between Ireland and Northern Ireland remains an outstanding issue for this phase of the negotiations. The European Council will assess progress in ongoing issues and the framework for future relations at the summit on 28-29 June. The EU’s proposals for future EU-UK relations The new guidelines provide the following framework for future EU-UK relations: • “as close as possible a partnership with the UK”; • The EU “will preserve its autonomy in decision-making”, so UK will be excluded from participation in EU Institutions and decision-making of EU bodies, offices and agencies; • The role of the Court of Justice of the European Union (CJEU) will be “fully respected”; • A future free trade agreement will be “balanced, ambitious and wide-ranging” and finalised once the UK has left the EU; • Trade in goods should cover all sectors, maintain zero tariffs and rules of origin; • Reciprocal access to fishing waters and resources; • Customs cooperation, preserving regulatory and jurisdictional autonomy of parties and integrity of Customs Union; • Disciplines on technical barriers to trade, and sanitary and phytosanitary measures; • A framework for voluntary regulatory cooperation; • Market access to provide services under host state rules; • Provisions on access to public procurement markets, investments and protection of intellectual property rights; • “Close cooperation” on global challenges, e.g. climate change, sustainable development and cross-border pollution; • “Ambitious” free movement provisions: reciprocity and non- discrimination, coordination of social security, recognition of professional qualifications and adherence to human rights; 6 Brexit: new guidelines on the framework for future EU-UK relations • Connectivity in transport services via agreements on air transport, aviation safety, security and other modes of transport; • UK participation in e.g. research and innovation, education and culture programmes, subject to conditions for third county participation; • “Robust guarantees which ensure a level playing field” by alignment of UK rules with EU and international standards; • Law enforcement and judicial cooperation in criminal matters; • Exchanges of information, operational cooperation between law enforcement authorities, judicial cooperation in criminal matters; • “Strong cooperation” in foreign, security and defence policy; • Dialogue, consultation, coordination, exchange of information, and cooperation mechanisms, including a Security of Information Agreement; • Adherence to EU rules on data protection; • Overall management and supervision, dispute settlement and enforcement mechanisms, taking into account need for legal certainty and the autonomy of the EU legal order. The Prime Minister’s Mansion House speech The Prime Minister acknowledged in her Mansion House speech on 2 March 2018 that neither side “can have exactly what we want”, but she envisaged the following for the future EU-UK relationship: • “the same regulatory outcomes over time” for when UK banks lose ‘passporting’ rights to trade across EU; • Associate membership of European Medicines Agency, European Chemicals Agency and European Aviation Safety Agency, accepting their rules and making financial contribution; • Participation in EU science, education and cultural programmes; • A “close association with Euratom”; • Possibly UK participation in EU internal energy market; • Independent arbitration mechanism for trade disputes to replace jurisdiction of the Court of Justice of the EU; • Fairer terms for UK fishermen based on reciprocal access to waters and shared stocks management; • Mutual recognition of broadcasting rules allowing UK channels to continue transmitting in the EU; • Rail, maritime, aviation and hauliers' access to EU markets; • UK regulatory standards will be “as high as the EU's”, though “not identical”, to allow continued trade. Areas of agreement and disagreement The Prime Minister’s Mansion House speech and the European Council guidelines show that there are several broad areas of agreed pursuit, which suggest the parties will seek to agree to a future partnership that is as close as possible while recognising the autonomy of the EU legal order, and to create a ‘level playing field’ which at least covers state aid 7 Commons Library Briefing, 19 April 2018 and competition law. This would cover in substantive terms: trade in goods (with a specific commitment to no tariff barriers); customs cooperation; so-called Modes 3 and 4 of services provision (establishment abroad under ‘host state’ rules, and temporary provision of services abroad under ‘host state’ rules); inclusion of rules on the movement of people that may surpass standard trade agreement rules; recognition of respective qualifications; civil judicial cooperation in matters of family law; all forms of transport; research and innovation (suggesting Horizon2020 and other research links); education and cultural programmes (suggesting Erasmus); and law enforcement, security and judicial cooperation in criminal matters (suggesting a replacement of the European Arrest Warrant. This leaves several matters proposed by one of the parties that the other has either not addressed in the Mansion House or the European Council guidelines, or has explicitly ruled out. The areas where there are clear disagreements on both approach and form are: • Mutual recognition as a viable mechanism by which
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