Exiting the European Union Committee
Oral evidence: The progress of the UK's negotiations on EU withdrawal, HC 372
Wednesday 21 November 2018
Ordered by the House of Commons to be published on 21 November 2018.
Members present: Hilary Benn (Chair); Joanna Cherry; Sir Christopher Chope; Stephen Crabb; Mr Jonathan Djanogly; Peter Grant; Wera Hobhouse; Andrea Jenkyns; Stephen Kinnock; Jeremy Lefroy; Seema Malhotra; Mr Pat McFadden; Mr Jacob Rees‑Mogg; Emma Reynolds; Stephen Timms; Mr John Whittingdale; Hywel Williams; Sammy Wilson.
Questions 3264 ‑ 3329
Witnesses
I: Agata Gostynska‑Jakubowska, Senior Research Fellow, Centre for European Reform; Professor Franklin Dehousse, former Judge at the General Court of the European Union; Dr Holger Hestermeyer, Shell Reader in International Dispute Resolution, King’s College London.
Examination of witnesses
Witnesses: Agata Gostynska‑Jakubowska, Professor Franklin Dehousse and Dr Holger Hestermeyer.
Q3264 Chair: On behalf of the Committee, I welcome and thank our witnesses for coming before us today to give evidence on the withdrawal agreement and the draft political declaration. In particular, I welcome Agata Gostynska‑Jakubowska, senior research fellow at the Centre for European Reform; Professor Franklin Dehousse, former judge at the General Court of the European Union; and Dr Holger Hestermeyer, Shell reader in international dispute resolution for King’s College London. Unfortunately, Mats Persson, who was listed as a witness, is unable to be with us today. Thank you very much for coming. We have a lot of questions that colleagues around the table wish to ask, so as succinct answers as possible would be helpful to enable us to get through all the material. Please do not feel under an obligation, all three of you, to answer every question.
Can I begin with you, Professor Dehousse? I was reading your article this morning, in which you reflected on the famous publication by Sun Tzu, The Art of War. You made an interesting observation about the EU’s approach to the negotiations when it comes to trade. You argued that, on the one hand, the EU says, “We cannot possibly discuss trade until the second phase of the negotiations” and, on the other hand, there are aspects of trade the EU has been really keen to discuss in the first phase of the negotiations, to wit fisheries recently and protected geographical indicators. Can you explain why it is that the Commission appears to have taken a different approach on different matters?
Professor Dehousse: I would say to begin with that it is not only the Commission. It is the EU, meaning all the member states. This is not only an administrative decision—far from it. This has been negotiated in the European Council quite a few times and this is important. Secondly, basically the argumentation was that article 50 made a distinction between settling the questions of the past on one side and having a political declaration that gives a general framework for the future. The definition of the line between past and future matters is very important. My feeling was that there have sometimes been problems of interpretation of this line. Sometimes, and you see this in the withdrawal agreement, there are aspects that concern the future relationship. The situation that is created is somewhat more complex now because you have these aspects in the withdrawal agreement and they have a legally binding effect. There you have items that are debated for the political declaration now, as we speak, and other matters will still come. The definition of the global future regime has become more complex, I would say.
Here, I refer to the fact that I was present at the time of the convention, when article 50 was introduced. I must tell you that the distinction that was put in this provision was based on many preoccupations, both on the side of the member state that wants to exit, and on the side of the EU. If you begin to mix the settlement of the past and the future relationship, you create a much broader thing. This could become an approach to renegotiate an addition to the EU, which is what the authors of the treaty wanted to prevent. That is why it was introduced. I use this opportunity, because I have read a lot of times that everybody in the convention never thought this article would be applied. I must tell you this is completely false. Nobody should believe that an article is introduced carelessly to a treaty that has been discussed for 15 months, with 20,000 documents of negotiation. This is not true and that is why the balance inside the treaty and the need to protect the interests of the two parties are so important. This is a principle of international law and, in the end, the EU treaties are international law. We must have a fair and good‑faith approach to the implementation of treaties.
Q3265 Chair: That is very helpful. The negotiations on the Irish backstop have brought in questions of trade in the future, inevitably. My second question is very specific: under the backstop that has been negotiated, Northern Ireland would, in effect, remain in the customs union and the single market, and the rest of the UK would remain in a common customs area, but not with the same obligations to do with single market rules. If the backstop comes into operation, will there or will there not be friction‑free trade between the rest of the UK and the rest of the EU? Think of Dover/Calais. If the backstop is in operation, will the goods travelling back and forth be able to travel as they are now, or will there be additional checks in the backstop, because the rest of the UK is not fully in the single market for the period of the backstop, which will have an impact on how things move?
Dr Hestermeyer: There is some discussion of whether the backstop is a customs union. I would argue it is a customs union but, in terms of regulatory alignment, accepting certificates, permits and licences and the regulatory part that is required to have frictionless trade, it is weak. Accordingly, there will be more friction than there is now. There will be less friction than if there was not a customs union, but more than now.
Chair: It will be in between.
Dr Hestermeyer: Yes.
Chair: That is very helpful.
Q3266 Stephen Crabb: Building on that, can I ask about what are referred to as the level playing field provisions that appear in the text? They appear in relation to the Northern Irish backstop and they are referred to in the political declaration on the future relationship. Perhaps the panel could start off by helping us to understand what these level playing field provisions refer to in practical terms and how binding they are on the UK.
Dr Hestermeyer: I will start with the theoretical background. Why are there level playing field obligations? If you think of a customs union, it abolishes all tariffs for trade in between members of the customs union. That is the theoretical idea. Now, that takes away some policy tools to react to things. Ideally, you also take away trade defence measures, compensating for state aid, for example. The connection to that is rather clear in the EU/Turkey customs union, where there is a provision saying we are still able to countervail as long as Turkey does not sign up to state aid.
If you abolish customs and take away these possibilities to react, you will want the partners to have a somewhat level playing field. You will not want one partner to say, “We now subsidise our industry to the tune of millions”, then export everything they produce into the other market, undercutting the domestic industry through these unfair means of trade. You can discuss what is and should be part of the level playing field. Here, you have environmental obligations, labour standards and social standards to prevent labour and social dumping. State aid is really important, as is competition law. The necessity of that was also recognised in the White Paper and it is rather common in customs unions. The details are always up for discussion.
Q3267 Stephen Crabb: Is it your understanding that, in the text on the future relationship, the British Government are essentially agreeing to constrain future policy choices by agreeing now that we will be part of the level playing field rules?
Dr Hestermeyer: To be honest, the declaration as it currently stands lacks a lot of detail, so it is difficult to discuss what will or will not happen. But, yes, part of the willingness to negotiate a trade deal is to constrain policy choices. I want to refer to the report by the House of Lords on trade options, where they say any trade deal is a choice between reducing friction and protecting sovereignty. It is about the balance that you want.
Agata Gostynska‑Jakubowska: Perhaps I will build on what Holger has said. We do not have a treaty on the future relationship yet. What we have and operate on is simply an outline of the political declaration, and we need to keep that in mind. The last time I was here, we discussed how it is not a legally binding document. Obviously the parties will discuss it in good faith and do whatever it takes to negotiate what has been mentioned. We will see what the final outcome of the negotiations is but, yes, you are right to say, at least from the outline we have seen, there is this idea that what has been agreed on the common customs territory and the level playing field should be the basis for future negotiations. I can say that it is indeed the intention of some EU member states to work on this presumption, and they will be pushing hard to make sure this reference is reflected in the declaration. It is simply a political commitment and it is not binding. We will have to wait for an outcome.
Q3268 Stephen Crabb: It is aspirational, so there is nothing in the draft withdrawal agreement and political declaration that removes optionality for a future British Government, if they chose to diverge from EU standards.
Agata Gostynska‑Jakubowska: There will most probably be—I can only speculate on this—reference to the backstop. Both parties will try to reassure each other that it is either temporary or the aspiration is to go for a future relationship that would obviate the need for checks. It might be worth explaining that the text has evolved and there is now a link between the withdrawal treaty and the future, which is set out in article 184, which is something that we call the principle of the best endeavours. Parties commit to negotiate the future relationship as soon as divorce has taken place, and they will also make sure that the objectives they have set are met.
Professor Dehousse: I understand the preoccupation here with the constraining effect of what is decided now, but this is the problem of introducing parts of the future relationship in a text that is dealing with the past. We are so preoccupied with provisions and legal constraints that we forget the general outline. Let us not forget that what we see in the political declaration will be a political commitment, but I understand that you care about binding effects. The binding effects will be limited until now. Why? You see in the withdrawal agreement basically two options for the UK, and a third will be added later, which is the future relationship. The country may choose between defining a future relationship with the EU, picking the options for customs union or going to the backstop if nothing else is decided, so there is still huge leeway. I could not tell you that there are many things that are really constraining. It depends a lot on what is decided later. This is the first point.
Secondly, when you referred to the level playing field, if I read your preoccupation correctly, you see that there are areas that apply to a subsidiary regime now that may not apply in the future. We do not know. That is why the remark was to the point. The fact is that this level playing field will apply or will not apply depending on the future choice of the British Government. Even if it applies, you will notice that it is defined in a more general way. There are references to principle and to the need not to diminish the general level, but these are general provisions. These are not the types of restrictions you had in the past, when you had “directive this”, “directive that”, et cetera. You must see that there has been an effort by the negotiator, even if there is this level playing field, to make it more general and less constraining.
Dr Hestermeyer: It is important to think of the level playing field in both directions. It is also in the interest of the UK, traditionally not one of the largest subsidisers by government, to have a level playing field with countries that have a tendency to subsidise far more. We also have to consider this from the point of view of the UK’s interests.
Q3269 Mr McFadden: I would like to ask you a little more about the future relationship declaration. We had a very thick document on the withdrawal agreement and a very thin document about the future relationship. We understand that, this week, talks are taking place with various member states focused on this thinner document. What is your reading of how this might change over the coming days before the summit and what different countries are pushing for, whether Spain over Gibraltar, other countries over fishing rights or some other issues? How is this likely to change before it becomes the finally agreed document?
Agata Gostynska‑Jakubowska: What we have seen and the British Cabinet saw last week is the outline, several pages. The text will be filled in. It will not be very thick, but we now speculate that it will be more or less 20 pages, so we will not need weeks and weeks to read it. I will start by saying what it will have and then say a little bit about what it probably will not have. Basically, the following elements will be in the political declaration: the strong commitment of both sides, when it comes to co‑operation, where there is convergence. That will probably be strong co‑operation on the common foreign and security policy, common security and defence policy and research programmes in which the UK wants to continue participating, as far as I understand, and sectoral co‑operation in areas like aviation and transport.
It will be fudgier on the economic partnership, and we can discuss later why I think so. I have already mentioned there will be an intention from both sides to reiterate that there is no need to activate the backstop. We have already seen an outline, and that is important for this Committee as well, of what the governance of the future relationship will look like, more or less, but also how the parties might intend to negotiate. We have seen, for example, a reference in the outline of the political declaration to the high‑level conference that will be meeting every six months. It seems to me that both parties might have already agreed that they will come up with a programme for the negotiations and will be debriefing regularly.
You are right to say that the final text of the declaration might also include what some member states are not happy about when it comes to the withdrawal agreement. There is no scope to open the withdrawal agreement as it has been agreed, so some member states might want to find references to fish in the political declaration, which have created quite a lot of tensions on both sides of the channel, but also to the level playing field, as we discussed, and perhaps something on Gibraltar. I know that the interpretation of the Spanish Government when it comes to article 184 is different from the interpretation of the Commission.
Q3270 Mr McFadden: What do the Spanish want on Gibraltar?
Agata Gostynska‑Jakubowska: I am not an expert on Spanish EU policy, but there is a worry in Spain that this article 184, which says, “The Union and the United Kingdom shall use their best endeavours, in good faith and in full respect of their respective legal orders, to take the necessary steps to negotiate […] the agreements governing their future relationship”, would also mean the status quo concerning Gibraltar. Correct me if I am wrong. The Spanish Government would like to make clear that it is not necessary that any extension of the transition does not apply to what is now agreed on Gibraltar, but I admit I am not a real expert on that.
What will not be in the political declaration, at least from my sense of being in Brussels these days, is reference to elements of the Chequers plan. I do not think the British Government can expect the EU to agree to refer to the idea of membership of the single market for goods. There is a strong pushback from the EU and, frankly speaking, I do not think there will be a reference to simply maintaining status quo in some other important policy areas, like internal security. To sum up, there is an understanding in Brussels that the political declaration is very important to the domestic debate and a recognition that we need to be as generous as we can. The key point is that the final text has not been agreed yet, so I am becoming more worried about the 25th and leaders rubber‑stamping the text.
Q3271 Mr McFadden: Is there a reasonable chance that there will not be a rubber‑stamping of the text because of those fears?
Agata Gostynska‑Jakubowska: The condition is that the parties, both the UK and the EU 27, at the level of the negotiators, need to agree the text of the political declaration. If they do, I do not see any significant problem. Then the EU leaders will give their political endorsement, which is also worth reiterating there.
Dr Hestermeyer: One of the things is about the level of vagueness. I am looking for example at what it says about services. It is really difficult to have a political statement that leaves options open and competently say anything about it, because the devil is so much in the detail. The EU has FTAs with other partners and most favoured nation obligations that restrict what can be negotiated, to some extent. In other aspects, there are exceptions that, if you negotiate far more, will make it easier. The devil is so much in the detail that it will be quite difficult to gauge precisely where we are heading.
Q3272 Mr McFadden: Can I just ask one more thing? You have basically indicated that this is all very vague and open. We call this a blindfold Brexit, but the UK and the EU, the UK in particular, have made a commitment in the six or seven pages that have been agreed, which talks about no hard border on the island of Ireland on a permanent footing. What implications does that have to the degree of openness of the future trade relationship? All these issues have come up about the backstop, open trade across the border, the need for common regulation, not having customs checks and so on. If the need for no hard border is permanent and is not just something for a few years, what does that tell us about the shape of this future trading relationship? In other words, is it as open as we think?
Dr Hestermeyer: I am not sure I can comment on the details, but I would not say it is a blindfold Brexit. If you read the political declaration, it is ambitious. That is something we can say. The services commitments, for example, are about having far more than is currently in the WTO, so somewhere between what is in the EU and the WTO. I would not call it “blindfold”. The ambition is there, which would fit in with the backstop. As the ambition is there, there is an ambition to replace the backstop, so to have more, allowing for freer trade, which also means more obligations. That at least is my understanding.
Q3273 Mr McFadden: That is what I am driving at: what is the shape of this?
Dr Hestermeyer: It is very likely to be a customs union plus some regulatory obligations. Of course that is still very vague. That is what I gather from the language in there.
Professor Dehousse: First, we have to deal with the withdrawal agreement, but the main objective here is not to deal with the past; it is to deal with the future, hence the political importance of the declaration. Whatever is written in the declaration, there will be enormous interest in defining a completely new regime, an enormous interest by the two partners. We are too important to each other and, consequently, the backstop is a little like your second parachute if you decide to jump from the plane, but this is not the main ambition. We must not lose sight of that.
Importantly, as it is a political declaration, we must know there will be this pressure. Business will want opportunities on both sides. They are going to push to have a deep trading relationship, because it will allow for more activity, which will be a huge factor in the development of the negotiations afterwards. The point is that the political declaration, in itself, has no constraining effect and is not legally binding. This is the first thing. Secondly, it remains very general.
We can speak about the level playing field. I have seen all the treaty negotiations since 1985. I can tell you they are a little like broccoli; I can offer you at least 10 ways of cooking them and this is certainly the case for the level playing field. You can see how this is written in the backstop and other treaties. I could make a comparison here between 10 different trade treaties, and there are different solutions each time. There is a huge place for flexibility in the next negotiations. We must see this. This is certainly not blind. Everybody around the table knows what he or she wants, and this will be an open field.
Chair: That was an interesting concept of a second parachute because, if the second parachute fails, we will say, “Don’t worry; we’ll design one while we are heading towards the ground”, which is what the future negotiation is all about.
Q3274 Mr Whittingdale: Can I pursue this a little? We can speculate about the extent to which there really is enthusiasm to find an alternative for the backstop, but one thing that is plain is that, if the UK decided that there is a viable alternative to the backstop, we could only move towards it with the permission of the European Union. To what extent is there any precedent for a trade treaty from which one side is not able to withdraw without the permission of the other?
Professor Dehousse: Your question is most complex, I must tell you, and everybody is rereading the Vienna Convention on the Law of Treaties, because this is the basis of the answer to your question. If you care to read the provisions, which we are trying to do, you will immediately reach the conclusion that this is not simple. First, there is an exit from this exit, but when you read the provisions of the Vienna Convention you will need to take in many elements of the field. I cannot answer you precisely because I need to know the context in the future. There will be other things surrounding. What will be the agreements in the states and the parties implicated in those? If you read the basic provisions of international law, you will know there are always ways to exit. The question now is in which circumstances and with which conditions, et cetera. It is a complex matter. I do not believe one can answer you yes or no now, most unfortunately, as with most of the problems in this negotiation, by the way.
Q3275 Mr Whittingdale: It is the case that article 20 requires a joint decision of the UK and the EU. The words “joint decision” surely suggest that, if one party does not agree, a joint decision cannot be reached.
Dr Hestermeyer: To take a step back, it is my reading there that are two ways to get out of the backstop. One is an agreement replacing it. That is at the very beginning, in article 1. That agreement will then say that the following provisions of the backstop no longer apply. The second one is article 20 and the review. That is the provision you would turn to if you said, “We now have a technological means to do this”. Article 20 has a joint review so, yes, there is no unilateral decision, but it also stipulates a goal. It says, “The Union or the United Kingdom considers that this protocol is, in whole or in part, no longer necessary to achieve the objectives set out in article 1(3)”. There has been some discussion among experts. I tend to believe there is a good faith obligation to look at this honestly so that, if you have clear evidence that we now have the tools, I would argue that the European Union would be in breach of its good faith obligation if it said, “Do you know what? We will not even to look at it”. Of course, you will have a lot of borderline situations where you would defer to the judgment of the parties, so you would have to have clear evidence.
Q3276 Mr Whittingdale: Can I turn to another aspect, which is the dispute resolution under the terms of the withdrawal agreement? There is an intention to set up an arbitration panel with representation from both sides, which is what you would expect. It then goes on in article 174 to say that questions of the interpretation of EU law are for the ECJ. Therefore, that will dictate to the arbitration panel what its findings should be. Is that your understanding as well?
Dr Hestermeyer: First, this is a diktat of EU constitutional law. The Court of Justice has developed a doctrine of autonomy of EU law that has evolved over the years. I would say it has gotten far stricter and possibly a little out of control. The last two cases that are relevant are the joining of the European Convention on Human Rights and a particular case called Achmea, in which the Court ruled that a bilateral investment treaty that is between EU countries that makes EU law applicable and does not have a provision on such a referral violates EU law. The first thing is that this provision is inescapable for the level of integration we want under the current case law of the Court of Justice. You will find a similar provision in article 322(2) of the EU/Ukraine agreement, for example.
As to the binding character, yes, you are absolutely right. The Court of Justice decides the matter of EU law, but it is also important to see the flexibility in that mechanism. By the way, this is why and how the referral mechanism was originally designed in the European treaties. The idea is, if the Court of Justice only decides the matter of EU law, there is still the flexibility to render the final decision for the national courts or, in this case, the arbitration panel. Trust me, judges find ways of saying, “This is what the EU law says and this is what the non‑EU law says, and so we come to the decision we wanted anyway”. There are limits to that, but the EU law matter will be decided authoritatively by the Court of Justice, although there is still the freedom for the arbitration panel to decide on other matters.
Agata Gostynska‑Jakubowska: I am looking at section (2) of article 174, which the honourable Member was referring to, and indeed, if the arbitration panel decides that the question does not concern the implementation of EU law and hence reference to the Court of Justice is not needed, it needs to give reasons why it thinks so and then the parties can challenge that within 10 days following the assessments. Am I correct? You have that extra layer to that procedure.
Professor Dehousse: First, my honourable neighbour is perfectly right. You need to read all the elements of article 174. As a matter of fact, the first section is the traditional mechanism, but you must realise that, in the second part, the EU negotiators have tried to stretch the possibilities in the maximal way. You must see that this thing is something new that has tried here to use the autonomy that could be given in the maximal way. That is why some EU member states or institutions are not fully happy about this, I must tell you. They have the impression that the maximal effort has been made because you can see here, in paragraph 2, the arbitration panel can make an autonomous assessment within 10 days, etc. In the end, there is some power of autonomy in this panel, which is important.
You can see also the way—and it is smartly done, I must say—you have the panel and then the committee, and you can go back to the committee. You can be sure that the people in this committee will not want to multiply submissions to the panel, first, because it takes time and, secondly, because they do not control the outcome. In my experience, politicians always prefer to control the outcome rather than giving it to panels. That is why I will not concentrate too much on the panel. When you see this system classically exist in other agreements, it is very seldom used, because the pressure of the economic interest is so strong that, most of the time, there is a political agreement. It is also a kind of second parachute, but you could check this qualification by verifying how much it is used. In some agreements it is more or less never used, but I understand the worry nonetheless.
Q3277 Mr Whittingdale: As Dr Hestermeyer referred to, the only precedent for this is the agreement with the Eastern Partnership countries, Moldova, Ukraine and Georgia. You also referred to how judges find a way around things. I would like to quote to you a distinguished previous witness to this Committee, Dr Baudenbacher, who said, “This is not a real arbitration tribunal—behind it the ECJ decides everything. This is taken from the Ukraine agreement. It is absolutely unbelievable that a country like the UK, which was the first country to accept independent courts, would subject itself to this”. Do you think he is wrong?
Dr Hestermeyer: Yes, I actually do. I respect his proposal for docking to the EFTA court. That was not a bad proposal. I quite liked it, but now he is overshooting the target. There is a problem here, which is a matter of choice. How much alignment do you want? How much frictionless trade do you want? To some extent, because the EU is already a supranational organisation, this is a structural problem with the negotiations. The member states already have their method for organising trade and they cannot have a second method on top. Simplifying trade means aligning with EU law and, under the current case law of the Court of Justice, this means the Court of Justice needs to have a role. The only other option is not to do it. That is simply the constraint in the system. You could stretch it, which is the Baudenbacher proposal, and have the EFTA docking mechanism, which comes with its own problems. There I would probably agree with Professor Baudenbacher that there is some orientation with the case law of the court, so you cannot escape the Court of Justice if you have that integration element.
Q3278 Wera Hobhouse: Can I come back to the political declaration? Dr Hestermeyer, you said the devil is in the detail, but clearly there is no detail. When we talked to Guy Verhofstadt a few months ago, he said it is not about the detail; it has to be specific. What would you say is specific about this political declaration? In the end, the European Parliament has to agree to this as well. I wonder whether you can gather what somebody like Guy Verhofstadt would call specific.
Dr Hestermeyer: I wonder whether that is just semantics. Saying “no detail but specifics” stretches my synonym scale. What is in there is a commitment towards simplifying trade. At least there have been statements from some MEPs saying, “We will hold both sides to this. We will not be happy about a deal that does not go along with that”. For example, if it says “appropriate arrangements on professional qualifications” and the final deal does not say anything about recognising professional qualifications anywhere, it would make MEPs very unhappy. That is where we are going.
Then what exactly will be in there? Will this just be limited to lawyers? That would make me happy, but perhaps not many other people. Will it also stretch to other professions? Which professions will be covered and how will this be done? That is difficult to gauge at the moment. Hence it is difficult to say what the value of this will be but, if there is nothing in there, MEPs will be unhappy and say it goes against the declaration.
Agata Gostynska‑Jakubowska: The way we have to read this political declaration is that we basically create a framework and then fill it up as we go. I cannot speak for Mr Verhofstadt, but that is also the idea behind his preference for the association agreement, which would underpin various elements of the negotiations. You have an umbrella, but you also have some flexibility to become more ambitious if you want.
I have one general point on the political declaration, something to which I have given quite a lot of thought recently. The fact that it is not detailed also serves the EU itself. We are just about to enter the EU reshuffle in 2019, and we cannot say with 100% certainty what kind of European Parliament we will have. I can probably tell you now that it will be more fragmented than it is, hence it will be more difficult to strike any deals within the European Parliament. The same goes for other institutions and the European Commission. In a way, it also serves the EU to keep it general, because details lock you into something that you might not want to pursue in the future.
Professor Dehousse: We must see what we are speaking about here when we ask for specifics. Let us say this declaration takes 20 pages, but the future agreement will be one of the most important agreements for the EU—for the UK, but on the EU’s side too. Already, CETA is a treaty of 1,300 pages. Ukraine is 1,600 pages. You see the difference between your 20 pages of general objectives, and one thousand and something pages. Obviously you are not going to get the same level of detail or specifics at all. This is a programme for the negotiation and it must be seen as such. That is why I say that, later, you can adjust your cooking in many ways.
Q3279 Emma Reynolds: Could I ask you, Agata, to expand on what you just said about the changing political make‑up of the EU institutions after the European elections this year? Even if the political declaration was specific or detailed—I am not entirely sure what the difference might be—is it not open to the EU, given it is not a legally binding document, to change some of the language or specifics if the political make‑up of the institutions was quite different as a result of the European Parliament elections?
Agata Gostynska‑Jakubowska: Basically, the future EU architecture will, in a way, determine the EU objectives. I can say now that the EU will start working towards developing its negotiating mandate probably before the UK has left the EU. You already see that in the outline of the political declaration.
Q3280 Emma Reynolds: Could that change as a result of political change at the European level?
Agata Gostynska‑Jakubowska: I cannot speculate on what the make‑up will be, but the European Parliament might take different views on various issues. It might be less liberally oriented. I cannot say, but the departure of all your colleagues will slightly shift the balance, perhaps towards a more protectionist orientation. Some of the seats of your colleagues in the European Parliament will be taken up by, among others, French MEPs. At this stage, it is difficult to say, but we will probably have more details between December and March, and especially after the agreement is concluded, but before it enters into force. The parties in this outline at least committed to start preparing structures for the future negotiations, so they fulfil article 184. We will know more or less soon where the member states are heading.
Professor Dehousse: Of course you have a political declaration, which is a general framework. First, it is so general that there is a lot of leeway anyway, but what you say applies to both parties. That is why I would not concentrate too much on the binding effect of the political declaration. This is an objective and it is a bilateral process, meaning that, if you decide to change something in the negotiation, you expose yourself to adjustments by the other party. Even though you see what could happen at the European Parliament, this is a heavy process. By the way, the Parliament is far from being the only actor in this thing. A proposal has to come from the Commission, which is still there, and you also have the Council. You need to be a very wise diviner to know what is going to happen.
Q3281 Emma Reynolds: That is my point. That is what I am trying to get at. Even if we have a 20‑page political declaration, it will still be highly uncertain what kind of future relationship we will end up with. There could be a change of leadership in the UK. You are absolutely right; it is not just on one side. There certainly will be changes in the European Parliament. Some predict that the populists in Europe will do better at the European Parliament elections. Let us see; we do not know. That will also determine the kind of European Commission we are going to have, and obviously the European Council make‑up changes all the time because of elections in different member states. My point is that we will have to take the 20 pages with a pinch of salt, because they could change significantly after March next year. Is that something you agree with?
Agata Gostynska‑Jakubowska: The key is that it is not legally binding. The professor has already underlined that. It is a sort of political objective. I still believe the framework will remain. How we will fill it in is open to discussion. When you quoted Mr Verhofstadt and how he wanted it to be specific, perhaps by specifics he meant to send the message across that this will be an unprecedented partnership that will be ambitious. There is no doubt that both sides want that.
Q3282 Emma Reynolds: Very briefly, I have a completely different question on the backstop. Article 1(4) of the protocol on Northern Ireland/Ireland suggests that the backstop is only intended to apply temporarily. What does this mean in practice? Does it mean days, weeks, months or decades? While the backstop is in place, if it is introduced, if the UK negotiated a free trade agreement, say with the United States, on services and goods, would those provisions apply to Northern Ireland? If we were to negotiate with them, how would free trade agreements interact with the backstop and how temporary would the backstop be? Those are my two questions.
Dr Hestermeyer: Legally, there are two ways to get out of the backstop. There is the article 20 review and the replacement by a later agreement. Within that context, leaving aside the Vienna Convention on the Law of Treaties for a while, those are the two ways to get out of it and otherwise there would be a lock‑in. To what extent would that prevent extending EU‑UK trade policy to Northern Ireland? It would be to a very large extent. On services, I confess that I have not gone through all the annexe V EU law documents that would be binding on Northern Ireland, but it was my feeling that it is weaker on services, because this is mostly targeted at goods. Accordingly, a services deal could be extended to Northern Ireland. Of course there is devolution, but it is my understanding that a services deal could be extended.
Emma Reynolds: On goods, a free trade agreement would not apply if the backstop was in place.
Dr Hestermeyer: On goods it would not, because Northern Ireland would be under the Union Customs Code. A large number of relevant legal documents to regulate and simplify trade in goods between Northern Ireland and Ireland, and guarantee there are no borders there, would prevent certain things; for example I saw GMOs in the document. Northern Ireland would be locked into those regulations.
I think Professor Baudenbacher’s proposal for docking would guard sovereignty a bit more, but we are not speaking about worlds of difference. We are in the territory of preferable but acceptable.
Q3283 Chair: Just for clarity, suppose in the negotiations the UK said, “Okay, we are going for Canada. We want a Canada deal”. The Prime Minister has said that a Canada deal would not keep an open border. If the UK went for Canada, would the backstop in relation to Northern Ireland continue to operate? Could that be done just by the Canada‑style agreement having a bit that refers to that or would you have to go back and amend this draft withdrawal agreement? It is important to be clear where that would leave Northern Ireland in those circumstances.
Dr Hestermeyer: My current understanding—and please correct me if my current understanding is wrong, because I did not sleep a lot while trying to read the agreement—is that any deal would specify and say in detail—this is article 1 of the protocol—which parts of the protocol no longer apply. Theoretically, and this is just theory, if the EU and the UK say, “Our future is Canada; the backstop ends”, then the backstop ends. Now, given what the parties have said, I do not think the EU would say that. The EU would say, “Canada does not keep an open border. Our goal, stated specifically in article 20, to keep an open border would not be reached. Accordingly, we will not put anything in there”. Then, in my understanding, the backstop would continue to apply as it is currently written.
Q3284 Chair: Would that be to Northern Ireland only if the rest of the UK decided a Canada deal is fine? Is that correct?
Dr Hestermeyer: Yes, but that would also be specified in the treaty. It would say, “We now replace the UK bit of the backstop”.
Chair: That is very helpful.
Q3285 Mr Djanogly: We need to go over the position for a no‑deal scenario, which is a possibility. I would be interested to hear the witnesses’ views regarding the state of play of the EU’s preparations for no deal, in particular for UK citizens who would be left in the European Union, and perhaps your views on the possibility of small multi‑deals. People keep talking about no deal, but it is unlikely to be that. There is the possibility of multi‑deals to mitigate the impact.
Agata Gostynska‑Jakubowska: The EU thinking is as follows. The EU is hoping for the best, but preparing for the worst. This is why, in parallel to the negotiations on the withdrawal agreement, the EU and member states—and it is worth keeping the distinction—have started preparing for a no‑deal scenario. We should probably be speaking of the preparations plus contingency planning on three levels: the EU level, the member state level and the stakeholder level, including businesses. I was going to show you a communication that the Commission recently published. It did not draw that much attention, because it coincided with the news about the deal, so very few of us read the communication at that point in time. Basically, the Commission published sectoral notes on the consequences of an unordered withdrawal and started seminars with the member states. Those seminars are taking place in Brussels and they will continue until the end of this year, if I am correct.
What is important, and probably what you are interested in, is that the Commission is co‑ordinating measures that member states need to adopt to ensure that they are in line with EU law. What is interesting is that the Commission’s communication urges member states to refrain from any bilateral discussions with the UK. There are two reasons; one of them is legal and the other is political. The legal one is that the Commission has pointed out that bilateral solutions would simply be incompatible with the division of competences. In areas where the EU has exclusive competences, member states should not engage in any discussions about mini‑deals.
Q3286 Mr Djanogly: Is this now, rather than after we leave, or both?
Agata Gostynska‑Jakubowska: Even before 29 March 2019, if there is no deal in January or February, and this is speculation, the financial markets will go crazy. There might be this temptation to discuss bilaterally how some of the issues will be resolved, but my point is that the Commission is trying to make sure that member states are not entering into any bilateral discussions with the EU, because it could be a violation of the division of competences but also, and this is also referred to in the communication, because it could simply jeopardise the integrity of the Union. We now come back to this point of picking out the strategy of various member states, as seemed to be the Government’s thinking in the past.
To sum up, in effect, there has been no discussion on any mini‑deals and I think that will remain the case. You can see the idea behind that. The EU wants to make sure that the EU 27 is united, at the end of the day, even if there is no deal. Imagine there was a leak of the preparations for having a mini‑deal. That decreases the appetite to strike an orderly withdrawal.
Dr Hestermeyer: For any strategy involving mini‑deals, it is vital to look at the division of competences to find the right partners for those mini‑deals, because they are binding. The timing would be crucial. The politics surrounding it mean you cannot do mini‑deals now, because they would reduce any appetite for deal and also end in disaster.
I think there was a misunderstanding with Mr Benn. Under article 2(2), even if there was a Canada deal, it would have to specifically state, “We want to supersede the customs union, the whole‑UK backstop”. It would need to state that. It would not automatically end.
Q3287 Mr Djanogly: How long do you think the mini‑deals would last if we came to them?
Dr Hestermeyer: It is also important in this context that there is no possibility to default to no deal and then sign up to the whole deal later, because the article 50 competence would be gone. The article 50 competence is rather extraordinary in the way it is applied. We would be reduced to mini‑deals. How long they would last is difficult to say and depends very much on the area we are dealing with. Some of them are likely to be designed just to be regular deals, if you think of how to govern airspace and things like that. They would become regular deals, if they were made.
Professor Dehousse: We need to take the context into consideration here, which is why I am worried from the perspective of business. Before wondering how long these deals will last, I would like to know how much time they will require to be made. As you know, the EU is a rather heavy beast in its processes. When we speak about deals, we should not have the impression that the Commission is going to come here and say, “Ah, let’s put something on paper and make this function”. It will not happen like that. There will be all these processes. That is why I believe that people sometimes do not realise that this alternative would be time consuming. Another thing to take into consideration is that this is a political responsibility and we are right at the end of an EU legislature, which could be an additional problem, because you need to find authorisation and people are not mobilised at all in this period to deal with urgency. We must not believe that this will be an instantaneous process.
Q3288 Mr Djanogly: The point was made that the Commission is saying there should not be bilateral deals and it should be negotiated with the Commission. I am not even thinking bilaterally; I am thinking in business terms, place by place. For instance, Calais could do a deal with Dover, the two ports talking to each other. Are you saying that would be banned by the Commission?
Dr Hestermeyer: You would have to look at what precisely the places can do. You also turn to the matter of national law and how the division of competences works there. There are certainly things that the ports can do as a business deal, and no one can prevent them from doing those, but there are limits to what they can do because of the way that nations are structured. If they cannot do it, they cannot do it. If the EU needs to do it, there needs to be a mandate to negotiate and this is also a political constraint. You cannot pass a mandate to have emergency deals when you are still negotiating the deal, because it would convey a pessimism that nobody wants in this difficult situation.
Agata Gostynska‑Jakubowska: As a final point, this communication I referred to also made clear that, in some areas, the EU, or the Commission in this case, would be assisting businesses, but there might be problems with state aid. This is where the EU might need to step up.
On the point that we are coming to an end of the EU legislative period, the Commission has underlined that there will be some EU regulations and directives needed in the case of a no‑deal scenario. They will absolutely be prioritised. The path has already been prepared to push them through the EU’s machinery as fast as possible.
Professor Dehousse: It is not so easy, because you must realise that the negotiations have dealt extensively with the problem of the dispute settlement. If we make deals, we will need to design a system for a possible dispute inside the deals. If you make a few deals, you will have a few debates of that nature. What I want to convey from the point of view of the enterprise is that this will really not be a piece of cake.
Q3289 Seema Malhotra: I am keen to come back to the issue of the EU’s perspective, particularly on the withdrawal agreement. You have laid out a clear picture of the intent of the EU 27 to stick together, it would appear, so there is some order despite the differences and individual nations’ concerns. To put this question to you first, Ms Gostynska‑Jakubowska, can you summarise what the overall reaction of the EU 27 has been to the withdrawal agreement and what the mood is?
Agata Gostynska‑Jakubowska: Overall, the EU 27 member states have been quite optimistic and satisfied, and that is in the public domain so you are all aware of this. They praised the work of the negotiators. The work that the EU negotiators have done, particularly in the last two weeks when they were in the so‑called tunnel, was appreciated. Having said that, some member states have concerns about some elements of the withdrawal agreement. Again, we all read the press and we have heard of some specific examples. Please do not question me on Gibraltar, because I am not the right person to comment on this, but I have an impression that some member states have the impression that perhaps the level playing field provisions are not going far enough. Some member states also have concerns about fish, hoping there could be a clearer reference to access for the EU to British waters. These are issues that member states have not been particularly happy about but, in general, there is an understanding that there is little room, or actually no room, to reopen the withdrawal agreement.
That is a key point I wanted to make here today. Any attempts to renegotiate bits and pieces of the withdrawal agreement would probably fail, also because—and it is worth making this clear—the EU already thinks it has made a series of concessions to the UK. We had a discussion before we entered this room and we agree that the EU has evolved in its thinking. It has backed down on some issues and it is unlikely it would concede even more. The idea of slightly reformulating the backstop and creating a whole‑UK customs union was already seen in Brussels as a concession, which is why some member states have pushed so hard for level playing field provisions. Some of them would like the UK to dynamically follow the EU regulations, rather than statically, and it is the same with governance. My point is that there are some issues of concern but, overall, the EU 27 understands that this is the best we could have achieved, given the circumstances and the red lines the British Government have sketched.
Q3290 Seema Malhotra: Is there a sense in which those issues, whether around fisheries policy and access, may be deferred to the political declaration and the working‑up of that, because there is some space? Would you expect to see some movement on that this week?
Agata Gostynska‑Jakubowska: It is difficult to speculate, so please excuse me for not being so keen to do it. Also, the talks are ongoing and it is a moving target. At least in the outline we have seen there is reference to fishing opportunities, and I have underlined one of the paragraphs, which says, “Within the context of the overall economic partnership, establishment of a new fisheries agreement on, inter alia, access to waters and quota shares, to be in place in time to be used for determining fishing opportunities for the first year after the transition period”. I suspect this is going to be in the political declaration in this way, particularly as France is not the only member state that is concerned about fish.
Q3291 Seema Malhotra: Can I put the question to Professor Dehousse and Dr Hestermeyer? Do you have anything to add on where the EU is right now? Professor, I know you made a comment about how much more space there is for negotiation in the future, but one of the sticking points is lack of certainty about how much we will be stuck to in the political declaration, which is one reason why people may hold back from supporting the withdrawal agreement. I am interesting in your perspectives.
Professor Dehousse: I have to tell you that what has been described is perfectly right, but one feels that there is a little bit of worry in some member states. They approved the negotiation process, but when you look at the position of the EU at the beginning, 18 months ago, and what it is now they have the impression that a lot of things have changed, and some of them are legally binding. I could tell you about the place of the European Court of Justice. At the beginning, it was said that this is the Court of Justice, full stop. This is not the case any more. This is not the case also on the question of EU and UK residents. This has changed too, in that you have a transitory period of eight years.
I come back to the question about the panel. I have to disagree with my colleague Professor Baudenbacher, because this is not fully the Ukraine system here. You have an addition, which is precisely the addition of article 174(2), which is that you have more autonomy in the panel and a greater role for the committee. The people in some member states say, “We have conceded this”. They began with the idea that I always opposed, which is that you could not have a deal separating the four freedoms. Now you have an option that is a separation of the four freedoms. They went into the negotiation with the idea that they needed a full level playing field and now you have a partial level playing field. You have to see that these elements are not in the political declaration and they feel they are legally constraining. There is a feeling that the potentialities have been stretched to the maximum to get the best deal between the EU and the UK, considering this is one of the most fundamental trade relationships for the future. You must see this from the perspective of the Union.
Dr Hestermeyer: I agree. What was particularly difficult and continues to be difficult for all of us was the introduction of the all‑UK backstop, which changed the nature of the whole deal and was done comparatively quickly. It was something, if I remember, on which the EU was afraid that Northern Ireland would be used to get an all‑UK deal and now we are there. No one is particularly happy about everything, which lies in the nature of compromises. It is clearly a difficult text. I would not share the worries about the ECJ; my worries are more about Northern Ireland and how sustainable that is.
I feel that some member states are used to trade negotiations, in which you often use the power of the market you have to put pressure on minor things that, to outsiders, look rather silly at times, cheese for example. You see that in the fisheries debate. If you look at the way the backstop is currently designed, the hammer that remains to get fisheries in there is tariffs on fish. What you would normally do in trade negotiations and what the US does is to say, “You will not get anything until you give us this specific detail”. This is why some countries are unhappy, as this negotiating power is now lost in the withdrawal agreement and you will have a deal that is tariffs versus access.
Q3292 Seema Malhotra: Thank you for those comments. I will ask you this final question. We are in a difficult time. There may be some sort of stalemate. Under what circumstances, if any, could you see the EU 27 considering a UK request to extend the article 50 period and how long could that be?
Chair: If one of you could answer that, it would be helpful.
Agata Gostynska‑Jakubowska: I am happy to take this one, as an intellectual exercise. There is very little appetite to extend article 50. The question is in what circumstances it could be extended. If the British Government want to extend negotiations simply to renegotiate some bits and pieces of the withdrawal agreement, it is extremely unlikely. If there was—and this is again me speculating—chaos in the UK and the British Government decided to legislate for the referendum, or there were elections, perhaps the EU 27 might be slightly more accommodating. I discussed this with Mr Kinnock last time, and I hold to what I said: there will be very little appetite to extend the article 50 deadline beyond the European Parliament elections. I hold by that.
There are numerous practical obstacles, not only the ones we discussed at that time, meaning how we organise elections. If the UK is a member state, you cannot deny the right of British citizens to participate in elections. There are perhaps other ways to go around it. My key point here is to remember that EU leaders will be in a campaigning mode in the European Parliament election. They might worry that, if they decide to extend article 50 negotiations, the populists back home in their own countries will come and say, “You are basically making it difficult for the British people to leave, even though they voted this way”. This is not my thinking, and I want to underline this, because we could probably discuss whether there is a legitimate case for another referendum for hours and hours. I am just trying to explain the thinking in the EU 27.
Chair: That is very helpful, but we have to move on. That was a very clear answer.
Q3293 Joanna Cherry: I want to come back to the subject of fishing rights, which you will be aware is a big issue in Scotland and in Scottish politics. You said that France is not the only country concerned about fish. I would be right in saying that Belgium, Sweden, the Netherlands, Denmark, Ireland and Spain all have concerns about fishing rights. That is correct; is it not?
Agata Gostynska‑Jakubowska: I have heard that some of those member states do.
Q3294 Joanna Cherry: Yesterday, there was a report in the Financial Times that said, “No element of the declaration on future relations exercises member states more than fishing rights”. There are “about eight countries whose fishermen rely on access to British waters”. It lists some of those countries I have just mentioned and says that they want “clearer guarantees on quota sharing continuing after Brexit”. Do you think that is a fair description of what is going on at the moment in relation to fishing and what might be in the future political declaration?
Agata Gostynska‑Jakubowska: What I can say is that fish is a hot topic in Brussels at the moment.
Q3295 Joanna Cherry: The FT is saying that the European Union may push for the political declaration to make explicit what has been the EU’s longstanding position that “Britain’s future tariff and quota‑free access to European markets—in all sectors—depends on a satisfactory deal on fishing rights”.
Dr Hestermeyer: We might be drawing from the same sources here, but this coincides with what I said before. In trade deals, you often use the hammer of the overall deal, and here in the backstop that hammer was given away. Some countries are unhappy, whereas others are not unhappy and it was obviously done. This clip probably carries over to that.
Q3296 Joanna Cherry: I will come back to the backstop in a moment. You are agreeing then with what I have quoted from the Financial Times. It is quite possible that the EU may say to the United Kingdom, “If you want to keep tariff and quota‑free access to European markets, in all sectors, there must be reciprocal access to British waters for European Union nations”.
Dr Hestermeyer: That is probably going to be a dispute in the Council. I do not think all member states would agree with that position.
Joanna Cherry: A number of member states will.
Dr Hestermeyer: A number of member states would, yes.
Joanna Cherry: There will be perhaps up to eight, led by the French.
Dr Hestermeyer: You have more insight into the political system.
Agata Gostynska‑Jakubowska: I am not in the room. I know that France has had issues with fish but, at the end of the day, the EU is a consensual beast, so there will be an attempt to strike compromises. It is also important to say that Brussels is aware that this is a touchy and problematic issue in the UK. Brussels is not blind about that.
Q3297 Joanna Cherry: Can we look at what the backstop says about fishing rights? Look at article 6(2) of the Northern Irish protocol. This has been overlooked by most commentators, but it has been drawn to my attention by the Scottish Centre on European Relations in Edinburgh. Article 6(2) deals with some fishing rights in relation to Northern Ireland. You will see that article 6(2), according to my reading, seems to say that the customs code “shall apply to and in the United Kingdom in respect of Northern Ireland (not including the territorial waters of the United Kingdom). However, the joint committee shall establish the conditions, including in quantitative terms, under which certain fishery and aquaculture products brought into the customs territory of the Union […] by vessels flying the flag of the United Kingdom and registered in Northern Ireland are exempted from duties”. What does that mean? Can you explain to us what that means and its significance?
Dr Hestermeyer: I will try to. I am not an expert on fisheries, but I have read these provisions carefully. The first thing to point out is that the provision on entry into force, which is 185 of the withdrawal agreement, specifies which parts of the agreement come into force immediately and which parts come into force after transition. These two provisions on fisheries come into force immediately, which has to do with the fact that they point to a decision that still has to be taken.
The first provision on fisheries and aquaculture is subparagraph 4 of article 6(1): “By derogation from the third subparagraph, fishery and aquaculture products, as set out in annexe I” are excluded from annexes II and IV. That basically says, “As to the customs union, the no-tariff access for fisheries and aquaculture is out”. Then you come to the paragraph that you said is also coming into force immediately, which talks about “conditions, including in quantitative terms” and the “customs territory of the Union defined in article 4”. That is always a reference to Northern Ireland, because it remains in the Union Customs Code. This applies to “vessels flying the flag of the United Kingdom and registered in Northern Ireland”, so they would still have tariff‑free access, however, within certain quantitative terms and the conditions will be fixed by the joint committee. This is the reason that both of these provisions come into force immediately: the joint committee can work on this immediately. That is why it is brought into force immediately. Northern Ireland will get special treatment because it is in the Union Customs Code. What conditions precisely will be fixed by the joint committee.
Q3298 Joanna Cherry: This article guarantees that, subject to the fixing of conditions, vessels registered in Northern Ireland will have an advantage over vessels registered in Scotland and other parts of the United Kingdom.
Dr Hestermeyer: Yes, that is my understanding.
Q3299 Joanna Cherry: It is quite important, is it not?
Dr Hestermeyer: Yes, I know.
Q3300 Joanna Cherry: It has not been talked about very much, but this could have a major impact on the fishing industry and aquaculture in other parts of the UK, including Scotland. Is that not right?
Dr Hestermeyer: Yes and if I remember correctly—but you will know better than me—strangely, fish consumption and production do not coincide, because the majority of the fish are exported and not eaten in the UK. That means tariffs are a major concern. The free trade agreements that the EU negotiates probably will not alleviate the situation, because there are more competitors. Yes, I agree that is a concern here, but it follows the logic of the Northern Ireland backstop and the way it is constructed at the moment.
Q3301 Joanna Cherry: I want to come in quickly on the Court of Justice. We have talked extensively about article 174. I will not go back there, but it is fair to say that, elsewhere in the treaty, articles 87, 89, 158 and, very importantly, in the Northern Irish protocol, article 14(4), the Court of Justice is still going to have significant jurisdiction over matters in the United Kingdom and particularly in Northern Ireland. That is right, is it not?
Dr Hestermeyer: In Northern Ireland, absolutely it will, as a consequence of being in the Union’s customs code. If you are there, you will want to defend and attack measures. Those are measures of EU law, so having the ECJ there is a logical consequence. In article 86 and onwards, these are transitional provisions. They relate to cases that have started before and then there are time periods. For example, for citizens’ rights, cases filed within eight years after the end of transition—but please do not kill me if that is not the wording—will still be able to go to the ECJ, but these will all run out. This is different for Northern Ireland.
Q3302 Joanna Cherry: For four years, the Court of Justice, under articles 87 and 89, has continued jurisdiction in cases brought by the Commission against the United Kingdom for breach of EU law or part IV of the withdrawal agreement during the transition period and for up to four years after the transition period.
Dr Hestermeyer: This is also a consequence of the fact that these cases take time. You first have to write a letter, and so on and so forth. The logical consequence of this is that you let the jurisdiction lap over. For me, these are just logical things you have, to regulate proceedings that have started.
Q3303 Joanna Cherry: We as lawyers see that. The man and woman in the street need to understand that, as a result of this withdrawal agreement, the Commission will be able to continue to bring cases against the UK, in the Court of Justice, for four years after the end of the transition period. There is going to be litigation in the Court of Justice for a considerable amount of time, or there could be, after the transition period ends.
Dr Hestermeyer: Yes, but the violation needs to be before.
Professor Dehousse: This exclusively concerns facts that happened before the end of the transition period, so there is no extension in time of the opportunity to contest some acts in the United Kingdom. It is also a settlement of the past, considering the length of the procedures. You know very well we are going to a national judicial procedure. There will be a request for preliminary holding and all this takes time. You need translations. This is to adjust this. There will be no new facts taken into consideration after four years.
Q3304 Chair: To clarify that, if it only applies to infringements that may have occurred before the end of the transition, why does the Commission need four years to bring the matter before the Court? Does that just reflect how long it takes to get to the door of the Court?
Agata Gostynska‑Jakubowska: It is just because of the length of the infringement procedures. You have to keep in mind that it is not that, on day one, the Commission already brings the case to the Court. It is formal notice; then you give time to the member state to explain whether it actually violated the EU regulations, then reasoned opinion. It takes time.
Chair: It gives them enough time to get there. That is really helpful.
Q3305 Hywel Williams: I apologise for not being here for the first part of your evidence. I want to ask about the effect of the backstop on trade between the UK, specifically Welsh ports, and Ireland, and more specifically Dublin and Holyhead. What effect will the backstop have if it is applied to Northern Ireland?
Dr Hestermeyer: Jump in if I say anything very foolish. This is a very complex bit of the agreement and there are several parts to it. There is the normal text of the protocol. There is annexe II, which regulates trade. Some of this is normal customs union language. A lot of the wording is taken from the GATT and is rather familiar. Some other wording is not that familiar. Then annexe III is quite interesting. In annexe III, if you want a backstop, not that we would not have had enough backstops, there are more detailed rules that will apply if the joint committee cannot come up with anything better in the meantime.
It is fair to say what will happen. My understanding is that trade from Ireland to Northern Ireland would largely continue as now. For trade from the UK to Northern Ireland it is important to see there are already some problems. Ireland is an epidemiological area and, accordingly, if you export live animals right now they are checked in a port, transported to Northern Ireland and the other way round. Northern Ireland will remain in the SPS bit, in the sanitary and phytosanitary measures bit, of the EU. The UK will not and that will complicate things a little. There is a movement certificate—regulated in annexe III—that applies, because the UK is not in the Union Customs Code, so things will get a bit more difficult, but they have tried to minimise the impact. That is my assessment of what is going on.
Professor Dehousse: You can see that, in some areas of the backstop, the role of the joint committee will be quite important, so this is not in a finished state. There will be developments. There are a lot of provisions and I am sure you know there is a process in the WTO called trade facilitation. If this structure begins to function, they will take it and try to adjust the situation. They had to take a lot of provisions. This is not perfect, but there will be adjustments. That is why this is not the end of the debate. If this text enters into function, there quickly be developments, which have already been foreseen, as Dr Hestermeyer indicated.
Q3306 Stephen Kinnock: We have established that the transition period will be an opportunity for the United Kingdom and the European Union to turn the 20 pages of the political declaration that we will have by the end of the summit on 25 November into 1,600 pages by 31 December 2020. First, is it not an absolute pipedream to believe that it is possible to turn a political declaration of 20 pages, on 25 November, now, into an international treaty of that detail and importance, particularly given that next year will be a year of tremendous institutional and political change in Brussels? Can you give me your overall assessment of the extent to which that is realistic, or is it just fantasy politics?
Dr Hestermeyer: Looking at the normal length that trade negotiations go through, I have always favoured a possibility to extend the transition period and I am happy that it is in there now, because I think it is a pipedream to do it within the original period. I also have to confess that I am impressed by how quickly they negotiated a whole‑UK customs union, which none of us would have thought possible either, quite frankly. If there is enough pressure, speed can work. I have read that the UK is trying to convince the EU to pass a mandate rather quickly on doing the negotiations. I would urge the Government to do that and get that out of the way before politics take over in the EU so that, at some level, negotiations can continue to work. Within the extended timeframe it is still tough, but my hope is that it would be possible to get at least the main things done.
Agata Gostynska‑Jakubowska: My sense is that it would be a tall order to negotiate the future relationship in 20 months. It is rather unlikely. In fact, at some point I found an official EU guide to international negotiations that said reaching a final agreement usually takes several years. We know that, and it involves over 30 stages from getting Council’s authorisation to entering into force. Knowing that the EU’s procedural machinery also takes time to get to speed, it is rather ambitious.
Q3307 Stephen Kinnock: There is a strong consensus that an extension to the transition period will be required. That decision has to be made and finalised by June 2020, does it not?
Agata Gostynska‑Jakubowska: It is July.
Dr Hestermeyer: I think it is July.
Q3308 Stephen Kinnock: Would it be accurate to say that the cliff edge we face to get these negotiations finalised as a third country, under article 218, could well be in June 2020, not December 2020, assuming that an extension to the transition period is going to be required and that decision, according to the withdrawal agreement, has to be made by June or July 2020?
Professor Dehousse: This is the qualification of “cliff edge”. We have seen what has happened in the negotiation for the withdrawal agreement, meaning that it was blocked for a long time due to factors I am not going to cover here. The perspective was not clear from the beginning. If we already have a mandate, if we already have functioning institutions and the beginning of negotiations, if the UK and the EU know what they want from day one, you can do a lot of things.
You must also keep in mind the possibility, which we have used in the past, for example for the coming eastern countries and more recently for Ukraine, to cut a path to the core of the agreement, which is trade, and push it directly. This could also be done if there is a worry at the time. It is a huge endeavour, but sometimes the machine can go quickly if both partners clearly know what they want. You still have this option of disconnecting parts of the deal. You are right; it will not be a cliff edge in July. There will need to be a clear perspective, if you do not have the extension, of how to use the remaining time.
Q3309 Stephen Kinnock: Can you give an assessment of the extent to which the negotiating time would be truncated if there were to be a shift in negotiating objectives towards a European Economic Area Norway‑style deal? How long would that take to negotiate during a transition period compared to some kind of bespoke deal, Canada plus a backstop or all these other options for the negotiating objectives? If the UK and the EU were to change the political declaration, for example, to explicitly commit to the European Economic Area as the destination, would it be realistic to expect that that could be negotiated relatively easily, well before December 2020?
Professor Dehousse: I believe so, yes, because you already have a defined model. If you want to make something bespoke, it takes longer. You can simplify this because we have a magnificent catalogue of external agreements. There is huge experience and a huge body, if there is the political will. You spoke yourself of this EEA model, but Canada is also a model and Ukraine is also a model. You already have a lot of things. You know the material. The EU and the UK are not very far apart at the beginning so, if you want to cut through this jungle, it is possible.
Nonetheless, if someone decided to add an option after the backstop and the whole customs union, it would be possible. The fact is that the system of the EEA is already well known and is a collective one. It has much more practice, because most of the deep trade co‑operation agreements we have now have not functioned for a lot of years. You see the example of Ukraine, Japan, Singapore, et cetera. In the EEA, you already have the core, the institutional buildings and the list of directives. From a legal point of view, it simplifies your life a lot.
Agata Gostynska‑Jakubowska: It is important to make this distinction. In theory, yes, having a template makes your life easier, but there will be some political constraints, as in all negotiations. In the European Economic Area, we sometimes forget about the non‑EU partners that will want to have a say. Norway will not be the big fish in the pond any longer. I do not know why I am referring to fish, but it is just to say there will be some political constraints and pressure.
Dr Hestermeyer: The customs union will be an additional thing to discuss at that stage, because that is the single market, but it would not resolve the customs union bit.
Q3310 Stephen Kinnock: You would require a derogation from EFTA to have a customs union while joining the EEA through the EFTA pillar. In your legal opinion, that would be possible.
Dr Hestermeyer: This is all feasible, particularly if we change the dialogue to a positive one. It would be difficult if we were to say, “EFTA, but just for a little bit, because nobody quite likes EFTA”. Then it would be difficult to convince Norway. It would be far easier if we say, “We envisage this as our new home. We realise we will be the biggest person living in this house and it will need to be refitted, to some extent, but we can make it better for anyone”. If that is the positive agenda, this should be possible within the timeframe.
Q3311 Sammy Wilson: Can I follow up with one question on fishing first? You had indicated that under the Northern Ireland protocol boats based in Northern Ireland, because we will be part of the Union Customs Code, will have access to the EU market for their fish. What implications does that have for EU vessels having access to Northern Ireland waters, if any?
Dr Hestermeyer: I did not see anything about access to the waters in the agreement. Did I miss it?
Professor Dehousse: If you missed it, you are not alone. By the way, it would be contradictory to have a fight about the political declaration if there was already something about access in the withdrawal agreement.
Q3312 Sammy Wilson: You are saying that there will be access for the sale of fish to the EU market and, in return, there is no demand, especially for the Irish fishing fleet, which extensively uses Northern Ireland waters at present, to have access to Northern Ireland waters. They will still have the same restrictions to Northern Ireland waters as they will to UK waters after we leave.
Dr Hestermeyer: At one point I saw there was an exemption for territorial waters somewhere, but I do not recommend the context any more. It is my understanding that, the way it is currently constructed, Northern Irish fish, under the conditions later to be fixed, would have access to the market, but this would not govern anything about fishing rights. It remains true that the Irish fishing fleet would currently not know what access they will have and that will have to be negotiated in the future.
Q3313 Sammy Wilson: Can I come back to the question that Pat McFadden asked? I am not so sure it was fully answered, or maybe the simple point he was getting at was not fully understood. There is this commitment to keep an open border or not to have a hard border, whatever that means—I have still never heard a proper definition of it—between Northern Ireland and the Irish Republic. If the UK sticks to it and the EU sticks to it as well, what implications does that have for the freedom the UK will have to negotiate relaxations of the customs union or the regulatory arrangements that are in the agreement in any future trade arrangement?
Dr Hestermeyer: First, Northern Ireland, as the deal is currently written, is part of the Union Customs Code. It has to apply a whole swathe of related laws and regulations. That limits the ability to sign up to any other type of trade arrangement. Of course, because the backstop is a whole‑UK customs arrangement, you could say that also limits the arrangement.
By the way, it is important for me to point out that this would be true for any trade deal. If you sign a trade deal with any country in the world, you commit to something that limits your options for the next one. In the end, it is about which choices, which partners and how far we go. This one goes very far for Northern Ireland. Accordingly, it limits other options, particularly in goods. In services I do not see the same restrictions.
Q3314 Sammy Wilson: The Prime Minister promises that, although we have the restrictions in the withdrawal arrangement, when we come to the free trade agreement or the future trade arrangement with the EU, we will be able to have much greater freedom and we will not be tied to EU regulations or the customs union. If she maintains the commitment to an open border on the island of Ireland, she really cannot fulfil that promise. Is that what you are saying?
Dr Holger Hestermeyer: I am not entirely sure how far that promise goes, and it is very political language, but what seems true to me is that the choices made here for Northern Ireland limit other options. Yes, that seems rather obvious.
Professor Dehousse: As we said at the beginning, you must see that the backstop is the last option. The first option is to define a new regime in the global negotiations about the future trade agreement. This can be done. This is not fixed in bonds for eternity; you might have alternative solutions. Considering, for example, the potential of technology now, I cannot say what will exist in five or 10 years. This is the first thing. It will also depend on the importance the UK gives to this. If you have a future global deep trade agreement that you negotiate, there will be a lot of adjustments. This applies to both parties, by the way.
At the bottom this remains, but there are always possibilities to correct it, revise it, to go to the joint committee or to introduce new customs techniques. It is not blocked for eternity.
Sammy Wilson: But that is dependent on the acceptance, which has been refused so far, of new technologies or new methods. It could be five or 10 years’ time. You are saying that the United Kingdom will be tied to the kind of restrictions that are in place if it stays in the market. The Chairman asked a question. Let us say the United Kingdom decided, “This is far, far too restrictive, and we want to go for a Canada‑plus type arrangement”. In the EU’s mind, that creates a problem on the island of Ireland. That means the UK would have to have an arrangement that could not apply to Northern Ireland. Is that correct? If we decided we were going to go for a much freer arrangement, Canada‑plus, but that creates these problems of a hard border in Northern Ireland, Northern Ireland would have to be excluded from that arrangement.
Dr Holger Hestermeyer: At the moment, a normal Canada‑plus would not comply with the conditions to end the backstop. That is true. But I just wanted to say that this is not just the EU; it is a joint thing. It is the EU’s and the UK’s commitment. We can discuss whether they are the right commitments, but we have to realise that they are difficult and painful compromises. I understand they are very painful. They are the consequences of the joint commitments that both parties have made.
Q3315 Sammy Wilson: That brings me to my last question. If the UK Government decide it is in our interests to go down the road of a trade arrangement that allows us much more freedom as far as the EU is concerned, Canada‑plus or whatever it is going to be called, what are the implications for the Republic of Ireland and Northern Ireland when it comes to trade across the Irish Sea?
Dr Holger Hestermeyer: That is a very good question. In the way the backstop is currently constructed, it is a whole‑UK backstop. If the agreement was that we wanted to roll back and reduce the relationship, the first question would be whether the whole‑UK backstop would be replaced by the future relationship. This brings me back to the provision in article 2(2). The replacement of the backstop requires that the parties put this into the treaty: “We will now replace these parts of the provisions”. If the parties do not put that in there, the whole‑UK backstop remains in place. That is at least my understanding of how the treaty is currently drafted.
Q3316 Sammy Wilson: But there is a separate protocol referring specifically to Northern Ireland.
Dr Holger Hestermeyer: That is article 2(2) of the Northern Ireland protocol.
Q3317 Sammy Wilson: If the UK decides that we want to have a different relationship, there is a specific backstop arrangement in Northern Ireland. This is important for people who are trading from the Irish Republic through the United Kingdom into Europe. It is important for the Northern Ireland economy, which relies on GB for 60% of its exports. We need to know the implications for trade between the island of Ireland and the UK. Whether it is Northern Ireland as part of the United Kingdom or the Republic of Ireland as a separate nation using the UK as a land bridge, what are the implications for trade restrictions, for checks, for the nature of what happens at ports, et cetera?
Dr Holger Hestermeyer: I will give you two different scenarios. In the first scenario, the UK decides, “We want to go Canada‑plus, but we are not going to replace the backstop”. The backstop remains in place, as a whole‑UK backstop. Trade will be done under annexe 2 and annexe 3 if Northern Ireland trades with Great Britain. That remains as it currently is. Let us say that for some reason—politics might change—the EU and the UK decide on a Canada deal, and decide to replace the whole‑UK backstop and just leave in place the Northern Ireland bits. Quite frankly, I have a hard time seeing that, but let us say that politics allows for that. Then trade would get significantly more difficult, because the customs union would fall away and trade between Northern Ireland and Great Britain would get more difficult.
Q3318 Peter Grant: I have a very quick question. There were demands, before the wording of the draft withdrawal agreement was known, for it to deliver certainty. We have spoken about access to fishing grounds. The withdrawal agreement had to deliver certainty about European access to British fishing grounds and about access of British fishing producers to sell the goods to the European market. The withdrawal agreement arguably gives some clarity on these matters for the transition period. Does it give any clarity at all as to what happens at the end of the transition period?
Dr Holger Hestermeyer: For the transition period, we have article 132.
Agata Gostynska-Jakubowska: That is the intention to negotiate the mutual access and rights.
Dr Holger Hestermeyer: Right now, it says that for fishing there is the consultation of the UK in the transition period. I am sorry. That is article 130(1). As regards the fixing of fishing opportunities, which in my understanding is the quotas, the UK will be consulted within the period. These are fixed year by year; that is my understanding. After that period runs out, this would also still apply in the extended transition period because the extended transition period has some different rules. The UK will be out of EU programmes, which I assume would include CAP but would not include the fishing rights. After the end of the transition, we are in the future and then we get to the political declaration. When it comes to fishing, the political declaration is problematic at the moment. There is the backstop, which regulates this to some extent, but we have spoken about that. Fishing is taken out of the customs‑free access.
Q3319 Peter Grant: More generally, we know that a lot of businesses, for example, are saying that they want certainty. Is it fair to say that if the withdrawal agreement is agreed by Parliament it gives a degree of certainty throughout the transition period, but it does not give much certainty about what happens afterwards? We are effectively putting off the uncertainty for another 18 months.
Dr Holger Hestermeyer: The original commitment was this: “We just want one change, so we will have a transition period that is largely unchanged”, and we have that in there. Even though the extended transition has some more changes, it is largely still the same trading conditions. Afterwards, business now has the uncertainty that there will be a final agreement, which we do not know, or the backstop, which we do know. That is better than what they had two months ago, which was uncertainty altogether. Now they know there is at least the backstop, but businesses still have uncertainty about the extent to which they will have to prepare for trade under the backstop, and whether they now have to think about how to operationalise this. Is annexe 3 really what they need to prepare for or will there be a final agreement? What shape will that take?
But it is a better uncertainty than the uncertainty there was a couple of months back. There is still uncertainty as to whether we will get to a transition, because that requires the deal passing everything, but let us assume that this is accepted. Business will have more time and will face a less steep edge at the end.
Agata Gostynska-Jakubowska: One also needs to distinguish between preparing for what happens afterwards and knowing when to trigger those plans. The other part, the latter one, is more difficult. But it helps that the draft of the withdrawal agreement provides that, by July 2020, the parties should decide on whether they want to extend the transition, which creates certain dates and gives a little more direction to business. Of course, we have not discussed this, but the other question is how complicated it is to extend the transition.
Dr Holger Hestermeyer: You can see that businesses are now saying, “We need certainty very soon or we will have to trigger our plans no matter what”. The business situation they are in is not very comfortable. I feel their pain.
Q3320 Chair: To pick up a point you made, Dr Hestermeyer, you drew our attention to what is on page 208. In the one extension of the transition period, there are certain things the UK could not do any more or that would not apply to the UK that were in the previous transition period. It says, for the purpose of the implementation of Union programmes, the UK would be considered as a third country. That would be from 1 January 2021. What would the implications of that be? What would we not be in any more that we were in?
Dr Holger Hestermeyer: These are programmes under the multiannual financial framework. This is a rather ingenious solution by the negotiators to one of the extension problems that existed. The problem was that we are now in a multiannual financial framework; we will get into a new one. How could you involve the UK in that and in those programmes? The solution they found was to take the UK out of those programmes. The largest of them is the common agricultural policy. Is that fair to say?
Professor Dehousse: I am not sure.
Q3321 Chair: What would it mean for continuing UK payments?
Dr Holger Hestermeyer: Yes, this is also important. First, any extension decision needs to have a payment bit attached. There is no extension without payment, but the payment will be decided by the joint committee. But the UK not being in programmes under the multiannual financial frameworks both excludes the UK, of course, from some things and makes sure that the payments would be lower, because if the UK was in those programmes payments would be much higher. What exactly those payments are, no one can say at the moment, because the joint committee will decide.
Q3322 Stephen Timms: I would like to go back to the question of what the political declaration says about the future relationship on services. Dr Hestermeyer, you commented earlier that the three or four paragraphs we have—it is more than that if you include financial services—are quite ambitious in this area, but you would agree they are quite sketchy as well. Given what a big proportion of the UK economy is accounted for by services, that is a concern. If there was a wish jointly to signal a commitment to a closer relationship on services in more specific terms than here, what kind of wording could be inserted into this between now and Sunday that would have that effect? What kind of things might you put in?
Dr Holger Hestermeyer: I would hope for some more detail and specifics on the services sector. One of the problems of services is that, unlike goods, where you have more cross‑cutting trade flows, services is very sector‑specific. All the problems that appear are very heavily regulatory in nature. That makes it difficult to be more detailed, because you would already need to negotiate those details. I would want a more detailed list of what parts of the services sector and what kinds of commitments we are looking for. I realise that is difficult, because of the MFN obligations and other free trade agreements, but that would be on my wish list.
Q3323 Stephen Timms: Give us one or two examples. What kinds of things are you talking about?
Dr Holger Hestermeyer: Let us take, for example, the appropriate arrangements on professional qualifications. What types of professional qualifications are included? What professions are included? Will it be similar to what currently exists in the EU in this regard? What would we do there? That would be one of the things. I am not a financial services expert, but I am pretty sure we would want more detail on financial services in particular as well.
Q3324 Stephen Timms: Can I ask you about the financial services aspects? What is here makes clear that equivalence is proposed as the basis of the future relationship, and there are worries about that because equivalence can be withdrawn with 30 days’ notice. That is the biggest concern. How likely is it that equivalence could be enhanced to provide a satisfactory basis for a future UK‑EU relationship on financial services?
Dr Holger Hestermeyer: I have to speculate here. Given that I am not a financial services sector expert, it is very difficult. For me, one of the concerns is always about the extent to which the EU will automatically have to extend what it gives to the UK to South Korea and Canada. You would have to look at all the detailed provisions in those free trade agreements and see to what extent they cover financial services, what exceptions there are and how they could be used. This is why I say the devil is in the detail. You can stay very general and say, “We want more”, and do not really say the details, but if you want to go into the detail you suddenly have to look at all these rather complex provisions. It seems obvious that, if you wanted to strengthen adequacy, you would give larger notice; you would have different timeframes. But, as I am not an expert in the sector, I would rather stay clear of that.
Professor Dehousse: By comparison—it has been invoked a lot in the last months—what is in the CETA agreement about financial services is quite limited. If you plead for the Canada model, you are pleading for something that is quite limited. You must be aware of that. If you want to go beyond, a problem very quickly arises. If you want to have better access to the financial markets—I am speaking generally here—there will automatically be a need for a level playing field. Then there will be a need to know what happens in the implementation of EU regulations. Automatically, you will need the guarantee that they are applied in the same way to the different parties of the trade agreement. Then you are going to discover very quickly that the problem of the European Court of Justice comes back.
I just want to tell you that this is the basis of any trade agreement negotiation: the more access you want, the more institutional constraints you have to accept to guarantee the level playing field. That is why you can put everything you want in the political declaration. At the end, at the bottom line, you will get into that field, with the additional factor that there is the most favoured nation treatment, and consequently there will be problems for the EU in granting the UK better access with less institutional constraint.
Dr Holger Hestermeyer: This is something to expect. If you look at the current level playing field, there was always a problem. For member states, you have the Commission on top so you have an independent supranational, not national, authority. How do you even construct that for the UK? The UK certainly cannot accept the Commission. Will member states accept that they are constrained by a not national authority, whereas the UK is not? The solution currently put in a lot of parts, which I find astonishing but I wonder how far it can be stretched, is an independent authority that is a UK authority, but with some rights for the Commission. You will find in environment; you will find that in particular in state aid. How far can this model go? I am not quite sure. I am sure this problem will reappear in the trade agreement negotiations.
Q3325 Jeremy Lefroy: If I could refer very briefly to the mobility clauses in the political declaration, a number of businesses, particularly in the services sector but also in the manufacturing sector, have said how important it is to be able to send their technicians and experts at 12 or 24 hours’ notice to go to fix a problem with software in the Netherlands, with an aircraft engine in Warsaw or something like that. Would you expect what it says about arrangements on temporary entry and stay of natural persons for business purposes to cover that: “Quick, let us send our engineer out to fix a problem that has arisen”? That is what it reads like to me. It does circumscribe that by saying “in defined areas” and therefore it is not a universal application, but I wondered what your comments on that were.
Dr Holger Hestermeyer: It is marvellously ambiguous at the moment. You have the first part, which covers what you say: arrangements on temporary entry and stay of natural persons for business purposes in defined areas, which is very limited. Then you have the second part: other aspects of mobility, based on non‑discrimination, including visa‑free travel for short‑term visits. “Other aspects” can always be stretched. Everything is another aspect that is not part of the first one. The first one would be largely uncontentious, at least for the EU, where those rights are guaranteed already. The second one depends very much on how much will be put in there, but at that moment the free movement debate might reappear, depending on the breadth of the whole agreement.
Q3326 Jeremy Lefroy: Could I say to my constituents, who are very concerned about this because it is very important for their business, that this provides quite a measure of certainty that they could continue to send staff over and, on a reciprocal basis, European businesses could continue to send engineers, technicians and software specialists over to the UK? Does this look like it will provide a potentially reasonable framework for that?
Professor Dehousse: Yes, sure. The problem about the mobility comes from the debate in the UK, not from the debate in the EU. I have never heard anyone explaining that there should be restrictions on the mobility of people involved in business. Of course, you have very competitive services enterprises. You need to guarantee service level agreements to your customers et cetera. It is true that the connection between the two parts of the provision is there, but it is exactly the objective that is foreseen by the first part. You will see the sectors where this applies, but generally, when you see the type of restrictions that exist, this is a WTO facility. It is only about the fact that we are going to extend some possibilities.
Jeremy Lefroy: If I broaden that a bit more to cultural activities, to musicians and artists, there has been a big problem raised in the UK about movement across borders to perform or whatever. Cultural activities are a huge part of the UK economy and indeed the European economy. You would expect that to extend to those as well.
Agata Gostynska-Jakubowska: Frankly speaking, on the basis of what we have in the outline, I am not sure we can say with full confidence that they will be covered. We will probably have to wait for the negotiating directives to be able to speculate.
Dr Holger Hestermeyer: It is important there to lobby the UK Government, because the more restrictive the approach of the UK Government is, the more restrictions other countries will insist on there being.
Q3327 Jeremy Lefroy: But at least the fact that this is in there indicates that it is there for discussion and on the radar.
Agata Gostynska-Jakubowska: Mobility was already mentioned in the European Council guidelines and it featured prominently. That is obviously one of the priorities as well.
Professor Dehousse: It is a priority. It is important to remember that this is a priority with a positive direction, not with a restrictive direction. Of course, they will come back and say, “This is the political declaration”. But the objective of the negotiation is very clear. It is something to broaden business perspectives and not to restrict them.
Q3328 Chair: I have one very final and very quick question. The UK has to pay during the transitional period. If the backstop kicks in, does the UK have to pay during the operation of the backstop? Does anyone know the answer to that question?
Dr Holger Hestermeyer: You mean the Northern Ireland backstop.
Chair: Say the Northern Ireland backstop comes in because the transition has come to an end.
Professor Dehousse: I want to be sure about which backstop we are speaking.
Chair: If the Northern Ireland backstop comes in after the transition has finished, does the UK have to pay while the backstop is operating? Is it clear in the treaty?
Professor Dehousse: First, as we said before, anything that concerns financial obligations after the first transition period will have to be covered by an agreement. This shows you two things. First, we have no regime for the financial contribution after the end of the first part of the transition period.
Q3329 Chair: It would have to be sorted out. It is not sorted out in the document before us. Is that correct? It is not clear from the document before us.
Professor Dehousse: It is not clear in the legal instruments we have now. If both parties agree to say, “We will have to define something”, it is clear that it is not defined now.
Chair: That is very helpful. You have been terrific witnesses, I must say.
Jeremy Lefroy: I am sorry, Chair. I believe Ms Gostynska‑Jakubowska wanted to say something.
Agata Gostynska-Jakubowska: Yes, but I know you are running out of time.
Chair: We are, but say it very quickly before we close.
Agata Gostynska-Jakubowska: I just wanted to speak about extending transition, because we have not really explored the topic. In order to extend transition, you need to agree the financial contribution.
Chair: I understand that.
Agata Gostynska-Jakubowska: If there is no agreement, there is no extension.
Chair: That is very helpful.
Professor Dehousse: Even if there were an extension, you must see that there is nothing in the Northern Ireland protocol—the backstop—that says that this has financial implications, which will be an argument. You cannot add an obligation that is imposed by a text. If the text is adopted, you cannot add to it later.
Wera Hobhouse: We can still crash out at any point.
Chair: Well, that brings the evidence session to a close. On behalf of the whole Committee, can I thank you very much indeed? It has been really, really useful. The degree of knowledge and understanding you have imparted to us will help us in our work.