Written Evidence – Andrew Watt (UER0002)
This letter and its Annex are intended for publication as Written Evidence as part of the Committee’s Inquiry entitled “Scrutiny of Brexit Negotiations”, subject only to redaction of my home address.
I write to draw to the attention of House of Lords European Union Select Committee questions of European Union Law of such seriousness as to lead me to conclude that the draft Withdrawal Agreement of 19th March 2018 will, in part or in its entirety, be abandoned.
If I am correct regarding the anticipated effect of the questions of European Union Law which cause me concern it seems to me to be essential that a referral is urgently made to the Court of Justice of the European Union using the procedure specified in Article 218(11) of the Treaty on the Functioning of the European Union.
Such an Article 218(11) referral may be made by the UK Government, the European Commission, the European Parliament or a Member State of the EU27.
Further, those questions of European Union Law, considered in a broader context, lead me to the conclusion that Brexit is doomed, at least in the sense that the United Kingdom will continue as a Member State of the European Union after 29th March 2019.
I expect the United Kingdom, in due course, to inform the European Union that the United Kingdom no longer wishes to leave the European Union.
I imagine that the Committee may find such conclusions surprising and perhaps startling.
In the remainder of this letter I will attempt succinctly to set out the reasoning that leads me to conclude that the draft Withdrawal Agreement of 19th March 2018 will be abandoned and that Brexit is doomed.
Before looking at the detail of the draft Withdrawal Agreement of 19th March 2018 I will briefly set out a framework for analysis of Brexit which I anticipate will be unfamiliar to the Committee.
The legal context of UKExit
The process by which a Member State may elect to leave the European Union is of unprecedented and underestimated complexity.
It appears to me that the unlawful potential of the draft agreement of 19th March 2018 arises from a serious failure of analysis by the United Kingdom and the European Union (EU27).
UKExit, considered in its entirety, engages five systems of Law:
The matters which, I suggest, require urgent Article 218(11) TFEU referral arise from questions of European Union Law, considered alone or in the context of the anticipated effects of World Trade Organisation Law.
The analysis which leads me to conclude that Brexit is doomed arise from a consideration of such matters of EU and WTO Law considered in the context of the practical constraints given the starting point of European Union membership and the timescale imposed by Article 50 TEU.
The specific concerns in European Union Law
There are three specific concerns to which I wish to draw the Committee’s attention:
There are obvious practical drivers leading to an identified need for a “transition period” after 29th March 2019.
However, it is far from clear that the EU27 have a competence in European Union Law to negotiate under Article 50 TEU a “transition period” which applies to the period after the date on which the UK is anticipated to cease to be a Member State of the European Union.
The principle of conferral in EU Law means that the European Union (in this context acting as the EU27) can negotiate a Withdrawal Agreement with a departing Member State.
However, the same principle of conferral indicates to me that the EU27 may not negotiate an agreement with a third country (which is what the UK is anticipated to be after 29th March 2019).
In other words, the EU27 cannot lawfully conclude a Withdrawal Agreement which includes a “transition period”.
A “transition period”, as currently drafted, comprises an agreement between the EU27 and a third country, as the UK is anticipated to be after March 2019.
In EU Law the process of negotiating and concluding an agreement between the EU and a third country is set out, for example, in Article 207 and 218 of the Treaty on the Functioning of the European Union.
The procedure set out in those Articles has not been followed nor, I suggest, can it lawfully be started until such time as the United Kingdom is a third country.
I conclude that a Withdrawal Agreement negotiated using Article 50 TEU cannot lawfully include a “transition period”.
I’ll now move on to the second of the three questions.
This question arises should the CJEU take the view that a “transition period” is, contrary to the legal argument set out in relation to the first question, in fact lawful in EU Law.
The second question is whether a proposed “transition period” of 21 months approximately is proportionate to the perceived aim of the “transition period”.
It seems to me that it is self-evident that nobody currently knows what the proportionate duration of any proposed “transition period” might be since nobody knows the end-point to which any “transition period” is directed and, as a consequence of that uncertainty, nobody has asked business what time will be needed for any proposed “transition period”.
It seems to me to be wholly inconsistent with the principles of EU Law that a matter of the importance of the duration of the “transition period” be decided by a politically convenient guess.
The third question relates to EU Law viewed in the context of World Trade Organisation Law.
That question raises a question of compliance with EU Law but also raises a question of whether it commits the UK to unrestricted trade with all other WTO Members.
The draft Withdrawal Agreement of 19th March 2018 seems to me to be ipso facto a trade agreement between the United Kingdom and the EU27 for the period 30th March 2019 to 31st December 2020 with the intent of ensuring the continuation of the current free trade in goods and services during that period.
After 29th March 2019 the legal framework for trade between the UK and the EU27 changes radically (assuming the UK exits the European Union on 29th March 2019) at least as viewed from the perspective of WTO Law.
Prior to March 2019 trade between the UK and the EU27 is exempt from the Most Favoured Nation principle of World Trade Organisation Law since trade between the UK and the EU occurs in the context of a regional trade bloc.
After the anticipated UKExit in March 2019 the situation in WTO Law is very different.
The UK is a WTO Member. The EU (as the EU27) is a WTO Member. Trading between the two WTO members will, so it is anticipated, take place on the basis of the “transition period” component of the draft Withdrawal Agreement of 19th March 2018 (as concluded).
The Most Favoured Nation principle of World Trade Organisation Law indicates that whatever the EU27 offers the UK and whatever the UK offers the EU27 must also be offered to all other WTO Members.
It seems to me that the EU27 might thereby lose control over its trading relationships with the rest of the World and that is a legitimate question of EU Law for the CJEU to consider.
More seriously, the UK may permanently lose control over its trading relationships with all other WTO members since the draft Withdrawal Agreement creates an essentially unconditional offer by the UK to the EU27 of unrestricted trade without imposing the detailed conditions that one might expect to find in a properly formulated trade agreement.
If the UK, in the final Withdrawal Agreement, offers unrestricted trade to the EU27 without substantive conditions it must similarly offer unrestricted trade to all other WTO Members.
If all other WTO Members have unrestricted access to the UK market there is no incentive whatsoever for those WTO Members to negotiate a trade agreement with the UK.
In other words, the much-anticipated trade agreements beloved of Brexiteers simply won’t happen, by virtue of the anticipated interaction between WTO Law and the seemingly unconditional access granted in the “transition period” by the UK to the EU27.
If the “transition period” appears in the concluded Withdrawal Agreement then the WTO may take the view that such a temporary arrangement commits the UK and the EU27 to trading on that basis in perpetuity.
Alternatively, the WTO may take the view the “transition period” is unlawful being a temporary agreement between two WTO Members in the absence of a clear permanent trade agreement.
The perceived uncertainty when WTO Law is applied to a Withdrawal Agreement which includes a “transition period” is a matter of significant concern.
The Article 218(11) TFEU referral procedure
None of the three questions of EU Law listed earlier in this letter have been considered by the Court of Justice of the European Union.
There is, therefore, significant uncertainty as to whether the CJEU would take the view that I have expressed regarding the concerns in EU Law.
However, it seems to me to be self-evident that areas of legal uncertainty in the proposed Withdrawal Agreement should be considered by the CJEU now rather than risk legal chaos in the period around March 2019.
In the Annex to this letter I have set out these three questions in a letter of 31st March 2018 to Michel Barnier, in which I ask Mr. Barnier urgently to refer these questions to the Court of Justice for the European Union for the Court’s opinion.
Article 218(11) of the Treaty on the Functioning of the European Union provides a mechanism to seek the CJEU’s opinion on a proposed legal agreement in the following words:
11. A Member State, the European Parliament, the Council or the Commission may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the Treaties.
Where the opinion of the Court is adverse, the agreement envisaged may not enter into force unless it is amended or the Treaties are revised.
It seems to me that the wording “an agreement envisaged” would allow an Article 218(11) TFEU referral now since, according to the colour coding, the draft Withdrawal Agreement of 19th March 2018 as it applies to the proposed “transition period” is sufficiently settled.
Article 218(11) TFEU, where the opinion of the CJEU is adverse, allows for two possible solutions:
In terms of EU Law, the simplest solution, in my view, is that all reference to the proposed “transition period” is removed from the draft Withdrawal Agreement.
Such an approach, while solving the perceived legal problems, would create new practical and political problems of immense practical significance.
Not least of those problems is how the anticipated cliff-edge (in the absence of a “transition period”) can be avoided.
It seems to me that there are two possibly viable solutions in terms of action by the UK Government:
Request an extension to the Article 50 TEU negotiation period
If I’m correct that a “transition period” is not possible in EU Law the prospect of a cliff-edge in March 2019 at the time of the anticipated UKExit is very real.
Such a cliff-edge would be hugely damaging to the UK economy.
In my view no sane Prime Minister could allow that to happen.
Requesting an extension to the Article 50 TEU negotiation period is explicitly provided for in Article 50(3) TEU:
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
Obtaining an extension to the Article 50 TEU negotiation period would avoid a cliff-edge in March 2019, thus solving the economic problem.
An extension to the Article 50 negotiation period requires the agreement of all Member States of the EU27. However, since those states are likely also to wish to avoid a cliff-edge UKExit such agreement may be readily forthcoming.
However, there can be no assumption that the Article 50 negotiation period can be extended without difficulty since it would only require the withholding of agreement by one Member State for an extension of the negotiation period to be refused by the EU27.
In the UK, there would, no doubt, be political furore among Brexiteers at a postponement of UKExit.
However, I know of no serious analysis by any Brexiteer which suggests that a cliff-edge UKExit in March 2019 is anything other than hugely damaging to the UK economy.
However, an extension to the Article 50 negotiation period is merely a temporary solution.
Inform the EU27 that the UK no longer wishes to leave the EU
The second option specified in Article 218(11) TFEU, should the CJEU opinion be adverse, is that the relevant Treaty or Treaties must be amended.
It seems to me that the only definitive solution to the emerging problems in EU Law and/or at the interface of EU Law and WTO Law is that Article 50 TEU be amended in a new Treaty.
Article 50 TEU, as currently drafted, does not allow UKExit that is both legally sound, practically achievable and economically sensible.
I see three broad areas where an improved Article 50 TEU is needed:
Until such changes are made UKExit is going to be, at a minimum, hugely problematic.
In my view there is “no sane Brexit” while Article 50 TEU continues in the form agreed in the Lisbon Treaty.
A new Treaty is needed.
Agreeing a new Treaty would require ratification in all the EU Member States which, I suggest, is not achievable within the anticipated March 2019 deadline.
Further, given the legal principle that a legal queston must be judged in the context of the Law that applied at the time, it seems to me that the UK’s current attempt at exiting the European Union must be abandoned.
I anticipate that the stubbornness (or persistence, if you prefer) of the Prime Minister and/or the political pressures on her may delay her informing the EU27 that the UK no longer wishes to leave the European Union until a date very close to the 29th March 2019 cliff-edge.
However, I believe that informing the EU27 that the UK does not wish to leave the EU is the only definitive solution to a multidimensional problem of Law and economics.
I imagine that the Prime Minister will, in such circumstances, have to resign.
However, it seems to me that the political career of one individual is of little consequence compared to the potential damage to the UK economy should an attempt be made to persist with Brexit.
Distribution
I am copying this letter and its Annex to a number of individuals who may be able to advise the Committee as to whether any weight should be attached to my concerns regarding the effects of EU Law on the draft Withdrawal Agreement of 19th March 2018.
The individuals to whom I have copied this letter are Professor Alan Dashwood, Professor Derrick Wyatt, Professor Michael Dougan and Professor Steve Peers.
I am unaware as to who might usefully authoritatively advise the Committee on the questions of WTO Law which I have raised in this letter.
In conclusion
The effect of the questions of European Law to which I draw attention are self-evidently serious if confirmed by the CJEU.
I ask the Committee, as a matter of urgency, to seek from the Secretary of State for Exiting the European Union, from Mr. Michel Barnier and from Mr. Guy Verhofstadt the understanding respectively of the UK Government, the European Commission and the European Parliament on these matters.
Neither the Secretary of State nor Mr. Verhofstadt have been sent a copy of this letter nor the letter of 31st March to Mr. Barnier.
The Committee may wish therefore to make available to the Secretary of State and Mr. Verhofstadt a copy of this letter including its Annex.
Not least among the questions I ask the Committee urgently to consider is whether the UK Government, the European Commission or the European Parliament intends to make use of the procedure specified in Article 218(11) TFEU to seek the opinion of the Court of Justice of the European Union on the draft Withdrawal Agreement of 19th March 2018.
In attempting to inform the Committee of my reasoning which leads me to expect that the United Kingdom will continue as a Member State of the European Union beyond 29th March 2019 I have attempted to abbreviate the flow of my reasoning.
Should the Committee consider that I have not made my case sufficiently clearly, I am willing to enter into more detailed correspondence with the Committee or provide further Written Evidence on request.
Yours sincerely
(Dr) Andrew Watt
P.S. The list on page 2 of the Annex (page 9 of this letter) is numbered 6. to 10. due to the operation of an unwanted automatic effect of my wordprocessing software. The correct numbering is 1. to 5.
P.P.S. In the letter to Mr. Barnier I refer to a case in the Administrative Court in London (CO/5929/2017). The hearing previously scheduled for 17th April 2018 has now, so I understand, been rescheduled for 12th June 2018.
ANNEX: LETTER OF 31ST MARCH 2018 to Michel Barnier
[Address redacted]
[Address redacted]
31st March 2018
Michel Barnier,
European Union Commission
[By email]
Dear Mr. Barnier,
Legal concerns re the Draft Withdrawal Agreement of 19th March 2018
I expect the draft Withdrawal Agreement to be abandoned
Urgent need for Article 218(11) TFEU Referral to the CJEU
I write to draw to your attention grave concerns about the Draft UKExit Withdrawal Agreement as agreed between yourself and David Davis MP on 19th March 2018 and further agreed at the European Council (Article 50) on 23rd March 2018.
The draft Withdrawal Agreement, if concluded, will be contrary to European Union Law.
It seems to me to be inevitable that the draft Withdrawal Agreement as currently conceived will be abandoned.
As a matter of urgency, I ask that the European Commission makes a referral of the draft Withdrawal Agreement to the Court of Justice of the European Union of the kind described in Paragraph 11 of Article 218 of the Treaty on the Functioning of the European Union.
By making an immediate Article 218(11) TFEU referral to the CJEU later legal problems may be minimised or avoided.
The legal context of UKExit
The process by which a Member State may elect to leave the European Union is of unprecedented and underestimated complexity.
It appears to me that the unlawful potential of the draft agreement of 19th March 2018 arises from a serious failure of analysis by the United Kingdom and the European Union (EU27).
UKExit, considered in its entirety, engages five systems of Law:
The matters which, I suggest, require urgent Article 218(11) TFEU referral arise from questions of European Union Law, considered alone or in the context of the effects of World Trade Organisation Law.
The draft Withdrawal Agreement of 19th March 2018: no competence
It is generally accepted that the effect of Article 50 of the Treaty on European Union is to impose a 2 year time limit for negotiation and entry into force of a Withdrawal Agreement.
The draft Withdrawal Agreement of 19th March 2018 attempts inter alia to produce a solution to the practical problems imposed by the 2 year time limit so allowing time for businesses both in the UK and in the EU27 to prepare for the effects of the anticipated UKExit.
The draft Withdrawal Agreement seeks a practical solution. In my view it fails to find a lawful solution.
My concerns about the legality of the draft Withdrawal Agreement relate to the attempt to negotiate an agreement which applies to the period from March 2019 to 31st December 2020 when, so it is anticipated, the United Kingdom will no longer be a member of the European Union.
I view the draft Withdrawal Agreement as it applies to the so-called “transition period” as being contrary to European Union Law.
As such, any Withdrawal Agreement incorporating a “transition period” cannot lawfully be concluded by the Council of the European Union as required by Article 50 TEU.
Let me explain briefly why I have concluded that the draft Withdrawal Agreement is unlawful.
Negotiations are taking place in the context of Article 50 TEU.
Article 50 confers on the European Council and Council (acting as the EU27) an exceptional competence to negotiate and conclude a Withdrawal Agreement with a Member State which intends to leave the European Union.
The principle of conferral (Articles 4 and 5 TEU) dictates that the European Union has competence only where such competence has been granted to the Union by the Treaties.
In the period after the anticipated UKExit in March 2019 the United Kingdom is a third country, not a departing Member State.
The EU27 has no lawful competence using Article 50 TEU to conclude a Withdrawal Agreement with a third country.
The EU has a lawful competence to negotiate with a third country as provided for in Articles 207 and 218 TFEU.
Given that the UK is not presently a third country and that the requirements of Articles 207(3) and 218(2) TFEU have not been complied with negotiation of an agreement with a third country cannot begin.
Given that the UK will not be a third country until, so it is anticipated, 29th March 2019 the Commission and Council cannot lawfully comply with Articles 207(3) and 218(2) TFEU until after the anticipated departure of the UK from the EU.
I conclude that the draft Withdrawal Agreement of 19th March 2018 is unlawful since the EU27 has no lawful competence to negotiate or conclude under Article 50 TEU an agreement which includes a supposed agreement with a third country.
In addition it is unlawful for the EU to begin negotiations of the kind envisaged by Articles 207 and 218 TFEU with the UK until such time as the UK may become a third country.
The need Article 218(11) TFEU referral to the CJEU is urgent
It seems to me that there are two possible ways to resolve the legal concerns which I have briefly summarised in the preceding section:
An Article 263 TFEU action can, as I understand EU Law, only be brought when there is an “act” of, for example, the Council.
In or around March 2019 the Council is anticipated to conclude the draft Withdrawal Agreement.
A competent Article 263 TFEU action can only occur, I believe, when the anticipated Withdrawal Agreement has been concluded by the Council. At least arguably, it is only then that an “act” will exist which can competently be challenged under Article 263 TFEU.
Thus, if I am correct, an Article 263 TFEU action cannot be started before March 2019 or thereby.
That, at the risk of stating the obvious, risks legal chaos in 2019 should the Article 263 TFEU procedure be begun in or around March 2019 given the time period that the CJEU is likely to take to consider a question of this magnitude.
Referral now by the Commission to the CJEU using the procedure specified in Paragraph 11 of Article 218 TFEU would seek the CJEU’s judgement on whether Article 50 TEU confers on the EU27 the competence to negotiate and conclude a Withdrawal Agreement with a third country (albeit that the third country formerly was a Member State of the Union).
The substance of the parts of the draft Withdrawal Agreement of 19th March 2018 are highlighted in green. I suggest that indicates sufficient certainty about that aspect of the proposed Withdrawal Agreement so as to permit an Article 218(11) TFEU referral now.
I appreciate that it may be embarrassing to make an Article 218(11) TFEU referral now but that seems to me to be visibly the lesser of two evils.
Embarrassment now is, I suggest, much to be preferred to the legal chaos which would result in March 2019 if an individual or a Member State (e.g. Ireland or Spain) were to seek to challenge the legality of a concluded Withdrawal Agreement using the Article 263 TFEU procedure.
Is there an alternative solution to the legal problem?
I assume that you will seek to examine whether there is a solution to the legal question regarding the “transition period” without using the Article 218(11) TFEU procedure.
The simplest solution, indeed in all likelihood the only legally sound solution, is to confine the scope of the draft Withdrawal Agreement to the period ending with the United Kingdom’s anticipated departure from the European Union in March 2019.
That solution, of course, leaves the enormous problem of what happens on the anticipated UKExit date in March 2019.
In other words, how might it possible to avoid the legal and trading cliff-edge in March 2019?
I have given the matter much thought and have concluded that there is, in the short term at least, no definitive solution.
There is the option of extending the 2 year period for negotiation of an Article 50 TEU Withdrawal Agreement. However, that does not solve the legal problem as to whether the EU27 has competence under Article 50 TEU to conclude a Withdrawal Agreement that includes a “transition period”.
It merely defers the date by which a definitive solution must be found.
I have concluded that, without a new Treaty modifying or replacing Article 50 TEU, there is no credible long-term solution that is lawful other than the UK withdrawing its decision to leave the European Union.
I have concluded that Brexit based on the notification letter of 29th March 2017 is doomed.
Let me explain why I have reached that, perhaps startling, conclusion.
UKExit (“Brexit”) is doomed
There are important issues in UK domestic Law which lead to the conclusion that a lawful Article 50 process was never started. That question of law is presently subject to legal challenge.
There is, for example, an oral hearing due in the Administrative Court in London on 17th April 2018 in an attempt at Judicial Review of Theresa May’s purported notification letter of 29th March 2017. The Court reference number is CO/5929/2017.
I know of at least three other planned legal actions in UK domestic Law.
In asserting that Brexit is doomed, I will put those questions of UK domestic Law to one side for the purposes of this letter.
How, if it is indeed possible, does the European Union ensure that there is no legal and economic cliff-edge in March 2019 at the time of the anticipated UKExit?
Is it possible to consider the draft Article 50 TEU Withdrawal Agreement as a “mixed agreement”?
It seems to me that the “mixed agreement” approach is not credible.
In my view it is clear in the Treaties that competence regarding trade with third countries is a matter for the EU, not the Member States.
Any attempt to treat the draft Withdrawal Agreement as if it were a “mixed agreement” would be open to legal challenge.
Even if it were possible to successfully argue before the CJEU that the draft Withdrawal Agreement was a “mixed agreement” that creates major problems of timing with regard to ratification by the 27 Member States of the EU27 by March 2019.
It seems to me to be wholly unrealistic to seek to achieve ratification of a supposedly “mixed agreement” by March 2019.
If an attempt were made to conclude a Withdrawal Agreement which included a “transition period” the negotiation period would require to be extended beyond March 2019 which is inherently problematic since unanimity of the UK and the EU27 is required for such an extension.
In any case, any extension of the negotiation period merely postpones the anticipated legal problem.
Another possible solution might be to use the procedures expressed in Articles 207 and 218 TFEU to cover the desired “transition period”.
Is it lawfully possible to use the procedures expressed in Article 207 and 218 TFEU to negotiate a “transition period” agreement with the United Kingdom?
Articles 207 and 218 TFEU relate to negotiations with third countries.
At the present time the United Kingdom is not a third country.
Therefore, it seems to me that the EU cannot presently lawfully use Articles 207 and 218 TFEU to attempt to solve the problem created by the draft Withdrawal Agreement of 19th March 2018.
It seems to me that the only durable solution which would be sound in European Union Law would be for the 28 Member States of the European Union to negotiate a new Treaty which includes an exceptional competence to negotiate with a departing Member State for what is presently termed a “transitional period”.
Negotiating a new Treaty would, of course, create enormous timing problems of its own given the deadline imposed by Article 50 TEU.
In addition, there would be multiple legal questions about attempting to use negotiations under the present Article 50 TEU if any new Treaty were agreed which modified or replaced the current Article 50 TEU.
It seems to me that the present approach to a Withdrawal Agreement can demonstrably be expected to lead to legal chaos in March 2019, with potential serious damage to the European Union (and likely greater damage to the UK).
It seems to me that with a single exception Brexit is doomed to fail to complete in March 2019.
That exception is for the United Kingdom to exit the European Union in March 2019 with no deal covering the period after the anticipated UKExit.
In that event Brexit is doomed to create legal chaos in the United Kingdom and, to a lesser but still serious extent, in the European Union.
The only rational course available to the United Kingdom Government is to decide not to proceed with Brexit.
In which case Brexit dies in the present framework of European Union Law.
In other words, Brexit is doomed. The UK will continue as a Member State of the European Union after March 2019.
Let me now move on to a second question of European Union Law which arises if the CJEU decides, contrary to the preceding arguments that I have put forward, that a “transition period” is possible in EU Law.
Legal Issue: Proportionality
It seems to me that there is a further cause in EU Law for an Article 218(11) TFEU referral to the CJEU regarding the draft Withdrawal Agreement – the question of the principle of proportionality and how it applies to the draft Withdrawal Agreement.
Let us suppose, for the purposes of this section, that the EU27 has an exceptional competence regarding a “transition period”.
There is the obvious question as to what a “transition period” is intended to achieve.
It seems to me that there are two plausible interpretations as to the purpose of the “transition period”:
To the best of my knowledge neither the UK Government nor the EU27 (or individual Member States) has consulted businesses to ask the basic question “How long will you need to make adjustments to be ready for business in the anticipated framework for future trade?”.
Without such a consultation the time period chosen for the “transition period” is demonstrably arbitrary and is, I would suggest, visibly grossly inadequate to allow all businesses in the UK and the EU27 to make necessary adjustments.
Further, without a trade agreement in place (which due to the constraints on Article 207 and 218 TFEU is not legally possible at present) it is impossible for business to rationally estimate the time needed to make necessary changes since nobody knows what the end point will be.
If I am correct in that view then it seems to me that the draft Withdrawal Agreement is inconsistent with the principle of proportionality and thus may be considered by the CJEU to be contrary to EU Law.
Having considered two questions of European Law without reference to effects in other systems of Law I now want to consider whether there may be effects of WTO Law arising in the context of the draft Withdrawal Agreement.
The effect of WTO Law
The relevance of World Trade Organisation Law arises should the CJEU consider that a “transitional period” is lawful.
It is clear from the draft Withdrawal Agreement of 19th March 2018 that huge effort has been expended in attempting to resolve a complex matrix of issues of European Union Law.
There is no evidence that comparable attention has been paid to issues arising from World Trade Organisation Law.
It is implicit in the draft Withdrawal Agreement that the EU27 will continue to trade with the United Kingdom (anticipated to be a third country from 29th March 2019) during the proposed “transition period” without tariffs and without quotas.
In WTO Law it seems to me that the EU27 and the UK have, in effect, entered into a trade agreement for the duration of the transition period where there no customs tariffs are payable and no customs quotas apply. At least that will be the case once the Withdrawal Agreement is concluded.
While some commentators refer to the proposed “transition period” as continuing the present situation when viewed from the perspective of WTO Law there has been a profound change in how trade between the UK and the other 27 Member States of the European Union should be interpreted.
Viewed from a WTO Law perspective trade prior to 29th March 2019 takes place in the context of a regional trading group and the Most Favoured Nation principle does not apply.
After 29th March 2019, the UK is then an independent member of the WTO.
After 29th March 2019, the EU continues as an independent member of the WTO.
The issue I wish to raise is whether the Most Favoured Nation principle of the WTO means that similar tariff-free and quota-free trade deals must be offered to all other WTO Members.
That question applies to the UK as a WTO member.
And the question also applies to the European Union (EU27) as a WTO member.
As far as the UK is concerned, the effect of a tariff-free and quota-free deal with the EU27 considered in the context of the Most Favoured Nation principle is that a similar deal must be offered to all other WTO Members.
In such circumstances, no WTO Member would have any incentive to negotiate a trade deal with the UK since they would already be entitled under the Most Favoured Nation principle to free access to UK markets.
As far as the EU27 is concerned, there must be a danger to the integrity of the single market if all WTO members would have tariff-free and quota-free access to the market in the EU27.
There must, I think, also be a question of whether it is lawful in WTO Law to offer a time-limited trade deal such as implicit between the UK and the EU27 during the transition period.
The adverse effects of WTO Law
In the earlier part of this letter I have set out why I believe a Withdrawal Agreement which includes a “transitional period” is not lawfully possible.
In this part of the letter I will set out the immense problems which may arise should the CJEU conclude that it is legally possible to conclude a Withdrawal Agreement which includes a “transitional period”.
To understand those dangers, it is necessary to broaden the discussion from European Union Law to include World Trade Organisation Law.
A Withdrawal Agreement which includes a “transition period” is, in WTO terms, a trade agreement between the United Kingdom (as one WTO Member) and the EU (as a WTO Member).
Since two WTO Members (the UK and the EU27) have for the period beyond March 2019 made a trade agreement it seems to me that application of the Most Favoured Nation principle of WTO Law means that the EU must offer the same trade agreement to all other WTO Members!
The trade agreement implicitly being offered to the United Kingdom after March 2019 is no tariffs, no quotas, no customs checks etc.
If a Withdrawal Agreement is concluded which contains such terms, or implicitly has such effect on trade between the UK and the EU27, then the European Union is bound in WTO Law to offer access to the Single Market on the same terms to all other WTO members.
It seems to me that such a situation would pose profound potential dangers to the nature of the Internal Market and perhaps even the integrity of the European Union itself.
The EU27, in the “transition period”, offers a trade agreement to the UK.
The EU27 must offer the same trade agreement to all other WTO members.
Those WTO members would gain access to EU markets while bypassing the lawfully required procedures expressed, for example, in Articles 207 and 218 TFEU.
The precise effect in WTO Law of any such Withdrawal Agreement would depend on the detailed provisions contained in the final Withdrawal Agreement.
I urge you to give careful consideration to the effect in WTO Law of any trade agreement between the European Union and the United Kingdom after March 2019.
It seems to me that the draft Withdrawal Agreement, considered in the context of WTO Law, potentially allows other WTO members to gain at least some of the benefits of EU membership while by-passing, for example, the procedure expressed in Article 49 TEU.
It thus seems to me that the CJEU may consider the draft Withdrawal Agreement to be unlawful, given the perceived threat to the framework of European Union Law.
WTO Law and the Ireland border
It seems to me that WTO Law also has the potential to constrain options re the ongoing discussions regarding the border between Ireland and Northern Ireland.
I refer you to Article 1 of the General Agreement on Tariffs and Trade of 1947 which was incorporated by reference in the General Agreement on Tariffs and Trade of 1994.
Article 1 is very widely drawn.
It has the effect, I believe, that any concession granted on international trade between Ireland and Northern Ireland must also be granted to all other WTO Members (given the assumption that the UK, including Northern Ireland, will be a third country).
Thus, it seems to me that the scope for any customised agreement re the Ireland / Northern Ireland border is negligible if it exists at all.
If there was an agreement to, in effect, allow unchecked flow of trade across the Ireland / Northern Ireland border it might have effects on the external borders of the UK and EU in other locations.
I can’t find anything in WTO Law that relates directly to such a situation but it seems to me that an open trade border between Ireland and Northern Ireland risks having the unintended effect of creating an open trade border for all UK external borders and all EU external borders.
To the best of my knowledge there is no precedent for such a situation. No doubt, lawyers expert in WTO Law will wish to examine the effects of any agreement on the Ireland / Northern Ireland border in the context of WTO Law.
It seems to me that there are other issues of WTO Law which might arise but it does not seem expedient to explore those in this letter given my expectation that the draft Withdrawal Agreement of 19th March 2018 must be abandoned in its present form and a new approach adopted.
Elections to the European Parliament in 2019
If, as I suggest above, the available solutions to the legal problems I have identified are as I have indicated it seems to me that preparations for the participation of the United Kingdom in the 2019 elections to the European Parliament must be given careful consideration.
If the Article 50 negotiation period is extended then the United Kingdom ipso facto continues as a full member of the European Union for the period from 29th March 2019 until the designated end of the extension period.
Similarly, if the United Kingdom withdraws its notification purportedly made under Article 50 TEU UK citizens resident in the United Kingdom will be entitled to vote in the 2019.
In both of the scenarios the UK must participate in the European Parliament elections in 2019.
The Article 218(11) TFEU questions for the CJEU
The Negotiating Guidelines refer to the possible negotiation of a “transition period” to the extent legally possible.
It seems to me that an Article 218(11) TFEU referral allows the European Council, the Commission and the Council to have more confidence that they have a sound basis to negotiate.
I suggest that the following briefly summarises the questions which the Commission must urgently refer to the CJEU using the Article 218(11) TFEU procedure if legal challenge is to be avoided in March 2019:
Question 1 addresses the question of whether the EU27 has a competence to negotiate a “transition period”.
Question 2 addresses the question, assuming a “transition period” to be lawful, of whether a “transition period” of some 21 months is lawful when examined in the context of the principle of proportionality.
Question 3 addresses the question of whether the (presumably unintended) effect in WTO Law of the draft Withdrawal Agreement is that there is damage to the integrity of the Single Market, the Customs Union or European Union membership.
Question 4 addresses the questions whether a supposedly time-limited agreement creates, in WTO Law, a permanent trade agreement and whether such a trade agreement is lawful in European Union Law.
The interests of the Member States
I ask you, as a matter of urgency, to forward a copy of this letter to the relevant individuals and institutions in each of the Member States.
I believe it is of great importance that each Member State has the opportunity to consider the implications of the legal questions which arise in the context of an attempt to include a “transition period” in an Article 50 TEU Withdrawal Agreement.
Similarly, each Member State must have the opportunity to make use of the Article 218(11) TFEU procedure if the Commission elects to ignore the legal questions which relate to these fundamental aspects of EU Law.
In addition I ask you to forward a copy of this letter to the European Parliament since it, too, has a right to make a referral under the provisions of Article 218(11) TFEU.
In conclusion
It seems to me inevitable that the question of the legality of the substance of the draft Withdrawal Agreement of 19th March 2018 must come before the CJEU.
The legal process can begin either now or in March 2019.
It seems to me that it is demonstrably more sensible to seek the CJEU’s opinion now using the Article 218(11) TFEU procedure rather than have the legal questions settled by the CJEU at a much later date using the Article 263 TFEU procedure.
For reasons summarised in this letter I have concluded that Brexit in March 2019 is doomed to fail.
The UK will continue to be a Member State of the European Union after March 2019.
The issues I have raised in this letter pose daunting difficulties for the United Kingdom Prime Minister.
The only sane and responsible choice available to the United Kingdom Prime Minister is to notify the European Union that the United Kingdom has decided not to leave the European Union.
Requesting an extension of the Article 50 TEU negotiation period only postpones the inevitable withdrawal of the United Kingdom’s intention to leave the European Union using the Article 50 TEU process as currently drafted.
Accordingly, I will be writing separately on that matter to the Prime Minister.
I look forward to your early reply on the legal questions raised in this letter.
I ask that the Article 50 Task Force carefully considers, as a matter of urgency, whether the draft Withdrawal Agreement, as presently conceived, must be discarded.
Given the timeframe imposed by Article 50 TEU and the absence, hitherto, of a formal indication by the United Kingdom that the UK no longer wishes to leave the EU, there is, I suggest, no time to lose.
6 April 2018
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