After June 2020, is there really no way of extending the Brexit transition period or securing a new 'implementation' period?
Published on 4th Jun 2020
This is an opinion piece by Nick Thody, Head of Knowledge at Osborne Clarke
At 11.00 p.m. London time on 31 December 2020, the Brexit transition period will end.
The UK and the EU will either enter straight into their negotiated 'future relationship', or there'll be 'no trade deal' and the UK and EU will trade on World Trade Organization terms.
That is the legal position as it currently stands.
Is there any way the transition period could be extended, or more time found for a deal to be settled and implemented?
The legal position
Article 132 of the Withdrawal Agreement - an international treaty between the UK and the EU – is clear. To extend the transition period, both parties have to agree to do so by 1 July 2020. They can agree to extend to either the end of 2021, or to the end of 2022.
That's a one-off decision. There is no opportunity to revisit it under the Withdrawal Agreement after June 2020.
So if there is no agreement by the end of June, it would then be too late to decide to extend the transition period.
UK law is similarly clear. It prohibits a government minister from agreeing to an extension of the transition period within the framework of the Withdrawal Agreement.
The UK government position
The UK is not contemplating any extension to the transition period. It has repeatedly said that it will not request an extension, and that if the EU asked for one, the UK would refuse.
So is that it?
As the end of the June approaches and with the negotiations seemingly bogged down, is it as simple as the transition period ends on 31 December 2020, with the relationship after that being a binary one of either the EU and UK agreeing and ratifying a deal which starts straight after that date, or going 'no trade deal' and so trading on WTO terms after 2020?
Come the autumn…
It is possible to see a situation where no extension was agreed in June, but the autumn arrives and the UK – despite its current seemingly adamantine stance – decides more time is needed and that either an extended transition period, or an 'implementation' period, is desirable.
What are the options after June 2020?
Amend the Withdrawal Agreement (and UK legislation) to extend the transition period
This would require all the EU Member States to agree to amend the Withdrawal Agreement and (as this Institute for Government paper discusses at pages 19 and 20), probably also a judgment of the Court of Justice of the European Union that the transition period can be extended in this way. Of course, the UK would also have to agree.
The UK would have to amend its domestic legislation. That should be straightforward given the government's current majority and the likely support of the Labour Party and the SNP for an extension.
It would, nevertheless, be extremely difficult for the UK government in terms of political optics; it would clearly be doing what it said it would not do.
Agree and ratify a final agreement by the end of 2020, but with an implementation period running through 2021
This would see the EU and UK nail down a complete trade agreement by the end of this year, but – to give businesses a year to prepare for change – 2021 would be an implementation period during which the current status quo persists. The new trade deal would kick in at the start of 2022.
The difficulty with this is two-fold. First, agreeing and ratifying a final deal by the end of 2020 is a very tight schedule. Second, it would mean the transition period in effect continues for another year – something the UK government has promised not to do.
Reach an 'detailed framework' agreement by the end of 2020, and then have an implementation / further negotiation period
This seems to me quite a likely outcome. The EU and the UK agree a 'detailed framework' trade agreement to take effect from, say, the start of 2022, with 'more details' to be agreed during an 'implementation' period that starts running from 1 January 2021.
This would respect the legal position in the Withdrawal Agreement and current UK legislation, whilst giving time for some further negotiation. It would enable the UK government to maintain that the transition period had ended as it promised at the end of 2020 – though the UK would very probably have to remain aligned with something that looks like the Single Market regulatory regime during this implementation period.
The great challenge, obviously, would be framing that 'detailed framework' agreement to be sufficiently comprehensive to constitute a trade agreement for WTO purposes, whilst allowing time for negotiations on detail to continue between the UK and EU, in a way that enables the UK government to maintain that this is something more than simply an extension of the current transition period.
But the EU's history suggests that where there is political will, there is a legal way.
Institute for Government paper
This recent paper from the IfG has a much fuller discussion of how more time could be secured if there is no agreement to extend the transition period in June.
The IfG is more pessimistic (see pages 27 and 28 of its paper) about the challenges of a 'detailed framework' agreement and implementation / further negotiation period approach, but does see it as one of a number of way in which more time could be secured in the autumn.
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