74: EU (Withdrawal Agreement) Act 2020 – part 1

Aaron Nelson Legal Director

The Conservative Party’s victory in December’s General Election – and their 80 plus majority in the Commons – has paved the way for the approval, ratification and implementation of the Withdrawal Agreement reached between the European Commission and the UK government in October 2019.

Of course, this wasn’t the Withdrawal Agreement negotiated by the UK government under Theresa May, concluded in November 2018. That was rejected by parliament three times (the famous ‘meaningful votes’). Rather, this was Prime Minister Johnson’s renegotiated Withdrawal Agreement and Political Framework on the UK/EU Future Relationship. The main changes between the Johnson and May ‘deals’ were:

the removal of the protocol on Ireland/ Northern Ireland – the much loathed ‘backstop’ – in favour of continued regulatory alignment on the island of Ireland; and
Northern Ireland being de jure in the UK customs territory but de facto in a customs union with the European Union Customs Union and thus in the European Single Market re free movement of goods, for a limited time.

Johnson tried to have this renegotiated Withdrawal Agreement (the WA) deal ratified by parliament in the Autumn, introducing a Withdrawal Agreement Bill. But parliament rejected it, precipitating the General Election. After the General Election, now with a sizeable majority, and almost as its first act, the government laid a revised version of the Bill. This passed through parliament unamended – all changes made in the House of Lords were overturned by the Commons – becoming the EU (Withdrawal Agreement) Act 2020 (the WAA).

The Bill which the government published was slightly different from the Bill the government had failed to pass before the General Election. Two significant changes reflected that the government now had a large majority, and would no longer needed to make concessions to parliament to get its business through:

first, the government significantly watered down parliament’s a role in the negotiation of the future UK-EU relationship. Under the revised Bill, and the WAA as enacted, parliament can only ask questions of the UK Minister appointed as the co-chair of the UK-EU Joint Committee established under the WA; and
second, the provisions on workers’ rights – which had been introduced as a concession to leave-supporting Labour MPs – were removed, albeit with a promise that they would be implemented through a different Act.

WAA / EUWA

The WAA is distinct from the EU Withdrawal Act 2018 (EUWA), which it substantially modifies.

EUWA can be thought of as the domestic equivalent of Article 50. That is, it is the means by which – in UK law – the UK’s membership of the EU is brought to an end. EUWA does this in s1 by repealing the European Communities Act 1972 (ECA), the UK law which gave domestic effect to the UK’s membership of the EU on ‘exit day’ – 31 January 2020.

As we’ve explained before, this makes a drastic change to UK law, because it removes the basis on which (almost all) EU law has effect in UK domestic law. The rest of EUWA then deals with the consequences of the repeal of the ECA, by providing saving provisions which ‘retain’ certain types of EU law and convert them into domestic law, preserving them, despite the fact that the ECA has been repealed. EUWA also provides a toolkit for adjustment/amendment of retained EU law. The objective of retaining EU law is to ensure that the UK statute book operates as closely as possible immediately following exit day as it did before (avoiding the infamous ‘black hole’ in the statute book).

Crucially, the EUWA – as passed – was fit for ‘no deal’ scenario. It was agnostic as to whether there was a Withdrawal Agreement or an agreement on a future Relationship between the UK and the EU, and as to the provisions of those. It provided legal certainty in the absence of a deal.

WAA / WA

The WAA, on the other hand, gives effect to the Withdrawal Agreement (WA). It does this in six ways:

it amends EUWA to make provision for the transition/implementation period agreed in the WA;
it gives the WA domestic legal effect generally;
it enables the ratification of the WA by cancelling the specific requirements in EUWA;
it makes provision re the WA financial settlement;
it deals with the implications of the WA for the devolved institutions; and
it gives domestic effect to WA provisions re citizens’ rights.

We will look at the first of these – transition – below, and consider the remainder next time.

Transition

Part Four of the Withdrawal Agreement provides that the UK’s exit will be followed by a time-limited ‘transition period’. The UK government prefers to call this an ‘implementation period’. Whatever it’s called (TP/IP), it will last until 31 December 2020.

Article 126 of the Withdrawal Agreement provides that, during this period, the UK will no longer be an EU Member State but it will continue to be treated as such under Union law (unless otherwise specified). During the TP/IP, EU law and EU supervision and enforcement arrangements will continue to apply to the UK. The UK will continue to participate in the EU Customs Union and Single Market (with all four freedoms) and comply with EU policies. Any changes to EU law will automatically apply to and in the UK unless provided otherwise. At the end of the TP/IP, this arrangement will come to an end.

This TP/IP was incompatible with the provisions of EUWA as passed, which repealed the ECA on ‘exit day’ (31 January 2020). So the WAA needed to modify EUWA to give domestic effect to the TP/IP. Arguably, the WAA could have done this simply by moving ‘exit day’, for domestic purposes, from 31 January 2020 to 31 December 2020, but clearly that was never going to be politically acceptable.

Instead, we have a slightly convoluted mechanism in the WAA of giving the ECA continued effect during the TP/IP despite its repeal on exit day. ‘Transposition’ of retained EU law into domestic law is also postponed until the end of the TP/IP. For example, s41 and Schedule 5 provide that any references to something happening on, before or after ‘exit day’ in regulations made under EUWA are to be read as if the reference was to the end of the TP/IP. The order-making power to correct deficiencies in domestic legislation as a consequence of the UK’s departure from the EU will now to expire two years after the TP/IP has ended (rather than two years after exit day).

Finally, note that article 132 of the WA provides that the TP/IP can be extended by the UK-EU Joint Committee (which is to be established under the WA) by one or two years. But s33 of WAA – as passed – prohibits a Government Minister from agreeing to any such extension. The government’s recent rhetoric also suggests that no extension will be sought.

The future relationship

The government and the EU will shortly commence negotiations on the UK/EU future relationship. The Prime Minister’s recent written statement to parliament set out that the UK is seeking – at most – a free trade agreement similar to that which the EU has with Canada, not a closer relationship:

‘The question for the rest of 2020 is whether the UK and the EU can agree a deeper trading relationship on the lines of the free trade agreement the EU has with Canada, or whether the relationship will be based simply on the Withdrawal Agreement deal agreed in October 2019… In either event the UK will be leaving the single market and the customs union at the end of this year and stakeholders should prepare for that reality.’

A Canada-style agreement would allow tariff- and quota-free trade in goods, but ‘the Withdrawal Agreement deal’ means that the UK and EU would (after the TP/IP) effectively trade on World Trade Organization terms, equivalent to the UK leaving the EU without a deal. The government has taken to calling this the ‘Australia’ model, as this is the arrangement between Australia and the EU at present.