Brexit Brief: Transition – A Bridge, or Bridge Too Far?

Posted on 21st March 2018

Transition period – but to what?

British and European Union negotiators on Monday celebrated the announcement that, in principle, a transitional period had been agreed to avoid the “cliff-edge” Brexit so many had feared.  The UK, after ceasing to be an EU member state in a little over a year’s time, will effectively remain part of the single market and customs union until 31 December 2020.  UK Prime Minister Theresa May had formally requested a transition period in a speech in Florence in September of “around two years” to give businesses on both sides the time to adjust to new arrangements.  The agreement is subject to further technical revisions and negotiations, although EU-27 leaders will be asked to sign off on a transition period in principle at a summit this Friday.  But transition implies a bridge between one state and another – around which discussions have barely begun.

Tech industry responds cautiously

Curiously absent from the draft text are provisions about data transfers.  Despite transition, the UK will become a third country at 11 p.m. Brussels time on 29 March 2019.  If it does so without an agreement reflecting that data transfer rules will continue to apply as if the UK were still a member state, data flows between the UK and EU may be disrupted anyway.  The premier tech trade body in the UK, techUK, welcomed the latest agreement but was not convinced it would help them: members were concerned that “there remains no formal agreement around the ongoing ability to deliver the free flow of data during the transition period.”

UK scores symbolic concessions

Businesses on both sides, including in the tech industry, found the high-level agreement reassuring.  However, the EU essentially secured all of its demands in return for a transition period while the UK, meanwhile, secured only symbolic concessions about the terms of the transition period.  The UK had been firm, for example, on not accepting new EU rules without consultation after it ceased to have a say over them –  but will now merely be consulted to ensure “their proper implementation” under the terms of Monday’s agreement.  Similarly, the British prime minister had insisted that free movement would end on exit day, but EU citizens moving to the UK during the transition will now have exactly the same rights as before, including being able to acquire “EU settled status” under a scheme planned to deal with current EU residents. However, the UK managed to win the ability to negotiate deals with third countries – including trade agreements – without the EU’s permission.  While this was a significant watering down of the initial EU position, few believe significant trade deals can be negotiated in the 21 months before Brexit – especially as the UK tries to negotiate an ambitious one with the EU.

Deal is between a Rock…

The transition period is not yet set in stone and may run aground on the Rock of Gibraltar.  Gibraltar has been British territory since 1713, although Spain claims sovereignty.  Early on, the EU-27 gave Spain a veto on whether the transition period applies to Gibraltar, despite the UK’s insistence that Gibraltar should be treated the same way as the rest of the UK.  Monday’s agreement was apparently agreed without consulting Spain on this point, which has led to reports suggesting the Spanish government may veto it.

… and a hard place

Nor was everything rosy on the UK side.  Some members of the Conservatives reacted with fury when presented with the agreement, while one cabinet minister publicly admitted “disappointment”.  Thirteen Conservative MPs wrote to the prime minister condemning the continued application of the EU’s Common Fisheries Policy to the UK during the transition.  This agreement, which apportions fishing quotas to all member states, has long been resented by fishing communities as unfavourable to Britain.  As per the transition agreement, the country will lose say over the quotas but will still have to abide by them, which backbench MPs say is a “further disaster” for the fishing industry. Some of them spent Wednesday morning throwing fish into the River Thames in protest. Michael Gove, the minister responsible for fisheries, admitted the deal was “sub-optimal” in parliament on Tuesday.

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Further reading:

Brexit Brief: Cherry Picking But No Picnic

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