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Brexit Blog: Impact of COVID-19 on EU-UK Future Relationship Negotiations

AUTHORs: Michael Jackson Services: Brexit, Brexit Advisory Group DATE: 02/04/2020

The United Kingdom left the European Union on 31 January 2020. In our Brexit Blog, Matheson partners will keep you up to date by taking a look at the progress of the negotiations on the future relationship of the EU and the UK, as these unfold.

Prior to the interruption of the negotiations by the COVID-19 pandemic, the EU and the UK negotiating teams met in Brussels from 2 March 2020 until 5 March 2020 for the first round of talks. In this issue, Matheson’s Managing Partner Michael Jackson assesses where matters currently stand.

As governments across Europe introduce unprecedented measures to deal with the health and economic impacts of COVID-19, the political priorities of early 2020 recede further into the background. To some commentators, already weary from the three years of political sparring that led to the Brexit Withdrawal Agreement, Brexit now seems somehow unimportant – bringing to mind the quote attributed to Henry Kissinger that “There cannot be a crisis next week. My schedule is already full.” Sadly for those who would rather leave those issues behind, while the prioritisation of the COVID-19 response is logical and laudable, the issues which have been necessarily deprioritised for now, remain to be resolved. In fact, it is becoming increasingly clear that the manner in which they are resolved is likely to be significantly influenced by the COVID-19 experience - and the speed at which economies recover from the economic shocks of recent weeks.

The immediate impact of COVID-19 on the Brexit process was that the second round of negotiations on the future relationship between the EU and the UK, which had been scheduled to take place in London from 18 to 20 March 2020, did not proceed. Following on from the initial ‘round one’ engagement in Brussels in early March, it would have been envisaged that negotiators from both sides would be progressing at pace through the planned schedule led by Michel Barnier for the EU, and David Frost for the UK. Unfortunately, Michel Barnier, because he has tested positive for the virus, and David Frost, because of mild symptoms, are both self-isolating. We wish them and Prime Minister Johnson a full and speedy recovery.

Even in the pre COVID-19 days, a serious question mark existed as to whether it would be possible to conclude talks on the future relationship in time for an agreement to take effect by the end of this year. The recent developments make that question mark even more pronounced. Any extension would have to be agreed by 1 July 2020.  There can only be one extension - and it will last either for one or for two years. The UK Government’s official position remains that no extension will be countenanced or sought, but as pressure grows from UK industry groups already struggling significantly to deal with the economic impact of COVID-19, and the impact of COVID-19 on governmental capacity being more acutely felt in every European country, it remains to be seen how feasible this position is.

While the negotiations are moving more slowly than planned, some progress is still being made however. Formal draft legal texts were exchanged as scheduled. The UK has asked the EU Commission not to share its text with member states. This UK draft may possibly be the first full UK exposition of their vision for the architecture of the future relationship. Perhaps now the EU has, at least in some respects, a sense of the real meaning, of ‘Brexit means Brexit’. If so, we have arrived at the start line.

In parallel to talks on the future relationship, the Withdrawal Agreement created an EU-UK Joint Committee to oversee its implementation. It is composed of representatives from, and co-chaired by, the EU and the UK. It is the sole forum for dealing with issues that arise between both sides on their obligations pursuant to the agreement. It has the power to propose amendments for up to four years after the transition to “correct errors, address omissions or other deficiencies”. It is the forum where the detail of implementation is decided, and disputes addressed. The Joint Committee is chaired by European Commission Vice-President Maroš Šefčovič and the UK Chancellor of the Duchy of Lancaster Michael Gove. Its first meeting took place on Monday 30 March 2020, albeit remotely due to COVID-19 restrictions.

The most important outcome from the Joint Committee meeting was what didn’t happen. Not unexpectedly, an extension beyond 31 December was not sought. If that wasn’t a surprise, it is a fact that leaves the pre-existing Brexit timetable in place with a diminishing prospect of delivering on it. On the Northern Ireland Protocol, the UK statement “reiterated our commitment to protecting the Belfast / Good Friday Agreement in all respects, and to upholding our obligations under the Northern Ireland Protocol.” With a heightened sense of emphasis, however, the EU Commission spoke of an “urgent need” to deliver on the detail of customs procedures, as well as sanitary and phytosanitary controls. A narrowing timeline is clearly in danger of being outrun by the body of work required for completion. The work of the six Specialised Committees established under the Joint Committee have been launched, with  the Ireland / Northern Ireland committee intended to begin work immediately. In implementing the Protocol, the EU Commission highlighted in its statement following the Joint Committee meeting that clear and reliable answers are key for allowing businesses to prepare for change, and that providing such answers cannot wait. The Joint Committee is expected to meet again in June.

The issues mentioned here are but a small sample of the wide range of matters which will need to be dealt with as talks progress. The still tentative nature of the processes to deal with those issues underscores the significant challenge facing the EU and UK before the end of 2020. As the political and economic fall-out from COVID-19 becomes clearer, that too will influence the approach adopted by both sides. In January, much of the UK commentary was centred on the fact that the EU may not want to adopt a negotiating position which might precipitate a hard Brexit and a possible recession. Now that COVID-19 means that the recession seems increasingly likely in any event, can we anticipate the EU being even more stringent in its calls on the UK to honour its commitments in the Withdrawal Agreement and being even less inclined to grant access to markets without real guarantees that the playing field will not be distorted? Will the spotlight shone by COVID-19 on the importance of supply chains and the increasingly likelihood of a recession there too result in a different approach from the UK? What is certain is that those who believe Brexit has become irrelevant are likely to be disappointed. There are some interesting times ahead.

Useful links:

Agenda for the First Meeting of the Joint Committee on the Implementation of the Withdrawal Agreement Monday

Draft text of the Agreement on the New Partnership with the United Kingdom (European Commission Task Force for Relations with the United Kingdom)

The EU-UK Withdrawal Agreement

For further information:

If you would like to know more about Matheson’s Brexit Advisory Services, please contact michael.jackson@matheson.com, sharon.daly@matheson.com, your usual Matheson contact or any member of our dedicated Brexit Advisory Group.