30th November 2020
Today is the last day of November and in one month’s time, on the last day of December 2020, the Brexit transition period is set to end – by automatic operation of law.
The stabilisers will be coming off the Brexit bicycle.
The United Kingdom formally departed the European Union on 31 January 2020.
It has not now been a Member State for ten months.
But the effect of ceasing to be a member was artificially delayed by a transition period that was to last until at least 31 December 2020.
This transition period meant that, with some minor exceptions, the substance of European Union law and policy would continue to apply in respect of the United Kingdom even though it was no longer actually a member.
There was the possibility of extending this transition period until the end of next year – which would have been sensible not least because of the ongoing impact of the coronavirus pandemic – but the United Kingdom chose not to seek such an extension, and the formal deadline for that extension is now passed.
There is still, perhaps, a possibility of a formal extension even now – it would not be legally or procedurally easy, and it would need the urgent goodwill of all the European Union Member States – but this is increasingly unlikely.
And so, unless something exceptional happens, the United Kingdom will leave the transition arrangements at the end of next month.
The next issue is whether there will be an agreement (or agreements) in place between the United Kingdom and the European Union in respect of trade and other matters.
There is already an exit deal in place between the European Union and United Kingdom, which is (supposedly) binding on the parties – and it is this agreement which was freely and knowingly entered into a year ago that the United Kingdom government is now seeking to breach with its proposed internal market legislation.
But that exit deal was primarily for certain tidying-up matters in respect of the departure, rather than the general ongoing relationship (though some provisions regarding Ireland were intended to have lasting effect).
With one month to go – and with no time for proper scrutiny and possibly no time even for ratification – there is still no agreement in place on the ongoing relationship.
It appears one issue is fish and fisheries policy – but it would seem there is still not agreement on far more fundamental issues such as governance of the agreement (that is, what happens when things go wrong or a party breaks its word) and the ‘level playing field’ (that is, will both sides have enforceable and equal standards against the other for commercial activity).
Governance and the ‘level playing field’ are not minor issues, but go to the very heart of any future relationship.
The various antics of United Kingdom government – not just limited to the internal market legislation – have made the European Union nervous about governance – and as has been said, trust is good but law is far better.
The United Kingdom should have spent these last few months showing the European Union – and other potential partners for trade agreements around the world – that it could be trusted to abide with international agreements.
But instead the United Kingdom has, at this most critical of times, shown the opposite – and so has created a needless but major moral hazard.
What serious potential international trading partner would now trust the United Kingdom to keep its word?
And in respect of the ‘level playing field’, the European Union is also – and again understandably – nervous about United Kingdom ministers unilaterally reneging on agreed and enforceable commercial standards in the name of ‘sovereignty’.
Because of all this, there is a non-trivial risk of there not being any formal commercial relationship in place for 1 January 2021.
And there is certainly no reason to expect the European Union to sign up to a deal out of charity or pity or otherwise against their interests – especially as current and future trading partners of the European Union are all looking on too.
There are still, nonetheless, many favourable conditions for a deal – the parties are still speaking, there is agreement on the majority of the legal text, the parties both have an interest in a deal, and both parties would benefit from a deal.
But all these conditions are not enough if there is not actual agreement on fundamental issues.
So we come to the final month of the transition period, where the end-of-year holidays mean even less working time available to finalise a deal, during a pandemic and amidst forecast of a severe economic downturn.
There is no deal in place.
And even if there will be a deal in place by the end of next month, the general situation and outlook is not good.
This is perhaps the worst time for the stabilisers to come off the bicycle.
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