There have been calls from some quarters to extend the Brexit transition period because of the coronavirus pandemic. Following the UK’s departure from the EU on 31 January, the rest of 2020 is set to be a transition period, giving both sides time to implement the withdrawal agreement and negotiate the terms of their future relationship. The UK was also planning to launch negotiations on new trade deals with countries outside the EU.
In this article, we look at how the UK is affected during the transition period by the EU’s response to coronavirus, what is happening with the UK’s plans to negotiate trade deals with non-EU countries, and what this means for Parliament. Part 1 of this series explored how the focus of governments on dealing with Covid-19 has affected the progress of the UK-EU future relationship negotiations and implementation of the withdrawal agreement.
Implications for the UK of the EU response
Under the terms of the withdrawal agreement, in many respects the UK is effectively treated as though it continues to be a member state during the transition period. This is relevant for some actions that the EU and its members have taken in response to the Covid-19 pandemic. For example:
- State aid: The UK is still subject to EU rules on state aid during the transition period. State aid is an advantage, such as a subsidy or a tax break, that national authorities confer selectively, for example only to specific companies or industry sectors. Generally, EU law prohibits state aid, although it may be permitted in some circumstances. The UK remains subject to EU state aid rules during the transition period. On 19 March, the European Commission adopted a temporary framework on state aid to enable member states to use the full flexibility foreseen under state aid rules to support their economies in the context of the Covid-19 outbreak. On 25 March, the European Commission approved two UK state aid schemes under the temporary framework. These schemes make up the Government’s coronavirus business interruption loan scheme, intended to provide support to small and medium enterprises (SMEs). The commission approved a third UK scheme on 6 April, intended to provide £50 billion of support to SMEs and large corporates.
- Restriction on exports of personal protective equipment (PPE): The EU implemented temporary restrictions on the export of PPE on 15 March. While the restrictions are in place, companies can export PPE outside the EU only with government authorisation. European Commission guidance makes clear that this does not apply to exporting PPE to the UK. This is because, under the withdrawal agreement, the UK is to be treated as a member state and not as a ‘third country’ during the transition period.
- Travel restriction on third country nationals: All EU member states except Ireland, plus Iceland, Liechtenstein, Norway and Switzerland (the Schengen associated countries) have a 30-day temporary travel restriction in place. This prevents people from other countries, or ‘third country nationals’, from making non-essential trips into the EU. The travel restriction does not apply to citizens of EU member states or Schengen associated countries. When it proposed that member states should implement a travel restriction, the European Commission noted that UK nationals must be treated the same way as EU citizens until the end of the transition period.
Under the withdrawal agreement, the UK would also be eligible until the end of the transition period for EU funding under various schemes to support its Covid-19 response. The House of Commons European Scrutiny Committee has called on the Government to make clear whether it will apply for any of this funding.
UK participation in EU schemes
The EU has launched four joint procurements under an EU Joint Procurement Agreement for gloves and surgical gowns, personal protective equipment, medical ventilators and respiratory equipment, and laboratory equipment including testing kits. The Joint Procurement Agreement is a voluntary arrangement under the EU Decision on serious cross-border threats to health. The UK could continue to participate in such joint procurements during the transition period.
The UK’s non-participation in the ventilator procurement has generated many headlines in the last couple of weeks, given a reported shortage of ventilators in the UK. There were suggestions that emails inviting the UK to join the scheme went astray, but the European Commission maintained that the UK was fully briefed on the plans. Michael Gove, minister for the Cabinet Office, argued that there was “nothing that participating in the scheme would have allowed us to do that we have not been able to do ourselves”. However, a Downing Street spokesman said the Government would consider participating in future procurement schemes “on the basis of public health requirements at the time”.
The House of Commons European Scrutiny Committee has asked the Government to clarify whether it is participating in the joint procurement exercises, and if not, to stipulate the reasons why.
No formal role for UK in EU decision-making
There is one very significant way in which the UK is not treated like an EU member state during the transition period. The UK can no longer take part in the EU’s decision-making and legislative processes in the same way as member states. Nevertheless, new EU laws that come into force during the transition period will affect the UK. Prior to Brexit, the Government said most EU law due to come into force during the transition period would have been agreed while the UK was still an EU member state, with full representation and voting rights.
However, the coronavirus pandemic means the EU is having to make certain policy decisions at speed and bring new rules into force more quickly than is often the case. The House of Commons European Scrutiny Committee said this highlights “the difficulties of the post-Brexit transition period, which means the UK has no formal say in shaping new EU law”. It pointed in a recent report to the temporary framework on state aid and a number of other proposed EU Covid-19 response measures that could affect the UK, but in which the UK had no formal input.
Negotiating trade deals with other countries
The Government was also planning to use the transition period to begin negotiating new trade deals with countries outside the EU to come into force after the transition period ends. The Government said its priority was to launch negotiations with the US, Australia, New Zealand and Japan.
The UK published its negotiating objectives for a trade deal with the US on 2 March. Talks were expected to begin later in March. On 24 March, the Government said both sides remained fully committed to negotiating a free trade deal. However, it explained that given the unprecedented coronavirus situation, both sides were “looking at options to conduct the negotiations in a way that reflects the current situation and respects public health”.
The Trade Justice Movement—a UK coalition of nearly sixty civil society organisations—wrote to the Government in late March asking it to delay the start of negotiations with the US. The Trade Justice Movement argued it would be “deeply inappropriate” to start negotiations when the Government’s attention “should be focused on dealing with the public health and economic crises which face our nation”. The letter also suggested that public and parliamentary debate about the issues associated with a US trade deal could not take place with the country in lockdown.
What role for Parliament?
The deadline for deciding whether to extend the transition period is 30 June. It remains to be seen whether calls for an extension grow stronger as this deadline approaches. If an extension were to happen, further legislation would be needed to remove the statutory ban on UK ministers agreeing to it. The House of Lords would have its usual role in agreeing any such legislation. However, there is no statutory role for Parliament in deciding whether there should be an extension.
Image by Martin Sanchez from Unsplash.