EUROPE has brought together in a single document its analysis of the 22 technical notes drafted by the European Parliament’s committees assessing the impact of the withdrawal of the United Kingdom from the European Union on their respective areas of responsibility.
These notes will inform the deliberations of Parliament which will agree its position – probably in April – for the Brexit negotiations.
The negotiations between London and the twenty-seven member states will begin as soon as the UK government activates Article 50 of the EU Treaty, before the end of March.
INSTITUTIONAL AFFAIRS: MEPs stress inter-relatedness of Brexit agreement and future EU-UK relations
MEPs on the European Parliament’s constitutional affairs committee (AFCO) stress the inter-relatedness of future divorce agreements between the United Kingdom and the European Union that will govern the EU’s relations with the UK once it becomes a ‘third country.’
Under Article 50 of the treaty of the EU, ‘the withdrawal agreement must take account of the framework for the future relationship of the withdrawing member state with the Union. This framework should therefore be defined before an agreement on the future relationship is negotiated,’ explains a document drawn up by the committee on the impact of Brexit in domains covered by the committee, adding: ‘The content of both agreements is thus interdependent, and the scope and object of the withdrawal agreement will change in function of how the future relationship will be framed.’
If the negotiations take longer than the two years foreseen in Article 50 of the treaty, the MEPs recommend a ‘cautious alignment’ between the exit agreement and the agreement on future relations. To this end, ‘transitional measures’ may help keep the process smooth.
Feeling – like the foreign affairs committee (see other article) – that it has the legal powers to pilot the draft report that is supposed to grant (or refuse) the European Parliament’s consent to the exit agreement between London and the EU, the AFCO committee lists measures that could be included in the divorce procedure: - conditions for the withdrawal of British representatives from all EU institutions and bodies; - the rights of British citizens residing in the EU and EU citizens residing in the UK; - British contributions to the EU budget and the balance of the EU’s budget interventions in the UK; - the rights of European officials holding British passports; - the closure of European agencies located in the UK (such as the European Bank Authority); - the UK’s withdrawal from the EU’s civilian missions and agreements linking it to Europol and Frontex; - establishing border controls and possibly special solutions for Northern Ireland and Gibraltar; - the fate of cases pending at the European Court of Justice; - changes in rights and duties arising from international agreements to which the EU and its member states are party.
Deciding on MEP numbers before the next term of office
AFCO stresses the importance of reaching agreement on the number of MEPs in the European Parliament in the next term of office, irrespective of the date when the United Kingdom actually leaves the EU.
This necessity would still be required in the following cases: - the future decision on the composition of Parliament (amending Decision 2013/312) gives a calculation formula for the number of seats; - the future decision sets a number of seats per member state in a 27-state solution and a 28-state solution (while the UK is still in the EU). Either way, the future decision will have to stipulate whether the 73 seats allocated for the UK will disappear or be partly or fully divided up among other countries.
See: Voir: http://bit.ly/2kXALAM (Original version in French by Mathieu Bion)
TRADE: Brexit will affect EU offers and possibly also outcomes of main free-trade talks
A European Parliament international trade committee working document, seen by EUROPE on Friday 10 February, underlines the impact of the United Kingdom withdrawal from the EU – Brexit – on EU common trade policy and shows, in particular, that Brexit may affect offers and, “to a certain extent”, the outcomes of all the on-going free-trade negotiations.
Brexit could have an effect on the content, timetable for adoption and procedure of a number of legislative texts that are currently under discussion or in the process of being adopted, such as the two regulations on the control of exports (the new anti-torture regulation adopted in 2016 and the revised regulation on dual-use goods which is currently being scrutinised), the regulation that will govern the trade in conflict minerals (due to come into force in the first half of this year), regulations on trade defence (modernisation of trade defence instruments – an issue on which the UK has steadfastly refused to do any softening of the lesser duty rule – and China’s status as a market economy) and the initiative to ensure reciprocal opening of third countries’ public procurement (an initiative deadlocked in Council and on which the UK remains “sceptical”).
Brexit will have clear implications for the host of free-trade agreements in force, concluded, being negotiated or at the pre-negotiation stage between the EU and third countries.
This is especially true of the TTIP negotiations with the United States, in view of the strong trade relations between the two countries. If the UK leaves the EU before TTIP negotiations are concluded, “it is unlikely to affect the overall objectives of the EU for the TTIP, but of course it can lead to different nuances for the final trade-offs to be made”, the note states, adding: “To sum up, the UK’s departure decreases the size of the EU market, thereby, making TTIP slightly less interesting for the US”.
With regard to CETA, the free-trade deal with Canada, the exit of the United Kingdom should have no effect on the provisional application of the agreement and the ratification procedure but “the trade volume will most likely be affected and after the UK’s withdrawal, there could be need for redistribution of commitments under the agreement among the member states”, according to the note.
Brexit could have a positive impact on free-trade talks with India that have been bogged down since 2013. The UK has a special link with India but is only its second largest EU trading partner, after Germany (its 18th largest partner globally), but Scotland has a major interest in a trade agreement with India for its whisky, the note states, adding: “In case the UK including Scotland would leave the EU, this could possibly facilitate FTA negotiations as tariffs on wines and spirits constitute an obstacle”.
Brexit will also have consequences for trade talks with Japan where the UK has “a significant offensive interest” especially in the field of financial services. The UK currently has a strong interest due to major Japanese foreign direct investment stock in the UK in the automotive and electronic sectors, mainly motivated by the free entry into the single market. This may result in diverging interests between the EU and the UK”, the note states.
The same is true for talks on a bilateral agreement on investment with China, where the UK has significant offensive interests with its financial services and which it will be in the country’s interest to defend in a post-Brexit situation.
Brexit will also affect the forthcoming free-trade negotiations with Australia and New Zealand, two partners which immediately indicated a desire to agree free-trade deals with the UK after its withdrawal. “A process of parallel consultations could complicate these negotiations”, the note suggests.
A “significant impact” is also to be expected in negotiations taking place for an international trade in services agreement (TiSA) “particularly in the areas of the negotiations, where the UK market is valuable, like financial services or telecoms, will have to be readjusted. The whole EU offer will also be reduced as a mechanic consequence of the UK withdrawal from the EU side”, the document states.
“All ongoing international trade negotiations, particularly bilateral ones, will need to take account of UK's departure from the EU. In practical terms, it can affect the offers and to a certain extent their outcome”, is the conclusion of the note in a second section which discusses provisions to be included in the withdrawal agreement that will define future relations between the EU and the United Kingdom, one aspect of which will be the future relationship between the two in terms of trade.
See: http://bit.ly/2lzgVt6 (Original version in French by Emmanuel Hagry)
TAXATION/FINANCE: Brexit will be good news for fiscal harmonisation
'Brexit' will have the consequence of the departure of a member state that is opposed to tax harmonisation at European level, the committee on economic and monetary affairs (ECON) of the European Parliament concluded in the working document on the impact of the withdrawal of the United Kingdom from the EU.
In the financial field, this document argues that the British financial entities will no longer have the same access to European market unless, firstly, London accepts the four freedoms and, secondly, it continues to meet European standards.
The document put together by the economic committee does not touch upon the issue of the fiscal future of the UK, with fears of a tax haven an hour away from Brussels having been voiced by the OECD itself. It has gone no further than to anticipate the impact Brexit will have on the negotiations underway on various different texts. And the conclusion is exactly the same in almost every case: the taxation dossiers on the table are more likely to succeed if the United Kingdom is no longer seated around the table of the Council of EU.
As regards the common consolidated corporate tax base (CCCTB) project, which London is expected to oppose (see EUROPE 11697), Brexit may "increase chances of reaching the required unanimity in Council – although the UK is not the only member state to have opposed the CCCTB (in the previous negotiation: Ed) and opposition from other member state is likely to remain", the authors of the document note.
On the double taxation dispute resolution mechanism proposed in October of last year by the European Commission (see EUROPE 11654), the ECON document states that although the United Kingdom is theoretically expected to support the proposal, it is unlikely that London would "agree to a binding mediation and decision-making body at EU level. Again, the UK's departure from the EU may therefore increase chances of the proposal reaching the required unanimity in Council", the report reads.
Access to the financial markets of the EU will be the clincher
As the ECON document stresses, access to the European market for banks from third countries depends on passports that are already part of the Community acquis. If there is no agreement by the time the UK actually leaves the EU, British companies' passports will cease to apply. This will affect 5,476 businesses registered in the United Kingdom and 8,008 companies of the EU or the European Economic Area (EEA) holding passports to do business in the UK.
In order to obtain a passport as a non-EU member state, the UK's only option would be an agreement similar to the EEA (the Norwegian model). "Such agreements include counterparts, such as accepting the four fundamental freedoms, the binding nature of the Court of Justice's rulings and a contribution to the EU budget", the document states, adding: "in the absence of concrete legal arrangements to the contrary, a single passport thus will no longer be available to UK-licensed firms, and third-country provisions will apply instead. This will have a significant impact on how the UK and EU financial institutions conduct their business".
After 'Brexit', a raft of rules on third countries, not linked to equivalence regimes, will apply for UK entities, including default prudential requirements to third-country exposures of EU banks.
Equivalence decisions (which are unilateral EU decisions) for certain sectors of the market could be a default option for the UK . "It could be argued that the UK, up to the moment of withdrawing, would have been compliant with all relevant EU law", the document reads, explaining that an equivalence decision could be adopted provided that London does not backpedal on any of the prudential rules. "Retaining equivalence over time" is possible as long as London maintains the EU's regulatory standards, the document states. However, it goes on to warn that "the EU can at any time change its regulatory framework, making the equivalence decision obsolete".
See: http://bit.ly/2k41VSH (Original version in French by Elodie Lamer)
INTERNAL MARKET: MEPs give overview of how Brexit may impact on internal market legislation
According to a provisional study by the European Parliament’s internal market and industry committee (IMCO), many items of legislation underlying the internal market will be directly affected by the United Kingdom’s exit from the European Union.
Among the more emblematic is European legislation for the reception and surveillance of the motor vehicle market, along with the services directive and the directive on the mutual recognition of professional qualifications.
The committee’s thirty odd-page study gives a long list of legislation that will be directly impacted by Brexit. For each item of legislation or legislative package, the MEPs tried to list the issues generated by Brexit and the questions that will needed to be decided. This newsletter has selected the following three items as being particularly of the moment.
Imbroglio in the certification of motor vehicles. Firstly, for the legislation on the reception and surveillance of the motor vehicle market (which is currently being revised (see EUROPE 11722)), the MEPs are concerned about the UK’s weight in the car manufacturing sector. For this particularly sensitive issue due to multiple frauds detected in tests of car manufacturers, the MEPs query the validity of reception of vehicles in the post-Brexit United Kingdom and vice versa.
Service suppliers in a state of flux. One of the other big issues in sight is the services directive (see EUROPE 11718). Here, the MEPs have targeted a long list of outstanding issues. Firstly, they wonder what will happen to the rights of service suppliers from continental Europe which have opened one or more bodies, such as branches, agencies or subsidiaries, in the United Kingdom, and vice versa.
Another question in suspense is whether it will be possible for service suppliers from the Continent to set up in the UK in the future. On this question, the negotiations between the EU and the UK will need to focus on modalities and mutual recognition for insurance, explain the study’s authors. They go further and wonder whether service suppliers from the EU27 will need to notify the British authorities of temporary provision of services provided by an EU member states on British soil. Likewise, the MEPs wonder whether the UK plans to remain subject to the 'e-governance' directive.
More broadly, the study highlights the question of future administrative cooperation between the UK and the EU27. Above all, the MEPs are concerned about respect of non-discrimination based on nationality or place of residence for the supply of services in the future.
Professional qualifications in limbo. The recognition of professional qualifications is a matter of concern to MEPs, particularly the fate of the European professional card which was provided for pre-Brexit under the EU directive 2013/55. They propose that special provisional measures should be introduced for professionals working in the United Kingdom who gained their qualifications on the Continent.
See: http://bit.ly/2kduEnP (Original version in French by Pascal Hansens)
ENERGY: Concerns over possible UK withdrawal from internal energy market
The European Parliament’s industry, research and energy (ITRE) committee has been giving consideration to the potential impact of Brexit on energy issues and, in particular, to the repercussions for key provisions in the revised regulation on the security of gas supply, including the need to amend the regional groups designed to improve cooperation and solidarity among member states (since the United Kingdom and Ireland are supposed to forming a North-West region), the solidarity mechanism among member states in the event of a serious shortage of supply and the obligation to provide notification of contracts made with third countries.
The committee wonders, too, whether or not the United Kingdom should provide notification of inter-governmental agreements (IGAs) in energy before its withdrawal with the revised decision on the transparency of IGAs requiring ex ante notification to the Commission before signing. Brexit could also have “practical implications” for the operation of the EU electricity market which “will have to be taken into account” in revising the rules which govern this market, such as the directive on electricity supply.
With regard to revision of the energy efficiency directive, the ITRE committee wonders how the EU’s 2020 target for primary/final energy consumption will be affected by the UK exit; similarly, for revision of the renewable directive, it “may be necessary” to factor in the departure of the United Kingdom, which has a binding national target of 15% of renewables in its energy mix by 2020, in setting national targets and contributions within the revised directive.
Beyond the impact on the legislative texts under discussion, the ITRE committee wonders if the UK will continue to participate in the internal energy market and what impact the withdrawal of the UK might have on completion of the energy single market and pan-European network codes. It believes, too, that the United Kingdom’s status in the various organisations (ACER, ENTSO-E and ENTSO-G) will need to be clarified. Furthermore, it wonders, in the event of the United Kingdom’s not applying internal market rules, what the effect would be on the market of British energy companies operating in the EU but not subject to its rules or state aid rules.
The ITRE committee also wonders about the impact of Brexit on infrastructure projects of common interest (PCIs) in the United Kingdom or connected with the country and, in particular, on projects that are in progress at the time of the exit and their eligibility for financing. In this context, the committee wonders about the impact on financing instruments, such as EFSI, EIB funding and the connecting Europe facility (CEF). There is also the question of the application by the United Kingdom, post-Brexit, of EU rules on the security of offshore gas and oil activities that were adopted in 2013. A further crucial issue is whether the procedure for triggering Article 50 will automatically apply to the Euratom Treaty, if the United Kingdom wants to continue to play a role in this treaty and if it continues to comply with EU standards on nuclear safety and waste management. Lastly, the committee wonders about the impact of Brexit on the situation in Northern Ireland, which forms a single energy market with Ireland.
See: http://bit.ly/2kAVtpn (Original version in French by Emmanuel Hagry)
TELECOMS: Brexit may lead to possible review of telecoms services financing and regulations
The United Kingdom’s departure from the EU may bring into question the financing and regulation of telecoms services on either side of the Channel.
In this regard, a document from the European Parliament’s industry, research and energy committee (ITRE) states that the exit agreement and/or agreement on future EU-UK relations should address the question of frequencies, rules applying to service suppliers on the telecoms market, roaming charges and cybersecurity requirements.
In terms of frequencies, there is the question of interference and cooperation between British regulators and those of the member states, or of EU bodies, such as the radioelectric frequencies policy group, when it comes to managing and harmonising frequencies.
The document also indicates that the EU should sign an agreement with the UK under EU Regulation 910/2014 to state that services provided by British suppliers are trusted services.
The document goes on to address organisation of the European agency responsible for networks and information and the European electronic communications regulatory body.
Finally, ITRE discusses how Brexit will affect various financial programmes, such as the mechanism for interconnection in Europe and Wifi4All. It says that British projects may be affected since financing is done on a first come, first served basis.
See: http://bit.ly/2kAVtpn (Original version in French by Sophie Petitjean)
RESEARCH: Raft of questions raised by prospect of EU science policy without British researchers
The report by the European Parliament’s industry, research and energy committee (ITRE) on how Brexit will impact on European research policy concentrates on the immediate issues relating to the EU’s framework research programme Horizon 2020.
The report is laconic and simply lists issues. This approach has the merit at least of giving indications of the scale of questions in this domain. The MEPs start by considering the immediate issues relating to Horizon 2020: - Will Brexit generate a shortfall in the budget?; - What will happen to projects currently under way and Knowledge and Innovation Communities (KICs) situated in the UK?
The future of public-private partnerships also raises a number of questions since the participation of private players is covered by civil law.
The MEPs stress that at the same time, the UK’s participation in the upcoming framework programme for research and innovation post-2020 will need to be negotiated since the UK will be at the negotiating table that decides on the shape of the future framework programme.
The future of the European Research Agra is the second aspect of MEPs’ concern since 15% of the UK’s university students come from other member states and 60% of the British research articles co-written with foreign researchers are with people from another EU member states.
See: http://bit.ly/2kAVtpn (Original French version by Jan Kordys)
JOBS: Legislation on mobility of workers and others will be a big issue under Brexit
The work of the European Parliament’s employment and social affairs committee (EMPL) in terms of the United Kingdom leaving the EU is focussing on the free circulation of individuals, on which a hefty document of nearly 80 pages has been drawn up.
Some 700 items of EU law cover employment policy, social affairs or the free circulation of workers, all of which will be affected by Brexit. One of the key issues of the future talks will be the free circulation of workers, which is one of the foundations of the EU, along with the rules to govern the travel, residence and work of British passport-holders in the EU27 and EU27 passport-holders in the UK.
Regulation 883/2004 on the coordination of social security systems is one of the key regulations and is about to be revised (see EUROPE 11688). It is used to manage welfare, unemployment benefits and pension payment for emigrants. The MEPs say that transitional measures will be needed, whether or not Brexit has occurred before the review of the regulation is finalised.
The situation is not totally identical for rules governing the posting of workers, which require particular political attention. London’s stance is not fully known and the country remains relatively neutral in the battle among Eastern and Western member states over the question (see EUROPE 11685). If the review of the 1996 directive is complete before the UK leaves the EU, no transitional measures will be required. If it isn’t, then transitional measures will be needed for the new 1996 directive and the 2014 application directive.
The agreement to be reached with London will concern much of the EU legislation on worker mobility, including rules governing non-EU passport-holders since the UK may eventually be considered in this bracket, explain the MEPs.
The parliamentarians also point out that solutions will be needed for projects financed in the UK by the European Social Fund, the European fund to help the most disadvantaged and the programme for jobs and social innovation. Brexit will impact on the budget of all these funds, including the European Social Fund.
See: http://bit.ly/2kQET3p (Original version in French by Jan Kordys)
TRANSPORT: Brexit - turbulence predicted for aviation
The future prospects study by the European Parliament’s transport and tourism committee (TRAN) does not paint a very rosy picture on how Brexit will affect European legislation for any means of transport, particularly for aviation.
Revision of EASA rules and regulations. Legislation in the air transport sector will definitely be deeply affected, going by what the MEPs explain in the study. Starting with the very structure of European Aviation Safety Agency (EASA), responsible for all aspects of aviation security and whose terms and conditions are currently being revised (see EUROPE 11721).
The MEPs wonder about the role of the British in the EASA’s managing board and their contribution to the operational budget. Another question mark is the role of products from the UK.
Depending on the nature of the agreement to be negotiated with the EU27, EASA may in the future no longer be entitled to certify products "Made in the UK". The review of the EASA regulation aims to extend the agency’s powers in a number of domains, including safety, drones and airport safety equipment, and make it responsible for certification in all areas.
Uncertainty about British manufacturing would have serious consequences for the country’s economy and also a non-negligible impact on European aeronautics. To avoid such a situation, one of the options considered by the MEPs would be to grant the UK a similar status to that of Iceland, Switzerland, Liechtenstein and Norway.
Gibraltar. Spain and the United Kingdom have been squabbling for decades over the sovereignty of Gibraltar (see EUROPE 11643) and the matter is of great concern to MEPs. Without prejudging the outcome of future negotiations, the MEPs say that a number of items of correlated legislation may be greatly affected by Brexit, including air passengers’ rights and the ‘Single European Sky 2+.' On the latter question, the study’s authors point out that the British were in favour of the proposed reforms. The MEPs find it hard to imagine that the British would leave the Single European Sky project, but they might lose EU funding for their part of the SESAR programme, a European air traffic management system, part of the Interconnection for Europe mechanism.
Continuity of air services. In any case, the MEPs feel it is inevitable that transitional measures will be required to ensure continuity of air services, failing which British airlines might not be allowed to automatically access the European market and vice versa. ‘Cabotage’ operations between European cities will probably become far more complex if not impossible for British airlines in the future. To avoid this type of inconvenience, the United Kingdom might opt to remain within the European Common Aviation Area (ECAA) and thus agree to recognise and therefore implement EU legislation in aviation sector.
The study is a densely-written dozen or so pages. The MEPs also address big issues in maritime, road, river and rail transport.
See: http://bit.ly/2lsv3Yp (Original version in French by Pascal Hansens)
FISHERIES: Brexit will have direct repercussions on fishing and CFP
The European Parliament’s fisheries committee says in a note on the impact of the withdrawal of the United Kingdom from the EU that Brexit will affect fisheries in several zones and will have “direct repercussions on the implementation of the Common Fisheries Policy (CFP) for both sides”.
The note was drafted for the meeting of the chairs of the Parliamentary committees and will, like the notes from the other committees, inform the report which Parliament is preparing on Brexit.
The UK’s exit from the EU will affect fisheries in ICES zones IIa, IVa-b-c, Vb, VIa-b, VIIa-d-e-f-g-h-j and will have a direct impact on the CFP for both the EU and the United Kingdom. Fishermen from many countries operate in British waters. A Community source has told EUROPE that “there is serious concern and with good reason, since fishing will be one of the sectors most affected by Brexit” (see EUROPE 11645).
The rights of British fishermen to access and fish in certain waters of member states and the rights of the fishermen from a number of member states (France, Belgium, Netherlands, Germany and Ireland) to fish in British waters, based on so-called “historic rights”, are laid down in Annex 1 and Article 5 of Regulation 1380/2013 on the common fisheries policy. Other bilateral agreements exist, such as the “voisinage agreement” between Ireland and the United Kingdom. “Historic fishing rights may only be marginally changed by an exit of the UK from the EU; however, due to the ambiguous legal situation no conclusive statement can be made at this stage”, the note states.
The fisheries committee highlights, too, the legislative acts that will be affected by Brexit: - technical measures (an issue under negotiation); - the multiannual management plan for demersal stocks in the North Sea (issue under negotiation); - management of the EU’s external fishing fleet (issue under negotiation); - management plan for demersal stocks in north-western EU waters (the Commission is due to bring forward a proposal on this issue). In addition, the United Kingdom is involved in several other management plans that have already been put into operation (for cod, sole and plaice in the North Sea, for northern hake, for sole in the Western Channel, for herring West of Scotland and for eel recovery).
Exit agreement. The fisheries committee says that, for existing historic fishing rights to be respected, the exit agreement, should include: - reciprocal access for the EU and UK fleets to the fishing grounds in UK and EU waters; - a regulation on total allowable catches for the year that the UK exit takes effect; - no increase on the part of the UK in fishing opportunities for jointly managed stocks (maintaining the current quota distribution in UK and EU waters); - granting the UK access to the European market only on the above conditions and granting EU fishermen reciprocal access to the UK market (were the UK to leave the customs union, there will, in principle, be tariffs on UK fish sold in the EU and vice versa); - provisions affecting the UK share of sustainable fisheries partnership agreements with third countries; - ensuring the maintenance of the same legal conditions for UK-registered vessels, without requiring stronger economic links that could make it virtually impossible for EU vessel owners managing UK flagged vessels to continue operating in the UK.
Lastly, the agreement between the EU and the United Kingdom could, the note says, contain provisions on: - governance; - fisheries management (reciprocal access to waters and cooperation on managing stocks by means of total allowable catches); - control measures, port access and landings; - technical measures, data collection; - protection of investments.
See: http://bit.ly/2lxlCCV (Original version in French by Lionel Changeur)
AGRICULTURE: Brexit will mean significant gap in CAP financing
A technical note from the European Parliament’s agriculture committee assesses the implications of the United Kingdom’s withdrawal from the EU for the common agricultural policy (CAP) and the “highly sensitive” political decisions to be taken by the 27 member states on how to finance it (see EUROPE 11708).
“It is obvious that Brexit will lead to a significant gap in the financing of the CAP once the UK contributions, on the one hand, and the expenditures related to British agriculture, on the other, have been removed”, states the agriculture committee note, signed by its chair Czeslaw Adam Siekierski (EPP, Poland) and intended to inform Parliamentary reflection on Brexit. Parliament is due to vote in April on a political resolution on the UK’s exit from the EU.
A recent paper on the subject assesses the gap at between €1.2 billion and €3.1 billion, “if the EU wants to maintain its current spending levels for the remaining 27 Member States”, the note says.
For the agriculture committee, “what matters fundamentally is the budgetary envelopes that will remain available to finance the CAP in its current form (that resulting from the reform in 2013) and/or to finance the future CAP (as it may result from the next reform)”, depending on when the UK leaves the EU. This will depend on three important factors, the note states: - the willingness (or not) of the remaining member states to increase their contributions to the EU budget to compensate wholly or partially for the UK withdrawal; - the willingness (or not) of the budgetary authorities to continue allocating the same proportion (around 39%) of the EU budget to the CAP (taking account of a clear political will to finance new policies or to reinforce existing ones); - the shape of the new CAP (post-2020) that will emerge from the next reform process “with mechanisms (direct payments, market measures and rural development) which may increase or decrease the need for financing from the EU budget”.
“Needless to say, these three factors are closely interlinked and highly sensitive from a political perspective”, the note states.
See: http://bit.ly/2lzg7Vb (Original version in French by Lionel Changeur)
ENVIRONMENT: Brexit may require readjustment of climate effort sharing and countless transitional measures
With regard to the breadth of the EU’s legislative arsenal in the area of competence of the European Parliament’s environment committee (ENVI – Environment, Public Health, and Food Safety), the United Kingdom’s departure from the European Union will have notable repercussions on files as sensitive as the implementation of the EU’s climate goals before and after 2020, GMOs, the cloning of animals for food purposes, the financing and provision of human resources for relevant European agencies (Environment, Medicines, Chemicals, Food Safety) or the future location of the European Medicines Agency (EMA), which is currently situated in London (see EUROPE 11639).
This non-exhaustive list is proportional to the 2,000 legislative acts currently in force and to those being examined, most of which contribute to the smooth operation of the single market or to the fulfilment of international commitments. It gives an idea of the concerns raised by the Parliament’s ENVI committee in an introductory note analysing the potential consequences of Brexit – a note which will be used to contribute to the overview being prepared by the European Parliament.
Uncertainty on climate. The outlook on Brexit is a major factor of uncertainty for the legislative files currently on the negotiating table regarding implementation of the Paris Agreement, like the division of effort in sectors outside ETS, the reform of the ETS for the fourth period of trading (2021-2030) and the adaptation of ETS legislation to the global agreement on a market measure to be finalised by the International Civil Aviation Organisation (ICAO). These three files will have to be finalised well before the effective departure of the UK from the EU.
More will need to be explored on the possible options for the EU27 to respect the EU goals for 2020 and 2030 – goals thus far based on the national contributions of the 28 member states – but also to plan the modalities for the joint fulfilment of the goals by the EU and UK. It will also have to be seen under what conditions, and how, the UK could possibly continue participating in the ETS after 2020.
A boon for unblocking the file on animal cloning for food. Countless transitional measures could prove necessary before the UK's departure from the EU, especially on the reimbursement of health care from the UK to another member state (and vice versa), GMOs, health claims, and food from the cloning of farm animals – a file currently blocked at the Council that might finally be unblocked (see EUROPE 11384). It is indeed the UK which, until now, has led the charge against the total ban of this practice.
Transitional measures could also be needed for the control of borders for products imported from the UK, in line with the new EU regulation on strengthening official controls throughout the agri-food chain, which should enter into force in the first quarter of 2017 in order to be applicable in 2020 (see EUROPE 11715).
While the move of the EMA attracts excitement from future candidates wanting to host it, the ENVI committee MEPs underline the need to anticipate the costs of this relocation and the reduction to the EMA's budget. The conditions for the UK's possible participation in the EMA post Brexit could also be envisaged.
See: http://bit.ly/2kdAcyJ (Original version in French by Aminata Niang)
JHA: Brexit may lead to Interim measures needed for asylum, databases and freedom of movement
The committee on civil liberties of the European Parliament has analysed the impact of Brexit on its fields of competence and, despite the many opt-outs of the United Kingdom in matters of justice and home affairs, and the fact that it is not a member of the Schengen zone, has drawn up a list of dossiers that could be affected, even though the impact will be limited to a considerable extent, it writes.
On the general protection of personal data, which was the subject of a reform adopted in 2015, for instance, the committee notes that Brexit will not mean that British companies are no longer subject to European rules, as the new general regulation on the protection of data (applicable to businesses and administrations) applies to all actors operating in the EU and relating to the data of European consumers.
This means that even if they do not have offices in the EU, British companies will have to appoint a representative in the EU, the committee writes. Transfers of personal data between the EU and the third country that the United Kingdom will then be must correspond to international standards and the Commission's practices with third countries. If the matter is not resolved during the divorce proceedings, there will have to be either an adequacy decision or an alternative instrument, such as contractual clauses between EU businesses and British businesses, or a 'Privacy Shield' type instrument, such as the one in place with the United States, which has been deemed adequate by the Commission.
On asylum, as the United Kingdom will be bound by the Dublin Regulation, which organises the member states' responsibility for processing asylum requests, until it leaves in 2019, the committee states that London will have to come back on board the revised regulation, but in the same capacity as the associated countries such as Switzerland, Norway and Iceland, which are also in Dublin, and that it will also have to re-join the new Eurodac system on the digital fingerprints of asylum seekers.
On this asylum dossier, the committee states that an interim regime will be necessary for asylum applications and procedures of transfers of asylum seekers carried out under Dublin once the divorce is finalised. This regime would have to have a time limit on it.
Interim agreements may also be necessary for the Eurodac regulation and would include a precise timetable for the UK's right to access and consult data, provisions on the early removal of data and data-marking and the budgetary contribution of the United Kingdom to the functioning of the system. The United Kingdom will also have to give up its seat on the board of the EASO (an interim arrangement may prove necessary, which would include the UK's budgetary contribution to the functioning of the EASO during the interim period).
The UK recently opted into the new Europol regulation. Interim provisions will be required after Brexit on the UK's seat on the board and (potentially) as to whether the UK may continue to have access to the Europol database.
Interim provisions will be necessary for the UK's access to the EU's information exchange systems for law-enforcement purposes (such as the SIS II, ECRIS or PNR records). Furthermore, access to the EU's databases will require appropriate provisions on how the UK will be subject to the supervision and arbitration of the EU institutions. The interim provisions would also have to fully respect Community data protection legislation.
Lastly, on the sensitive issue of the freedom of movement, which dominated the referendum campaign, and on Directive 2004/38/EU, currently applicable in the United Kingdom, the divorce agreement would have to include provisions on the status of EU citizens resident in the United Kingdom and British citizens' resident in the member states of the EU, the committee notes. Interim measures could be taken in order to avoid legal uncertainty post-Brexit along with provisions on whether the rights of freedom of movement would be retained.
See: http://bit.ly/2kAWZaU (Original version in French by Solenn Paulic)
JUSTICE : Brexit impact on automatic recognition of civil and commercial decisions
There will be an impact, quite possibly limited due to the fact that London already has opt-outs, but still considerable, on civil justice affairs. This is the finding of the committee on legal affairs in a report analysing the fallout of Brexit in this area. In particular, the Regulation Brussels 1 on the mutual recognition of civil and commercial judgements will be affected.
The committee proposes replacing Brussels 1 with the Lugano Convention, which binds Switzerland on these matters, or with another ad hoc convention, as is the case in this field with Denmark.
Nor will the regulations Rome 1 and Rome 3, which deal with the rules applicable to contracts and the law applicable to non-contractual obligations respectively, apply. The committee additionally stresses its concerns at the fact that many decisions with a long-term effect will no longer be automatically recognised and applicable.
Furthermore, as regards the judicial cooperation instruments in criminal and police cooperation matters, at a technical level, interim provisions will be needed for all Community instruments based on the principle of mutual recognition as regards procedures underway. For example, an interim proposal will be required in order to maintain the effect of all European police warrant procedures already in place.
An interim regime will be needed for European criminal investigation warrants, once the act is fully operational in May of this year. An interim regime will also be required for the duration of European protection orders already issued.
Interim provisions will also be needed for all court criminal proceedings already underway before the UK leaves, as EU legislation provides for extended procedural rights for suspects, for those accused and for victims, whose rights must be respected right until the end of the procedure in question.
See: http://bit.ly/2lzge2X (Original version in French by Solenn Paulic)
EXTERNAL ACTION: European Parliament's foreign affairs committee wants to have lead in consent procedure
In a note assessing the stakes of the United Kingdom's departure from the European Union, the European Parliament's foreign affairs committee (AFET) has said it should have the lead in the European Parliament's authorisation procedure.
"On the agreement itself, AFET should have the lead in the consent procedure, as it has for association agreements with the third countries", it said.
The committee also says that the impact of Brexit on its legislative files would be "mainly budgetary". "As a result of the budget cuts stemming from Brexit, the number of projects implemented via external financial instruments would be in danger", if the funds that came from the UK are not compensated in some way, the note states.
According to the AFET committee, the UK's departure could have an impact on the revision of these financial instruments, in terms of the priorities and funding allocated, although the mid-term review is scheduled for 2017-18. The committee wants the UK, once it has left the EU, to choose to channel its external aid via European instruments.
The AFET committee also questions the possible impact of Brexit on the negotiations aiming to amend the instrument contributing to peace and stability that was created in 2014, while saying that the UK seems to support the general objectives of the proposal, which should limit the impact of Brexit.
In the view of the AFET committee, it is possible that the international agreements in the process of being negotiated or ratified might be blocked. Such a situation could lead to a delay in the request for consent from the European Parliament. Furthermore, all the agreements with third countries will have to be amended to take account of the UK's departure. The AFET committee MEPs also think that relations between the EU and the British Commonwealth countries could undergo a transformation.
More generally, Brexit will have an impact on the common foreign and security policy and the common security and defence policy. In the view of the AFET committee, the EU "will continue to have a relationship with the UK in the construction of the common architecture of Europe's security, which the future agreement should take into account". The committee would also like London's foreign policy to remain in line with that of the EU, especially as regards sanctions on third countries.
See: http://bit.ly/2kXALAM (Original version in French by Camille-Cerise Gessant)
DEVELOPMENT: EU needs to prepare for financial and geopolitical impact of Brexit on cooperation policy
The United Kingdom’s withdrawal from the European Union could impact on the financing of the EU’s development and humanitarian aid policy from the EU budget and this needs to be prepared for, explains a memorandum published by the European Parliament’s development committee.
The memo on the potential impact of Brexit was written for the Conference of Presidents of Parliament's committees and will fuel the summary report on Brexit being prepared by the presidency and the future exit agreement between the EU and the UK.
Brexit may also impact on the EU’s relations with English-speaking countries in the ACP (Africa, Caribbean and Pacific nations) in post-2020 ACP-EU relations if the United Kingdom decides to give preferential treatment to its relations with Commonwealth countries, explain the MEPs.
Financing. The UK’s withdrawal will impact on the EU’s budget and make it more difficult for the EU to honour the pledges it has made to collectively allocate 0.7% of its GNI to public development aid (it only allocates 0.47% at the moment).
Although the UK’s contribution to the budget stands at 10%, it has pledged to provide 14.7% to the eleventh European Development Fund (2014-2020), in other words €4.48 billion. No measures exonerate a country from its duty to pay up if it leaves the EU, but the UK is one of the four biggest shareholders in the European Investment Bank (EIB), contributing 16.1% of its capital. The MEPs say this means measure are needed to avoid current projects being interrupted.
The regulation on the European sustainable development fund, a key aspect of the European fund for foreign investment, which will be adopted before Brexit comes into force, leaves the door open for participation of non-EU bodies. For the agreement that will replace the Cotonou Agreement after 2020, it is not clear whether its resources will be part of the EU budget or take the form of a twelfth EDF. Brexit may influence member states’ decision about this if both the EU and the UK are interested in participating in relations with the ACP nations post-2020.
Exit agreement. For joint competence agreements, such as the Cotonou Agreement between the EU and ACP nations or Economic Partnership Agreements (EPAs), the measures that come under the EU’s competence will remain binding and tricky arrangements will be needed to decide what comes under the competence of each side.
MEPs feel that it would be in the general interest to have a role for the UK in the post-Cotonou agreement and that this should be taken into account in the exit agreement, but they point out that it is possible that the United Kingdom will prefer to focus its development cooperation on Commonwealth countries.
See: http://bit.ly/2l1S0Rq (Original version in French by Aminata Niang)
HUMAN RIGHTS: MEPs question consequences of Brexit on other international agreements
The European Parliament's human rights sub-committee questions the impact of the United Kingdom's departure from the European Union on international agreements.
According to the sub-committee, the approach taken by the UK to human rights could have an impact on the agreements currently being negotiated, or that could be negotiated, between the EU and third countries – an impact that is nevertheless expected to be limited. The format of the clauses on human rights in the UK's bilateral agreements could, for example, be used as a reference for third countries.
The sub-committee is especially concerned about the negotiations on the successor to the Cotonou Agreement. It is also worried that the formalisation in the legal acts of the UK's withdrawal, which must be ratified by all the partner countries, could be the opportunity, for some of these partner countries, to ask for a renegotiation of specific controversial clauses.
The sub-committee hopes that the EU and the UK will continue to cooperate in terms of sanctions linked to the violation of human rights, the rule of law and democracy. If not, these measures, like the embargoes and financial sanctions, will lose their impact and influence. The sub-committee would also like London's alignment with the EU's policy on torture equipment, dual-use goods and weapons exports.
As regards the legislative files, it is only the review of the European instrument for democracy and human rights that might suffer the impact of Brexit, more in terms of budget cuts than regarding thematic priorities.
See: http://bit.ly/2kdolkc (Original version in French by Camille-Cerise Gessant)
DEFENCE: Brexit does not have to mean an end to British participation in EU missions and operations
The United Kingdom leaving the European Union means that the EU will lose 25% of its military capability, but the 'security and defence' sub-committee of the European Parliament hopes that the UK will continue to participate in the civilian missions and operations of the EU.
The report of this sub-committee gets right to the point. First of all, it recalls the existence of two directives (which, in reality, are little applied) relevant in the field of defence. These concern public defence procurement and transfers of products related to defence. The Brexit effect will depend on the result of the negotiations as to the links between the UK and the single market.
British participation in missions and operations launched in the framework of common security and defence policy (CSDP) should be able to continue after Brexit, the MEPs go on to suggest. They argue that temporary measures ensuring continuity should be considered. However, they take the view that the use of quarters located in the UK should be phased out.
Lastly, they argue in favour of reaching an agreement on the Galileo programme in order to guarantee the EU access to its military usage (see EUROPE 11663).
See: http://bit.ly/2kdsrbQ (Original version in French by Jan Kordys)
COHESION: Brexit - MEPs fear consequences for budget in 2014-2020
MEPs on the European Parliament’s regional development committee fear that Brexit will impact on the Cohesion Policy budget for post-2020, and a provisional study suggests it will also impact on the current period.
The MEPs foresee potential ‘adjustments’ to the Structural and Investment Funds (ESI Funds) and the EU’s Solidarity Fund (EUSF) in the second part of the 2014-2020 financial cycle. The question of a backlog of unpaid claims will certainly become acute at the end of the 2014-2020 period. Overall, the MEPs feel that there will be ‘complications’ due to parallel negotiations with the United Kingdom over it leaving the EU, particularly calculating the statistical basis for determining regions’ eligibility for European funds.
On a positive note, the MEPs say that Brexit will not have any impact on the current negotiations on two crucial items of EU legislation; the support programme for structural reforms – which has just reached interinstitutional agreement (see EUROPE 11721) – and the ‘omnibus’ regulation (see EUROPE 11642).
After general considerations, the MEPs cite a number of tangible examples. Firstly, the legal question of a number of aspects specific to the United Kingdom in the regulation on European funds (1303/2013), notably the recital on relations between Northern Ireland and the rest of the United Kingdom (Recital 25) and the derogations foreseen for the UK when it comes to suspending payment commitments relating to macroconditionality (Article 23, paragraph 13).
Moreover, the MEPs wonder about the continuity of surveillance and monitoring of implementation of the Structural and Investment Funds after 2020, in that the ex-post assessments for the current period will last until 2024. Likewisem for the financial management and finalisation of programmes that are scheduled for 2025.
More broadly, the MEPs hope the inter-regional programmes will continue into the future, even when the UK has left the EU.
The Committee of the Regions will meet on 28 February to discuss how Brexit will impact the EU’s Cohesion Policy beyond 2020.
See: http://bit.ly/2kQKrL6 (Original version in French Pascal Hansens)
WOMEN: Brexit could facilitate adoption of certain files
A document compiled by the European Parliament's women's rights committee (FEMM), dated 23 January, says that the United Kingdom's departure from the EU could lead to a slight shift at the Council as regards files linked to gender equality.
"Brexit will not have any technical or legal impact on the existing or pending legislation of the FEMM committee (...) There are nevertheless political considerations which may have an impact on pending legislation", the FEMM committee states.
Overall, the document says that the only legislative change to be provided for will be the removal of the reference to the UK in the directive against human trafficking (2011/36/EU). This does not change much in reality as London was already not bound by this legislation. The FEMM committee document also sets out the consequences on the share of the EU's budget dedicated to gender equality, but it does not, however, set this impact out in terms of figures. For the rest, the changes are expected to be minimal ... but highly political, as the UK is one of the main opponents of gender equality-related issues, such as maternity leave, women's quotas on company boards, and the Istanbul Convention. The FEMM committee is under no illusions, however, as it concludes that after the UK's departure, there are still expected to be a number of member states opposed to these issues.
See: http://bit.ly/2lzd0g1 (Original version in French by Sophie Petitjean)
CULTURE: Status of English and participation in EU programmes under question due to Brexit
Brexit calls into question the participation of the United Kingdom in the EU programmes Erasmus +, Creative Europe and Europe for Citizens, as well the status of English as an official language, according to a document of the committee on education and culture of the European Parliament, dated 13 January.
Broadly, the UK's withdrawal should mean its withdrawal from the Europe for Citizen programmes, which aims to bring Europe closer to its citizens, and which has never gone down terribly well on that side of the English Channel. Parliament's document goes on to state that on the other hand, the British are likely to want to continue to participate in the programme's Erasmus + and Creative Europe: during the academic year 2013-2014, 43,000 students benefited from the exchange programme for higher education between the EU and the UK. Similarly, the British audio-visual sector received just over €100 million for the programming period 2007-2013 from the MEDIA programme (one of the planks of Creative Europe). However, British participation in these programmes in the future will depend largely on the position the country takes on the free movement of people. As to the future rules on audio-visual media services, currently under negotiation, chances are that the UK will no longer be a member of the EU when it is transposed.
Another issue discussed was the status of the English language. Although it is an official language in Malta and Ireland, it was not notified by either of these countries as the United Kingdom had already taken care of this. Failure to keep English as an official language would compromise the practical functioning of the European institutions. In light of these considerations, it would seem logical to act quickly to guarantee a pragmatic, legally clear approach to ensure the status of English after Brexit, the committee's report concludes.
See: http://bit.ly/2kuCVEL (Original version in French by Sophie Petitjean)
BUDGET: Does EU budget need to be downsized due to Brexit?
The departure of the United Kingdom from the EU may lead to a loss of €10 billion a year from the European budget, the institute Notre Europe estimates (see EUROPE 11705). The questions this raises are as follows, a note of the committee on budgets of the European Parliament on the effects of Brexit reads: - should the size of the EU budget be adjusted and spending on EU policies reined in to plug the gap left by Brexit? - Or should the remaining 27 member countries of the EU be asked to increase the size of their contributions to maintain the level of spending unchanged? “The nature and level of the future EU-UK relationship agreement will obviously have an impact on how big an adjustment to the EU budget will be needed”, the note concludes.
See: http://bit.ly/2lHfVDm (Original version in French by Lionel Changeur)