The Committee for Exiting the EU heard evidence from Allie Renison, Head of Europe and Trade Policy, Institute of Directors; Henry Newman, Director, Open Europe; and Michael Dougan, Professor of European Law and Jean Monnet Chair in EU Law, University of Liverpool.

I asked about the withdrawal agreement and being ready for Brexit. Doing a deal is not just about words on a piece of paper. It’s about having the institutions in place. It’s a pipe dream to think we can create and build new institutions by December 2020. An EEA based Brexit is the only viable option.

Stephen Kinnock: First of all, just a quick process question. The former Secretary of the State for Exiting the EU said that he believed that if Parliament votes on the withdrawal agreement and the political declaration and it goes through, it will be possible to start negotiations with the EU on turning the political declaration into a legally binding treaty prior to 29 March of next year; ie from the moment that Parliament votes it through, you can then start the negotiations. We have also heard evidence suggesting that you cannot really begin to turn the political declaration into a legal treaty until such time as the UK is a third country. Formally speaking, the European Commission would not set up its team for those negotiations because the team that it sets up would be based on Article 218, and you cannot have that while Article 50 is still in effect. I would welcome the panel’s comments on that.

Michael Dougan: The latter interpretation is correct.

Stephen Kinnock: Thank you very much.

Allie Renison: From some of the discussions that I have had in Brussels, formal negotiations are one thing, but how much work can you do to start doing the substantive preparations for the mandate? It also comes back to the question of: how detailed do you want to make the political declaration, in a sense? We would prefer from a business perspective to see as much detail as quickly as possible, but is there a potential that trying to effectively negotiate as much detail as possible through the political declaration holds up the withdrawal agreement itself, which in turn holds up moving on to the substantive negotiations in the future? There is that legal dimension, but the substantive question about how much you want to put into the declaration now versus waiting for the formal negotiation to start is a political question, in my opinion.

Henry Newman: Drawing the same distinction that Allie Renison just made, but also to say that this takes us back to something that Professor Dougan was discussing: the limitations of Article 50 as a highly deficient mechanism, which Britain and the Commission are both now amply demonstrating. It is a very suboptimal clause in a Treaty that we are now limited in our ability to use. If it is not legally possible, that is one thing, but it obviously makes sense, as soon as the conclusion is reached on the withdrawal agreement, for formal discussions to begin. If a mechanism can be found to do that, that would be welcome.

Stephen Kinnock: We note Professor Dougan’s view that in practice that will not be possible because the Commission will not set up a team to make that happen until such time as the European Parliament has given its assent.

Michael Dougan: We have to distinguish between formal negotiation, which will require negotiating mandates from the Council, and those cannot be delivered until after withdrawal, and more informal negotiation.

It also depends on what the nature of the future relationship is likely to be. If we are talking about something relatively off-the-shelf, if we end up with a free trade agreement effectively like Canada, or if we end up with an EEA-style agreement like Norway, there we are dealing with known quantities, and we can more or less refer to them in not that much detail on the text because all the detail is known behind the text. We all know what they look like. If we are talking about something more bespoke, there has to be more detail because everyone is going to want to know what is bespoke about it. What are the safeguards, the limits? What are the institutions and the processes? In a way, the less ambitious the agreement in being bespoke, the easier it will be to have a reliable political declaration. The more ambitious and the more bespoke and special, the much more difficult it is going to be to have it detailed.

Stephen Kinnock: Thank you. That is very clear. On the point that you made there in your initial comments, Professor Dougan, about trust and the key role that institutions play in building trust, is it not the case that an institution such as the EFTA Court, for example, provides that level of institutional stability and, therefore, trust, which would deliver much of what is being asked for in the Chequers declaration? It would be interesting to know why it is that we do not just sign up to the EFTA Court and dock to the EFTA Court.

Michael Dougan: This is true, by the way, not only the judicial side but also on the administrative side. To come back to an example that Allie used earlier, state aid. The Chequers agreement refers to a common rulebook on state aid. The defining characteristic of EU state aid rules is not the rules themselves; it is the Commission being the virtual sole enforcer of the state aid rules. Who is going to do the job of the Commission for the UK? It is very doubtful that the EU would accept that a UK public body polices UK public aid because it does not accept that for itself. It does not accept that for the EEA. It relies on the EFTA Surveillance Authority. The problems are parallel in both administrative and judicial senses.

Stephen Kinnock: Yes. The key point there is that this is not about words on a piece of paper. It is about the institutions, and institutions that have taken decades to build. Perhaps, Mr Newman, you could comment on that. How realistic is it that we get to December 2020, the end of the transition period, and we have built a set of bespoke institutions that have the buy-in and trust that has taken decades to build across—

Henry Newman: I am personally open to docking into the EFTA Court. That was something that we recommended in our paper. Equally, as Professor Dougan was saying, there are already a series of examples of arbitration mechanisms that the EU already has in place. CETA has one, for example. I do not think it is that complicated.

The whole question around trust: I understand at one level the European Commission’s concern, but equally, Britain is a very rules-based country with very powerful and independent institutions. I do not think it is really that plausible to think that Britain is suddenly going to go totally rogue and start ignoring commitments that we have in international or indeed in domestic law. That is just not a picture that I would recognise for this country at all, particularly after decades and decades of membership where we have followed all the rules. We have sometimes argued around the table for particular opt-outs and so on, but equally we have been very careful members. I think the Commission should take a slightly more benevolent view about our ability to be a trusted partner in the future.

Michael Dougan: Can I just come in on that, though? I think you are talking about trust at too high a level. This is not about whether you are a trustworthy country and a civilised place that plays by the rules. This is about the daily nuts and bolts of the way jobs get done. Some of the things that you see in EU law—and this is the bread and butter of my daily work—are the little failures of trust between authorities. It is when your insurance certificate is not properly recognised by a French authority. It is when your forklift truck is criticised by a Minister in Finland. It is the hundreds of little failures of trust that risk the system functioning.
Henry Newman: I accept that. That has to be resolved with clear, binding rules and so on, absolutely, but there is also a rhetoric that we see from the Commission, particularly on unattributed sources, which does speak to my wider point about the UK suddenly becoming an untrustworthy country. I just do not recognise that.

Allie Renison: There is a domestic implementation model under I think the EU-Ukraine association agreement for state aid, but the difference there is that—and I defer to the professor on this—because Ukraine is starting from here and the UK is here and talking about an actual common rulebook, I do not think Ukraine has signed up fully to the complete package of state aid rules in the way that the UK is necessarily proposing. The more you talk about a common rulebook, the more you potentially do need a surveillance authority.

Stephen Kinnock: We have not really touched on the agencies. I think there are 49 or 50 EU agencies. Can you say very briefly a couple of words about how you see the Chequers statement relating to the issue of the agencies? We know that in about half the cases, the agencies have no provision for participation of third countries in any way, shape or form. Then there are a number where you have to be EEA in order to get observer status at least. I think this plays absolutely into the issue of institutions and trust. The role of the agencies in the context of the Chequers agreement: I would be grateful for your take on that.

Henry Newman: There are obviously some pretty fundamental concerns in that direction. Equally, there are examples of non-EEA states participating in certain agencies, like Switzerland and the Aviation Safety Agency. I think Professor Dougan can speak to more of the technicalities on that.

Another huge area we have not discussed—we have spent the entire morning discussing the economic relationship—and more profoundly concerning in many respects is the security relationship. That is a detail in the Chequers statement. Talking to any officials inside Government who are working on security, they are profoundly concerned by the attitude the Commission and also member states are taking. The UK is not asking to sit at the table and make decisions on internal security and so on, but we are asking to make sure that operational capabilities do not fall off. That is profoundly at risk and it is something that I hope the Commission takes very, very seriously.

Michael Dougan: Agencies are a bit like regulatory regimes in the field of financial services. There is no single model. They vary about whether it is available in the nature of participation in a relatively ad hoc way. This is one of the areas where until we know better what the common rulebook scope is meant to be—is it literal border checks or is it a common market for goods—we cannot know which agencies will be relevant and, therefore, where the legislation might fulfil the UK’s aspirations or where we might need to say to the EU, “Can you change your legislation?”

Just to come back on Henry’s point, it is easy to say politically this seems crazy and politically this seems unacceptable. If the legislation says, “You cannot participate”, you either have to live with that legislation or you have to change it. Now we are asking the EU to change its rules to accommodate us. The politics and the law have to work constructively together there, rather than seeing one or the other as an absolute obstacle.